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Government tips $15 m into submarine cable
Posted on 19-Sep-2013 18:06 by Bill Bennett | Tags Filed under: Articles


Communications and IT Minister Amy Adams
Communications and IT Minister Amy Adams

Besieged by complaints about government favours to network company Chorus, Communications Minster Amy Adam found time for an announcement about government support for a trans-pacfic submarine cable.

Adams says the government wants expressions of interest from companies considering building an international cable linking Australia, New Zealand and the USA. At the time of writing only one company has publicly committed to such a project: Hawaiki.

She says the government is willing to contribute $15 million to a project. Give that figure is between five and seven percent of the likely cost of building a trans-Pacific cable, it's not a drop in the water, but nor is it enough to interest fresh players.

Government as anchor customer

More importantly, she says the government is prepared to commit as an anchor customer buying capacity for research and educational users in New Zealand.

She says the cable would need to meet the requirements of the research, education and innovation communities, as well as normal commercial traffic. Pretty much any likely cable builder can tick that box.

High levels of reliability

As for: "In order to take part in global research projects, our research and education communities need dedicated capacity that can handle huge data volumes and provide high levels of reliability". Any credible new project will do that.

She says: "Building a new cable will further increase the resilience of New Zealand's international telecommunications links and also introduce more competition on the route, as well as providing additional capacity." Well yes, but there's more than enough capacity for immediate demand, the issues are more to do with competition and security.

We've been here before. Two years ago the government offered a similar sum to Pacific Fibre, which despite the contribution failed to raise all the needed money.

Digitl comment: The government needs to tread carefully here, if it commits too heavily to a new submarine cable it risks damaging the incumbent Southern Cross Cable Network's business. On the other hand, there is a need for more redundancy given a modern economy would struggle to function if the two existing links were both out of action at the same moment. As Pacific Fibre showed, $15 million of government money isn't enough to swing things for a builder, but it is a welcome contribution.

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