Well they took the risk to invest and build in the cable, no one else (until recently) has decided to take the risk, the proposed Pipe network PPC1 and 2 cables are very short and safe runs (NZ > AU and AU > Guam) no way near as ambitious as the SXC.
If I was a SXC shareholder I would expect them to charge "what they can get" for the service and to make me a good return. They're not running a charity.
Ragnor: If the prices are so sky high for our geographic isolation why hasn't anyone built a competing cable sooner?
Commercial reality is an inconvenient truth?
I don’t know the economics of it, but I suspect it’s a case of natural monopoly. One cable can be justified and a return can be made, but with the limited population in NZ a second one wouln’t generate enough return to justify it’s purchase, unless heavily subsidised by the government. We have usage caps in NZ, but in reality only the high end users are really affected significantly by this. A typical household in NZ won’t use more than 2-3GB per month right now, and I suspect that even if a second company laid a new cable and bandwidth price dropped significantly there wouldn’t be enough extra usage stimulated in NZ by that price drop for either company to make a profit. I’m fairly sure that the average usage in America is not that much higher than it is here.
Ragnor: If the prices are so sky high for our geographic isolation why hasn't anyone built a competing cable sooner?
Commercial reality is an inconvenient truth?
I don’t know the economics of it, but I suspect it’s a case of natural monopoly. One cable can be justified and a return can be made, but with the limited population in NZ a second one wouln’t generate enough return to justify it’s purchase, unless heavily subsidised by the government. We have usage caps in NZ, but in reality only the high end users are really affected significantly by this. A typical household in NZ won’t use more than 2-3GB per month right now, and I suspect that even if a second company laid a new cable and bandwidth price dropped significantly there wouldn’t be enough extra usage stimulated in NZ by that price drop for either company to make a profit. I’m fairly sure that the average usage in America is not that much higher than it is here.
So National should forget about building a fibre network in country and build a great big fat cable to the USA then wholesale it on equal terms to all local providers...let the local access (fibre, wimax, WCDMA, LTE etc) be decided in a competitive environment and allow the international backhaul/access costs be susidised by the government (using our tax dollars) and therefore achieve the aim of lower cost broadband to ALL new zealanders???
So National should forget about building a fibre network in country and build a great big fat cable to the USA then wholesale it on equal terms to all local providers...let the local access (fibre, wimax, WCDMA, LTE etc) be decided in a competitive environment and allow the international backhaul/access costs be susidised by the government (using our tax dollars) and therefore achieve the aim of lower cost broadband to ALL new zealanders???
+1
When i think national fibre network + government, it always seems to = ~KAREN And who benefits from that - schools - not me.
The local loop is a very competitive market and i agree more should be put into reducing our international costs.
Yeah I'm sure the government has a spare NZD $3 Billion dollars (USD $1.5 Billion) right now, or could easy borrow it (lol financial crisis)... oh wait...
NonprayingMantis: I don’t know the economics of it, but I suspect it’s a case of natural monopoly. One cable can be justified and a return can be made, but with the limited population in NZ a second one wouln’t generate enough return to justify it’s purchase, unless heavily subsidised by the government.
i believe that NZ only accounts for a small portion of the bandwidth utilization on the SCC. There is some fairly large usage out of hawaii iirc. There used to be some nice diagrams on the SCC website, but that seems to be having problems - like being hijacked, or forgetting to renew the domain name
raytaylor: When i think national fibre network + government, it always seems to = ~KAREN And who benefits from that - schools - not me.
KAREN was built using TelstraClear infrastructure on a commercial basis and eventually will become self funding, so is a little different from what National were proposing I think.
Universities and NZ Research organisations benefit from KAREN (and indirectly NZ as a country) - up until recently NZ was one of the few developed countries in the world not to have a research and education network. KAREN includes an international component (155mbit to Australia and 622mbit to the USA which will be increased as needed).
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