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Business A-listers test waters for super-fast Pacific cable venture

Thursday 11th March 2010

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A group of well-known New Zealand businessmen are sounding out appetite for a new internet fibre cable venture to link with Australia and the western United States seaboard.

Pacific Fibre proposes securing funding to build a $900 million 5.12 Terabits/sec capacity fibre cable to be ready in 2013, connecting New Zealand directly to the US, as opposed to the Southern Cross cable, which routes through Hawaii from the US mainland.

It will be five times the capacity of Southern Cross's 10 year old link. The 13,000km cable would link Australia and New Zealand direct to the United States, avoiding a stopover connection in Hawaii and its inherent latency delays.

The venture has been founded by a group including the founders of The Warehouse, TradeMe, and Xero, Stephen Tindall, Sam Morgan and Rod Drury respectively.  Also on board are former Vodafone chief marketing officer Mark Rushworth, technology industry veteran John Humphrey and strategy consultant and entrepreneur Lance Wiggs. Pacific Fibre is now engaging in early discussions with cornerstone investors and customers.

“How long it takes for us to raise the funding is a bit of chicken and egg scenario,” Rushworth told BusinessWire. “At the moment we have six passionate people investigating how we might make this happen. The next phase is talking more to initial customers, investors and banks; and that could take six to nine months.”

Once finance is secured, along with the decision on Pacific Fibre’s debt to equity ratio, under a standard project build model it would take about 22 months to put the undersea cable in place. Rushworth said while an IPO can’t be ruled out for the venture, the finance model depends on the mix of investors and that it is not the initial direction that is being pursued.

“With 90% of New Zealand internet traffic going offshore, a major boost in international capacity is needed to fix the 7pm bottleneck,” Rushworth said. “The situation is bad now and only going to get worse as the New Zealand Ultra-Fast Broadband initiative and the Australian National Broadband Network start delivering fibre to the premise.”

The proposed cable configuration would have two fibre pairs whose 5.12 Terabits/sec maximum lit capacity would be upgradeable to 12 Terabits/sec as new emerging 100 Gbit/sec per lambda technology becomes a reality. The newer cable and repeater technology that Pacific Fibre proposes using is substantially more upgradeable than that of existing cables Rushworth said.

The increasing use of video and high resolution multi-party videoconferencing is a major call on cable bandwidth that Pacific Fibre hopes to fill.

“We believe a unified approach in building the cable is good news for the entire telecommunications industry, including Telecom, who will finally be able to deliver innovative new services expected as normal in other countries,” said Rushworth.

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