Prospects for Pipe's submarine cable look good

Stuart Corner
Friday, 06 July 2007 12:34

Business IT - Networking

Pipe Networks has given an optimistic update on its as yet unconfirmed plan to build a submarine cable link from Sydney to Guam.

The company indicated in March that a final decision would be made in May but has given no further information on progress since that time. However, it told the ASX today, 06 July, that the plan, dubbed 'Project Runway' had been progressing well with vendor and network design running to schedule. "An announcement regarding vendor selection is expected in approximately four weeks and a final decision on the project within a further four weeks thereafter," the company said.

It explained the delay by saying: "There was some delay as various international company structural challenges took longer than expected to address. These issues have now been mostly resolved."

Pipe initiated the project last year in conjunction with Indian telco, VSNL International. VSNL owns an extensive global cable network which would provide onward connections from Guam.

Pipe cited the main reason for Project Runway as being high prices on international links from Australia resulting from the lack of competition: there is only one direct link to the US, Southern Cross, owned by a consortium of global and local carriers. The other main link from Sydney, Australia Japan Cable, is also controlled by major telcos.

Shortly after Pipe's last, March update on Project Runway, Telstra announced plans  for its own direct link to the US, via Hawaii, to reduce its dependence on Southern Cross. Despite these developments. the Internet Industry Association Australia (IIA) warned this week that the high cost of international connectivity could stifle broadband in Australia and it called for greater competition in this market.

CEO Peter Coroneos, said: "Promises from political parties to deliver faster services, while very welcome, may have the perverse effect of bringing our international capacity constraints to a head sooner rather than later."

The IIA has championed the need for faster broadband services, including setting national targets for 2010, but Coroneos said: "it is becoming evident the more we look at this that, without better competition and investment in international links, emerging uses of the Internet may remain out of reach, even though we'll have the speed to access them...By virtue of our isolation, the limited number of cables connecting us to the global Internet and the proportion of content we source from overseas, we face much higher costs in international traffic."