iiNet first customer for Pipe's submarine cable

Stuart Corner
Monday, 14 January 2008 04:25

Business IT - Networking

With Pipe Networks due to announce details of Project Runway, its submarine cable to Guam, later today, it has been pipped at the post by iiNet naming itself as the first customer, with a 15 year capacity deal. The bandwidth acquired and the financial terms were not disclosed. iiNet managing director, Michael Malone said: "this agreement will provide iiNet with long term supply certainty and significant cost savings...This solution provides ample capacity to match iiNet's plans for growth and is considered a key plank in the company's ability to continue delivering affordable high speed broadband to our customers."

Malone said that international capacity represented approximately 15 percent of iiNet's cost of sales and the switch to Pipe "will provide a significant saving for iiNet in international bandwidth costs as well as providing iiNet with greater certainty over the services it delivers."

Pipe's cable, according to iiNet, is due to come into service in late 2009 and iiNet says it has also put in place contingency plans with existing providers which gives the company flexibility and certainty of supply until the new capacity comes online.

Malone added: "iiNet has been saying for years that the bottleneck in Internet access in this country is in the international links, not in the access network. This project signals the first entirely new cable delivered to Australia in eight years and will deliver more capacity for bandwidth starved Australians."

However the Australia Japan Cable, controlled by Telstra, is being upgraded ,  Telstra is building a new cable to Hawaii   and Southern Cross is being upgraded . Pipe's contention has been, since it initiated the plan, dubbed project Runway, that lack of competition from systems other than those controlled by the dominant carriers rather than lack of capacity has been the main issue, keeping prices artificially high.

The timeframe for Pipe's network seems relatively long given that the company has been working on the project for over a year. Telstra announced its Hawaii cable in March 2007, saying it would be completed by mid 2008.