REANNZ becomes first customer for Pacific Fibre's planned Aust - NZ - US cable

Stuart Corner
Friday, 20 May 2011 15:13

IT Industry - Deals

REANNZ (Research and Education Advanced Network New Zealand Ltd) - the equivalent of Australia's AARNet, has become the first customer on the cable planned by New Zealand company Pacific Fibre to connect Australia and New Zealand to the US West Coast.

The move comes just two years after REANNZ scrapped a RoI for the provision of a new trans-Tasman cable saying that the only proposal, from Kordia, was not sufficiently advanced.

Pacific Fibre and REANNZ say they have "agreed key commercial terms for a substantial contract to supply international capacity on the new Pacific Fibre cable system'¦for the NZ research, education and innovation communities." The two said that Pacific Fibre won the business through an open tender, and that they are now negotiating a final contract based on the signed key commercial terms.

REANNZ CEO, Donald Clark, said: "At current market rates, the value of the capacity commitment is over $NZ400m, though obviously we are paying far less than that. This is a long term commitment, and one that recognises our support for the Crown's policy goals of increased international cable competition at the right stage in the market process."

According to REANNZ: "The deal will see the amount of capacity available to KAREN [the name for the network operated by REANNZ] subscribers rise from today's 1Gbbs to an initial 40Gbps and then to 160Gbps over time. This step change is possible due to the superior economics of the new cable system and through restricting the use of the capacity to the KAREN community."

Clark, said: "Pacific Fibre will provide us with effectively unconstrained capacity to Australia and the USA from mid-2014, allowing us to collaborate with the rest of the world on an equal footing."

REANNZ is investing its own operational funding, along with $NZ15 million that the NZ Government granted to support a capacity purchase on a new submarine cable system.

The move has cast doubts on the prospects for Kordia's long-planned OptiKor cable that, if it goes ahead, will link Australia and New Zealand.

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