Southern Cross Cable cuts prices, announces upgrade

Stuart Corner
Friday, 14 August 2009 13:29

IT Industry - Strategy

Southern Cross Cable has announced a price cut for services on its submarine cable network linking Australia and New Zealand to the US via Hawaii, and plans to increase capacity by more than 50 percent early in 2010. It has also announced that it is planning an entire new cable system.

Sales director, Ross Pfeffer, said: "Another price reduction is available immediately and by March next year lit capacity will expand again, this time by more than 50 percent." He added: "The latest initiatives follow closely on the heels of the last price reduction and capacity upgrade that was completed in January of this year. Southern Cross is accelerating its capacity expansion and reducing prices in anticipation of continuing strong demand and in support of Government initiatives for high speed broadband in both Australia and New Zealand."

Prices for circuits to the US, from both Australia and New Zealand, have been reduced by 15 percent, a move that brings reductions over the last 18 months to more than 50 percent. "These reductions are made possible by our ongoing implementation of cost effective capacity expansions," Pfeffer said. He added: "The new Southern Cross price for 5Gbps of restored capacity represents around $US0.28 per Gigabyte downloaded from the US. This has reduced by 86 percent, from $US1.95 per Gigabyte, in December 2003."

Southern Cross has also reduced both its Trans-Tasman and Hawaii–US prices. "Our prices for these smaller markets have just been reduced by 49 percent and it is our intention to keep prices for these markets aligned to ensure our Trans-Tasman pricing reflects very strong competition in the US-Hawaii Market," said Pfeffer.

The latest reduction comes ahead of imminent competition from Pipe Networks' PPC-1, scheduled to come into service in September and which will run from Sydney to Guam, providing an alternative route to the US and elsewhere by interconnecting with other cable systems in Guam.

Ever since it announced plans for PPC-1 Pipe has claimed that it needed to 'break' the near monopoly held by Southern Cross, which, according to Pipe, results in artificially high prices. Since then Telstra has constructed Endeavour, a 1.28tbps system linking Sydney to Hawaii and the SPIN consortium has announced plans for system that will connect Australia and New Zealand to Hawaii via New Caledonia and French Polynesia. Kordia networks is also looking at a new cable that will connect New Zealand into PPC-1. Its board is due to make a decision in September.


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