The Cable Directory

THE Queensland telecom Pipe Networks has given the go-ahead for a $200 million undersea cable between Sydney and Guam, amid surging growth in internet broadband. The entry of a third player into the cable market in Australia, as Pipe Networks takes on Telstra and Southern Cross Cables – which is owned by Telecom New Zealand, Singapore Telecommunications and the US carrier Verizon – is expected to lead to cheaper access prices for internet service providers. But it remains to be seen whether the providers will pass on the lower costs to consumers in the form of reduced internet prices. Yesterday Pipe Networks revealed the industry’s worst-kept secret when it announced it had enough contracts with customers, including iiNet, Primus and Internode, to approve the construction of a 6900-kilometre cable. The cable will also be connected to Madang, in Papua New Guinea. Its main trunk will deliver 1.92 terabits of data a second. The use of undersea cables is one of internet service providers’ biggest costs because so much content is transferred across the Pacific. In the past two years traffic volume has soared due to an insatiable appetite for such internet phenomena as social networking sites and video sharing. The cable will increase capacity on links from Australia by 30 to 40 per cent. It is expected to be completed by late 2009.

Pipe Networks described it as vital to break the “stranglehold the gang of four have on Australia”. The Minister for Communications, Stephen Conroy, has been mindful of the need for more capacity because analysts say it is pointless building a fibre-optic network in Australia if there is a bottleneck in cables to the rest of the world. An ABN Amro analyst, Ian Martin, said yesterday that the entry of Pipe would lead to greater price competition, although traffic on the cable was likely to “fill up reasonably quickly given the expectations of growth in broadband”. Although Southern Cross Cables might lose some business in the short term, Mr Martin said “whatever Pipe takes away will be made up fairly quickly”. Telstra announced early last year that it would lay a 9000-kilometre undersea data cable between Sydney and Hawaii. It is due to be completed by the middle of this year and will be wholly owned by Telstra. Southern Cross is also in the midst of an upgrade to double its capacity to 860 gigabits a second by the end of the year. Its cables connect Australia, New Zealand and Fiji to the mainland US. The West Australian telecom iiNet said its 15-year agreement with Pipe Networks for capacity on the cable would result in a significant saving in international bandwidth costs. Shares in Pipe Networks rose more than 3 per cent, or 14 cents, to $4.54 yesterday.