Government tips $15m into trans-Pacific submarine cable

Communications Minster Amy Adams says the New Zealand Government will support a trans-Pacific submarine cable.

The government wants expressions of interest from companies considering building an international cable linking Australia, New Zealand and the USA. At the time of writing only Hawaiki has committed to doing that.

She says New Zealand is willing to tip-in $15 million. That’s between five and seven percent of the likely cost of building a trans-Pacific cable. It’s not a drop in the water, but nor is it enough to interest fresh players.

Government as anchor customer

Adams says the government will commit as an anchor customer buying capacity for New Zealand research and educational.

She says the cable would need to meet the requirements of the research, education and innovation communities, as well as normal commercial traffic. Any likely cable builder can tick that box.

High levels of reliability

As for: “In order to take part in global research projects, our research and education communities need dedicated capacity that can handle huge data volumes and provide high levels of reliability”. Any credible new project will do that.

She says: “Building a new cable will further increase the resilience of New Zealand’s international telecommunications links and introduce more competition on the route, as well as providing additional capacity.”

Well yes. Although there’s more than enough capacity for immediate demand. The issues are more to do with competition and security.

We’ve been here before. Two years ago government offered a similar sum to Pacific Fibre, which despite the contribution failed to raise the needed money.

Comment: The government needs to tread carefully. If it commits too heavily to a new submarine cable it risks damaging the incumbent Southern Cross Cable Network’s business.

On the other hand, there is a need for more redundancy given a modern economy would struggle to work if the two existing links were both out of action at once. As Pacific Fibre showed, $15 million of government money isn’t enough to swing things for a builder, but it is a welcome contribution.