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Southern Cross Cable

Brendan Ritchie from DTS  revisits the arguments for an against building a submarine cable linking New Zealand to the world. In How will a new international cable benefit NZ? Ritchie looks at capacity and concludes, at least from this point of view, there’s no pressing need for another cable.

SCC is frequently upgrading its capacity and at present only runs at 15% utilisation, so anyone who suggests that there is a capacity crisis in NZ is simply wrong. While data usage is increasing 30% per year in NZ, the SCC has the ability to upgrade supply substantially.

Total lit capacity on the Southern Cross system is now 3.6Tbps. I’m with Ritchie on this. We only use a fraction of capacity on The Southern Cross Cable Network. It is not the issue.

What concerns me is the single point of failure. Or as Southern Cross often points out, two points of failure.  Two cables link New Zealand to the world. If one stops working — and that has happened in the past — Southern Cross can route traffic in the other direction.

That’s reassuring. Yet New Zealand’s entire economy hangs on one company and two lines. I’m not entirely comfortable with that level of risk. For me that is the compelling argument for a third or fourth link.

11 thoughts on “Arguments for and against a second submarine cable

  1. I’d guess that the usage of capacity is limited by the cost of international web traffic (as reflected ultimately in end-user download caps). (Either that, or people are at the limit of the amount of movies and video conferencing they want to sit through).

    If the former is the case, then reducing prices would increase SX’s traffic, but probably not do much for their profits.

    But with a second cable, traffic will tend to go by the cheapest route and given the negligible marginal costs, prices and revenues will rapidly fall. That would tend to end in the bankruptcy of either the new cable owner and/or SX.

    Which might not be a bad thing for NZ, given that someone will buy the asset from the liquidator at much less than the cost of construction and be able to operate profitably at much lower prices (which will in turn bankrupt the other cable owner, of course).

    I’d hope no public money gets lost in this process and it all falls on the dumb and mad investors…

  2. I would expect the rate of usage to increase far more rapidly as fibre become ubiquitous. Therefore I think we will have capacity problems far sooner than suggested. In addition, there is the issue of competition with SCC able to charge monopoly prices. A second cable would see broadband prices dropping still further and usage increasing even more rapidly.

    • “Therefore I think we will have capacity problems far sooner than suggested.”

      Possibly, but potential Southern Cross upgrades can more than match even the most optimistic (or pessimistic depending on your point of view) projections of international traffic over the next five to ten years.

      After that, a new cable will be necessary anyway.

      As for competition, the jury is out on whether prices will drop in practice. SCC competes on traffic into and out of Australia yet it’s price tariff in that country is the same as in New Zealand where it doesn’t face competition.

  3. Good on forward-looking Northland.

    It could also be useful for Invercargill to explore opportunities. Manapouri electricity will become available with the expected demise of the aluminium smelter, and the temperatures down there are often at the cooler end of the spectrum.

    Helpfully, Labour’s IT spokesperson Clare Curran wants a South Island landing point discussed.

    Decision-makers still need to factor in how concentrating cable landing points in one, northern end of the country puts all our international data-flow eggs in one, northern regional basket. This creates national vulnerabilities should some major natural or other disaster in Auckland or north of the Cook Strait sever these parts from the rest.

    Significantly also, such concentrations further overload Auckland’s over-congested infrastructures.

    On the other hand, a cable at the other end of the country would make for evenly-spread data flows throughout that could enable digitally-supported development from the South to the North as well as vice versa. All much more robust infrastructurally, economically and socially.

    Then there are still little-noted wider, foreign policy issues.

    Being a little nation that tags along with one big one limits our possibilities and our imagination.

    Imagine, on the other hand, the potential in creating infrastructures and skills for brokerage between any and all: diplomatic in Wellington, and international data, research and training amenities in the Invercargill region…

    The leadership of the Green and the Internet Party respectively have tweeted these possibilities to their members.

    • I know of some fairly heavy energy users looking at locating in Invercargill, makes sense from that angle, and it is certainly pretty diverse. There would have to be some quick domestic network builds though, not many ISP’s in Invercargill, think there are only 4 or 5 of us connected to Chorus down there.

  4. The other site has comments under moderation. Pretty light article. Anyhoo I commented thusly …

    My point was that Internet Bandwidth is supply not demand driven.

    The fact that there is capacity but we have less than stellar international connections illustrates the problem perfectly.

    If we added 100x bandwidth, we would use it all, allowing not just Xero but any service exporter to export more using video conferencing at multiples if the bandwidth usage we know now.

    My idea was moving from $ per MB to $ per connection so we step change our usage for all businesses, schools and hospitals.

    Think big!


    • “Internet Bandwidth is supply not demand driven”.

      At first I wasn’t sure about this idea. Now I’m certain it’s correct.

      We’re already seeing that domestically with thousands of people in small towns up and down the country aiming for their home to become a Chorus Gigatown. If that doesn’t demonstrate demand, nothing does.

      • The demand is there to get the headline maximum tail speed, but then a consumer typically takes a screen shot of their speed test to a domestic server and then uses a fraction of their potential bandwidth in every day use. Do people even have routers capable of running at the speeds their Gbps circuits can provide? Do ISP’s have sufficient domestic transit? Sufficient number of 10Gbps handovers? A core with hardware that can actually provide the throughput on the scale required? Some do, many don’t. To wrap up this rant, demand is there, but the demand is not based on a demonstrated requirement/ability to use the best case throughput of the last mile.

    • Glad you mention “small towns up and down the country.”
      There’s been some rather innovative social science research on how people in such towns or “villages” could utilise ICTs to network locally and globally to create a vastly more successful economy while living the lives they want in the kinds of social and natural environments they want.
      The following sample blogs from the village-connections.com website explain how ICTs might be so utilised, and by extremely well-networked people who would know what to do with heaps and heaps of bandwidth! The blogs are:
      1. From Localities to Network Localities & Nations of Well-Connected Villages
      2. Local-global connection-building for futures that work

  5. I agree Bob, I didn’t mention it in my “light” article (just posted a reply by the way Rod) as i have a couple of follow ups planned, the next being on price and the last on the subject you have made mention of, namely the current lack of a redundant or secondary path via a completely separate cable provider. For me that is also the key, and a different region for the landing zone would be ideal.

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