Hawaiki says it has completed the route survey for its 14,000km submarine cable connecting New Zealand and Australia to the US mainland via Pacific island nations and Hawaii. The job was done with Hawaiki partner TE SubCom.
Completing the survey puts Hawaiki on track to begin operating from the middle of 2018.
The company says submarine cable manufacturing is now well underway with more than 4,500 km of fibre ready to roll. It also has 25 completed repeaters and work has started on the branching units which will connect the network to American Samoa, New Caledonia, Fiji and Tonga.
TE SubCom vice-president Debra Brask confirmed the project schedule. She says: “Our partnership with Hawaiki’s operations team is very productive and system manufacturing is well on track. In addition, permits are secured in Australia and are well underway in other locations. We continue to be on schedule for a mid-2018 completion.”
When complete Hawaiki will give New Zealand a fourth international submarine cable connection. The Southern Cross Cable Network has a figure of eight design and has links to the east and to the west of New Zealand.
Meanwhile Southern Cross is talking up its Next cable which it describes as “a high capacity express route, providing datacentre connectivity between Sydney, Auckland, and Los Angeles”. It is due to complete in 2019 and will add a meshed network design so customers can spread their traffic across what will be all three Southern Cross cable routes.
Spark says the Tasman Global Access cable will be ready for service by the end of January 2017.
The 2,300km trans-Tasman cable linking New Zealand and Australia is a joint project between Spark NZ and Vodafone with a minority investment from Telstra.
When complete, the TGA will add capacity to the Southern Cross Cable Network which already links New Zealand to Australia and to the USA.
While there is plenty of headroom on the Southern Cross Cable, an extra link will give New Zealand a much-needed back-up. It reduces dependency on a single network operator and increases the number of international links from two to three.
TGA is also important because the internet centre of gravity is moving from the USA to Asia. The TGA will link New Zealand to Australia’s east coast and from there, traffic can connect to the five cables connecting Australia to Asia.
The TGA cable is made from two fibre pairs. It will have a total capacity of 20 terabits per second. This is about three times as much capacity as the Southern Cross provides at the moment, although it can match the TGA capacity with upgrades.
Briscoe also outlined the financial mountain he thinks Hawaiki must climb to make a profit.
Hawaiki CEO Remi Galasso wasn’t on hand to argue the opposing case. Instead Tuanz called on former Pacific Fibre CEO Mark Rushworth, now with Paymark. The short version of Rushworth’s argument was “competition is good”.
And it is. So is resilience. Briscoe admits there may be a case for another network to give New Zealand a back-up for Southern Cross.
In New Zealand, we tend to view resilience as a local problem. Having only one provider with two cables makes us feel insecure. In an age where the internet is the economy, a lot relies on one company and two cables.
It’s as if our economic well-being hangs on a couple of threads.
Single point of failure
Outsiders see the problem in reverse. The see one submarine cable as a single point of failure. Maybe one and a half points of failure if they take the Southern Cross two-cable design into account.
Either way, they see it a reason not to invest here.
It’s why, despite cheap, renewable energy, multinationals haven’t built New Zealand server farms.
The Tasman Global Access cable tips the balance. Add Hawaiki and, maybe, the proposed Bluesky cable. Now New Zealand looks a better prospect.
One, two… many cables
Almost overnight we will go from one company with two cables to three or four companies and four or five cables.
New Zealand is an attractive destination for applications where latency isn’t crucial. It’s ideal for large-scale secondary back-up. But also, maybe, for big data projects where there isn’t a great deal of data on the move.
We’re western. We’re stable. We’re part of the big trade agreements. Our laws are understandable and manageable, especially to lawyers in English-speaking countries.
We’re known as good people to do business with. Salaries are on the low side. We have skilled people, but even if we don’t have enough, skilled people are keen to come and live here.
Green energy calling
There is abundant, low-cost renewable energy. If, as expected, Tiwai Point closes, datacentre owners may find good deals. Bringing the big names to New Zealand would be a coup for a politician.
One issue needing thought is that submarine cables enter New Zealand in the north of the country. The spare hydro capacity lies in the south.
It’s easier and cheaper to move bits through fibre than electrical power through wires. You lose more electrons en route than bits.
It may make sense to put data centres in Southland and Otago. Nobody cares how long it takes for electrons to move from Tiwai Point to Whangarei. Moving photons over the same distance adds another 25 milliseconds or so of latency in each direction.
More pipes, more traffic
We’ll leave those questions to the professionals. The key is if one or more big cloud operations open in New Zealand, the traffic will boost profits for all the cable operators.
It would also change the economics of submarine cable links. At the moment the traffic levels are asymmetric. Far more comes down to NZ from overseas than travels the other way. ISPs and other cable customers have to buy symmetric capacity.
A New Zealand server farm run by a global operator would even the flow of traffic.
Of course a giant New Zealand server farm doesn’t need to be owned by an overseas multinational. This could be a good time for local entrepreneurs to move, by the time the new cables open for business it could be too late.
International cloud providers reluctance to invest in New Zealand because of the ‘single point of failure’ speaks volumes. That alone is a case for more than one submarine cable operators. ↩
Hawaiki appears to have succeeded where Pacific Fibre and Spin did not.
Remi Galasso, Hawaiki CEO, has worked on the project for years and was previously involved in the Spin cable. It can’t have been easy getting this project over the line.
It’s very much a New Zealand project. Galasso lives here. He has teamed with Malcolm Dick, best known for being the power behind CallPlus and Slingshot. Sir Eion Edgar is a Hawaiki co-developer.
Hawaiki: Cable to the islands too
Like Spin’s abandoned project, Hawaiki plans to run cable spurs to New Caledonia, Norfolk Island, Fiji, Vanuatu and Samoa among other island destinations. There’s also provision to reach the Cook Islands.
The April 1 press release has no specifics about island links. Instead it says there are : “options to expand to several South Pacific islands”.
Earlier Galasso said the cable would run to Hawaii and then pick up other cables to mainland USA. The April 1 press release says it will go to the US West Coast and provide an alternative route from Hawaii to Oregon.
Hawaiki contract signed, construction phase coming
The press release says a contract between Hawaiki Submarine Cable LP and TE SubCom has come into force and “the construction phase has commenced”.
We need to be careful about that last clause. While a contract “coming into force” is officially the moment when a cable project goes live — in theory, it is unstoppable — nothing is real or final until the ships lay cable. Indeed some submarine cables have been laid and not lit.
Hawaiki says the system will be complete by mid–2018.
Cable completion dates can slip
When Vodafone, what was then Telecom NZ and Telstra announced the go-ahead for the Tasman Global Access cable in December 2014, the press release said:
“The project will begin early in 2015. Alcatel-Lucent has been selected as the cable laying contractor after a competitive tender process, and the TGA Cable is expected to be built and providing data traffic by mid–2016.”
According to sources close to the project, the ship that was booked to lay the cable across the Tasman is now busy repairing the damaged Basslink cable between Tasmania and Victoria. TGA now hopes work will start in October of this year.
Cable laying is quicker than you might expect, so TGA could be live early in 2017 — just six months or so after the promised date.
If it runs to schedule, or even a little behind, the new trans-Pacific cable will be operational by the time New Zealand finishes its urban, fibre-to-the-premises UFB roll-out in 2019.
You won’t notice a thing… but that’s not the point
Few everyday users will notice if another submarine cable connects New Zealand to the rest of the world. It won’t make your broadband faster. It won’t mean bigger data caps. Prices for internet plans won’t change.
For most of us it will be business as usual.
The chances of an accident cutting us from the rest of the world will reduce. But for ordinary users that’s just another way of saying business-as-usual.
After all, we haven’t been cut off in the 15 years or so the Southern Cross Cable Network has been our digital gateway to the rest of the world.
There’s no pressing need for extra capacity. The Southern Cross Network has plenty of headroom and when the TGA cable starts operation it will add further capacity across the Tasman to where the big regional cloud and entertainment data centres are located.
SCCN CEO Anthony Briscoe on why Hawaiki isn’t needed
At a Tuanz After Five meeting in Auckland earlier this week Southern Cross CEO Anthony Briscoe used the same arguments his company has always used against a new trans-Pacific cable.
His argument is persuasive, there are no pressing technical, economic or political reasons to install a second line across to the USA. He admits there may be an argument for the additional resilience a new cable would bring, but otherwise dismisses Hawaiki’s proposed cable as not making one jot of different to the everyday internet user in New Zealand.
As Mandy Rice-Davies once put it: “He would say that, wouldn’t he?”. Southern Cross stands to lose some business, or potential business, if Hawaiki comes on-line.
Vocus: A customer’s point of view
Vocus is one of Southern Cross’s largest non-telco customers. Chief technical officer Luke Mackinnon appeared on the Tuanz panel to give a user’s perspective of the international submarine cable market out of New Zealand.
Mackinnon says Vocus grew big on the back of wholesaling capacity on the Southern Cross Cable Network and is still experiencing 150 percent year-on-year growth in that market. Although a lot of that growth is out of Sydney, not New Zealand.
He says that the network: “Has been architected to provide resilience. It’s not like the other cables operating out of Australia.”
This is a timely reminder of just how reliable SCCN has been over the years. There was a small disturbance when a ship disturbed a cable, but the network’s figure-of-eight configuration meant traffic could be rerouted.
Compare this with other networks out of Australia. Most have suffered major outages in recent months. Basslink, which is connected to a power cable, has been down for three months. Sea-Me-We 3 out of Western Australia is frequently broken.
Mackinnon says Vocus sees Hawaiki as offering an “interesting alternative route. It will give us access to other destinations. We might want that.”
Yet he says Vocus is looking for performance and is unlikely to stray from Southern Cross in the short term.
However, a few years ago Vocus CEO James Spenceley said his company was a “price taker” when it comes to international bandwidth. Since then Vocus has grown in size and importance, the arrival of an alternative route to the US is likely to give Spenceley more bargaining power.
Rushworth: It’s about competition
Tuanz asked former Pacific Fibre CEO Mark Rushworth to offer an alternative view. After agreeing, or rather not disagreeing, with many of Briscoes’ arguments against a new cable, he took little time zooming in on the key point.
“Do we need more capacity? Probably not. Would a new cable change prices? No. But, we’ve learnt in New Zealand that it’s never good when one company owns a market. Imagine life with just one airline or one bank”, he says.
Rushworth says New Zealand needs a second trans-Pacific cable because of what competition brings to a market.
Pacific submarine cable myths
Anthony Briscoe answered the critics, dismissing their arguments as myths:
Capacity. If users think they have slow internet because of insufficient international data capacity: “They should talk to their internet service provider. There’s no shortage of capacity. The ISPs may not be buying enough.”
Prices won’t change. The international component of a typical home user broadband plan is NZ$4. With plans costing from $75 for 80GB, halving the price of the international component won’t make a difference.
Redundancy. “They may have a point, but SCCN has never been out of service. If there was a redundancy problem the Tasman Global Access will go live soon.
Choice. “Consumers don’t buy international capacity, ISPs and telcos do. New Zealand ISPs get it for the same price, sometimes lower, than Australians”
Congestion at peak times has little to do with international links. Most content is cached locally, almost all the rest is cached in Australia”.
*SCCN only cuts costs when competitors emerge*: “We’re not that smart. We have a simple pricing model and we sell a long way ahead”.
Unpicking Hawaiki’s economics
At the Tuanz session, Briscoe ran over back-of-an-envelope calculations for the new cable network. The numbers here have not been checked back with Hawaiki, so they need to be treated with caution, but they’re too interesting to ignore.
Briscoe says the Hawaiki network will cost around NZ$500 million to build. This is the number Hawaiki has used in its publicity material.
“The depreciation on that investment would be $25 million. To break even on these numbers the network would need sales of NZ$50 to $60 million a year. At the moment the total traffic sold in New Zealand is $202 million a year”, he says.
While demand is climbing — remember Vocus talks of 150 percent year-on-year growth — revenue will not be increasing at anything like that amount. So a new player entering the market is likely to have a dramatic impact on Southern Cross Cable Network revenue.
Today the Commerce Commission confirmed it had looked at plans for the Trans-Global Access project and said there are no competition issues at this stage. It went on to say it won’t be investigating further.
At the time of the announcement, Pullar-Strecker reported the Commerce Commission would look into the competition implications. He quoted comments from Spark chief executive Simon Moutter who said there were no competition concerns.
Alarm bells rang in some quarters because Spark is a major shareholder in the TGA cable owning close to 50 percent. Spark also owns 50 percent of the Southern Cross Cable Network.
There are fears the TGA reduces the likelihood of another international submarine cable project being built, preserving Spark’s dominant market position in international cables in an out of New Zealand.