Telecom, Vodafone and Telstra to jointly construct Auckland-Sydney cable

20 Feb 2013

Telecom New Zealand has announced the signing of a non-binding memorandum of understanding (MoU) with UK-based Vodafone Group and Telstra of Australia to co-invest in the construction of a new submarine cable between Auckland and Sydney. The new cable, which has been tentatively named the Tasman Global Access (TGA) cable, will reportedly ‘significantly improve New Zealand’s international telecommunications connectivity as well as strengthen links into fast-growing Asian markets’, and it is expected to cost less than USD60 million to construct. According to a press release issued by Telecom regarding the development, the cable will incorporate three fibre pairs with a current design capacity of 30Tbps – a figure it claims is approximately 300 times the current internet data demand out of New Zealand. With the TGA partners aiming to reach a final design for the submarine link within the next few months, the cable itself is expected to be completed by mid- to late-2014.

Commenting on the plans, Telecom CEO Simon Moutter and Vodafone New Zealand CEO Russell Stanners jointly commented: ’The business case for a new cable between New Zealand and Australia is compelling, providing greater capacity and global redundancy capability. It also reflects the growing importance of trans-Tasman internet traffic: for example, around 40% of both Telecom and Vodafone’s international internet traffic is now Australia to New Zealand, versus just 10% in 2000.’

However, in the wake of the announcement, the National Business Review reports that telecoms regulator the Commerce Commission of New Zealand has revealed it will examine the proposals. ‘We haven’t received a clearance application in relation to the cable joint venture. However we will be taking a look to see if it raises any competition issues,’ Commerce Commission communications manager Allanah Kalafatelis was cited as saying. It is understood that competition issues have been raised in light of the fact that Telecom owns a 50% stake in the Southern Cross Cable, which is currently New Zealand’s only major international broadband link.