Tasman Global Access Launched – Positives/Negatives

With the announcing of a non-binding MOU between Telecom, Telstra and Vodafone to build a new trans-Tasman cable, I have noted a few points that immediately come to mind, both good and bad.

Positives:

  • Content providers such as Amazon, Google, Microsoft, Akamai, etc all peer out of Sydney, so providing cheap point to point connectivity to this wealth of data is of huge benefit. If the price per Mbps is significantly lower than that currently available over southern cross, ISP’s may well look to leave aside local caching options, which in turn brings more content closer to shore.
  • Without being able to confirm this, the building of this second cable “may” remove some barriers around dual country access as required by some of the content providers listed above and make it more likely that NZ will have those networks move on to our shores in the years to come, providing they aren’t put of by Telecom’s partial ownership in both cables, and that domestic demand warrants the expense.

Negatives:

  • Both through the fact that Telecom will own a large share of the Southern Cross Cable and the proposed Tasman Global Access, and because the Southern Cross Cable will still be the only backup option for ISP’s, Telecom will have a massive say in wholesale bandwidth pricing. And in reality, I can’t see Telecom being keen to undermine their SCC revenue.
  • There will not be a third player in this market for the forseeable future, Telecom has essentially agreed to pay one third of the $70 million price tag to capture the trans-Tasman cable market. With a current design capacity of 30 terabits per second, demand will not get near supply for many years to come. Is this less about creating competition, as Pacific Fibre sought to do, and more to do with ensuring no new entrants can build a successful business case to enter the market?
  • Whether it is based in reality or not, this cable doesn’t help get NZ away from the image of simply being an extension of the Australian ICT landscape.

Brendan Ritchie

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6 Responses to “Tasman Global Access Launched – Positives/Negatives”

  1. Donald Clark

    It’s a beautiful defensive play: takes the pricing pressure of SCCN from the NZ market; removes a near- to medium-term option for any other TT or TransPacific cable; is small enough to be internally funded by 3 incumbents; Telstra is happy coz it is less dependent upon SCCN with Reach and now this cable; Telecom gets to offer business customers dual-cable resilience; Voda gets more bandwidth into Aussie for peering / caching etc.

    I suspect that we will now see very gradual price reductions TT – certainly nothing to match the last 18 months of reductions.

  2. Hayden Kirk

    Business wise, it’s hard to fault their play. I must admit, I was quite surprised by the announcement. I wonder how long they had that up their sleeve.

  3. Brendan

    Yeah, that’s an interesting question. It may well be that they were they taken back by the “near miss” of Pacific Fibre’s attempted launch and that was the catalyst for the MOU. If so, it could have been in the works for at least a couple of years.

  4. Vikram Kumar

    I think we need to factor in, at least as a possibility, that Hawaiki Cable will go ahead. I missed them out initially in my thinking and then went back and fixed it by doing more of an analysis in a blog post

  5. Brendan

    where would they succeed where Pacific Fibre failed? Where are the funds coming from? might be easier for you to just post link to your blog 🙂

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