Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Trans-Pacific telecom cable prices cut again

Trans-Pacific telecom cable prices cut again

By Pattrick Smellie

Jan 14 (BusinessDesk) - The price of internet connection to the rest of the world is dropping again as New Zealand's only international cable owner, Southern Cross Cables, announces a 20 percent cut in its capacity prices.

However, critics of the single carrier say it should be cutting its fees much harder to encourage the uptake of fast internet services which government policies have identified as a crucial element in getting New Zealand growing faster.

Jointly owned by Telecom New Zealand, Singtel-Optus of Singapore and Australia, and the American telecommunications provider Verizon, Southern Cross has long been the butt of accusations that its pricing is uncompetitive.

But a would-be competitor involving prominent New Zealand businesspeople, Pacific Fibre, withdrew its plans after failing to raise funding for an alternative cable to service the New Zealand and Australian mainlands via the US and Pacific.

Despite annual average rate cuts by Southern Cross of just over 20 percent over the last decade, former Pacific Fibre spokesman Lance Wiggs said capacity demand was increasing by as much as 50 percent annually.

"I get angry because 20 percent (rate cuts) isn't sufficient to drive the growth we need in New Zealand," said Wiggs. Revenues would continue to rise at Southern Cross even with the rate cut because demand growth was likely to more than offset the reduction.

However, Southern Cross's director of sales and marketing, Ross Pfeffer, said the new pricing was consistent with regular price reductions and relected "the capacity side and market conditions, particularly in Australia, Hawaii, and the US", where Southern Cross faces competitor cables.

A further 15 percent reduction from the latest list price was also available for parties who signed up in the first half of this year, and it was also common for longer term contracts for very large bulk buyers of capacity to be struck at prices reflecting the expectation that prices will keep falling in the future.

Dion Hallam of Wellington internet service provider Xtreme Networks said there had been particularly active discount offers last year when Pacific Fibre was still in prospect, but that the company was paying "maybe 20 percent of what we were paying eight years ago."

Part of Southern Cross's ability to continue price-cutting reflects improvements in cable technology, which have allowed increased capacity to be installed without adding additional physical cable.

The cable, which runs in a figure-eight loop between New Zealand, Hawaii, Fiji and the US mainland, is nearing completion of its eight capacity upgrade, taking total lit capacity to 2 Terbits a second, with potential to go to "at least 7Tbps, about 30 times higher than our original design capability," said Pfeffer.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Fonterra Slashes 2015 Milk Payout, Earnings Tumble 76%

Fonterra Cooperative Group cut its forecast 2015 milk price payout by about 12 percent, citing weaker global dairy prices and said there is a risk of further declines given strong global milk production. More>>

ALSO:

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news