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

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news