Southern Cross Twins Committed to Ultra Fast Broadband

Southern Cross Twins Committed to Ultra Fast Broadband and National Broadband Network

A successful trial of 100 Gigabits per second prototype transmission equipment has just been completed on the Southern Cross twin cable network. This significant technical breakthrough was demonstrated during extensive testing of the latest 40 Gbps equipment from a number of suppliers in readiness for the next Southern Cross capacity expansion targeted for 2012. Southern Cross currently uses 10 Gbps transmission equipment.“Southern Cross continues to invest and build ahead of demand, to support new innovation and broadband growth,” says Ross Pfeffer the Southern Cross Sales and Marketing Director.

The 28,500 kilometre Southern Cross undersea cable network is a major regional asset that has been constructed at a cost exceeding US$1.4 Billion. The network provides uninterrupted international capacity to the US for broadband internet connectivity from both Australia and New Zealand.

“It is very pleasing to see 100 Gbps equipment operating some two years earlier than previously expected" says Ross Pfeffer the Southern Cross Sales and Marketing Director. "While it is unlikely that we will be able use the 100 Gbps equipment for next year's upgrade, it is going to be an option much sooner than we previously thought and the potential size of our network will keep growing in huge leaps.”

“It is a feature of our network that we can readily replace land based transmission systems with equipment that provides continuing improvements in performance. Our 2012 upgrade which will be our fifth, is likely to be based on 40 Gbps equipment which will take our total network potential to at least 6 Terabits per second, some 25 times higher than the original design capability of just 240 Gbps in 2000.”

Pfeffer said “We are very committed to supporting Australia’s NBN and New Zealand’s UFB initiatives to build Fibre to the Home (FTTH) and increase the access speed of internet subscribers. Southern Cross support for NBN and UFB will be based on the four key elements of our market strategy to date:

1. Using technological improvements to substantially expand capacity ahead of demand and to lower the cost of supply.
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2. Offering prices based on both competitive market forces and the reducing cost of capacity expansions.
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3. Applying competition based prices equitably to similar markets.
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4. Enhancing the automated protection ability on our dual cable network to ensure that a single cable failure does not interrupt service.
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Capacity demand out of both Australia and New Zealand is currently growing at an annual rate of 35% on the Southern Cross Network. Growth over the last 2 to 3 years is strongly driven by rapidly increasing downloads per fixed line subscriber which have been made possible by a dramatic increases in average access speed, a massive lifting in monthly retail data caps and continuing reductions in international capacity prices.

Over the next 5 years the implementation of NBN and UFB will substantially lift fixed line access speeds for a large percentage of the subscriber base and this will clearly encourage download growth. Just how much is difficult to judge for a number of reasons. First, there has already been a massive improvement in average fixed line access speeds over the last 2 years (nearly 40 per cent now have access at 8 Mbps or greater) and this has been very much stronger than the increase in average subscriber download volume. Second, there has been substantial growth of caching as content suppliers move data closer to subscribers. Third, despite very large increases in monthly data entitlements, many fixed line subscribers are using a small proportion of their monthly paid data entitlement.

A Market Clarity report released in January 2011 estimated the average monthly data entitlement of Australian subscribers at 40 GB as at June 2010 while average data usage was just 6 GB (or 15% of paid entitlement). That strongly suggests demand from fixed line subscribers is not constrained by retail prices and that international capacity prices are not the demand bottleneck that is often argued. In fact international capacity prices have fallen so much that they are no longer the dominant component of retail broadband cost and there is considerable unused but paid-for retail data entitlement.

International capacity prices are expected to continue their decline. This will be driven by the very competitive Australian market where four international capacity suppliers operate out of Sydney, by capacity upgrades that lower the marginal cost of supply, and by our ISP customers who actively seek to drive down the cost of supplying ever increasing volumes of data at falling retail prices to their subscribers.

Pfeffer said “We will continue with our commitment to competition based pricing in all of our markets. While we are the only operator out of New Zealand, we set our NZ to US prices at levels no higher than our Australia to US prices. We will also continue to keep our Trans-Tasman prices at the same level as our Hawaii-US prices, another market in which competition is well entrenched.”

"International capacity in support of NBN and UFB is not just about increasing supply and reducing price. Supply also needs to be secure. Southern Cross operates a twin cable network that provides both Australia and New Zealand with diverse paths to the US and we make sure that this major regional asset is used as intended by encouraging our customers to use our protected and fully restored products".

“We also ensure every network component, system and process for each of our cables is as robust as possible through a continual programme of improvement. In this regard we are currently installing sophisticated optical switching in all nine cable stations so that our response to network events can be seamless and immediate”.

“The improvements in transmission systems that are at the heart of our ever increasing capacity have also created a network of continually improving quality. The performance of the 6 fibres and 500 repeaters that make up our twin cables is better today than when the network was constructed over 10 years ago. That allowed us, in 2010, to confidently extend our customers capacity contracts from 2020 to 2025. I expect that opportunity will arise again in 2015 when there is a strong likelihood that 100 Gbps transmission equipment will already be deployed and the commercial life of the Southern Cross Network will be able to be extended beyond 2025.”

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