Dan Warne14 January 2008, 3:57 AM
Australia will get a new internet link to the United States, with the announcement of a $200 million cable to be built between Australia and Guam.
Australia will get a new internet link to the United States, with the announcement of a $200 million cable to be built between Australia and Guam.
The PIPE Pacific 1 (PPC-1) cable will run two fibre optic strands for 6,900 km and carry data at a maximum rate of 1.92 terabits per second.
It will initially be provisioned at 10 gigabits per second, though 40 gigabit technology may be available by the time the cable is switched on in 2009.
The company behind the link, PIPE networks, is an Australian company with no commercial connection to Optus or Telstra, thus giving Australia an important new level of competition in international data backhaul.
"This is one big step – a huge step -- a gigantic step for Australia," said Rhavi Bhatia, CEO of Primus. "This has nothing to do with legacy telecom companies, and will add 30-40% capacity to Australia’s connectivity to the rest of the world."
Simon Hackett, CEO of Internode, said the new cable would be a "circuit-breaker" in the industry in terms of cost. "Its presence puts downward cost on the international cable circuit market in the Asia Pacific – it creates tension in the market and keeps people on their toes."
The cable will run from the US territory of Guam -- a major interconnection point for different countries connecting into the internet backbone -- to Sydney.
 PPC-1: the cable has many connection points for landings at future undisclosed locations, according to PIPE. |
PIPE started life in 2002, largely in response to the cost of transmitting data within Australia through the large telcos' networks. It established Australia's first commercial internet peering exchanges, where ISPs could connect directly to each other, sending data cheaply via PIPE rather than having to pay high rates to send it via the incumbent telcos.
PIPE then expanded its business to provide fibre optic runs to Telstra exchanges, making it financially viable for telcos to install their own ADSL2+ equipment into exchanges. (Previously, ISPs had to pay Telstra's high rates for connectivity to each exchange, making it prohibitively expensive to get data from the ISP to ADSL2+ DSLAMs.) PIPE now covers 50% of east-coast exchanges with its fibre-optic backhaul.
Now, with PIPE's additional international fibre link competing with the Australia-Japan cable and Southern Cross, prices for international connectivity are expected to drop across the board.
"You see, the problem hasn't been with overseas capacity," said Lloyd Ernst, Executive Director of PIPE Networks. "There's loads of capacity. It's been about a lack of competition."
Ernst said that some ISPs had said they could buy twice as much capacity from PIPE's Pan-Pacific 1 (PPC-1) cable as they could for the same price from other providers.
This discount data model would stimulate demand across the market, he said.
"When one ISP starts offering US-style broadband plans, with US-style bandwidth, the other ISPs will have to compete. It will create demand across the marketplace. It’s a bit like the discount airline model – you make the prices cheaper, more people want to fly."
Ernst said that down the track, Australian consumers might even see the return of plans where data is not metered, once enough ISPs get access to very cheap international data capacity.
He said the new cable was also a critical factor feeding into the nationwide fibre-to-the-home network promised by Labor.
"When you build an FTTN network, the demand for capacity dramatically increases. Without the extra international capacity, it would be like buying a Ferrari and finding your speed limit is 15km per hour.
"At the moment what happens to ISPs is they have to buy all of the internation data through two providers – the main tier one telcos out there. This is about bringing a third provider into the market. ISPs can pay X amount of dollars and get X amount of bandwidth from the existing providers. Now they can pay X dollars and get multiples of that bandwidth from us."
Ernst admitted that the new PPC-1 cable was not a diversified cable system like Southern Cross, where if one link is broken, the other takes over. But he said that having a third major international data cable coming out of Australia would increase reliability across the board for all ISPs. If one cable was broken, there would be two other cables available to take up the slack in bandwidth.
PIPE currently has two survey ships out plotting an exact route for the cable, and is focusing on taking the cable through parts of the seabed least likely to be disturbed by ships, such as rockfields, and large troughs in the seabed, as deep as 9 km below the surface.
iiNet, Internode and Primus are PIPE's key customers enabling the network to be built. PIPE says the $200 million cost of building the network will be "debt free within six months" and EBIT positive within 12.