New subsea internet cable will reduce broadband prices for business

Businesses will benefit from cheaper broadband prices after a new $450 million international cable is up and running in 2013, analysts say.

Internet service provider Pacnet will team up with Pacific Fibre Limited to construct a subsea fibre optic cable to increase connectivity between Australia, New Zealand and the US. The project will cost $US400 million and will stretch over 13,600 kilometres.

Telco analysts say the cable will help a bottleneck issue that has plagued international traffic in Australia for some time, and will help Australia’s infrastructure cope with the increased usage from the National Broadband Network.

David Kennedy, Ovum research director, says the cable will underpin a much more competitive market for Australian internet users.

“We’re heading away from a very constrained sort of competition to something that will be more fluid and free flowing. This can only be helpful for things like bandwidth costs, and of course it will keep retail prices lower because there is now more capacity.”

The cable will be completely finished in 2013, which is about halfway through the National Broadband Network’s construction cycle. Kennedy says the new cable will help handle the increased amount of traffic.

“One of the things we expect to see overtime is that the NBN will drive up the usage of data. This will place a strain on our existing capacity links, and create opportunities for more cables to be constructed. It’s a win-win situation for consumers here.”

Gartner research vice president Geoff Johnson says Pacnet is picking up some of the slack in international bandwidth control, an area he felt needs more attention ahead of the NBN.

“The real issue was whether there was enough capacity, we thought the marketplace was going to take that in and deal with that, and this is one bit of evidence we see that that’s happening.”

Pacnet said in a statement the cable will offer a direct route between its landing points, and will deliver extremely low latency connections.

“As Australia and New Zealand look towards deploying national broadband networks that will raise broadband penetration and access speeds, this new cable that we are building with Pacific Fibre will deliver the enhanced international connectivity that is essential to support these broadband initiatives,” chief executive Bill Barney said.