Pacific Fibre announced this morning that Vodafone New Zealand had signed up to a 10 year multi-million dollar deal to acquire international bandwidth from the fledgling cable company.
With this deal, and the previously announced one with REANNZ, Pacific Fibre should have done enough to get them through to build stage – and it looks increasingly likely that the project will actually happen.
Another cable connection between New Zealand and the outside world is good for NZ Inc, and good for consumers. I don’t however agree with Sir Stephen Tindall, Pacific Fibre co-founder, when he says that;
It’s like parking New Zealand off the West Coast of America, removing the tyranny of distance.
The biggest tyranny that NZ suffers in terms of connectivity is the physically limitation of distance – Pacific Fibre won’t overcome that.
What it will do however is introduce competition to the domestic marketplace – something that has been lacking until now. I don’t predict a massive impact on consumers in the short to medium term, Pacific Fibre is a commercial entity and its funders want to make a good return – entering into an aggressive price war with competitor Southern Cross isn’t a way to ensure good returns. However I do imagine that the competitive pressures will result in an incremental benefit to consumers through increased data caps and an opening up of capacity.
As I said, the Pacific Fibre backers and execs are smart people, they know that they can come into the marketplace and claim (correctly) to be breaking the Southern Cross monopoly. But at the same time they’re also pragmatists and will be able to make a great commercial return out of what will now be a duopoly – while I’d never suggest hat Southern Cross and Pacific Fibre execs have been talking around the issues, it’s a safe bet that they both understand the mutual benefit to be made out of keeping things stable.
