Published on the 14/05/2024 | Written by Heather Wright

Just don’t expect a bill decrease…

“We’re in a pretty good space at the moment, or at least we will be.”

Craig Young, chief executive of Tuanz – the Tech Users Association of NZ – is talking submarine cables on the back of Australian telco Vocus’ announcement that it is partnering with Google to deliver what it claims is the highest-capacity submarine cable system between Australia and the US, with a spur off to New Zealand.

“It’s a good move resiliency-wise and market-wise as well.”

The Honomoana Cable will be ready for service in 2026 provide as much as 30Tbps (terabits per second) of capacity between Australia and New Zealand. It’s an expansion on the previously announced Pacific Connect initiative and will provide a double landing in Australia – in Melbourne (that’s the New Zealand link) and Sydney (via Fiji). A new domestic Sydney to Melbourne route is also included, alongside the first diverse route across the Tasman.

It’s a vastly different story to just nine years ago when New Zealand was serviced by just the Southern Cross Cable and the Tasman Global Access (TGA) cable owned by Telstra, Spark and One NZ and running from Raglan to Sydney.

“When I started in this role eight or nine years ago, international connectivity was one of our top six issues,” Young told iStart.

Back then, the argument went that New Zealand didn’t need additional capacity over and above what Southern Cross could provide. A decade on, Southern Cross has added a second cable, and the Hawaiki Cable is also in operation as cloud, streaming video, and now AI, push demand for capacity.

“With this growth in cables, and also the growth of onshore cloud centres, the market is being met at this point.”

Businesses shouldn’t however, be expecting the addition of another cable to bring cost savings, Young says.

“I don’t expect any reduction in prices. The major reason for the new cable is growth in data, so resiliency and capability is why these cables are going in.”

Rather than seeing decreases in customer bills what it does is it means bills might not go up because there is a competitive market enabling broadband providers to shop around for the best deal when they need additional capacity.

There is, however, one exception, Young says: The biggest organisations, such as ANZ or Air New Zealand, might see some impact in their bills.

The Google/Vocus initiative isn’t the only cable heading this way.

The Te Waipounamu cable, courtesy of New Caledonian company Intelia – founded by Rémi Galasso who also led the development of the Hawaiki Cable connecting Australia, New Zealand, America Samoa, Hawaii and the US – has also been touted and would land in Invercargill on New Zealand’s South Island.

The Hawaiki cable, which went live in 2017 was one of the first cables to break Southern Cross’ stranglehold on the international market. The New Zealand government bought $65 million in capacity in a multi-year contract to get the venture off the ground, and provide resiliency and competition in the Kiwi market. (Hawaiki was later acquired by Singapore’s  BW Group, which last year signed a contract with the Australian Department of Foreign Affairs and Trade to connect New Zealand and Australia to the US and Pacific Island regions through the Hawaiki Nui cable landing in Southland).

“It’s very interesting that Google is a co-investor in the new cable,” Young says.

“Obviously the growth in cloud computing over the last nine years and now the growth in New Zealand of data centres being built here, require high capacity back haul within the country, but also, because they are doing services across the globe, good resilient high-capacity out of New Zealand.”

As well as big name players such as Microsoft, AWS and Google planning local cloud computing resources in New Zealand other companies, including Canberra Data Centres and DCI have, or are, building hyperscale data centres in the country.

A hyperscale data centre has also been proposed for Southland – linking neatly with the Southland cable plans.

“If the smelter closes down in Southland they have all this power, why not build a data centre because they’re power hungry. It’s all renewable power, so it’s a good thing for New Zealand. It uses that renewable power and it’s better to build it there than somewhere else in the world where they’ve got to burn coal to power it,” Young notes.

“But they will need connectivity. So instead relying on connectivity coming in at the top of New Zealand, they’ll be able to connect to the world from there.

“It’s a good move resiliency-wise and market-wise as well.”

Cables, however, are expensive and getting them off the ground – or should we say into the deep sea bed – isn’t always a given. The Hawaiki cable took years to get off the ground because it needed investment.

“At the moment we’re getting investment because of the growth in data, and it will continue,” Young says. “But if global investment gets tight, it may go elsewhere.”

Vocus says Pacific Connect will ‘significantly’ uplift trans-Tasman data capacity with its Auckland landing. It effectively forms a trans-Pacific subsea ring between Australia and the US via diverse landings and an interlink cable between Fiji and French Polynesia. The system will also include pre-positioned branching units to enable other Pacific nations to connect in future.

“Submarine cables are critical digital infrastructure, and by establishing new diverse landings throughout Australia, New Zealand, Fiji, French Polynesia and the US, this new system will significantly uplift the digital resilience of Australia and the broader Pacific region,” Vocus CEO Ellie Sweeney says.

Vocus will initially have 30Tbps of capacity, with dark fibre across the Pacific Connect system and the option to acquire additional capacity in future as demand requires.

The cable and data centre growth bodes well for New Zealand’s push for productivity improvements through digitisation.

“You can tie it back to us being well served by cloud providers and international connectivity, so some of those barriers to using digital tools in business are going. The main barrier  to people using digital tools in their business now is just time and effort and if we can get over that and hlep them understand this can help their business grow, help them be more productive, then that is a key thing.”