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Idealog—in the ideas business

Pacific Fibre signs first supply deal for $91m

The local startup with its sights set on running a fibre-optic internet cable under the Pacific Ocean to link to the US has just sealed its first supply deal for $91 million.

Pacific Fibre will supply international capacity to government-owned Research and Education Network New Zealand Ltd (REANNZ). The deal has been signed off by shareholding ministers Bill English and Wayne Mapp.

The company, fronted by a group of Kiwi entrepreneurs including Stephen Tindall, Rod Drury and Sam Morgan, wants to build a 5.12-terabit-a-second cable system running 13,600 kilometres across the Pacific, at a cost of US$400 million.

Pacific Fibre chief executive Mark Rushworth says: “Announcing the REANNZ key terms in May gave important momentum to our engagement with our vendors, finance partners and other foundation customers.

“While today’s news marks another important step, we have also made considerable progress across the board.”

Back in March, the cable guys told Idealog they were keen on the project because they wanted the end service for their businesses.

Director Rod Drury said he saw businessmen from the States with 50 megabit-per-second fibre connections leading completely different lives, making New Zealand’s slow broadband frame us as a “backwater”.

“We can’t do Live Meeting demos or WebEx demos credibly into [offshore] markets. We can’t have US phone numbers. We can’t do good Skype video calls. It just doesn’t work. In the US they’re doing multi-party video calls.”

According to Stephen Tindall, installing the cable would plug New Zealand into the US economy.

“Basically, you’ve got a whole country wired into the US. That’s what I believe this does. It’ll give Kiwis much more of a sense that they can participate in the US economy with small businesses to start with … we are constrained by distance, and this is going to alleviate that problem.”

The REANNZ deal will enable KAREN, the broadband network for schools, universities, polytechnics, government agencies and Crown Research Institutes, to tap capacity of an initial 40 gigabits a second, compared with the current 1 Gb/s, rising to 160 Gb/s over time.

When the terms of the deal were announced in May, REANNZ chief executive Donald Clark said the value of the Pacific Fibre deal was more than $400 million.

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