Telstra invests in SubPartners fibre pair

Telecommunications entrepreneurs Bevan Slattery and Ted Pretty have had their first breakthrough in a plan to build a competing cable from Perth to Singapore, signing a memorandum of understanding with Telstra for the nation’s largest carrier to invest in the project.

Cable laying ship used in a former Slattery venture, PIPE's PPC-1 subsea cable.

Slattery and Pretty’s subsea cable start-up SubPartners today announced it has signed Telstra to a non-binding deal to buy a fibre pair on the Perth-Singapore route.

The cable operator, run by the PIPE Networks founder (Slattery) and former Telstra executive (Pretty), said that under the "non-binding memorandum of understanding" Telstra will "prospectively acquire" the fibre pair on its APX West cable system.

Today Slattery said he couldn’t go into the commercial terms of agreement and said he hopes to sign formal executing binding agreements over a “short period of time”  –  and well before a build is complete.

Telstra Global's managing director Martijn Blanken said in a press release that the subsea investment would be "instrumental" to meet the data transmission needs of Telstra's enterprise customers in the region.

A new model

SubPartners is plotting east and west subsea cabling systems. The West system will have four fibre pairs, according to telecommunications specialists CommsDay, meaning Telstra's buy is one quarter of the cable's capacity. Slattery said today the build of this cable should come in at around $180 million.

The East cable system is expected to run from Sydney to California, with repeaters at Hawaii and some Polynesian islands. It will also have four fibre pairs.

The project uses a cooperative funding model. Rather than committing customers to leasing capacity on the fibre, SubPartners buy all or part (usually a half or quarter) of a fibre pair.

“A lot of the key differences between this and the other partners is, they’ll sell you 10GB or 100GB of capacity, but with us what people effectively buy is the spectrum,” Slattery told iTnews.

“Our partners can put their equipment at either end of that spectrum – it might be 2.5GB today but it could be 10GB tomorrow – you can ride the upgrade path with it. An owner might want Terabit superchannels in the future – and they’ve got the freedom to do that.”

Slattery said the model – which he previously saw utilised by the likes of Google and SingTel for the Unity cable between Japan and the USA – combines “the best part of a consortium and the best part of being a cable owner.”

“I liked the model at the time – it’s a more cooperative approach,” he said.

Slattery said he expects the remaining fibre pairs to be sold to other carriers and cloud providers.

Slattery said Telstra’s investment would not impact SubPartners’ promise to be carrier-neutral. “We have promised partners in the cable project that we won’t sell capacity after-market in competition with them,” he said. “We strata title it, so to speak.”

Who dares wins

APX-West will compete with the existing SEA-ME-WE 3 cable and two proposed builds by Leighton Holdings (ASC-1) and Huawei Marine Networks (ASSC-1).

Telstra has invested in a fibre pair on the ASSC-1 cable.

Slattery said he expects that at least one of these two competitors won’t complete a build. “I’m not sure who will get there first, but I am confident our project will get up,” he said. “It’s a model attractive to competing carriers.

"Local and international carriers are more likely to invest with a [subsea cable] provider that won’t compete with them.”

Slattery said he hoped the Perth and Sydney data centres of NextDC, a business of which he was a founder and part-owner, will be the landing stations for the two APX cables.

“We haven’t finalised negotiations with NextDC, and due to the potential for conflict of interest I’m not part of the negotiation of that,” he said.