Southern Cross reduces prices, adds capacity

The Southern Cross Cable network has increased international capacity and dropped its prices by 20 percent to keep up with competitive projects and demand for higher data caps by ISPs.

SCCN sales and marketing director Ross Pfeffer told iTnews the move marks the firm’s 10th major pricing reduction since the 28,500km submarine cable network was originally deployed in 2000.

“It’s been pleasing to see big increases in data caps and declines in retail data cost for Internet users in both Australia and New Zealand over the last year," he said. "Our continued initiatives to increase supply and reduce price are designed to encourage this process and to support the needs of Australia's NBN and New Zealand's Ultra Fast Broadband," he noted.

As with previous decreases in capacity prices, the reduced prices only apply to new additional purchases of capacity, so the savings should be expected to take a while to filter through to the ISP market.  

The undersea cable network that runs between Australia, New Zealand, Fiji and USA will from the end of February incorporate 40Gbps transmission equipment by Ciena, taking the total lit capacity on the Southern Cross Network to 2 Tbps. The third stage of the network's expansion program will take advantage of Ciena’s 100Gbps transmission equipment, which will ramp up the lit capacity to 2.6 Tbps by June 2013.

Pfeffer said that with the increasing simplicity of equipment upgrades, the network has the potential to reach at least 7 Tbps, 30 times higher than the original design capability of the network.

“Our capacity potential will increase dramatically over the next few years when transmission equipment speeds are expected to quadruple. With ongoing and dramatic advances in technology Southern Cross has the ability to stay well ahead of demand over the longer term”. 

Southern Cross Network is the sole cable that connects New Zealand to Australia and the USA after the demise of the Pacific Fibre project last August. But SCCN still competes with a number of cable systems that connect Australia to the US and to SE Asia including Pipe Networks PPC-1, Telstra’s Endeavour and AJC.

Pfeffer told iTnews maintains that this competition doesn't factor into price reduction and capital expansions.

“We are the only hi-capacity cable system connecting NZ, but our NZ-US prices are the same as our Australia-US prices which reflect the highly competitive AU-US submarine cable market.  Similarly our NZ-AU prices are the same as our Hawaii-US prices which reflect another highly competitive submarine cable market”.

In September 2012, Australia's Communications Minister Stephen Conroy threatened to take $250 million dollars out of the NBN budget to fund a new submarine link between Australia and the US if international pricing did not fall to reasonable levels.

Acting Minister for Broadband, Communications and the Digital Economy, Kim Carr welcomed Southern Cross' announcement:

“These price reductions will assist Australians in achieving the full benefits of the NBN," he said.