Pacnet has stepped in to jointly fund a US$400 million ($447 million) undersea fibre cable connecting Sydney to the United States via Auckland that will double capacity along the route.
The cable was first announced back in March by Pacific Fibre, a company run by several high-profile New Zealand businessmen. Pacific Fibre's chief Mark Rushworth said at the time that financing for the project was yet to be secured.
"It was an idea born out of frustration," he said.
It was initially projected to cost somewhere in the region of NZ$900 million ($734.6 million) but the cost was drastically cut with Pacnet's involvement.
Pacific Fibre and Pacnet will sign a joint build agreement with a supplier, and share maintenance and operational costs once the build is complete.
And more financial partners could be added, potentially increasing the cable's base capacity.
"The incremental cost of adding a fibre pair isn't much," Pacnet chief Bill Barney said today.
The cable is expected to be lit up with a 5.12 Tbps capacity in 2013.
The two partners shortly planned to issue a request for proposals (RFP) from parties interested in the actual construction contract. The likes of Tyco, Fujitsu, Huawei and NEC were expected to lodge bids.
Landing stations were planned for Los Angeles, Auckland and Sydney, although the companies were open to branching the cable into other city markets on the route.
The company was examining options to land the cable in either the northern or southern cable protection zones in Sydney, although a decision had not been taken on which.
The Australia-US route is serviced by a diverse range of cables. Pacnet's main competitor will be Southern Cross (which follows the same route), PIPE's PPC-1 cable via Guam and others such as the Endeavor two-part cable with routes via Hawaii.
Pacnet believed that a "more direct" route into Los Angeles would result in lower latency connections for customers.
"It's going to be about 37 percent faster than going via Guam," Rushworth said.
Barney said reducing transit prices on the route was among the reasons to invest in the cable.
"I think the issue you struggle with his how do you get [traffic] out of [places like] Guam inexpensively," Barney said.
"That's why we're looking at a cable with no variables. It's about how do you jump to the US more easily."
Pacnet was also said to be "aggressively" examining options to build its own data centres. It currently has space shared between Global Switch and Equinix's IBX facility in Sydney.