Pacific Fibre shuts down operations

Pacific Fibre shuts down operations

Summary: The Pacific Fibre board has resolved to cease operations including its plan to construct a subsea cable between the US, Australia and NZ, after failing to raise the funding needed.

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TOPICS: Telcos
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Plans to construct a 13,000km fibre-optic cable between Australia, New Zealand and the US have been abandoned, after the cable's board failed to raise the required NZ$400 million in funding.

Where the proposed cable would have run.
(Credit: Pacific Fibre)

The ambitious project, dubbed Pacific Fibre, was first announced in March 2010, and was set to facilitate a total capacity of 12.8 terabits per second (Tbps), with a latency of 66 milliseconds.

But the construction of the cable continually ran into trouble. The original partner to the project, Pacnet, dropped out of the agreement in late 2010, and although the company originally projected that the cable would be in the ocean by 2011 and ready for services by 2013, in 2011, the company announced that the project would be delayed until the first quarter of 2014.

While the company maintained that the project would still go ahead, rumours of the struggle to obtain funding were rife, and the company reportedly set a June deadline to secure the required funding for the project. Today, however, the organisation's chairman Sam Morgan revealed in a statement that Pacific Fibre will cease operations.

“We've spent millions of shareholder funds trying to get this done, and despite getting some good investor support, we have not been able to find the level of investment required in New Zealand initially and more broadly offshore," he said. "The global investment market is undoubtedly difficult at the moment, but we knew this was always going to be hard, regardless of our timing."

Morgan thanked investors and customers, such as iiNet and Vodafone New Zealand, that signed up for capacity in the early stages of the project.

"This project had encouraging early momentum, and we were pleased to attract a great team and board, and shareholders who invested because they felt passionately that this problem needs solving for New Zealand," Morgan said. "We believed funding for these long-term infrastructure investments would have been more readily available and were confident the business case was solid.

"We feel like we've done everything we can to succeed, and we are all hugely disappointed that we have not managed to get there."

iiNet's chief technology officer John Lindsay told ZDNet Australia that he is disappointed to see the project go under.

"It is always amazing to see submarine cables completed, when you consider the complexity of land access, marine permits, crossing other cables and underwater infrastructure, putting delicate electronic and optical equipment under 5 kilometres of ocean; it's easy to forget that it also has to be funded for hundreds of millions of dollars," he said.

"iiNet has always understood that this cable, like all proposed cables, had a risk that it would not be completed by 2014. We have more than sufficient capacity options available to ensure that this does not impact us."

iiNet last week signed an agreement with Southern Cross to boost its capacity for that international cable from 20Gbps to 200Gbps.

Topic: Telcos

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • Turns Out The Problem Was The US

    They got funding from China, but the US then refused to allow the cable connection if there was any Chinese money or equipment behind it (source: interest.co.nz).

    But I don't see why that should be the end of the project. If it can't connect to the US, why not go to China instead? There are several existing cable connections to Hong Kong and the mainland, so you should be able to connect to the rest of the Internet that way.
    ldo17