A further cut in capacity price by Southern Cross may reduce Australian Communications Minister Stephen Conroy's desire to build a government-funded subsea cable.
Southern Cross has announced that it will reduce its prices by 20 percent for capacity on the 28,500km cable running between Australia, New Zealand, and the US, as part of its upgrade to Ciena 40Gbps transmission equipment to get lit capacity of up to 2Tbps. The next stage of the upgrade will be to install 100Gbps equipment this year.
Sales and marketing director Ross Pfeffer said that the price drop comes as Australian and New Zealand residents are being given more data on their monthly caps.
"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. Our continued initiatives to increase supply and reduce price are designed to encourage this process, and to support the needs of Australia's [National Broadband Network] and New Zealand's [Ultra-Fast Broadband]," Pfeffer said in a statement.
Pfeffer said that the upgrades could see the cable get up to 7Tbps when completed.
"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."
Last year, Conroy told a telecommunications industry conference in the US that Australians were being charged too much for international capacity on subsea cables, and that the government could potentially spend up to AU$250 million to roll out its own cable.
"I've often said that if the international market doesn't improve ... I'll build a new pipe to the US to drive prices down if they don't start responding to market pressure," Conroy said.
Internode founder and iiNet board member Simon Hackett said that Conroy's comments were "a real worry", because it is the National Broadband Network's (NBN) pricing model that would drive against greater data use.
Vocus and iiNet have both recently increased the capacity that they purchased on the subsea cable.