The Hawaiki cable is going to change the internet game in NZ – here's how

by Peter Griffin / 07 August, 2018
RelatedArticlesModule - Hawaiki internet cable nz

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Feeling more connected to the world? Put it down to the unheralded arrival of a new internet link. 

New Zealand’s second undersea fibre-optic cable to the US has gone live with little fanfare but major implications for internet surfers.

The 15,000km Hawaiki cable snakes up the Tasman from Sydney with a fork heading south-east to land at Mangawhai Heads. On the way through the Pacific, it connects American Samoa and Hawaii, then carries on to the coast of Oregon, where it plugs into the US’s internet backbone.

You won’t suddenly see a surge in download speeds or a halving of your broadband bill now the fibre has been lit up. But the cable for the first time provides competition for the transpacific Southern Cross Cable half-owned by Spark.

The new 43 terabits route to the US, which boosts total data capacity by several times, should enable internet providers to strike better bandwidth deals.

It will cater to the ever-growing demand for data-hungry internet applications and give the world’s big content hosts more confidence to locate data centres in distant and shaky New Zealand.

Its completion follows at least two ill-fated attempts to get a second international cable venture going, most notably in 2012 by Pacific Fibre, which had backing from Xero founder Rod Drury, Sam Morgan of Trade Me fame and Sir Stephen Tindall. Despite signing deals to supply bandwidth to internet and telecoms companies, the venture foundered for lack of financial backing.

Doubts about the Hawaiki cable coming to anything were dispelled a year ago when internet entrepreneur and Hawaiki director and investor Malcolm Dick posted a photo on Facebook of a ship with thousands of kilometres of optical fibre spooled in its hold. “Last tank filled. Boat leaves tomorrow,” he wrote.

So what finally made a second cable viable? This time the dollars added up. “The build cost had reduced markedly between the Pacific Fibre project and the Hawaiki project, to the tune of $200 million less,” says Dick, a pioneer of the New Zealand internet industry who sold CallPlus and Slingshot to Australian firm M2 in 2015. Hawaiki ended up costing US $300 million ($440 million).

The cable provider, TE SubCom, which had also worked with Pacific Fibre, provided some bridging finance to help get Hawaiki under way. And the nature of how internet content was being shuttled around the world, and by whom, was also fundamentally evolving.

“The market had changed with the over-the-top players and data-centre players now requiring large amounts of capacity rather than it just being a requirement for incumbent telcos,” says Dick.

Amazon Web Services, the data- hosting arm of the e-tailing giant, is a key Hawaiki customer. More data hosters can be expected to buy capacity as cloud computing grows in importance for business and private internet use.

Dick says the monopoly that internet service providers faced for decades in buying international capacity led to less-than-ideal cost-cutting moves. “They all buy sparingly and try to get around capacity restrictions by installing special data caches for the likes of the large over-the-top players, and by buying cheaper, indirect capacity such as across the Tasman.”

Hawaiki’s arrival gives them more efficient options for routing data in an industry where milliseconds count. Dick says lower prices could also be on the cards as competition bites.

The cable, which has a 25-year lifespan, will also connect New Caledonia, Fiji and Tonga, adding much-needed capacity for our Pacific neighbours.

The project is a boon for the region. Combined with Southern Cross intending to replace its ageing link, and the TGA transtasman cable that went live last March, the country is suddenly well connected.

This article was first published in the August 11, 2018 issue of the New Zealand Listener.

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