Pipe Pacific-1 gets green light

[fnord]

Sorry, did a couple of searches, couldn't find this having being posted, so sorry if I have cocked up.

Original whirlpool article

PIPE to go ahead with international link
Phil Sweeney | Yesterday, 9:00 am | General | got a news tip?
PIPE Networks is to go ahead with its $200M plan for a new international link between Australia and Guam.

Guam is an ideal destination as it already has significant connectivity to other countries such as Japan and the US.

iiNet has announced this morning that it has signed up to use the link for 15 years as a "foundation customer". Other foundation customers include Internode and Primus. "This agreement will provide iiNet with long term supply certainty and significant cost savings", said iiNet managing director Michael Malone.

The link will break an essential duopoly on international traffic by the Southern Cross Cable (SXC) and Australian Japan Cable (AJC), which are mostly owned by Optus and Telstra respectively.

"Foundation customers...are the real champions of competition", said PIPE CEO Bevan Slattery. "They wanted a change from the same old overpriced bandwidth product available for the past 8 years. We all realised that this is the last chance to break the Gang-of-Four's stranglehold on international capacity pricing into Australia. All Australians will benefit from their vision and belief that the days of paying too much money for too little bandwidth had to end.

Initially announced late 2006, the cable is expected to be completed in mid to late 2009 with potential capacity of 1.92Tb/s. Telstra is also planning a new link to Hawaii to be finished later this year.

This looks quite promising, and may already be having downward effects on the price of international transit to AU.

ITnews quoth

PIPE Network undersea cable to boost Australian broadband

[SNIP]

By Adam Turner
14 January 2008 03:15PM
Tags: pipe | network | undersea | cable | boost | australian | broadband
PIPE Network undersea cable to boost Australian broadband

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Australians are set for faster, cheaper internet access with the announcement of a $200 million submarine cable link to Guam.

Due for completion in mid-2009, the Pipe Pacific Cable 1 (PPC-1) will be built by Australia's PIPE Networks - breaking Telstra and Singapore Telecom's stranglehold on Australia's cable links to the rest of the world. The main trunk of the PPC-1 system will be a 2-pair fibre cable capable of delivering 1.92 Terabits of data per second.

Adding 30 to 40 percent capacity to Australia's links to the rest of the world, the 6900 kilometre cable will run from Sydney to Guam via Brisbane as well as Popondetta and Madang in Papua New Guinea. From Guam it will connect to the United States and parts of Asia.

Announced by new Federal Communications Minister, Senator Stephen Conroy, PIPE Networks' cable will play a key role in the government's plans for a national Fibre to the Node network.

"It has the potential to improve Australia's internet transmission capacity and increase competition in the Australian telecommunications marketplace. This is great news for Australian internet users because the result will be faster and cheaper broadband," Conroy said.

"As a firm believer in the value of competition in the telecommunications sector, it is great to see a smart, energetic Australian company doing so well and also having such ambitious plans for the future."

The new cable will provide a "significant reduction of international bandwidth prices" for foundation customers including Primus, Internode and iiNet, said PIPE Networks executive director Lloyd Ernst. The announcement is already allowing these ISPs to drive harder bargains with other cable providers at this weeks' 2008 Pacific Telecommunications Council conference in Hawaii.

"It's not about capacity, it's about competition," Ernst said. "Look at the discount airline model. Australians didn't benefit much from competition when there were only two major airlines. Just like new players in the airline industry, we aim to be the disruptive force that changes the market."

Brisbane-based PIPE Networks currently operates 670,000 meters of fibre optic-based network, servicing central Sydney, Melbourne and Brisbane.

One of Australia's largest peering providers, PIPE Networks' peering customers include WebCentral, the Australian Broadcasting Corporation, iiNet, Primus, TPGi and AsiaNetcom.

The new PPC-1 cable to Guam will compete with the three existing key cable links to Australia. Southern Cross Cable cable - linking Australia to the United States east coast via New Zealand, Fiji and Hawaii - is owned by Telecom New Zealand, SingTel Optus and Verizon Business. Plans are afoot to boost the cable's capacity to 860 Gbit/s by the end of 2008, although storm damage in late 2007 has restricted the bandwidth available to Australia.

The Sea-Me-We-3 (South East Asia Middle West Europe 3) cable, which links Perth to the Germany via 39 landing points, is also controlled by Singapore Telecom along with France Telecom.

Telstra recently added an extra 40 Gbit/s of capacity to its Australia-Japan Cable, which also runs via Guam. A second 120 Gbit/s upgrade is due for completion in April 2008. Last March, Telstra unveiled it would build its own new submarine cable to Hawaii at a cost of approximately $300 million.

[CaptainChewbacca]

Its very cool to see stuff like this. Most people don't think large data networks still run through cables anymore, but that its all satellites and wireless.

[phongn]

Its very cool to see stuff like this. Most people don't think large data networks still run through cables anymore, but that its all satellites and wireless.

Hell, virtually all network traffic runs through fibre lines these days. Satellite access has too much latency and not enough bandwidth.

[weemadando]

Hu-fucking-zzah.

Might this finally mean non third world broadband for Australia?

Maybe if the bandido and his gang ever ride out of town, but otherwise I doubt it.

[fnord]

You referring to Sol Trujillo?

Telstra CEO may leave this year

By Michael Sainsbury

January 14, 2008 07:20am
Article from: The Australian

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TELSTRA'S traditional fixed-line telephone and data business is about to deteriorate further amid speculation that imported chief executive Sol Trujillo may depart before the end of the year.

Telstra (tls.ASX:Quote,News) arrested the decline of its fixed-line business - which still contributes 50 per cent of its profits - with a big effort to win back customers early last year.

But that trend is now set to reverse as Australians continue their migration to mobile services and Telstra's rivals develop broadband offers using the company's copper network, according to Macquarie Securities analyst Andrew Levy.

Fixed-line revenues would continue to decline as a result of subscriber migration to mobiles and unbundled local loop services, Mr Levy said.

"We expect declines to re-accelerate compared with the June 2007 half but to remain moderate compared with declines of a few years ago.''

The new decline in fixed-line revenue is likely to be exacerbated by the competition regulator's decision last week to once again cut the price at which Telstra must rent its copper wires, in an arrangement known as the unbundled local loop.

The decision was the latest blow to a two-year-old bid by Telstra to charge its rivals a blanket $30 monthly. At present their are four geographical bands for basic network prices, and Band 2 covers about 70 per cent of the population.

The Australian Competition and Consumer Commission told Melbourne-based Primus during arbitration that it only had to pay $14.30 monthly in Band 2 - down from the previous level of $17.

The new price will be passed on to other companies.

Telstra will report its first-half results on February 21, as chief executive Sol Trujillo's five year, $12 billion "transformation'' project nears its halfway mark.

Mr Levy has tipped that the company's underlying earnings will tick up by 1.1 per cent, excluding a $100 million dividend the telco will get from its pay-TV operation, Foxtel.

"The result will highlight that wireless data revenues are now the critical driver for the group, providing more than 50 per cent of Telstra's total growth, despite being well below 10 per cent of total revenue,'' Mr Levy said.

Including Telstra's Chinese property website, SouFun, the two divisions could represent more than 60 per cent of its 2.7 per cent revenue growth, he said.

"This percentage could rapidly increase if fixed-line revenue declines were to re-accelerate, or mobile voice calling rates come under pressure,'' Mr Levy said.

Mr Trujillo outlined his blueprint for a "new'' Telstra in November 2005.

Now there is growing speculation inside the company and in financial markets that Mr Trujillo, who was brought from the US to run the company, will leave before the end of year.

He originally signed a three-year contract from July 1, 2005, but last year this was changed to a rolling, "evergreen'' deal that means Mr Trujillo need only give the telco's board 30 days notice if he wishes to leave.

At the same time he was granted a large, unspecified pay rise - opposed by shareholders - that could push his annual salary above $20 million if the company's share price rises.

Mr Trujillo, who made his name at telco US West, is believed to be keen for a second stab at running another large US company.

Telstra's share price has been hit by general market woes in the past two weeks, falling from $4.74 to $4.60 since January 2.

"Telstra's price-to-earnings multiple of 16.1 times (compared with the market ex-resources, which is trading on 15.8 times) is full, given ongoing regulatory uncertainty,'' Mr Levy said.

[The_Saint]

Ando might have been but that's what I'd have labelled jack boot johnny and Mrs online-speedbump coonan a month ago...

Bloody liberals tying Telstra's hand behind it's bakc to "make the market fair" and then wondering why nobody else bothered to compete with infrastructure...

[fnord]

Looks like PPC-1 has Southern Cross Cable and Australia-Japan Cable (the aforementioned duopoly that has held transit prices hostage) already worried.

According to a PIPE disclosure to the ASX last year

AU-US capacity is 20x the retail unit cost of JP-US capacity
AU Unit bandwidth prices haven't significantly moved
And, most importantly, the existing cable duopoly is currently mostly owned by the Gang of Four.

The prices for a 10 gigabit IRU over the existing cable systems over 15 years cannot exactly be called cheap, either.
Approx 75M USD over SXC, and 67.5M USD over AJC.
At a 10% pa discount rate, that works out to annualised costs of 8.9M USD and 8.1M USD respectively. On a per megabit per month basis, that is 747 USD and 672 USD.

Strangely enough, just PPC being a credible threat caused the duopoly to drop their prices by at least 20% (SXC 21%, AJC 35%) in July last year. I don't know if that affects the prices of previously-negotiated IRUs - hopefully someone with appropriate commercial experience can enlighten us.

Whirlpool comments by people who you would hope are knowledgeable about the AU internet industry (Simon Hackett (founding MD, Internode and group), Bevan Slattery (founder, CEO, PIPE), for two), seem to expect that the competitiveness of AU retail ISPs will result in most of the gains flowing thru to customers, directly or otherwise.