Telstra to Invest in US Fibre Link

By Greg McNevin

April 2, 2007: Telstra is reportedly planning to cut its use of the Southern Cross Cable Network, the main data link to the US, by 2008 by constructing its own $300 million fibre cable link to Hawaii.

Currently Australia’s internet traffic is managed by New Zealand’s Southern Cross’s 240 gigabit link to the US. Owned by Telecom New Zealand, MCI and Optus the company was hinting at a future upgrade, however, with its main customer looking to invest in its own 1.2 terabit link to Hawaii, a separate link to the key US network, this could now be in jeopardy.

The announcement will no doubt also come as a major blow to Southern Cross’ sales, which have been experiencing booming sales due to increased broadband adoption in Australia and New Zealand.

“Owning the infrastructure that provides this vital connection to Australia enables Telstra to deliver additional network capacity and reliability to our retail and wholesale customers, and will maximise returns for shareholders when we re-route traffic from existing routes owned by competitors,” Telstra’s COO, Greg Winn told telecomtv.com.

Telstra’s plan could be good news for Australian broadband as depending on how the Telco flexes its new fibre muscle, the plan could not only improve speeds for Australian users, but may also help to reduce connection costs which are some of the priciest in the world.

Telstra’s cable plan is one of several currently underway, with Pipe Networks announcing to the ASX that is too is planning a $200 million link to the US island of Guam, and New Caledonia’s OPT building a 300 gigabit cable between Sydney and Noumea.

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