Australia Optus, Telecom NZ, SingTel mull cable project
Australia Optus, Telecom NZ, SingTel mull cable project
SYDNEY (Dow Jones): Australia's Cable & Wireless Optus Ltd.
said Tuesday it has teamed up with Telecom Corp. of New Zealand
Ltd. and Singapore Telecommunications Ltd. to examine the
development of a broadband cable that would link Australia to
Singapore via Indonesia.
While corporate talks are at an early stage, analysts say
there is a good chance the venture will proceed due to ballooning
demand for corporate data services in the region.
The proposed cable would stretch 5,800 kilometers and by
analyst estimate it could cost about US$250 million. It would
slot into an overland network which would effectively link Sydney
and Singapore, and pass two-way traffic onto the U.S. through the
pan-Pacific broadband cable operated by Southern Cross Cable
Network.
Details on the proposed link that would be capable of handling
streamed video over the Internet, as well as ordinary data
traffic, are scarce.
The companies haven't released any financial details or a
timeframe for the cable construction but a person familiar with
the situation says they are hoping to have it operational within
two years.
Chris Hancock, managing director of Optus data and business
services, said in a statement with Telecom NZ and SingTel that
the companies had identified a growing need for bandwidth in the
Asia Pacific region.
"The Asian region is a large and rapidly expanding market for
corporate and IP services. All three companies have identified a
growing need for robust infrastructure between Australia and
Asia," Hancock said.
"Our customers are demanding more and more bandwidth as they
e-enable their businesses," Hancock added.
Indeed, much of the inspiration for the Sydney-Singapore link
comes from Southern Cross, which is a joint venture 50 percent-
owned Telecom NZ, 40 percent-owned by Optus and 10 percent-owned
by Worldcom Inc.
The Southern Cross cable cost US$1.2 billion to build and has
already become a cash-cow for its owners, who have received
capacity orders totaling US$1.6 billion. Southern Cross paid a
maiden dividend of US$200 million, which was split pro-rata
between the owners.
Telecom NZ's group general manager of networks Simon Moutter
said the new cable would complement the Southern Cross cable
which links Australia to the U.S. via New Zealand.
"Our investments in cable have reaped rewards, operationally
and financially. Similarly, if this proposal goes ahead, it would
be a solid investment opportunity for all three companies,"
Moutter said.
Andrew Hines, telecom analyst at ABN AMRO, said the proposed
cable would complement Southern Cross but, more importantly,
would provide an alternative route for data traffic from Asia.
"Strategically it is an important link in terms of getting
data out of Asia to the U.S.," Hines said, noting Internet
traffic and corporate data currently enter the U.S. from cable
links in Taiwan and Japan.
The Sydney-Singapore cable link has yet to be approved by the
boards of three companies and must first obtain permits and
licenses from the Australian Communications Authority before the
venture is formalized.
If the proposal goes ahead a cable using Dense Wavelength
Division Multiplexing, or DWDM, technology will be built between
Perth, Jakarta and Singapore.