Southern Cross Cable director answers the critics

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Ross Pfeffer says international connectivity is being unfairly blamed for high internet charges

Southern Cross sales and marketing director Ross Pfeffer says he put out a media release announcing a 100Gbps trial in part to counter misinformation in the market about twin-cable system.

He says international connectivity has been blamed for unreasonable datacaps and slow internet during peak usage in the evenings.

But Pfeffer says, depending on how it is measured, and based on the published current standard price, the international component accounts for between 5c and 65c a gigabyte. The cost to the end-user is substantially more because ISPs factor in backhaul, transit and other costs when charging customers. “ISPs pay for what they think they will need,” he says.

Pfeffer claims that end-users often don’t use their full plan allowance. He points to a Market Clarity study in the Australian market showing although the average monthly data entitlement was 40GB, subscribers used just 6GB (15 percent of the allowance).

He also believes Google and Akamai are caching their video content, so that it is located closer to the user. This means the content is only travelling through the Southern Cross cable once, before it is cached and accessed from a local server.

The lit capacity on the twin-cable system is currently 1.2Tbps, but Pfeffer says less than half of that capacity is used. A percentage of the unused capacity is there to ensure resiliency (that is, provide back up should one of the cable section’s fail). He says that capacity could be doubled in months.

New contracts were negotiated last year and there is a 90 percent take-up for an extension from 2020 to 2025. Pfeffer says if customers choose not to use the capacity, they will still have to pay maintenance and operation, which are a percentage of the overall cost.

Pfeffer says that pricing for New Zealand to US international connectivity is no higher than Australia to US pricing. Four cable systems in Australia has created a thriving market, which Pfeffer admits will become more competitive if Pacific Fibre launches its cable. Although the most rapid decline in pricing may have already occurred.

“Price pressure occurs the moment they (competitors) announce they are going to build,” Pfeffer says.

Comments
Yea right OK - come clean Mr Southern Cross - and tell us how much profit you are taking per year from this?
Posted by Anonymous at 1:27:25 AM on July 6, 2011

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