By Dylan Moran
Vodafone has today announced a multi-million dollar contract with Pacific Fibre, reaching a 10-year agreement for supply from the company’s new cross-Pacific cable system.
The partnership between Vodafone and Pacific Fibre will allow the company to provide its own broadband, rather than relying on the market rate set down by Southern Cross which owns the current cable connecting New Zealand with the world, of which Telecom is a 50 percent shareholder.
“By partnering with an innovative, entrepreneurial business such as Pacific Fibre, we’re helping to break down the digital divide between New Zealand and the rest of the world,” says Vodafone CEO Russell Stanners.
As well as the potential business benefits for Vodafone, the deal is helping ensure the Pacific Fibre cable is constructed.
"By backing PacFibre, they are helping to guarantee that it will go ahead," says technology commentator Ben Gracewood, "This will in turn guarantee lower prices in the future. We can hope that they'll pass these prices onto consumers, but there's no promise of that."
Mr Gracewood says Vodafone broadband prices may not drop significantly as the company looks to shore up losses from other competitiors and falling mobile phone call rates.
The Pacific Fibre cable is being constructed as an alternative to the current Southern Cross cable, the only connection between New Zealand and the US mainland.
The current solitary connection causes problems for internet consumers.
The complications arise as the majority of New Zealand internet traffic goes offshore through one cable, creating a bottleneck effect in the cable system.
As well as the US connection, Pacific Fibre is also building a cable linking New Zealand to Australia.
“This will help us to support New Zealanders’ online ambitions by making sure they can confidently connect to the world and the world can confidently connect to New Zealand,” says Mr Stanners.
Vodafone joins Australian internet provider iiNet as a long-term partner with the company.
The cable is expected to be completed in 2014.
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