REANNZ, the crown-owned company that operates the Kiwi Advanced Research and Education Network (KAREN) is to be Pacific Fibre’s first customer.
The two companies announced that they have agreed key commercial terms to supply international capacity.
According to a statement REANNZ is investing its own operating funding, along the $15 million that the government granted to support a new cable system.
“We are excited to secure an anchor tenancy providing long-term capacity for the research, education and innovation communities in New Zealand. Pacific Fibre will provide us with effectively unconstrained capacity to Australia and the USA from mid-2014, allowing us to collaborate with the rest of the world on an equal footing,” says Donald Clark, outgoing REANNZ CEO.
The deal will see the amount of capacity available to KAREN subscribers rise from today’s 1Gbps to an initial 40Gbps and then to 160Gbps over time. Clark says that deal with Pacific Fibre makes this “step change” possible.
“At current market rates, the value of the capacity commitment is over NZ$400 million, though obviously we are paying far less than that,” says Clark. “This is a long term commitment, and one that recognises our support for the Crown’s policy goals of increased international cable competition at the right stage in the market process.”
Pacific Fibre CEO Mark Rushworth says REANNZ is the company’s first announced customer.
“We couldn’t be more aligned with their goals. We are helping REANNZ offer extremely high capacity connections to the community and that capacity will grow over time. The proposal also more than meets the Crown’s requirement for one new cable - as we will be providing two,” Rushworth says.
The deal is subject to the approval of REANNZ shareholders.
Kordia not defeated
Kordia has posted the following statement on its website, from CEO Geoff Hunt, in reaction to the news that the $15 million REANNZ funding has been given to its rival Pacifc Fibre:
“OptiKor is a trans-Tasman cable project only, and is designed to break the current Internet bottleneck in New Zealand. OptiKor will provide onward access to numerous existing cable systems out of Australia to Asia and to the U.S.
“The REANNZ tender was for capacity to Australia and the U.S. which is the route of the proposed Pacific Fibre cable. So this decision makes sense.”
Hunt says he is unable to give more detail on the status of the OptiKor project at present, except to say that it is alive and well.
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