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Fibre Watch: UFB outlook cloudy

14 Jul 2011

Start-up international cable provider Pacific Fibre remains high-spirited about its plans to challenge the monopoly held by Southern Cross when it comes to connecting New Zealand with the rest of the world.

Pacific Fibre announced this week it had firmed up a deal with REANNZ to get the Government network operator onboard for its yet-to-be-built service.

The Pacific Fibre/REANNZ deal is worth $91 million – well up on the $15 million figure that had previously been mentioned, but still just a drop in the bucket compared to the total value of sign-ups Pacific Fibre needs to get its project off the ground.

The company’s CEO, Mark Rushworth, is upbeat about Pacific Fibre’s overall progress, saying details of further customer signings will be revealed within weeks.

Of course this activity in the international connectivity space is just one part of the wider broadband story.

With the Government’s ultra-fast broadband initiative now underway, what enthusiasm is there out in the market, and from service providers, for super-quick fibre connectivity?

CallPlus said recently it planned to offer consumer plans of at least a terabyte-a-month off the back of the UFB network.

Nice cheer-leading stuff. But at the same time TelstraClear says it is scrapping plans for a 100Mbps service on its network because of a lack of customer demand.

Service providers always face the dilemma of finding a balance between being innovative with their product offerings and realistic about what users are willing to pay for. The market will stagnate if providers aren’t innovative and able to convince customers of the benefits of new technology but in New Zealand ISPs appear to be dealing with a relatively conservative user base.

A survey by Forrester has found local businesses are dragging their feet when it comes to implementing cloud computing initiatives, something that goes hand-in-hand with the growth of fast networks.

The Forrester survey has been criticised for its very small sample size but I suspect it still paints a reasonably accurate picture of what local companies are thinking. Essentially they realise cloud computing’s potential, but haven’t been convinced yet that they can get a good deal implementing a cloud strategy.

Over time the roll-out of the UFB, developments in the international connectivity space and further infrastructure investment from ISPs and players in the wider technology sector should help change that.

HP, which commissioned the Forrester survey, is an interesting case in point. The company recently trumpeted a deal with Softsource which has built a $10 million data centre in Albany off the back of demand for cloud computing.

At the same time HP is sending out mixed message about its own direct data centre investment. Back in March the company said it was building a new data centre at Tuakau, south of Auckland. But since then it has failed to deny suggestions it has canned the project.

The outlook for fibre-based services will be less cloudy if major players like HP are in a strong position to champion their benefits though a demonstrated commitment to backing the necessary infrastructure.

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