NBN 101: Floating the submarine cable question

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“Some ISPs are utilising a form of caching for video traffic now and they are getting 20 to 30 per cent improvements and that is what is leading to the consumer broadband market unlimited data push,” Cannon argued. “That is coming out of nowhere. Everyone is saying, international traffic equals bottleneck, but how come all of a sudden we have gone from 100GB of data to 1TB? We’ve gone ten-fold in data download limits and nothing has happened on international connectivity. How has that happened? It’s because of the caching solutions.”

Yes, people can use existing technologies to access a lot of this video. But not everyone can at a good level of service quality and at the same time as they are using multiple devices with multiple users on any one connection. And that is without factoring in the potential for multi-stream HD video or 3D video content.

Additionally, existing technologies are very much a one way street at the moment – i.e. upload speeds are poor and the incentive to create data-heavy content (such as HD video) is conspicuously absent - which one could argue is an inhibiting factor to fostering the digital economy.

Keeping in mind, again, that the internet content discussion is only one part of the whole broadband infrastructure debate and that many applications will be focussed on domestic traffic only, it is still reasonable to conclude a ubiquitous and scalable network with better upload speeds would very likely result in more people having more access to and potentially creating more internet content, while encouraging more local caching and thus faster/better delivery and service levels.

That said, and bringing the discussion back to submarine cables, there is a strong argument for including investment in submarine cables to help drive down the IP transit cost as part of any national broadband plan.

Next: Undersea cables aren’t that expensive

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International links should be part of the equation, but to what extent?

Buddecomm director, Paul Budde, has long been a vocal advocate for increasing the number of international links to help drive down the cost of bringing in data from overseas and argues this should be part of any national broadband infrastructure plan.

“Yes, we get a lot of our content from overseas and we are far away from the other English speaking countries,” Budde said. “So yes these costs are high and therefore we do need more capacity. But what you also increasingly start seeing is that we start hosting or replicating some of that content in Australia as well. On one side we will always have that international link issue as that is our geographical situation but on the other side new technologies are going to assist us as well.”

Like many others, Budde says the prices paid by ISPs for international data traffic are too high (See above).

“If there is indeed enough capacity then the prices are far too high in comparison to other submarine cables,” he said. “If you bring in more competition and capacity then automatically prices should drop.”

While investing in an international link would not have much impact on the internet experience in Australia, it could be achieved in a much quicker time frame and for far cheaper than both the Liberal and Labor party plans.

For example, the Pipe Network’s PPC-1 cable launched late last year is estimated to have cost $US150 million and three years to construct.

According to the Australian-Japan Cable’s Russell, his investment was $US500 million. The Southern Cross network was roughly $US1200 million and Telstra’s Endeavour cable $US150 million. In total the investment across the four key undersea cable links sits at approximately $US2 billion.

While Budde may have solid ground in suggesting an increase in competition would decrease prices and potentially have a flow on effect to the prices we pay ISPs, Russell argues that as these cable operators are only worth 10 per cent of the ISP value chain the impact would be minimal; a 10 per cent decrease in prices at best.

On the whole, while the price for IP transit may be a point of contention, it is clear that the existing submarine cable situation in Australia and the fact internet content is based overseas should not be used to argue against building out broadband infrastructure, whatever shape that may take. However, there are arguments for more international links and it would seem prudent to include this as part of any national broadband plan.

PPC-1 launch video:


Copyright © 2010 IDG Communications, Inc.

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