Computer gamers and businesses could benefit most from a new internet cable that Southern Cross Cable plans to lay between New Zealand, Australia and the United States.

Chief executive Anthony Briscoe said the company, which is half-owned by Spark, had held talks in Sydney with customers of its existing cable network and planned to have the new cable, which it is calling Next, in service by 2020.

Next would cost about US$300 million and would run between Auckland, Sydney and Los Angeles.

It would have a capacity of 60 terabits – five times the likely maximum capacity of the existing Southern Cross Cable network.

Southern Cross says Next would provide the lowest-lag route for internet traffic to the United States by “some considerable margin”, because the cable would be direct and not routed via Hawai‘i.

Lag, or latency, is the bane of computer gamers, cloud computing service providers and financial traders.

Internet traffic travels along fibre-optic cables at the speed of light. But the distance between New Zealand and the US and the fact numerous packets of data need to be sent back and forth for most computer actions, means that reducing lag by even a few milliseconds can provide a better experience when using more demanding applications.

Game Developers Association board member Stephen Knightly said lag was a critical issue when playing online games and “any reduction, be it a few per cent or 10 per cent will make a difference”.

“A lot of game servers for popular online games are now based in Australia or Singapore, but there will still be many gaming communities where we have to connect to the west coast of the US.”

The shortest path between New Zealand and the US on the existing Southern Cross network, which is due to remain in service until 2030, is about 63 milliseconds.

Southern Cross marketing director Craige Sloots believed the 12,600km Next cable could get that down to 55ms to 60ms.

Pacific Fibre – a defunct venture that tried to raise money for a link between New Zealand and the US – reckoned it could do a little better still and reduce lag to 54ms by going direct, and touted that as a major benefit of its plan.

New Zealand is currently almost entirely reliant on the Southern Cross Cable network, a “figure of eight” loop centred on Hawaii that connects the US, New Zealand and Australia.

The Next cable would provide extra redundancy, in the event that both legs of Southern Cross’ existing network experienced a subsea cut – an unlikely scenario.

However, Briscoe indicated Next would use the company’s existing landing stations.

Spark and Vodafone are laying a new cable between Raglan and Sydney. Hawaiki Cable is carrying out a marine survey for its trans-Pacific cable, which will run between Sydney, Whangarei and Oregon, via Hawaii, with an offshoot to American Samoa. Its cable is due to be in service by 2018.

These cables would diversify New Zealand’s land-based facilities as well as its subsea connections.

Sloots played down any intrigue, but it is worth noting that rival cable venture Hawaiki Cable has been in talks with the Foreign Affairs Ministry and Pacific island governments about the possibility of government funding for links from its cable to more Pacific Islands.

The ministry issued a communique in February saying officials would present leaders with “solutions for a submarine cable and satellite infrastructure” to improve communications for the islands by last month.

It is possible that an announcement is imminent on funding that would make Hawaiki’s venture more certain.

Briscoe said Southern Cross was not looking to build a new cable system interconnecting with Pacific islands, though it remained “committed to the Pacific” and open to talks.

Hawaiki Cable chief executive Remi Galasso said he could not comment on the Next venture and what it meant for Hawaiki.

Sloots said his understanding was that Pacific leaders were looking at a solution that would connect French Polynesia through to Samoa “picking up the Cook Islands and Nuie on the way”.

“That seems to be completely different to what Hawaiki are planning,” he said.

Southern Cross is half-owned by Spark and 40 per cent-owned by Singapore-based Singtel-Optus, with US phone giant Verizon owning 10 per cent.

It receives a steady stream of profits from its existing cable network, so there is no doubt it has the funding to build Next if its shareholders are prepared to forego some dividends and let Southern Cross take on a bit of debt.

The big unknown is whether Southern Cross’ large Australian customers in particular would choose to buy capacity on the cable, given they have other choices. Times have changed since the original Southern Cross network was completed in 2000.

Briscoe said “all major projects are subject to successful financial milestones and approvals”, which suggests Next is not yet guaranteed.

Sloots said: “It is fair to say shareholders’ approvals and sign-offs have not been done yet. Customer pre-orders are not critical but they will obviously help their own internal business cases a lot.”

- Stuff