The Pacific has a new submarine cable as of today. The Hawaiki cable system has officially launched, connecting the Pacific Northwest with New Zealand and Australia via Hawaii with up to 43Tbps of initial design capacity. The cable spans some 15,000km and cost about $300M to build. With us today to give us a bit more color on just what Hawaiki has built and what is next on the menu is CEO Rémi Galasso.
TR: How did the Hawaiki cable project come to be? What hurdles did you have to overcome to make it happen?
RG: We have been working in the South Pacific for more than 15 years and identified two key issues:
- A lack of connectivity with too few cables to meet sharply growing demand.
- The high prices of capacity, which are currently among the most expensive in the world.
In other words, the market in Australia, New Zealand and Pacific Islands has been kind of locked by a monopoly situation since 1998, and our intent was basically to introduce true competition in the market and drop the cost of connectivity across the region.
By 2012, we started working on a specific network design to find the right balance between customer requirements and technical constraints. Our plan was based on the following principles:
- A carrier-neutral infrastructure to unleash competition.
- A single cable system to serve five different routes and markets, incl. AU-US route, NZ-US route, AU-NZ route, Hawaii to Mainland US route and Pacific Islands market.
- Propose the most diverse route between A/NZ and the US, and the best latency from Sydney to US for customers.
It took us six months to define the right route and we finally announced the Hawaiki Cable project in August 2012 during the Pacific Forum in Rarotonga.
That was the beginning of a journey that ended up taking longer than first expected. All up we spent about six years building the network and putting it into commercial service.
There were indeed many hurdles:
- The first challenge was to reach financial close to start the system construction (in March 2016). We had to convince a few partners, including customers, to sign pre-construction deals, investors to inject the required equity, lenders to offer attractive loans, and suppliers to accept competitive terms and conditions.
- The second challenge was to actually build the system: a 27-month programme with 15,000 km of cable to manufacture and lay, including five landings (Sydney, Mangawhai Heads north of Auckland, Hawaii, Oregon and American Samoa).
I have to say we had many ups-and-downs during those six years, and as you’d expect, our various competitors did not make it easy for us. But the team never abandoned hope and was always ready to continue the fight.
That perseverance has definitely now been rewarded.
TR: How does the Hawaiki cable system differ from those that have gone before it on this route?
RG: There’s a number of things that set the Hawaiki cable apart.
- Timing: the last AU/NZ to US West coast cable was launched in 2000. The market is obviously very different today, with capacity growing 45% annually, new datacentres and cloud services popping up everywhere, and the diversity requirements. A new cable on this route was sorely needed by the industry, and so we feel that it’s perfect timing for Hawaiki to launch now.
- Business model: OTTs substantial investments in the subsea space altered dramatically the competitive landscape, while opening the door to new and more flexible business models.
As a carrier-neutral cable, Hawaiki does not have any conflict of interest with its customers, putting us in a good position to satisfy new market requirements.
- System architecture: as explained above, Hawaiki is a single cable system but serves five different routes and markets, incl. AU-US route, NZ-US route, AU-NZ route, Hawaii to Mainland US route and Pacific Islands market.
- Investors with a clear vision, and a highly experienced and talented management team: Hawaiki shareholders - including Sir Eion Edgar, Malcolm Dick, Greg Tomlinson and me - perfectly understand the strategic importance of connectivity and have skin in the game. Their entrepreneurial approach has been a key success factor for Hawaiki. And our management team, comprising of six executives, have more than 100 years of experience in the telecom industry between them.
TR: What do you see as the main driving force or forces for new cables in the Pacific today? Capacity, diversity, the capabilities of modern technology one can deploy, or something else?
RG: Capacity, upgradability and diversity are the main driving forces. Latency is a plus.
International data traffic for Australia and New Zealand is doubling every two years, so there’s definitely demand for the sort of huge pipe we’re delivering.
Hawaiki’s design capacity at launch is 43.8 Tb - several times the current levels of Australia and New Zealand combined – and we have plans to upgrade and expand this capacity in the coming years.
Diversity has also become a top priority for customers, who are keen to spread their capacity over multiple cables to achieve full redundancy and guarantee always-on services.
TR: Now that the main cable itself is complete, do you have plans to add any additional branches in the short term? Are there other cable projects that Hawaiki might take on?
RG: Hawaiki has decided to include four branching units dedicated to the Pacific Islands in the system. American Samoa will be connected from day one - together with Hawaiki’s main trunk - given they actually invested in the branch. New Caledonia, Fiji and Tonga will have the opportunity to connect at a later date, when funding is available.
Regarding other cable projects, we are carefully listening to our customers to include their requirements in our strategic development plan.
TR: What does bandwidth demand look like between the US and Australia/New Zealand today? Do you think there are likely to be additional cable buildouts on this route any time soon?
RG: We believe New Zealand is now well connected, with two new cable systems (Hawaiki and TGA) in addition to the existing Southern Cross cable. This new connectivity and diversity will play an important part in boosting the New Zealand IT industry.
The country could also become a champion in the cloud business, given all the right ingredients are there: massive renewable power; cool weather and access to cool water; political stability; and a great education system. Considering its remote location, New Zealand could represent one the greatest safe-havens for international data.
Australia is a much larger market and needs more connectivity. On top of Hawaiki, two cable projects have been confirmed between Perth and Singapore (ASC and Indigo), and more systems might be needed in the coming years to provide further connections between Australia, Asia and the US.
TR: Thank you for talking with Telecom Ramblings!