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Nextgen cable project 18 months behind schedule

James Hutchinson (via AFR) | July 4, 2013
The undersea cable project sold off by Leighton Holdings alongside other telecommunications assets last week is running 18 months behind schedule, fuelling speculation over whether the project will survive amid rivals.

Nextgen has invested $15 million to date in the project, including surveys of the planned cable route. It has also signed between six and eight customers as foundation partners for the cable, representing a $100 million commitment in future revenue.

It is believed to be in discussions with SingTel, which owns Optus in Australia, and Telstra, which has signed non-binding agreements with the Huawei-built ASSC-1 and SubPartners cables.

The Australia-Singapore market is currently served by the 14-year-old Sea-Me-We-3 cable, owned by a consortium of global telcos including SingTel and Telstra.

But connectivity to Asia is seen as a growing hub for internet traffic as content and data centres are increasingly located in Singapore.

"Clearly out of the west [of Australia] there's a key bottleneck there," Mr McGrath said.

An additional cable on Australia's west coast would provide a much-needed back-up for internet and phone connectivity into Asia. The Sea-Me-We-3 cable was cut in Singaporean waters in January and repairs took four months.

iiNet chief executive Michael Malone said that where 95 per cent of the internet service provider's internet traffic once originated from the United States, domestic and Asia-Pacific traffic has grown significantly as content providers and major websites such as Google and Microsoft store more data closer to Australia.

"At the moment we're not under any pressure but longer term - five-plus years - all of the growth we're seeing is into Asia," he said.

Mr Spenceley said extra capacity on the Sea-Me-We-3 cable was expensive and difficult to obtain.


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