Telecom, Telstra, Vodafone open bids for transtasman cable

Telstra, Telecom and Vodafone have issued a tender for their proposed Tasman Global Access cable between Auckland and Sydney.

In a statement, the companies say they expect responses to the tender in two months.

The contract for the 2300km, $US60 million cable is expected to be awarded by the end of the year.

One point of interest will be whether China's Huawei - which sniffed around Pacific Fibre - makes a bid to construct the transtasman cable, and if so how the NZ and Australian governments will react (Pacific Fibre co-founders at times implied political heat stopped them tapping Huawei, but at other times took jabs at the cash-rich, cost-effective Chinese giant).

Construction should begin in 2014 and the cable be operational by 2015.

When the cable was first announced in February, the three companies were wooly on commercial details, such as the size of each partner's stake, and where the joint venture would be incorporated (the 50% Telecom-owned Southern Cross Cable Network, which owns and operates the only major cable out of NZ, is incorporated in Bermuda).

There are no further details on that front this morning.

Telecom corporate relations general manager Andrew Pirie told NBR ONLINE, "The process is for tenders to be received and a preferred tenderer chosen. Then the partners will each have a firm costing on which to confirm their business case, and obtain necessary internal approvals.  At this stage the joint venture company will be formed."

The companies say two landing options on the North Island’s west coast are being evaluated for the New Zealand end of the cable:  one south of Auckland and the other to the north.  In Australia, a number of sites in northern and southern Sydney are being considered.

"The partners don't believe landing permissions are likely to be a significant issue," Mr Pirie told NBR ONLINE. Consents held by the partners for existing cables are expected to ease the process.

The Commerce Commission is keeping a watching brief on the cable.

Earlier, Callplus CEO Mark Callander told NBR there was a danger of what he called a Telecom-Vodafone "cosy duopoly" in the domestic market being extended to transtasman broadband.

A key point of interest for Mr Callander and other ISPs is whether they will get wholesale access to the new cable on equal terms with Telecom and Vodafone. But with the joint venture company yet to be formed, they only have vague target to shoot at.

"Wholesale arrangements are still to be determined," Mr Pirie said this morning.

Pacific Fibre co-founder Rod Dury told NBR that Tasman Global Access was on balance a positive development, but that a cable that extended to the US was needed for real change. Mr Dury has proposed a Crown-owned transpacific cable that would be run at cost.

Telecom, Telstra and Vodafone say their cable will boost transtasman competition, and competition overall given it will provide access to the Australian market and its multiple cables running up to Asia and the US.

Pacific Fibre, which tried and failed to raise $400 million, pitched its Sydney-Auckland-LA cable as the only independently operated submarine broadband link in the region. Other cables are owned in whole or part by  phone companies that also have retail operations. When Telecom was split in two in 2011, its retail operation inherited the 50% stake in Southern Cross Cable - a holding some saw more correctly falling with its wholesale and network half.