International Ties - Business Broadband in NZ

Our connectivity from NZ to the rest of the world is becoming an increasingly vital part of our economy. You could think of it like shipping trade routes of old - without them, you simply couldn’t trade. Similarly, you could think of congestion on these routes as similar to Auckland’s motorways (and other roads for that). Once they get blocked up, productivity dips with a big impact on output.

So why have the last 12 months have been so important for NZ’s digital future?

Increased capacity to Australia 

In March 2017 the Tasman Global Access (TGA) cable went live. TGA was a joint venture between Spark, Vodafone and Telstra to put another international cable between NZ and Australia. Before TGA, the only high capacity offshore link was via the Southern Cross cable. 10yrs ago - 5 even - a lot of NZ’s internet traffic went from over the Southern Cross straight into the West Coast of the US. This was roughly a ratio of 2:1 in terms of destination vs Australia. That ratio has changed and roughly reversed. The biggest changes have come about through the significant and growing presence of cloud providers in Australia, particularly Sydney. When AWS builds a data centre, it brings all sorts of other services that run on its platform. Similar to Azure. Similar with Google Cloud Platform. In Feb 2018 the Hawaiki cable landed at Mangawhai Heads, Northland, and adds capacity both into Australia and to the US.


While the Southern Cross cable was incredibly reliable and provided redundant paths, it still represented a risk in the event of a failure. What is interesting with three international cables in place is that we probably have better redundancy internationally then we do domestically for significant parts of the country. One of the things the Kaikoura earthquake exposed was that there wasn’t as much redundancy in some networks as thought. Fortunately, service providers banded together to lessen the impact. We also have more landing sites for international cables now, with TGA coming into Raglan, and Hauwaki into Mangawhai. TGA is probably more significant in this regard, as traffic south of Auckland can get out to the internet without going via the supercity.


When I first started working in the ISP industry over 10yrs ago, 1Mbps of International bandwidth would cost a business around $600-800 per month! Now you can get a 1Gbps business broadband connection with unlimited bandwidth for around $200 per month. While that isn’t an apples for apples comparison, I can tell you which one will work better for you…. While the two new cables may not see a noticeable difference in price as they go live, this is largely because the presence of competition has already forced significant corrections. Every time a new cable was announced over the last decade, it was typically met with a reduction in the pricing from Southern Cross.

Better abroad? 

What is particularly interesting about this is that you may now get a better service, at a better price, connecting to international content and services than you would if connecting to a local data centre. Why? Not all ISPs in NZ freely exchange traffic at peering exchanges, which creates a market for domestic bandwidth - local connectivity to other ISPs and data centres. The price of this domestic bandwidth has resulted in ISPs sometimes preferring to route traffic to other local ISPs internationally (yes - for real). Basically just because something is ‘local’ doesn’t mean the connectivity to it is necessarily better, and conversely, because it is international, doesn’t mean it is worse.

With companies like Megaport, we have also seen extremely flexible ways to set up and buy international bandwidth become available. Megaport will allow you to establish a private connection to the major cloud infrastructure providers and integrate this directly into your local WAN or data centre network. Driven by their software-defined platform, you can simply dial up and down the amount of connectivity you need, plus establish connections to new cloud platforms in minutes. 

NZ is better connected internationally than it has ever been, underpinning the reliance of our economy on offshore cloud-based services. Put this together with the awesome UFB services we have in this country, and the picture looks far better than few would have imagined 10yrs ago. 

From our perspective at The Instillery, we have seen some of the last big hurdles well and cloud-based leapt for companies looking to use public cloud services.