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New Zealand’s new US$400m submarine communications cable project, Pacific Fibre, has signed Reannz (Research & Education Advanced Network NZ) as its first customer.

The Pacific Fibre undersea cable system will connect Australia to the United States with two fibre optic cables via New Zealand and should bring more competitive pricing to the international transmission market - it will go head-to-head with the incumbent Southern Cross Cable network.

Under the agreement, Reannz is investing its own operational funding, along with a NZ$15 million government-backed grant. Reannz owns and operates Karen, the Kiwi Advanced Research and Education Network, on behalf of New Zealand’s research, education and innovation community, including universities and Crown Research Institutes (CRIs).

The deal will see capacity available to Karen subscribers rise from today’s 1Gb/s to an initial 40Gb/s and then to 160Gb/s.

The value of the capacity commitment is more than NZ$400m at current market rates but, citing economies of scale of the new network, Reannz CEO Donald Clark said the organisation is “paying far less than that”.

Clarke said Pacific Fibre will "provide us with effectively unconstrained capacity to Australia and the USA from mid-2014, allowing us to collaborate with the rest of the world on an equal footing.”

Pacific Fibre CEO Mark Rushworth said the undersea cable system will “unleash the potential of the Australian NBN and New Zealand UFB/RBI projects. It will provide the fastest path to the United States with the most competitive cost basis and help Australia and New Zealand meet the ever-increasing demand for international voice, data and internet content.”

In April, Pacific Fibre invited the submarine cable industry to tender for the construction on the cable network. It hopes to sign a construction contract by Q3 of 2011.

Last month the Pacific Fibre appointed ANZ Bank, Credit Suisse and First NZ Capital to help raise funds for the cable. First NZ Capital and Credit Suisse will seek equity investors, while ANZ will raise debt finance. ANZ said that as lead arranger it intends to provide a significant proportion. ®

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