Pipe Networks (ASX: PWK) has initiated testing of its Sydney to Guam optic fibre link with a successful first light transmission.
Pipe first signed an agreement with Indian company, VSNL International, in 2006 to construct the cable connection at an estimated cost of $200 million. The submarine line, dubbed the PPC-1, was intended to introduce much needed competition to end the international capacity stranglehold of Southern Cross Cable Network and Australia Japan Cable. Optus and Telstra are major stakeholders in the two companies respectively.
The project was thrown into financial turmoil after a credit facility from Westpac and ANZ fell through. It was eventually salvaged after a group of Internet service providers (ISPs) ramped up their financial commitment by signing long-term capacity leases - some for as long as 15 years - on the impending Pipe link.
According to Pipe Networks chief executive, Bevan Slattery, the first light was successfully transmitted and received across PPC-1 at 1.45pm on August 23.
“We had protocols to ensure the signal arrives correctly and back,” he said. “We tested the strength of the data and had to make sure no there were no errors as well as data encryption to make sure everything is working fine at an optical level.”
This is the first phase of testing and will run for four weeks and Pipe will then begin to light up capacity to kickstart assessments for other segments beyond Guam. Circuit trials from Japan to Australia and Japan to the US will commence soon afterwards and Pipe expects to wrap up testing and hand over capacity within the next 6-8 weeks.
While the cable will not be commercially ready until its official launch date of October 8, other cable companies are already feeling the heat. Southern Cross recently slashed prices for circuits to the US from Australia and New Zealand by 15 per cent, a reduction of more than 50 per cent over the past 18 months.
“We have already seen existing cable owners dropping their prices significantly as the first effects of the competition,” Slattery said. “Service providers have taken steps to remain competitive in the market place.”