Technology columnist Richard MacManus finds the arrival of the massive Hawaiki cable has created an opportunity for New Zealand to build global cloud computing businesses, thanks to our clean power, cold water and stable politics.
This month, New Zealand got just its second undersea internet cable directly connecting us to the United States. The Hawaiki cable is a 15,000 km fibre optic deep-sea cable that runs from Pacific City in Oregon on the west coast of the US all the way to the top of New Zealand’s North Island at Mangawhai.
Like the Southern Cross cable, Hawaiki also connects us to the east coast of Australia. One unique aspect of Hawaiki is that it has a landing point in Pago Pago, American Samoa, giving the Pacific region a big internet connectivity boost.
The other notable thing about Hawaiki is its power. With a capacity of 43.8 Tbps, Hawaiki has about eight times the capacity of Southern Cross.
It’s all thanks to Rémi Galasso, the founder and CEO of Hawaiki, who began working on the $400 million project in 2012. Interestingly, Galasso announced his project shortly after another, high profile, local effort bit the dust. The Pacific Fibre project, backed by Sam Morgan, Rod Drury and others, failed to raise enough money for its projected undersea internet cable and ceased operations in August 2012.
It took Galasso and his team until March 2016 to raise enough money, so it wasn’t an easy investment pitch for Hawaiki either. But they managed to do it, and just over two years later the cable has been laid and is now operational.
Hawaiki is an impressive business story already, but the best may be yet to come. The new cable has created huge opportunities for New Zealand’s IT sector, particularly in cloud computing.
Indeed, Galasso told the website Telecom Ramblings that Hawaiki could enable New Zealand to “become a champion in the cloud business.” He said that “all the right ingredients are there: massive renewable power; cool weather and access to cool water; political stability; and a great education system”.
As yet, there’s little evidence that local cloud computing businesses are being created. Although in January, there was talk of a New Zealand company called The Server Farms building a $125 million cloud-computing facility in Marsden. I asked the company for an update, but didn’t receive a reply.
So perhaps it’ll be up to the global cloud computing powerhouses – Google, Amazon, Microsoft and the like – to lead the way.
Certainly Galasso thinks so. He told me that “Amazon Web Services recognised the significance of this project [Hawaiki] from the start, being one of the first global cloud companies to buy capacity on the network back in May 2016.”
“Global content and cloud providers are leading the way, and are involved in most of the new cable projects around the world,” Galasso elaborated. “One of their prerequisites for setting up operations locally is connectivity, which boils down to the number of cables actually available in the country.”
In Galasso’s view, Hawaiki “will make New Zealand seem a more attractive option for some of these big digital firms.”
Did we just conquer the tyranny of distance?
So does this mean that New Zealand has finally defeated the ‘tyranny of distance’, the aphorism commonly used to describe our geographical isolation?
“Geography cannot be changed,” said Galasso, “but the digital economy has its own rules”. He thinks New Zealand’s geographical isolation is now “less of a challenge thanks to submarine cables like Hawaiki’s carrying data at the speed of light.” But he cautions that it’s up to Kiwi entrepreneurs “to make sure we stay on the map, by developing great projects and attracting foreign investors”.
While it may be global cloud computing heavyweights like Amazon that initially benefit from Hawaiki, our data centre providers could also be in line for further business.
I asked Datacom’s Tom Jacob, director of the company’s data centres, about the opportunities Hawaiki may present. Datacom is one of New Zealand’s largest IT providers and last October it announced a $45 million expansion to its data centres. The upgrades aim to increase Datacom’s rack capacity by 40 percent across its four main sites (in Christchurch, Wellington, Auckland and Hamilton).
Jacob told me that Hawaiki is “a great opportunity for our local ICT industry”. The lack of redundancy prior to Hawaiki “turned multi-national organisations away, especially those that might otherwise provide services from New Zealand to the world.” But now, he said, the Hawaiki cable will prompt potential customers “to look more closely at New Zealand’s clean energy, solid internal internet infrastructure and political stability – all operating at a cost that is well below what is paid further afield”.
That’s all well and good, but Datacom also faces pressure from global cloud computing giants like Amazon, Google and Microsoft – who, as mentioned above, will surely take advantage of Hawaiki’s increased local capacity too.
Not so fast, says Jacob. He thinks “it will take some time before you will see full public cloud come across the Tasman to New Zealand”.
“The nearest public cloud node to New Zealand is currently Sydney, over 2000 km away,” he said. “That instantly imposes latency issues for Kiwi businesses, especially for sensitive applications or any organisations that need to move large pools of data quickly.”
For this reason, Jacob thinks the big cloud companies aren’t an immediate threat to local operations like Datacom. There will be “an ongoing demand for high quality local data centres for the foreseeable future,” he said.
‘It’s up to you now’
That may be true, but many of our internet success stories have moved their data offshore to cloud computing facilities. Last year our biggest internet company, Xero, completed its migration to Amazon Web Services. It was such a big project that it took two years for Xero to migrate “59 billion records and $1 trillion worth of transactions from on-premise servers onto a fully-managed AWS environment.”
Regardless of whether Amazon or another mega-company creates a cloud node here, the Hawaiki cable is a great opportunity for local “big data” entrepreneurs. As Galasso said, it’s now up to our startup community to utilise the faster internet speeds and increased capacity that Hawaiki has delivered.
And who knows, perhaps in a few years the next Xero will be able to keep its data in Godzone too.