The Silicon Review
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Southern Cross and its associated companies was formed in 1997, born from an agreement between Telecom New Zealand (now Spark New Zealand), Optus and MFS Globenet (subsequently acquired by WorldCom, now Verizon) to sponsor a submarine cable link between Australasia and the United States West Coast, due to unexpected and rapid growth of the Internet, resulting in an imminent international capacity bottleneck for carriers in Australia and New Zealand.
Southern Cross was initially architected as an SDH protected system. Over the coming years, with the emergence and development of new technologies, Southern Cross product offerings have expanded to include both Ethernet and OTN based solutions. Southern Cross has also expanded it’s connectivity access beyond the cable stations, to now include 5 data-centre locations across Seattle, Silicon Valley, and Los Angeles.
The First Project and Initial Problems
The original Southern Cross project was a massive project as it was the design and construction of the twin international submarine cables that make up the existing highly resilient Southern Cross network. The original construction was a USD 1.3bn project, incorporating 9 landing stations across the 4 international jurisdictions, approximately 28,000km of subsea cable rollout, and 4000km of terrestrial fibre connectivity. That’s equivalent to a build stretching three-quarters of the way around the equator!
The project was high profile, and not without its challenges at the time, but was very successful and has provided the network which has formed the basis of Southern Cross’ successful market offerings over the years.
Submarine cable projects are in essence large construction projects, involving a large amount of initial expenditure, with the expectation of financial returns over time. As such, you need to be confident in your market forecasts and management of initial construction costs. Even so, there is always an element of financial risk in any such construction project.
Not abnormally for submarine cable projects, pre-sales helped reduce the risk profile of the project, at the cost of typically heavily discounted pricing to incent customers to commit early.
A key learning for anyone contemplating a submarine cable build would be to be comfortable that you have the security of an inherent internal demand. Southern Cross is owned by Spark, SingTel/Optus, and Verizon, themselves carriers and resellers in the capacity market, and as such there is an inherent need for capacity from its own sponsor group. The project and the financial returns are not solely leveraged on the requirements of a third party market.
The Success That Followed
Customers have been very happy with the services that Southern Cross provides, and in fact, Customers have ranked Southern Cross as Asia-Pacific’s number 1 cable system for 9 years in a row as part of independent AC Nielsen Customer Satisfaction surveys.
Yet, not surprisingly, Southern Cross’ success has been due to more than just simply providing quality products. It has adopted a strong focus on customer satisfaction. Southern Cross is a team of fewer than 20 people, so the staff play a critical role in the success of Southern Cross, from initial engagements through to the quality and operation of the service, and everything in between. It all comes down to the people and a customer-focused attitude.
That is not to say that it can’t improve, and a strong focus of the organization is to look for feedback from the customers and see how the company can continually develop and grow its product and service offerings to meet the changing requirements of the customers. The introductions of Ethernet and Bandwidth on Demand services are examples of where product developments have been directly driven by changing customer needs.
Southern Cross has an open access internal approach but is also very collaborative with both its customers and the suppliers. Besides the ongoing typical customer engagement approach typical of any sales organisation, every year for the last 19 years it holds a Customer Forum to which all of its customers and key suppliers are invited.
Here they discuss what has happened in the network over the last year, plans for the current year and in fact longer-term plans as well. It provides a forum of open discussion at all levels of its business for customers and suppliers to provide feedback, but as importantly for our customers to see developments that the suppliers are working on, and its suppliers to hear directly what changes and challenges the customers are experiencing. All this forms the primordial soup from which specific Southern Cross developments can be identified and the feasibility discussed.
Future Plans and Projects
Southern Cross is working on a new large project, called Southern Cross NEXT, to construct a third, high capacity submarine cable link between Australia and the USA.
The new Southern Cross NEXT path will add over 72 Terabits per second of capacity to the Southern Cross eco-system and Southern Cross is focused on further developing its product portfolio to take advantage of the three path network. The company’s focus will remain on quality resilient products, and of course on customer service.
The Southern Cross NEXT cable will also provide connectivity to New Zealand and Fiji, as well as the first international submarine links to Kiribati and Tokelau dramatically increasing their connectivity to the global community. With other existing systems from Vanuatu and Tonga already connecting to Southern Cross in Fiji, this continues to greatly enhance the connectivity of the Pacific Island community.
Southern Cross is not the only cable provider in its region, facing competition from alternate suppliers over its whole period, and the future is likely to see increasing competition as new cables and alternatives enter the market. Southern Cross views these as opportunities. The business should not be taken for granted, and competition is an opportunity to continually improve, adapt and keep the customer foremost on their mind. Southern Cross knows from experience that competition and opportunities work hand-in-hand, so if half of some of the demand projections for the region are true, Southern Cross will be very busy doing the best for their customers for some time to come.
The Southern Cross NEXT project is currently underway with a targeted ready for service by the end of 2021.
The Leader of the Firm
Laurie Miller | President & CEO
Laurie was appointed to the position of President and Chief Executive Officer for Southern Cross Cable Network in February 2019.
Prior to his role as President and CEO of Southern Cross, Laurie held key roles as Head of Wholesale and Interconnect in 2degrees Limited and as President and Country Manager in Sparks’ former US operation, Telecom New Zealand USA Limited, in California. Laurie has an extensive background in management and sales and over a 27-year career in the International Telecommunications Industry starting with Telecom New Zealand in 1991.
“We are a private company providing fast, high capacity dedicated connectivity from Australia, New Zealand, Fiji and Hawaii to the heart of the internet on the US West Coast, via our redundant and diverse fibre-optic submarine cable network.”