ISP iiNet says its quick move to secure capacity on Pipe Networks’ planned new $200 million, 6900km Sydney-Guam undersea cable will help lower Internet pricing.

Australia’s third biggest ISP says it will switch up to half its international capacity on the cable when it lights up in 18 months, after signing a 15-year international “foundation customer” agreement.

“This agreement will provide iiNet with long-term supply certainty and significant cost savings,” said iiNet MD Michael Malone, checking in from Hawaii.

Company spokesman Greg Bader said the deal should allow the ISP to keep its download pricing in reach of consumers. International bandwidth accounts for around 15 per cent of the company’s costs.

Pipe and iiNet say the new cable will jolt “the effective duopoly on international traffic” by the Southern Cross Cable (SXC) and Australia-Japan Cable (AJC), which are dominated by Optus and Telstra. AJC has already announced a plan to increase its capacity by 50 percent to 240Gbps by April.

The Pipe cable should light up in mid- to late-2009 with potential capacity of 1.92 terabits a second.

Guam is the junction for other cables to North America, Japan and China (see Verizon report, next story, page 2).

“Foundation customers want a change from the overpriced bandwidth product available for the past eight years,” said Pipe CEO Bevan Slattery. “We all realised that this is the last chance to break the stranglehold on international capacity pricing into Australia.”

Communications Minister Stephen Conroy got in on the act, officially announcing the Pipe project. Drawing something of a long bow, Conroy said the cable is critical to the success of the Federal Government’s plans to spend $4.7 billion on a new national FttN broadband access network.