“If I ever get killed in a suspicious car accident, make sure you check out those guys at Southern Cross Cable," says Rod Drury.

We’re chatting in the Langham hotel foyer after Mr Drury’s speech to Web 09.

The Xero boss is joking.

I think.

But certainly, it's a fact that there's no love lost between Mr Drury and the managers of Southern Cross Cable Network, the company that operates our only data pipe to the outside world. Most of Mr Dury's theories about SCCN's backroom dealing cannot be printed.

I was reminded of our April conversation yesterday when crown company Reannz pulled the plug on its (modest) RFP for a state-funded second transtasman cable.

Kordia, with its seemingly undiminishable enthusiasm for new projects, is still chasing its cable dream regardless, and is now mounting a business case for IT and communications minister Steven Joyce (more here).

On stage at Web09, Mr Drury outlined his now familiar case for a cost-plus, crown-funded cable that would break the Southern Cross Cable’s physical monopoly on our internet connection to the outside word.

Very broadly, he supports the government’s $1.5 billion fibre-to-the-home policy, which he describes as aspirational.

But without better links to the outside world, “all it will mean is we’re sending email to each other faster”.

The 50% Telecom-owned Southern Cross Network, which owns and operates the Southern Cross Cable, quite naturally prices data for scarcity, but in doing so is putting a bottleneck on business growth, says Mr Drury.

The Xero boss reckons any New Zealand exporter should be able to have US phone numbers, cheap high-def video conferencing and other broadband frills that would come through a cheaper international link. Currently he finds NZ-to-US web conferencing “embarrassing”.

Then he added a twist to his previously-stated theories on international fibre: “We could buy the Southern Cross cable”.

After the speech, I asked the Act-voting Mr Drury if indeed meant that the government should buy this privately-owned telecommunications asset.

While Act leader Rodney Hide is not even fully on-board with domestic crown fibre, let alone a transglobal nationalisation, Mr Drury says it’s best for business for Southern Cross to be treated like a utility - and the government will only buy this argument if it's put forward like entrepreneurs like himself says the SaaS champ.

In practice, buying the cable would be tricky, I proffered.

After all, Southern Cross Networks is incorporated in Bermuda, safely out of reach of NZ’s Telecommunications Act. And there are also the interests of its 40% owner (Singtel) and 10% stakeholder (Verizon) to consider.

No matter, the government could lean on Telecom with regulatory threats that would make it cough up Southern Cable or, better, the state or a state-backed consortium could build its own cable. Lots of retirees with money mired in (now) low-interest cash deposits and fund would appreciate an 8% or 9% government bond issue funding such a venture, says Mr Drury.

The government could borrow $1 billion to build a second cable from New Zealand to the US, operate it on a cost-plus basis, and pays $80 million or so a year to service the debt - incidentally, the same amount that Telecom earned in its Southern Cross dividend last year.

Mr Drury (who was still alive and well, at least as of Thursday) stresses that his beef is purely with Southern Cross.

“We need a strong national telco,” he told me, and the apprenticeships, training and other benefits that Telecom could provide as our largest high tech employer.

Mr Drury’s enthusiasm for a second cable was shared by Orcon boss Scott Bartlett at a later meeting.

“All I know is that for competition, at any time ever in the history of the world it’s better to have two of anything,” said Mr Bartlett.

(He then proceeded to reel of a few examples. My notes include “two girlfriends”. A couple weeks down the track, I’m not sure if Scott actually said this, but given the amount of time he mentored under Seeby Woodhouse, it can’t be ruled out.)

Mr Bartlett noted the folly of the Shore Loop, a $36 million fibre network built by a government pilot project to connect schools on Auckland’s North Shore (the loop’s many problems were raised by the North Shore City Council in its submission to Mr Joyce on crown fibre; see my Technology column in NBR’s print edition today).

The Shore Loop now lies largely idle, thanks to high international data costs, says Mr Bartlett.

Last week, I again put the international cable issue to Mr Joyce.

He said the situation was under review, but his enthusiasm seemed dim, and he again reiterated that Southern Cross has a lot of spare capacity, and has recently, and steeply, lowered its rates.

While the minister is known for keeping his own counsel, Southern Cross’ lobbyist - former National MP Roger Sowry - has obviously managed to at least get his key points heard.

No profit? Great
Matt Crocket, the head of Telecom Wholesale (which sells access to the cable), has also told NBR that while Southern Cross Networks might be cash machine for Telecom today, it had a number of years of struggle (see Earthquake hits Southern Cross Cable for more of Mr Crockett’s counter arguments, and response to why the SCC is so much more expensive than trans Atlantic cables).

And, regardless, says Mr Crockett, the vast majority of Southern Cross’s dividend last year was generated from operations outside New Zealand. And all that profitable business would be lost to an NZ or NZ govt-owned cable.

No profit? But that’s the whole point, responds Mr Drury, who will continue to campaign for a cost-plus cable operator.

Anyhow, if anyone is up for a big international data download this weekend*, hang the price, the new Star Trek movie looks good.

* joking