Great headline, eh? It’s also true. You didn’t notice, which reveals a lot of what’s good, and bad, about our only internet connection to the outside world.

When I was talking to head of Telecom Wholesale Matt Crockett earlier this week, he mentioned there had been an undersea earthquake recently, which destroyed a shunt on the Southern Cross Cable (SCC).

Nobody noticed.

The SCC, which describes a figure 8 of submarine fibre optic strands between Australia, New Zealand, Hawaii and the mainland US, is actually two sets of cable, each separated from the other, running in the opposite direction.

To when a piece gets knocked out of commission, as it did by our quake, the other circuit takes the load (and it easily can, there are scads of free capacity).

The bad news: trouble can happen a lot. Looping around 25,000km, the SCC is the longest continent-to-continent cable in the world, and the second longest on the planet full stop (after Tata’s globe-spanning SeeWeMe-3.

“It traverses some of the deepest and most earthquake-prone water in the world,” says Mr Crockett. Undersea earthquakes, undersea volcanoes; it’s all on in the Pacific’s ring of fire.

Mr Crockett is in a good position to know. His Telecom Wholesale division includes Telecom International, one of several companies, including Australia’s Pacnet, America’s Verizon Business and Telstra, which re-sell access to the SCC. Mr Crockett also sits on the board of Southern Cross Cable Network, the Bermuda incorporated company that owns and runs the SCC (50% owned by Telecom; 40% by Singapore’s Singtel and 10% by US carrier Verizon).

“When when something goes wrong, we have to send a ship out, then lift the cable 9km or 10km before it can be fixed,” Mr Crockett continues.

“That costs a lot of money.”

Aha. Now we’re getting to the crux of things.

NZ pricing pegged to Australia
I called Mr Crockett as I helped to referee a spat between opponents and defenders of the SCC.

Many, like Rod Drury, say international data charges are too high, and peg the blame on the SCC’s physical monopoly.

When I put this to SCC director of sales and marketing Ross Pfeffer, he pointed out that this company always keeps its NZ-to-US wholesale pricing the same as its Australia-to-US wholesale pricing. There’s only one cable running between here and Australia (the SCC), but four running from the more competitive Australian market to the US, so the (voluntary) peg keeps rates fair.

But Aussie pricing not that cheap
When I relayed this to Aussie telco analyst Paul Budde, he was unimpressed, saying Australia-to-US rates are not that cheap by international standards (it costs upward of 50 cents to transfer a gigabyte of data between here and the US; it’s tricky to put an exact per-gigabyte data on it because companies buy capacity - and as much data as gets hurled down that pipe - rather than set chunks of data). Rates between the continental US and Europe, for example, are ten times cheaper.

Which is where Mr Crockett came in, explaining how the SCC is so expensive to maintain.

Simple distance also comes into it. “The economics apply that make a plane trip from Auckland to the US more expensive than from New York to London,” says Mr Crockett.

Reaching the wet cable
Another issue: when a wholesaler like Telecom International puts together a package for an ISP like, say, WorldXChange, it’s not just buying raw capacity on the SCC (which is all the Southern Cross Cable Network sells). It also has to buy domestic backhaul; both in New Zealand to get from Mayoral Drive to where the SCC leaves our shores on Takapuna beach and, much more expensively, backhaul from Seattle, where the SCC lands in the US and the “wet fibre” ends, to a peering exchange in San Jose.

Mr Crockett says most of the data we want to access sits on servers in the US, and most of the traffic, by dint of our population is one way. Our small population also gives Telecom Wholesale little muscle in horse-trading for bandwidth.

“Telecom may be huge in New Zealand, but in international terms its tiny,” says Mr Crockett. “We don’t have the bargaining power of a BT, or another telco with a big population base behind it.”

I also put Paul Budde’s 10-times cheaper argument to the SCC’s Mr Pfeffer.

Over-capacity, over there
Mr Pfeffer said there’s something like 11 cable systems linking the mainland US and Europe. “Nothing’s been built since the early 2000s because there’s so much overcapacity. Some of the cable companies are probably selling below cost.”

That’s painful for the companies that own the submarine cable but, Mr Pfeffer concedes, good for customers.

For more on the SCC debate, including revelations about its international pricing, and reaction from Kordia, Mr Drury, and Communications and IT Minister Steven Joyce, read "Meet the bad guy".