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Kim Dotcom’s fibre fantasy vs Rod Drury’s PPP reality

Dotcom's "plan" is nothing more than buffoonery - but it has put an new cable back on the agenda at at time when Rod Drury has formally begun a push for a public-private cable. UPDATED with comments from Rod Drury.

Mon, 05 Nov 2012

UPDATE: There are a number of reasons a Kim Dotcom-backed cable will never fly.

Pacific Fibre co-founder Rod Drury added another when he talked to NBR this morning: the accused pirate wouldn't get approval to land the cable in the US.

LATEST: Dotcom's cable - fact or fantasy? Kim makes his case

Mr Drury saw Mr Dotcom's overtures to Pacific Fibre as little more than clowning around on Twitter.

He was pleased a second cable was back on the public agenda as he formally pursues his new public-private partnership concept with ICT Minister Amy Adams (below), but Mr Dotcom's comments were "not helpful."

Undaunted, Mr Dotcom tweeted this morning, "I'll arrange a meeting with Pacific Fibre founders this week (if they have time) & explain my plan. Let's see what they think."

Sam Morgan told NBR he had never spoken to Kim Dotcom and was not involved in any way with his project.

"We [Pacific Fibre's backers] still think it is a big issue for NZ and wish anyone trying to do this the best of luck," Mr Morgan said.

"But doing this requires significant risk money with no guarantee of success.  We spent $6 million trying before we called it a day."

Kim Dotcom got an impressive amount of media over the weekend for his “plan” to revive Pacific Fibre – with the twist that Kiwis will get free or heavily discounted broadband (subsidised by charges to business and government, and money from the not-yet-launched Mega).

Sorry, but the bus just doesn’t go out that far.

Even at the height of Megaupload, Mr Dotcom didn’t have $400 million to spare for a Sydney-Auckland-LA cable.

His Plan A is to fund the new cable through his revived file-sharing service, Megaupload - due to launch January 20, but its success is far from assured (the entrepreneur is asking for investors via a recently launched splash page).

His "plan B" proposal to fund the project by suing Hollywood studios is the stuff of fantasy.

And as for the parallel suggestion of crowdfunding … that’s a neat idea for a $ 1 million project. Not so much for one that costs half a billion.

Dotcom mentioned Pacific Fibre co-founder Sam Morgan as a possible partner, but Mr Morgan told Stuff the pair had not discussed the project.

On Breakfast this morning, Prime Minister John Key dryly noted that Mr Morgan and fellow Pacific Fibre backer Sir Stephen Tindall could have put a lot more of their own money into the cable start-up (Mr Morgan told NBR that, collectively, Pacific Fibre’s NBR Rich List backers lost between $5 million and $6 million).

The PM also noted that the government had supported Pacific Fibre. He didn't detail the committment, but it was in the form of a pledge by a major government network operator, Reannz, to buy $91 million capacity over 10 years.

Drury's PPP plan
But despite his buffoonish proposal, Kim Dotcom has done the country a favour by putting Pacific Fibre back on the agenda.

In fact, it never went away.

Rod Drury is now pushing the idea of a new cable as a public private partnership (Mr Drury and Mr Morgan have previously told NBR they don’t think any private cable will succeed).

The entrepreneur has formally written to ICT Minister Amy Adams, asking the government to support the idea.

Ms Adams reply was that dialogue should be kept open on the project. However, at this point, Ms Adams said, the UFB was not in trouble, and it was premature government funding was necessary.

The next phase in the PPP project will be Mr Drury taking his arguments to the public, I strongly suspect – and that should make for a fascinating, forceful debate.

It will be interesting to see the details of Mr Drury's plan. In pre-Pacific Fibre times, he often mooted a debt-funded cable, with charges set at just enough to service the debt, plus ongoing management and maintenance costs.

Mr Key noted this morning that the 50% Telecom (as in Telecom retail not Chorus)-owned Southern Cross Cable (which currently enjoys a monopoly on NZ’s broadband access to the outside world) has capacity to spare. 

Pacific Fibre’s backers always argued that was part of the problem: manufactured scarcity.

For price competition and security*, two cables are better than one.

(*On security, Southern Cross is always at pains to point out its figure eight design includes two separate cables, with two separate landing points in Auckland).

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Kim Dotcom’s fibre fantasy vs Rod Drury’s PPP reality