Abstract: Hard on the heels of last week’s Bosun cable system announcement, a Pacific-facing system has been confirmed. Chorus and Datagrid, both New Zealand based, will construct a Tasman Sea fibre ring to connect Melbourne and Sydney to the North and South Island, potentially creating an infrastructure to share data centre loads between the two markets. 

As geopolitical tensions rise, diversifying subsea cable routes has become essential for resilience and security. As we noted last week, Australia plays a strategic role in this diversification, providing alternative paths that bypass sensitive areas like the South China Sea and Malacca Strait. Routes like the “Great Southern Route” through Australian waters avoid congestion and geopolitical risks, safeguarding global data flows. Integrating New Zealand into this role strengthens communications security and data centre diversity in both markets.

Data centre growth and the Tasman Ring

This week, Chorus and datacentre provider Datagrid announced a Tasman Ring cable network. The 6,000 km network will connect Sydney, Melbourne, Auckland, New Plymouth, Greymouth, and Invercargill with up to 540Tbps of capacity.

This comes at an opportune time. Australia’s and New Zealand’s data centre industry is at a pivotal moment, poised to double its capacity to meet skyrocketing demand for digital services and cloud computing. As internet-connected devices, AI applications, and emerging technologies like 6G evolve, data centres have become critical enablers of the economy. 

In Australia, we expect deployable capacity to increase from 1,350 MW in 2024 to 3,100 MW in 2030, driven by a forecasted $26 billion in investment. This growth positions Australia as a key player in the global data economy, bolstered by its political stability, abundant renewable energy resources, and proximity to high-growth Indo-Pacific markets. Yet, the sector faces challenges, including workforce shortages in key technical roles and the need for sustainable energy solutions to power these energy-intensive facilities.

New Zealand can play a role in meeting demand and in securing sustainable energy. Datagrid has been developing proposals for New Zealand data centres that can exploit renewable hydroelectric sources on the South Island to help the data centre industry meet sustainability goals. An integrated ANZ data centre market can also facilitate load shifting, particularly for applications that are not latency-critical. 

Artificial intelligence data processing and model generation definitely fit this bill. AI will generate a growing share of data centre loads and energy consumption over time, as the following research for New Zealand demonstrates. 

1. Typical data centre power consumptio

Source: Analysys Mason, “AI implications for DC demand in New Zealand”, 2024

As data centres move toward 100% renewable energy by 2030, they offer opportunities in power purchase agreements, green energy technologies, and grid optimisation. Subsea cables, integral to the global internet, are increasingly designed with lower environmental impact, opening avenues for eco-conscious investment and innovation.

Why does this matter?

Subsea cables are the unseen infrastructure enabling the modern digital economy, carrying 99% of transoceanic internet traffic. These cables are indispensable for global communication, financial transactions, and data-intensive technologies like AI and cloud computing. Australia’s reliance on subsea cables continues to grow, with projects like the Bosun and Tasmanian Ring cables enhancing links between the Indo-Pacific, Asia, and the Americas. 

There is a wider picture here too. As geopolitical tensions rise, diversifying subsea cable routes has become essential for resilience and security. Australia plays a strategic role in this diversification, providing alternative paths that bypass sensitive areas like the South China Sea and Malacca Strait. Routes like the “Great Southern Route” through Australian waters avoid congestion and geopolitical risks, safeguarding global data flows. 

Both the Bosun and Tasman Ring cables exemplify this strategy, offering secure and reliable pathways while reinforcing Australia’s position as a trusted digital hub in the Indo-Pacific (see our report “How Bosun subsea cable and data centre investment will shape Australia’s Indo-Pacific future”). This diversification strengthens regional connectivity and ensures the global digital economy remains robust and secure. Integrating New Zealand into this role strengthens communications security and data centre diversity in both markets.

To solidify their role as a regional digital hub, Australia and New Zealand must focus on targeted investments, robust policies, and workforce development to sustain momentum in its digital economy.

1. Attracting Global Players: ANZ’s strategic location and renewable energy resources make it attractive to tech giants. To retain investment, the government should provide tax incentives, streamline permits, and strengthen public-private partnerships, ensuring continued growth in subsea cables and data centres.
2. Strengthening Regulation and Cybersecurity: Protecting critical infrastructure requires stricter cybersecurity measures and alignment with international standards. Diversifying cable routes and collaborating with regional partners on cable management and repairs will enhance resilience against geopolitical risks.
3. Building a Future-Ready Workforce: Meeting workforce demand for 8,300 additional roles by 2030 will require targeted training programs, industry-academia collaboration, and policies addressing IT and engineering skills shortages to attract global talent.

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