Pacific Fibre has sealed its biggest deal to date, a 10-year commitment from Vodafone to supply international bandwidth on its undersea cable system linking the US to Australia and New Zealand.
Vodafone chief executive Russell Stanners said the "multimillion dollar" agreement would see Vodafone become Pacific Fibre's biggest New Zealand customer.
Pacific Fibre was bringing much needed competition to the international bandwidth market, he said.
"By partnering with an innovative, entrepreneurial business such as Pacific Fibre, we're helping to break down the digital divide between New Zealand and the rest of the world."
He said it would allow Vodafone to scale customer offers in the future and improve both the quality and quantity consumers demanded.
"This will help us to support New Zealanders' online ambitions by making sure they can confidently connect to the world and the world can confidently connect to New Zealand."
Mark Rushworth, Pacific Fibre chief executive, said the Vodafone deal is its biggest to date following a contract with REANNZ.
"Foundation customers such as Vodafone and REANNZ have championed the cause of ensuring international bandwidth competition. Their commitment will have a direct impact on bringing faster service and better rates to the region, helping to break the monopoly on capacity pricing into and out of New Zealand."
According to Pacific Fibre cofounder Sir Stephen Tindall, building Pacific Fibre's cable system moves us closer to the US market.
"It's like parking New Zealand off the West Coast of America, removing the tyranny of distance. It will help foster future innovation and greater economic development for New Zealand."
Labour's communications and IT spokesperson Clare Curran said Pacific Fibre would bring much needed competition to the international bandwidth market and ISPs should consider lifting data caps.
"A key constraint on data access has been the monopoly held by Southern Cross Cable which has exacted high prices over the years to ISPs for access. The recent threat of competition has forced Southern Cross to drop its prices enormously."
The Pacific Fibre cable is scheduled to be launched by early 2014.