Kim Dotcom has announced his intention to invest in a second Internet cable connecting New Zealand to the world.

Dotcom has said that the move isn't out of charity towards New Zealanders who are currently reliant on one international cable link to the rest of the world - Southern Cross Cable, which is majority owned by Telecom. He says his new business ventures need a second cable in order to service potentially millions of customers around the world.

In the past two weeks Dotcom has been testing two new cloud products called, a cloud locker service similar to the one shut down early the year by the US government, and Megabox, a music service.

To support the "new Mega", Dotcom is establishing a business out of New Zealand, which will include a data center to host, and he says it could be an example for others to use New Zealand as a base for cloud services.

Dotcom is a New Zealand resident, living in Auckland's North Shore. He says he wants to set up in New Zealand because of its relatively cheap and clean power supply.

"You have clean and cheap energy here. Power is becoming the biggest cost factor for data centres around the world. With its own cable, cheap power, and connectivity New Zealand could attract foreign internet businesses," says Dotcom.

"The new Mega based in New Zealand might be what's needed to make this thing happen."

The two new services alone will require connection speeds of over two terabits within two years.

New Zealand could benefit from Pacific Fibre

Dotcom suggests resurrecting the failed Pacific Fibre submarine internet cable project, which fell short of its $400 million target earlier this year.

Dotcom says he was a supporter of the cable project, which would have connected New Zealand to Australia and the US. Two years ago Dotcom met with Mark Rushworth, co-founder and Pacific Fibre CEO, to discuss funding the cable and flew in the chief executive of Cogent Communications to discuss potential parnerships in the venture.

"I was always of the opinion that Pacific Fibre was the most important investment into the future of New Zealand to ensure its competitiveness in the online world,"says Dotcom.

"Unfortunately the government wants to invest more into tarmac roads,"says Dotcom.

"In 10 to 15 years most people will work and shop from home. You don't need tarmac, you need fibre."

When Pacific Fibre wound up, chair Rod Drury cited a lack of investment was the deciding factor in the project's failure.

Dotcom says he would raise investment domestically with backbone providers and through his Mega business, which would be the biggest customer on the cable.

If there is a shortfall, Dotcom says "Plan B" is to sue the US government for shutting down Megaupload and use any money recouped from civil proceedings to fund the cable.

Once the cable is live, Dotcom says New Zealand ISPs would be provided with free access to overseas connections for residential customers. Government and business connections would be charged for.

He expects this to reduce prices across the market for broadband data.

Rushworth says he wishes Dotcom all the best with the project. "It will be good for New Zealand if he gets it away."

He says the meeting with Dotcom and Cogent Communications two years ago took place over a "lovely lunch" at Dotcom's house. However a deal with Cogent didn't eventuate because most of that company's traffic is within the US and it isn't a big user of bandwidth in this part of the world.

Rushworth was unaware of Dotcom's new plans but he is open to "a swim at Kim's" (a reference to a pool party that Dotcom held for high profile tech commentator Ben Gracewood and friends earlier this year) to find out more.

Extradition could prevent cable being laid

When asked if he thought it would be difficult for a cable project backed by Dotcom to get consent to land the cable in the US because he is facing extradition, Rushworth agreed that it probably would.

Rushworth says he hasn't done any work on Pacific Fibre for the past two months, "other than to lie there and think how else can this be done?"

Pacific Fibre co-founder Sam Morgan has tweeted about Dotcom's plans. "Dear Journalists: I've not yet talked to Dotcom, but wish him all the best if he is going to do a cable. Not easy, but important for NZ."

TUANZ CEO Paul Brislen says the case for a second Internet cable is strong, but the failure of Pacific Fibre in the past will weigh on the minds of potential investors. He says Dotcom's influence might play a crucial role in any new venture.

"He's a strange character, but his contacts might be just what is needed for a second cable. If anyone could do it, it is him," says Brislen.

Brislen says getting a licence to land a cable in the US will be difficult considering Dotcom is currently facing extradition to the US on copyright charges. Dotcom's chances lie with Pacific Fibre and its consents and previous ventures.

Brislen says this could be a defining moment for the New Zealand technology scene in showing it is capable of supporting a cloud business the potential size of

According to Brislen, the Southern Cross Cable has spare capacity to support Dotcom's new business. In October, Southern Cross said it has a capacity of two terabits and is capable of expanding to 7 terabits. Brislen says it has the cash to expand its capacity further if needed.

In a conversation Brislen had with a Google executive recently he was told the deciding factors for building a Google data center in a country are its power supply, liveability for Google engineers, the number of IT graduates available and international connectivity.