Confirmation Hawaiki Cable will build a new internet cable from New Zealand to the United States will further assure the country's "place in the global digital economy," Communications Minister Any Adams says.

Science and Innovation Minister Steven Joyce said the cable would provide "choice and resilience" for consumers and businesses.

Hawaiki said it had secured funding for the cable, which will also connect Australia, Hawaii and probably some other Pacific islands. A contract under which it would be built by United States firm TE SubCom had now come into force, it said.

Hawaiki Cable could mean an 'end to data caps' says new investor Malcolm Dick.

Xero chief executive Rod Drury said confirmation of the cable investment was "a surprise and fantastic news".

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The new cable, which is understood to have a price tag of about $500 million, had been "a long time coming", he said.

InternetNZ chief executive Jordan Carter said the non-profit society had long hoped that a commercial solution would be found for an additional cable across the Pacific and was "very pleased to see that day has come".

"New Zealand internet users will benefit from additional connectivity. Over time, the Hawaiki cable should lead to more bandwidth, at cheaper prices, and with more security in supply," he said.

Drury previously backed another venture, Pacific Fibre, that also hoped to lay a cable across the Pacific but said he had no regrets about calling time on its effort.

"It was too early and we couldn't quite get there. It is great to see [a cable] happen and sad it wasn't us, but the second-best prize is to have a lot more bandwidth."

High-definition video-conferencing relied on ample international bandwidth and Xero wanted to do a lot more of it, he said.

Hawaiki said technology entrepreneur Malcolm Dick had come on board as an investor.

Dick, who co-founded telecommunications firm CallPlus, now part of Australian firm Vocus, said in a statement that Hawaiki's cable should make "data caps a thing of the past".

Hawaiki spokeswoman Michelle Boag said an undisclosed deposit had been paid to TE SubCom enabling the legal milestone, known in the cable industry as "coming into force" or CIF. Hawaiki said the cable would be completed by mid-2018.

Spark spokesman Andrew Pirie said it had already got ample international capacity on the Southern Cross cable, which it half owns, to serve its broadband customers "for the foreseeable future", adding he expected that cable to remain operational until at least 2030.

Responding to an inquiry in November about what Hawaiki's cable might mean for Southern Cross, its chief executive, Anthony Briscoe, said Southern Cross had plenty of capacity "is as fast as anything available in the world market, has very good redundancy" and was "very reliable and well-priced".

"We will still be the first choice for customers in at least the medium term, until 2020-2025," he said.

Telecommunications Users Association chief executive Craig Young said the biggest call for another cable had come from big overseas IT companies and academic researchers for whom Hawaiki's cable would be "great news" .

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