Prime Minister John Key is declining to comment on claims that United States suspicions of Chinese investment helped sink plans to build a second fibre-optic undersea cable linking Australia, New Zealand and the US.
Pacific Fibre announced on Wednesday that it will not go ahead with its plan, because it has raised only half the money needed.
Company founder Rod Drury has since said that American suspicions of China blocked the company from seeking investor funds from the Chinese.
Mr Key says the Government is disappointed that Pacific Fibre couldn't get off the ground, as it would have been an import step both for the company and the country, but he cannot comment on security matters.
He says even though investors in the proposal have backed out, he believes there is still enough capacity on the existing Southern Cross cable.
Mr Key has dismissed criticism from the Labour Party that the Government should have done more to support the proposed second cable.