revolutionise future internet communication.
The researchers have created a small, novel device, called a microresonator optical frequency comb, that could enable the next generation of faster, more energy-efficient internet.
Their breakthrough results have been published in the world's premiere scientific journal Nature this morning.
The internet is one of the single biggest consumers of power in the world.
There is huge pressure to find new solutions to increase the speed and capacity of the internet, given that data capacity is expected to double every year, and "the physical infrastructure used to encode and process data reaching its limits'', the researchers say.
Principal investigator Dr Harald Schwefel and Dr Madhuri Kumari's research has found an answer.
They have made a microresonator optical frequency comb from a "tiny disc of crystal''.
This device transforms a single colour of laser light into a rainbow of 160 different frequencies - each beam totally in sync with each other and perfectly stable.
One such device could replace hundreds of power-consuming lasers currently used to encode and send data around the world.
Every email, cell phone call and website visit is encoded into data and sent around the world by laser light.
In order to cram more data down a single optical fibre the information is split into different frequencies of light that can be transmitted in parallel.
Dr Kumari said the current infrastructure is "struggling to cope with demand'' as internet consumption increases significantly.
Lasers emitted only one colour at a time.
"What this means is that, if your application requires many different colours at once, you need many lasers.
"All of them cost money and consume energy.
But the idea of the new devices was that "you launch one colour into the microresonator a whole range of new colours comes out,'' Dr Kumari said.
"This is a very very exciting project to be working on.''
"Optical frequency combs have literally revolutionised every field of applications they have touched.
You can use them for vibrational spectroscopy, distance measurement, telecommunications.
"I'm looking forward to seeing how we can use ours.'' Dr Kumari said.
Dr Schwefel said the new approach was "a really cool energy-saving scheme''.
"It replaces a whole rack of lasers with small energy efficient device.''
The work was born out of Dr Schwefel's previous research at the prestigious Max Planck Institute in Germany and his collaboration with Dr Alfredo Rueda who did some of the preliminary research.
Dr Schwefel expects the devices to be incorporated in sub-oceanic landing stations in less than a decade, perhaps within a few years.
At these stations all the information from land based fibres is crammed into the few sub-oceanic fibres.
"To develop the device for the telecommunications industry we will need to start working with major telecommunications companies,'' he said.
"We have started the process by collaborating with a New Zealand-based optical technology company,'' he said.
This breakthrough is the first milestone in a government-funded collaboration between scientists at Otago University and Auckland University, who are part of the Dodd-Walls Centre for Quantum and Photonic Technologies.
This is a virtual organisation gathering New Zealand's top researchers working in the fields of light and quantum science, and is directed by Prof David Hutchinson, of the Otago physics department.
The research project has been awarded nearly one million dollars of Marsden Fund money to develop and test the potential of microresonator frequency combs.
Optical frequency combs are based on a very unusual optical effect that happens when the intensity of light builds up to extremely high levels.
You send a single colour of visible light into the crystal disc along with a microwave signal and because the crystal disc is such high quality, the light and microwave radiation gets trapped inside.
The light and microwave radiation keeps pouring in and bouncing around and around inside the crystal.
In most situations light never changes colour but in this case the intensity becomes so high that the light and the microwave radiation start merging and making different colours.
The phenomenon is known as a non-linear effect and it has taken the Otago team many years to optimise.
The internet is just one of the possible applications for the new optical frequency combs.
Another use is high-precision spectroscopy - using laser light to study and identify the chemical composition, properties and structure of materials including diseases, explosives and
chemicals.
Dr Kumari's next mission will be to explore this application amongst other possibilities.
The only other group in the world making devices of competing quality is a collaboration from Harvard and Stanford Universities in the US, also published in this month's Nature, but currently Drs Schwefel and Kumari held the record for the most efficient device, a university spokeswoman said.
Essentially this meant that their crystals did not leak any light.
The trick was to have an extremely high quality crystal, and Dr Schwefel's and his group were "world experts in crafting crystal discs'' in his Otago laboratory.