Government stumps up $18.4m to fix NBN satellite service

Communications Minister Malcolm Turnbull has announced a new deal, and a strict fair use policy to relieve capacity constraints on the NBN interim satellite service, and bring speeds back up from dial up speeds.

After signing 45,000 customers, NBN Co ceased taking on new customers on the interim satellite service last year, amid complaints from consumers that speeds on the service were slowing to a crawl, as demand far outstripped the available capacity on the service.

As first revealed by ZDNet last month, the government has been negotiating a deal with Optus to provide more capacity on the service, and migrate customers over from IPStar's satellite to Optus' own satellite.

Today, Turnbull told the parliament during Question Time that the AU$351 million deal struck under the former Labor government had been a "trainwreck" for a service that many customers could barely use.

"The 45,000 unhappy current customers are costing the taxpayers of this nation AU$7,300 each in direct subsidy," he said.

"That is nearly three times the level of the old Howard-era broadband subsidy, and for a much worse service."

Turnbull said that the government had struck a deal with the satellite operators, IPStar and Optus, to upgrade the capacity for all users for AU$18.4 million, and there would be a new strict rule on how customers will be able to use the satellite service.

"We will institute a new stringent fair use policy to ensure a minority of very heavy users cannot crowd out the majority," Turnbull said.

He said NBN Co had trialed this change already, and found that the service became usable again.

"It will not be as fast as the speeds promised, and not delivered, by Labor, but it will be broadband. And much higher, and certainly not anywhere near the anemic speeds at present."

A spokesperson for the minister told ZDNet that capacity will be increased by one third, from 30kbps to 40kbps, and the new arrangements will see their download speeds in peak periods increased from below 500kbps to above 1.5Mbps.

The new fair use policy will be implemented through a monitoring tool used by NBN Co to see how much capacity each retailer is using, and NBN Co will also be able to identify individual users taking up "abnormally high amounts of capacity".

Turnbull also said that the government will announce "in the coming days" plans to expand the interim satellite service to around 9,000 customers in regional and remote parts of Australia who have been on a waiting list to be connected since the satellite service reached capacity last year.

NBN Co executives indicated earlier this month that it is looking for the least-disruptive solution to providing satellite services in the next year ahead of the 2015 launch of NBN Co's own satellites.