NBN awards $300m interim satellite tender

The National Broadband Network Company (NBN Co) has confirmed that Optus and IPstar have been selected to provide interim satellite internet to rural and remote areas of Australia, in deals worth a total of $300 million.

(satellite dishes image by Paul Keller, CC2.0)

NBN Co has paid $200 million to Optus to provide managed satellite services and satellite capacity, while IPstar has picked up $100 million to provide some additional satellite capacity for the internet service, set to have 6 megabits-per-second downlink and 1 megabit-per-second uplink speeds.

The service will be made available from July this year for retail service providers to sell services to residential and small business customers across Australia, with priority to be given to customers without access to broadband services first. NBN Co will be aiming to roll out services to around 300 customers per month from July to October, and to around 1000 customers per month after November.

The Interim Satellite Service is designed to replace the Australian Broadband Guarantee program and ease the transition for the three per cent of regional and rural customers who are outside the fibre and wireless footprints of the NBN, and will receive broadband services by satellite.

The $237.7 million Australian Broadband Guarantee (ABG) scheme that subsidises the cost for delivering broadband services in remote areas of Australia is set to come to an end by 30 June 2011. Communications Minister Stephen Conroy said the scheme was a stop-gap measure.

"The ABG has provided an effective safety net for Australians unable to get an adequate broadband service," Conroy said. "However, the ABG was not designed to deliver the step change in performance required to bring forward enhanced services to rural, remote and regional Australia. The NBN Co Interim Satellite Service is the first step in bringing about this change ahead of the long-term satellite launch in 2015."

Liberal Senator Simon Birmingham told The Adelaide Advertiser earlier this week that by scrapping the scheme, the government was dooming those customers without decent broadband connections to higher prices, and many would not be able to afford the costs of installation for the new service. However, NBN Co has said that it will bear the costs for installation and maintenance of the equipment required on-premise for the service, and will retain ownership of this equipment.

Existing ABG customers will also not be affected by the roll-out of the new Interim Satellite Solution, Conroy said.

NBN Co will begin the trial of the Interim Satellite Service with two retail service providers who already provide services under the ABG scheme; however, NBN Co had not yet named the two companies when asked by ZDNet Australia.

NBN Co expects customers to be transitioned to a 12Mbps satellite service once the company launches its own satellites in 2015. NBN Co said that it is in the process of finalising contracts for the wireless service, which is expected to be available by mid-2012.