NBN Co CEO Mike Quigley and Shadow Communications Minister Malcolm Turnbull yesterday clashed over risks associated with NBN Co's satellite launch.
Following the awarding of the $620 million tender to US communications giant Loral earlier this year, NBN Co has been getting everything in place for when the service is launched in 2015 to provide broadband services to 3 of the 7 per cent of Australia not covered by the National Broadband Network (NBN) fibre roll-out. Speaking at a joint parliamentary inquiry on the NBN in Sydney yesterday, Quigley said that NBN Co has secured uplink and downlink frequencies for the service, and is going through a process with the International Telecommunication Union (ITU) to get approval for four orbital slots from 135 degrees east, at 5 degree increments each that will cover Australia.
Although NBN Co hasn't received formal approval from the ITU for these slots, because the process takes a number of years, Quigley said that NBN Co is still going about preparing the satellite development for use in these slots. Quigley admitted that the slot selection would affect the design of the satellites, and Turnbull questioned whether this represents a great risk to NBN Co if it misses out on the slots that it is seeking.
"It is not uncommon that people launch satellites without that process being completed," Quigley said. "What you go through is a process of coordination. We have had no objections at this point, and we frankly don't expect to have any.
"In all projects of this sort ... you never have these things completely tied down. Our assessment is that this is secure. We expect the formality will be completed well before we launch our satellites."
Quigley said that if NBN Co waits the years that it takes for the ITU to approve this process, it would delay delivering satellite services to regional Australia. He said that the risk that the launch vehicle designed to take up the satellites would fail is in "order of magnitudes" higher than the risk of missing out on the slots, and said that NBN Co would take out insurance to cover the launch.
Following Quigley's evidence, Turnbull tweeted, "Quigley & Gvt happy to take risk of building and launching $660 million [sic] satellites without having the orbital slot allocated."
(Screenshot by Josh Taylor/ZDNet Australia)
Quigley shot back during the hearing.
"I just noticed we had a tweet from Mr Turnbull ... I thought just five minutes ago I made it absolutely and abundantly clear that we did not say we would be launching without having the slots," he said, adding that the issue "was not a risk that keeps me awake at night".
But Turnbull wasn't convinced, writing a blog post yesterday afternoon stating that a change in orbital slot would lead to more costs for NBN Co.
"If the orbital slot is an important assumption in the design of the satellite, and if the slot assumed in the design is not the one ultimately granted, there would presumably be additional costs to take into account the new slot and potential delays, depending on how long the grant of the new slot actually took," he said. "Is it really a risk of such a miniscule nature that Mr Quigley is right not to lose a moment's sleep about it? Or is it important when you invest $660 million of the taxpayers' money you take a rigorous belt-and-braces approach to all of the legal requirements?"
Department of Broadband Communications and the Digital Economy secretary Peter Harris told the committee that there is a high degree of assurance that NBN Co will be successful in getting the orbital slots, and, should another company object to it, there would be a negotiation process, but the design and construction of the satellites would continue as planned. He said that orbital slots are not like property rights, but it is more like a coordination process between other satellite companies.
Quigley said that given the demand for NBN Co's interim satellite service, the company had forecasted an increased demand for satellite services when the permanent service is available in 2015. The company has revised its take-up expectations of 106,000 premises to 200,000 premises. Despite this, Quigley said that the satellite service would still not make a profit for NBN Co.
Last week, Turnbull criticised NBN Co for falling behind in the roll-out of services to new housing estates, known as greenfields. In the six months to 31 December 2011, NBN Co had only 110 active services, with 958 premises passed. Quigley provided a revised figure of 280 active services, with 1100 premises passed, and said that the number could be confusing, since people may not even be living in houses where the NBN has been connected.
"We know how many lots have been passed, but what we don't know is how many of those lots have somebody living in them," he said.
As the Coalition turned up its attack on the NBN, Essential polling released yesterday shows that 57 per cent of Australians favour the roll-out of the NBN, including 42 per cent of coalition voters, versus 40 per cent who oppose the roll-out.