Australian government mulls NBN satellite options

The office of Communications Minister Malcolm Turnbull has said that the government is considering its options after iiNet announced it would no longer sign up any new customers to the National Broadband Network (NBN) interim satellite service as it reaches its limit.

NBN Co is preparing to launch two new satellites in 2015 that will service the three in 100 premises that will not be covered by the fibre-to-the-premises network or the fixed-wireless network. In the meantime, NBN Co has tapped into capacity on Optus' and IPStar's existing satellites in a deal worth AU$300 million.

As ZDNet first revealed in August, iiNet removed its 20GB interim satellite plan from the market, citing difficulty in obtaining enough capacity on the satellite service, but the company has now gone one step further, and has said yesterday that it will no longer offer any new plans on the service.

"At its peak, we had 500 customers signing up every week for our NBN satellite services. There is clearly a significant demand for higher quality broadband in remote Australia, and we're absolutely gutted that we've had to withdraw this crucial service from sale," iiNet CEO Michael Malone said.

An NBN Co spokesperson told ZDNet that there were a total of 42,044 customers on the service as of last week, and the capacity limit is 48,000. iiNet said yesterday that NBN Co had "ruled out" providing more transmission capacity on the interim service before the satellite services have launched, but when asked about capacity, NBN Co referred ZDNet to Turnbull's office.

Turnbull's office confirmed that the satellite service was out of capacity in Victoria and Tasmania already, but would not state whether the government would seek additional capacity to address the demand before the launch of the satellites in 2015, stating that it was currently under consideration.

Speaking at the NBN Rebooted conference in Sydney today, NBN Co's head of satellite, Matt Dawson, said that although users only had access to speeds of up to 6Mbps, they were using the service heavily.

"People are now able to do video streaming, enjoy YouTube and do their Skyping and that has placed a huge demand on the network," he said.

"It's a positive feedback thing. People who previously haven’t had access to broadband are now enjoying that facility."

The service can currently only handly the 48,000 maximum users using around 9GB of data per month, and NBN Co has put a fair use policy on its retail service providers to ensure they stick to that amount. 

"That's worked reasonably well but we’re now over 42,000 activations and the users are starting to experience some contention," Dawson said.

Once the long term satellite solution is up and running, it will be able to support 200,000 or so users, accessing up to 60GB of data per month. He said that once the service is up and running, it would take between 12 and 18 months to move customers over from the existing satellite service.

Prior to the election, the Coalition had called for the 48,000-premises cap to be raised for the interim satellite service, but then-Communications Minister Stephen Conroy warned in May that the cost would be incredibly high to expand the service.

"NBN Co has investigated options for expanding the available capacity on the ISS," he said. "If we were to buy all the remaining capacity on IPStar and other satellites, we could potentially increase our user numbers to about 75,000. To add about 7,000 new services, the cost would be roughly AU$86 million; to add 17,000 new services, the cost is estimated at AU$143 million; and to buy all 27,000 of these services, the cost is estimated at AU$206 million."

Malone said yesterday that he expected the quality of service on the satellite service to continue to decline, and iiNet was now looking at moving some of its 8,000 customers over from the service to an Optus wholesale 3G or 4G wireless broadband service.

"We recognise that the Federal and State governments are currently funding 'uneconomic' mobile networks in regional areas. It would be in the best interest of these isolated communities to ensure open access to this crucial infrastructure — improving services and encouraging competition," he said.

"As soon as NBN Co commissions its new satellites, iiNet will immediately provide higher performance services for all qualifying customers."

Updated at 2:50pm AEST November 19, 2013: Added comment from NBN Co's Matt Dawson.