NBN interim satellite service a victim of its own success

iiNet is preparing to withdraw its 20GB plans on the NBN interim satellite service, citing capacity constraints.

NBN Co's interim satellite service (ISS) is proving to be so popular that iiNet will be forced to withdraw its highest download offering, citing a lack of capacity on offer on the service.

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 .

The service has proven to be very popular, offering cheaper internet access and a variety of providers in parts of Australia where it previously didn't exist. As of the end of June, there were 34,600 customers on the interim service. The current cap is 48,000, and former Australian Communications Minister Stephen Conroy indicated in Budget Estimates in May that current capacity is expected to be exceeded in early 2014.

In addition to reaching the maximum number of users, signs point to those already pushing the limits on the services available on the satellites.

iiNet itself has 6,000 customers on the service as of last reporting, and CEO Michael Malone has confirmed to ZDNet that the company intends to withdraw the larger of its two NBN interim satellite plans, citing a lack of capacity on the service.

The 20GB plan is still up and available to order on iiNet's website at the time of writing, but Malone indicated that the company has found that the biggest issue with customers getting on the service is that they actually want to use a decent amount of data every month.

The issue will likely only get worse over the next two years, until the satellite launch in 2015, assuming construction is completed and it is launched on time. The Coalition would like to see the limit raised in order to accommodate more customers, but Conroy indicated in May that this would be a very expensive exercise.

"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."

The Coalition will go ahead with the construction and launch of the two new satellites should it win the election.

ZDNet contacted NBN Co for this article; however, the company had yet to provide a comment at the time of writing.