NBN wireless and satellite service costs balloon

The cost of providing National Broadband Network services to  politically-sensitive bush areas over satellite and fixed-wireless  has blown out by about a third and will now cost $5.2billion by 2021.

A landmark strategic review of the satellite and fixed-wireless programs that will make the NBN available to rural and low-density areas has found that the launch of NBN Co’s satellites is at risk of delay and a fixed wireless program is at “significant risk” of not meeting its start dates.

The programs will now cost $5.2bn between 2011 and 2021, about $1.2 bn more than NBN Co had predicted in its 2012-15 corporate plan.

As foreshadowed in The Australian today, the NBN Co has been forced to triple its connections to the bush after a strategic review found that between 440,00 and 620,000 connections will be required -- but NBN Co’s 2012 to 2015 corporate plan had only prepared for connections to about 230,000.

The company will be forced to almost double the number of wireless base stations from 1400 to 2700 -- risking a protest from local communities and councils, though NBN Co will try and find ways of sharing towers with mobile phone operators.

It will also extend the reach of the fibre-to-the-node network to reach up to 25,000 premises that would have otherwise had a fixed-wireless or satellite connection.

Without these measures, there would be a shortfall of about 200,000 who would not be able to get a service.

Leaving hundreds of thousands of people unable to get super-fast broadband under the NBN would be a particular headache for a Coalition government given its dominance in regional areas.

As well, NBN Co does not have radio spectrum rights in urban-fringe areas, but will have to get it to be able to provide fixed-wireless NBN to about 80,000 premises in areas like the Gold Coast hinterland. The government-owned company now has to secure this spectrum and, if it fails to do so and more fibre has to be rolled out, this would blow out the costs of the NBN rollout by hundreds of millions of dollars.

While the NBN Co satellites were supposed to be launched in the third quarter of 2015, it is now expected to be in early 2016 “or sooner”. Today’s review has identified multiple delay risks.

As revealed exclusively in today’s Australian, the review has rejected the costly option of building and launching a third satellite to deal with the problem, but will instead impose stringent use requirements aimed at ensuring that so-called “bandwidth hogs” cannot dominate scarce capacity.

The review finds that a partnership to access capacity on a third satellite owned by someone else is an option, but says there are trade-offs that make it preferable to instead speed up the roll-out of fixed wireless.

While building and launching a third satellite would mean fewer wireless towers, it would drive up the peak funding needed for the project by about $1bn.