Turnbull's NBN satellite stop-gap

After roundly criticising NBN Co’s decision to pay $620m for two new satellites to provide broadband services to the bush, Malcolm Turnbull can't wait to get the 'Rolls Royce' satellites off the ground.

NBN Co’s satellites will presumably reach orbit by the end of next year but until then the Interim Satellite Service (ISS) component of the network will have to persevere through what the Communications Minister Malcolm Turnbull describes as a “patch-up" job.

With NBN Co’s interim satellite service struggling with capacity constraints, the federal government had to find a way to keep eligible customers content and bring some new ones on board.

The solution rekindles the ghosts of the Howard-era Australian Broadband Guarantee (ABG), through a scheme that subsidises the set-up cost of in-premises equipment and its installation.

After roundly criticising NBN Co’s decision to pay $620 million for the two new satellites to provide services as another example of Labor’s profligacy, Turnbull is probably just hoping that the two 'Rolls Royce' satellites get off the ground as quickly as possible.   

The $34m boost to the ISS includes $18.4m to lift capacity for existing users by a third, with additional funding to go towards subsidising 9,000 more households who miss out on accessing the ISS, to the tune of about $2,000 each.

Retail providers will set the prices but as the 44,000 users of the current service can attest to, getting connected and getting a decent service are two very different things.

Malcolm Turnbull is acutely aware of the inadequacy of the service currently available and also the fact that, for the moment, there’s very little the government can do other than apply band-aids.

“It’s a patch-up,” Turnbull told Business Spectator yesterday, adding that the only other alternative was to let the service just wither on the vine. 

“The alternative was to wash our hands and say, ‘This is another Labor Party shambles’ and wash our hands of it. We had to find a way to remedy it as far as we could, but to do so within a reasonable cost envelope.”

Covering the angles

Finding a way to cover all the angles “within a reasonable cost envelope” has clearly been a challenge, with Turnbull saying that other solutions on the table had come in at “well over $100 million” -- and that’s where the strict eligibility requirements come into play.  

The 9,000 new customers will have to meet a stringent criterion to become eligible and, once on the service, will have to carefully manage their usage.

Congestion is choking the current interim satellite services and while the ISS was never designed to provide the same kind of services NBN Co’s Ka-band satellites will be capable of delivering, the appetite for better broadband in the bush is undeniable.

That appetite isn’t just for better speeds to download movies and games but for essential service delivery.

Both the demand for broadband and the limitations of the interim services were underestimated the first time around, and NBN Co will need to do a better job the second time.

But even the new capacity will be a stop gap measure, and is likely to evaporate quickly. The stringent eligibility criteria will be accompanied with stricter usage monitoring, designed to ensure that the limited capacity is stretched as far as possible.

It may not be enough to cover the gap until NBN Co’s satellites are off the ground and as NBN Co gets ready to start its Long Term Satellite product and pricing consultation next month, there will be a whole new set of costs and complexities that need to be factored in as customers on the interim satellite program migrate onto the new long-term service.

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