Market Insight

Australian satellite launch imminent

February 13, 2012

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Australians living in the remotest areas of the country will soon have access to fast, reasonably-priced broadband services, following the launch of a project to design and build two satellites for the delivery of high-speed broadband. The agreement, worth USD 620 million, was signed between the NBN Co and US-based company Space Systems/Loral (SS/L).

The NBN Co is a state owned company created in 2009 to oversee the development of Australia's first national wholesale-only open access broadband network.

The two satellites, when constructed will be next generation Ka-band satellites, solely used to improve broadband services specifically in Australia. This contrasts with other satellites delivering broadband currently, which are also used for a number of different other tasks, such as providing services for satellite phones, television or services in multiple countries.

With their scheduled launch in 2015, the satellites, in conjunction with the fibre and fixed wireless networks will allow broadband services to be accessed by every home and business in Australia. This will include some of the most remote towns in Australia such as Calvert in the Northern Territory and Bandya in Western Australia. According to the NBN Co, the national open network will be able to offer services with peak speeds of 12 Mbps download and 1 Mbps upload at uniform wholesale prices. A stop-gap solution, the Interim Satellite Service, was launched by the NBN Co in July 2011 to provide a transition to the new satellite service. This service offers peak download speeds of 6 Mbps (wholesale).

The project launch has been welcomed by organizations such as the National Farmers Federation, which has previously voiced concerns that remote communities were being neglected with respect to broadband access. In addition, such a service could prove to be invaluable when connecting remote communities with medical specialists and education resources.

However, the challenge will be to change the attitude of Australians in these communities who have used previous satellite services and found them to be costly and unreliable. One such high profile service has been offered by Telstra since 2002, and by the end of 2011 there were 103,500 Telstra Bigpond Satellite subscribers. However, reports from subscribers suggest that the reception tends to be weather dependent and inconsistent.

Another potential problem could be the speed of delivery, since while a download speed of 12 Mbps might sound impressive, it is notable that this is a 'peak' speed at the wholesale level. Therefore, the actual speeds provided by the ISPs to the end user will depend on equipment quality, premises connection and/or type of broadband plan on offer.

However, it is important to note that the National Broadband Network is managed by the state owned NBN Co., and as such is available to all eligible operators on a non-discriminatory basis. This allows for a level playing field with respect to network access. This is good news for the consumer, since non-discriminatory access will prevent operators from gaining a significant competitive advantage from the project, and will also lead to a certain degree of regulated pricing.

NBN Co Telstra
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