"The rural satellite and fixed wireless components of the NBN are currently subject to a separate top-level review following the release of a major review into the fixed component last week. We understand that options on the table include the potential need for additional satellite capacity - potentially a third satellite in the long term - and also the potential sale and lease back of the NBN Co satellite assets."
NBN Co completed the Strategic Review of the National Broadband Network last week and has delivered the findings to the Government. Reference to the satellite segment was brief, but did include.
Financial performance Revised Outlook – Satellite Capital Expenditure
The Corporate Plan Capital Expenditure for the ISS and LTSS total $1.9 billion.
This includes the construction and deployment of two purpose-built NBN Co satellites, which have been fully contracted for and are on schedule for delivery and launch in 2015.
Whilst the majority of the costs of the two long term satellites are known, there are some elements that are yet to be finalised. There are also risks including the following:
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· There is no clear understanding of the requirement for further capacity which may be needed if the demand for the LTSS exceeds that outlined in the Corporate Plan; and Further Satellite capacity may be the only viable solution if fibre and Fixed Wireless coverage is less than the 97 percent included in the Corporate Plan.
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· The Independent Assessment has identified a potential increase of expenditure in addition to the Corporate Plan.
Undertake a review of Fixed Wireless and Satellite
NBN Co will undertake a detailed review of its Fixed Wireless and Satellite programs. The review will consider strategic options available to NBN Co to cost effectively provide coverage to areas outside the fixed footprint, as well as considering the optimal model to provide this coverage.
Fixed Wireless and Satellite
NBN Co is currently planning to use Fixed Wireless and Satellite technology to serve 7 percent of premises outside of the 'fixed footprint', in rural and low-density locations. It is planning to deploy two satellites as part of a long-term Satellite strategy and 1,392 Fixed Wireless base stations.
Another ~200 base stations are slated for construction with their location to be determined based on need informed by actual uptake.
Customers are taking up Fixed Wireless and Satellite faster than planned. Under a 'business as usual' model, NBN Co will need to add another 800 base stations and possibly an additional Satellite if current levels of demand continue, contributing to the increased cost described in the above section.
The allocation of customers to the Fixed Wireless and Satellite footprint requires further consideration. For example, FTTN could be used in some areas currently planned to be served by Fixed Wireless and Satellite. An initial estimate identifies ~55,000 premises that could be shifted from Fixed Wireless provision to FTTN provision, and ~45,000 premises from Satellite provision to FTTN provision. At least 90 percent of the customers in these ~100,000 premises are within copper loop distances sufficient to receive ~25Mbps. This would free up capacity on both platforms and as such it is likely to mitigate capacity upgrade costs. Costs avoided are potentially million by not building base stations,
In the current fixed footprint there are also premises planned to be served by FTTP that could be most cost effectively served by Fixed Wireless. An early estimate suggests Fixed Wireless may be less expensive than FTTN and FTTP in ~450 geographic distribution areas (~10,000 premises). Shifting these customers would yield potential savings to NBN Co of up to million, and more work will be undertaken to investigate this following the Strategic Review.