NBN plays down low-earth orbit satellites as full-fibre upgrades kick off

NBN Co will not follow Telstra, Vocus, Optus and others in rushing into low-earth orbit (LEO) satellite technology — such as that offered by Elon Musk’s Starlink — citing limitations in data volume as the number of users increases.

But the company building Australia’s national broadband network is considering the technology to replace its ageing Sky Muster system at the end of its life, while moving about a quarter of the premises covered by satellite to faster fixed wireless connections.

NBN Co chief executive Stephen Rue said LEO was not designed for large amounts of data. Credit: Edwina Pickles

“The low-orbit satellites are not built to carry large volumes of data by concurrent users,” said NBN chief executive Stephen Rue, following the company’s full-year results on Thursday.

“It may have a role to play. But at the end of the day, with the applications coming down the track, people are going to need to have a fixed line, or fixed wireless service, which is built for carrying large volumes of traffic.”

Rue said those applications included near-term leaps in machine learning, virtual reality, healthcare and entertainment, which would drive an increase in data demand in homes and businesses.

NBN’s Sky Muster satellites were cutting edge when engineered more than a decade ago, but today the geostationary satellites are much slower than LEO solutions, and have far greater latency, making them impractical for real-time communication. NBN is in talks with LEO providers to explore potential offerings.

NBN Co announced full-year revenue of $5.27 billion, in line with its guidance and up three per cent year-on-year. It is, however, still losing money — reporting a $1.12 billion loss — and owes about $25.8 billion in debt.

One of the company’s key investments in the past year has been in a program to upgrade homes on fibre-to-the-curb or fibre-to-the-node to full fibre-to-the-premises, allowing for faster and more stable connections. Customers in eligible homes will trigger the upgrade when they sign up to a 100mbps or higher internet connection, which generally start at about $100 a month.

NBN Co reported that 2 million premises were now eligible, and more than 100,000 had upgraded as of the beginning of this month, which is slightly below its previous estimate. Rue said the multi-year project to eliminate ageing copper infrastructure was on track, but that some service providers had been slow to offer the upgrade for marketing or IT reasons.

“We’re expecting in coming months, a ramp-up in the number of retailers who will be in market, a ramp-up in marketing dollars, and therefore a much greater take-up,” he said.

“There’s latent demand that the retailers will tap into, and a cohort of customers who, when their area becomes available, will move up. And there will be an increasing number of people who will move on as well over this decade.”

Some 2.5 million premises will continue to be covered by the HFC cable network, with NBN Co foreshadowing upgrades that will help it keep up with full fibre connections. Rue said the company intended to follow US cable operators in implementing a distributed access architecture — meaning replacing some components to get fibre deeper into the field and closer to people’s homes — while keeping the existing cables.

“On the HFC network, people can order our highest speed tier today,” he said.

“Distributed architecture enables us to not just provide more capacity and lengthen the life cycle of HFC, but also over time will enable us to do things like deliver like multi-gig [exceeding 1Gbps] services.”

The company has previously announced plans for multi-gigabit speeds on fibre-to-the-premises connections, utilising new optical network equipment from Nokia.

NBN Co is also varying its Special Access Undertaking, which would revise the commercial contract between it and retailers, but Rue said consumers should not expect this to translate into increased prices this financial year.

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