The launch of NBN Co's first satellite called Sky Muster is a significant step forward for remote communications but in Business Spectator the discussion focuses on why it is only a small step forward for a company in trouble.

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Prime Minister Malcolm Turnbull has carefully fostered the perception that he understands technology and knows how to foster innovation but as we look skyward this week to acknowledge the launch of NBN Co’s first satellite it is appropriate to remember that in 2012 he argued that the satellites were a “Rolls-Royce” solution that were not needed.

At the time Optus CEO Paul O’Sullivan indicated there was insufficient capacity available on the Optus satellites for the NBN and NBN Co’s satellite project director Matt Dawson had cautioned that there was an unacceptable risk if the satellite project was outsourced to a smaller company.

One of the companies seeking the NBN satellite project, NewSat collapsed earlier this year due to alleged mismanagement and troubled financial dealings. In light of that,  the satellite initiative - started by former NBN Co management -  was right to argue that the risk of outsourcing the satellite component of the NBN would have be an unacceptable risk.

More satellite capacity needed

Sky Muster’s successful launch is an admirable achievement but it won’t be able to do the job on its own.  In fact, even with a second satellite in operation, capacity concerns are likely to be an issue.

The two NBN Co satellites will provide total throughput of 135/40 Gbps and this capacity is allocated to varying size cone antennas that provide 101 varying size spot shaped coverage regions, some of which overlap slightly. What this means is that if customers were guaranteed a minimum of 25/5 Mbps at all times then there could only be about 5400 customers connected to the satellites.

Using a typical traffic contention ratio of 80/1 the number of connections possible becomes 430,000 but the traditional telecommunications approach to utilise high contention ratios has a downside, and this occurs during peak times when the majority of customers want simultaneous access. The growth of streaming media means that during peak times not only are customers accessing the internet and social media but they’re also trying to access streamed media which requires a reliable connection with low latency and stable throughput.

The government’s plan to utilise a 40/1 contention ratio to connect about 200,000 customers to the satellites has a high risk of failure because the congestion during peak times might overwhelm the satellites creating a massive slow-down for every customer. The congestion problem caused by high contention ratios is exacerbated when customer usage shifts from viewing discrete small items of content such as a web page on a social media site to watching YouTube videos and streamed movies.

ADSL customers are very familiar with congestion during peak times and to offset anticipated customer dissatisfaction NBN Co has put in place usage rules that will limit customers to 50 GB per four week rolling aggregated usage period measured weekly and customers that exceed this limit will have their download connection speed limited to 128 Kbps for the next two weeks. It has also implemented a 9.7 GB download limit for individual items of content or streamed media.

The recent decision not to lay fibre to the four remote towns in Western Queensland was a backflip by the government as the decision was made to focus on getting customers onto the satellites. In the future, possibly as early as 2020, as the satellite capacity dwindles there will need to be further consideration of laying fibre to the remote Queensland towns to reduce the load on the satellites and this process could extend to other remote communities.

Satellite capability

NBN Co’s two Ka Band satellites, ten ground-stations located around Australia and other satellite related systems will cost over $1.5 billion and provide up to 135/40 Gbps of total throughput when both satellites are in operation. The satellites have the same coverage providing some redundancy and flexibility when utilising available capacity and will cover an area of 7.69 million square kilometres which takes in Australia and islands from Lord Howe and Norfolk in the east to Christmas and Cocos Keeling in the west and reaching to Macquarie Island in the south.

Sky Muster will be positioned in a geostationary orbit of about 36,000 km and cost about $7,900 per customer, which is actually cheaper than the cost for the average remote telephone connection that relied upon satellite, microwave or radio links.

One downside of connecting to the NBN via satellite is the 250 millisecond (ms) round trip latency caused by the signal having to travel 72,000 km from the ground-station up to the satellite and back down to the customer premises. This delay is significant, does not include the terrestrial transmission delays and can limit the effectiveness of delay sensitive services such as telephony and video streaming which rely on a total transmission delay of no more than about 150 ms for a high quality service. Significant technological advances have reduced the overall negative effect that satellite transmission latency, but it will still be a noticeable downside for satellite customers that should not be overlooked

One small step for NBN Co

The launch of the first of the two NBN satellites will be a major outcome for NBN Co at a time when criticism of the Fibre-to-the-Node (FTTN) rollout is growing and NBN Co appears to be struggling to overcome a range of technical problems with the fixed access network rollouts. And there’s a chance that they can be used over time to provide a wider range of mobile broadband services.

The NBN Co satellites can be used to support grey nomads travelling around Australia, especially when they stop and camp, sometimes for months. Moving vehicles like buses, trains and so on can also be connected but this would be a lower priority. NBN Co must look to monetise the satellites quickly and this is in keeping with this government’s cost effectiveness mantra, so any failing to look at expanding the number of potential customers that can be connected to the satellites would be a waste.

Regional and remote Australia will be a major beneficiary of Labor’s decision to lock in the satellite contracts thus preventing Turnbull from carrying out his threat to cancel the “Rolls Royce” NBN satellite contracts and creating yet another mess during his tenure as Communications Minister. It is quite remarkable that the Turnbull government is now basking in the success of NBN Co’s satellite project when Turnbull argued strongly that it was a waste of funds.

Mark Gregory is a senior lecturer in the School of Electrical and Computer Engineering at RMIT University.