NBN Co's current plan to deliver broadband services to the 7-8 per cent of population outside the NBN fixed line footprint woefully underestimates the demand in those areas according to a report released today by the government-owned company.
The review also found that work on the fixed wireless rollout and on NBN Co's Long Term Satellite Service (LTSS) is behind schedule, NBN Co CEO Bill Morrow told a press conference today.
The satellite service is now likely to become commercially available in early 2016, NBN Co estimates.
However, "NBN Co will work to bring that forward," JB Rousselot, the organisation's head of strategy and transformation, said.
In response to the review NBN Co will look at increasing the footprint of fixed wireless services by building more towers as well as rolling out fibre-to-the-node (FTTN) services to areas that would previously not have received fixed line NBN services.
Under the preferred scenario canvassed by the report NBN Co will build an extra 1300 fixed wireless base stations, bringing the total number to around 2700.
FTTN services would be delivered to 25,000 premises that are currently earmarked for fixed wireless of satellite.
The review of the NBN fixed wireless rollout and Long Term Satellite Service concluded that demand in areas outside the fixed line footprint may be several times greater than what was previously forecast in the NBN Co corporate plan.
"Demand in these areas is between two to three times greater than previously estimated, taking the total connections by 2021 to 620,000," Morrow said.
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Despite nearly tripling the users, the overall expenditure will only increase by 33 per cent and hence stay within the approved peak funding envelope, the CEO said.
"NBN Co had previously thought fewer people within the last 7 to 8 per cent of premises would want high speed broadband services or that there would be commercial alternatives; more recent trends show otherwise," Rousselot said.
"Over the past year we have seen such strong demand for the Interim Satellite Service that we had to stop selling services last December when we reached maximum capacity."
Demand for the Interim Satellite Service had led to a 9000-strong backlog. In response to capacity constraints on the ISS, Communications Minister Malcolm Turnbull in March announced that NBN Co would spend $18.4 million to increase capacity from 30 kilobits per second per user to 40 kilobits per second as well as implement a new 'fair use' policy.
NBN Co revealed in March that it would launch a subsidy scheme that would let users waiting for a chance to receive Internet access through the ISS to access commercial satellite services.
Although the LTSS would have more capacity than previous satellite services it is a "finite resource that must be managed carefully," Rousselot said.
The design of the LTSS satellites was based on forecasts of lower demand than NBN Co has witnessed since launching the ISS.
"As a result, NBN Co has a heightened need to manage satellite capacity beam by beam," Rousselot said.
To do so the review recommends changes to how satellite products are developed, he said.
Retail service providers will be given more control over the kinds of products they offer and quality of service measures will prevent one RSP from impacting on the customers of another RSP.
The review recommends a standard satellite product construct with a network capacity allocation per end user of 150 kilobits per second.