Internet service provider TPG has only bought enough bandwidth on Telstra-owned cables connecting Tasmania to the mainland to service 60 percent of home broadband customer needs.
Customers of TPG-owned iiNet and Internode have been struggling with severely degraded internet speeds since last Friday when the Basslink data cable used by the ISPs to provide services to Tasmania was cut for repairs.
Despite the repair date being known in advance, it quickly became clear that the ISPs had failed to secure enough bandwidth to service their home broadband customers once Basslink was out of operation.
Wide reports of dial-up level speeds and high rates of packet loss saw the Tasmanian government intervene and force TPG to review its Bass Strait strategy.
The ISP managed to broker a last-minute deal with Telstra over the weekend to access capacity on its subsea cables, but the extra bandwidth won't kick in until this Thursday.
However, CEO of Tasmanian IT industry body Tas ICT, Will Kestin, told iTnews the extra capacity would only service 60 percent of TPG's home broadband customers. TPG is a member of the representative body.
Business and government customers had been taken care of, Kestin said, but TPG had made a commercial decision based on what it would cost to service around 80,000 residential, non-essential services customers.
"They're making the assumption that 40 percent of their customers will be happy with the services as they stand," Kestin said.
"What they're also hoping is that customers will access things at different times. Residential customers will still be able to check their emails and surf the net, it's just the downloading that's the issue. This will hopefully improve it, but it will also depend on the time of the day."
According to Kestin, TPG is trying to keep its costs down due to the expensive double payments it is being forced to pay to both Basslink and Telstra Wholesale. Other ISPs had made the decision to wear the costs and purchase full capacity, he said.
"It's ten times more expensive to transmit data from Tasmania to Melbourne than it is from Sydney to Melbourne, and they are paying twice," Kestin said.
"They're making a commercial judgement that the amount they are paying will be sufficient. They don't want to go into a loss.
"There's still question marks about whether the increased capacity will appease customers. I think their biggest challenge from a company perspective is how frustrated people will get. And TPG's competitors will be offering incentives to switch."
TPG confirmed it had purchased "60-70 percent" additional bandwidth on Telstra cables.
It said it was working with Telstra Wholesale on being able to deliver "additional further bandwidth" longer term.
"We are working towards improving the overall situation for customers in Tasmania," chief operating officer Craig Levy said.
The Basslink data cable wll be out of service until the end of May. The majority of iiNet and Internode home broadband customers can expect improved services from this coming Thursday.