Niche satellite providers fear backhaul squeeze

Small satellite service providers have urged the competition watchdog to rethink its 121 point of interconnect model for the National Broadband Network amid fears the cost of leasing backhaul to regional nodes could squeeze them out of the market.

Under the model, satellite service providers would be required to connect their networks to each of up to 41 of the 121 points of interconnect established in regional areas in order to serve NBN Co's planned long-term satellite product to all Australians deemed eligible in 2015.

These points of interconnect are connected through NBN Co's transit network to a total ten earth stations the wholesaler plans to build over the next three years to support its two Ka-band satellites.

Satellite providers would purchase services from NBN Co at points of interconnect in the same general area as the premises intended to be served by that provider, even though the points do not physically connect to the premises.

The model differs from the interim service, in which all traffic is backhauled to a central Sydney point of interconnect, which is in turn connected to the two earth stations supporting the system.

The newly formed satellite services working group under the Communications Alliance met this month to consider the issue, which one member said would cause them to limit their business nationally if unabated.

"The satellite customers are by definition very thin on the ground but spread out around Australia," Activ8me chief executive Tony Bundrock told iTnews.

"Any service provider would have to provide 41 separate backhaul [links] in order to provide a satellite service over the NBN. We're working with one PoI at the moment, why not just continue to have one for the Ka-band satellite networks when it's set up?"

The working group intends to write to the Australian Competition and Consumer Commission to discuss the issue, which it said could be an "unintended consequence" of the regulator's decision to mandate NBN Co build its network to 121 points of interconnect.

Communications Alliance chief executive John Stanton said the group would likely ask for clarity on the ACCC's role in monitoring the PoI model for years to come.

A spokesman for the regulator did not reply to requests for comment at time of writing.

The initial decision was meant at the time to provide a balance between NBN Co's preferred 14-PoI model and as many as 950 points of interconnect, suiting both service providers seeking to reach those points and competing backhaul owners.

Numerous service providers have previously criticised the decision, however, with Internode managing director Simon Hackett warning it would squeeze all but a few providers from connecting to NBN Co directly on a national scale.

Though construction has begun at some of the points of interconnection as well as remediation of Telstra exchanges slated for use in the PoI model, NBN Co executives have told iTnews that it would feasible to revert to a 14-point model if required in future.

But NBN Co satellite project director Matt Dawson defended the ACCC decision as an ongoing option for even niche satellite providers.

"[The ACCC] fully understands what that means to small players and big players and they took that into account. The whole purpose of the ACCC PoI decision was to create a level-playing field and now you've got maybe one or two players who are not happy with a level-playing field, they want a special playing field," he told iTnews.

"At the end of the day, we are obliged and NBN Co is obliged to abide by that decision."