Australian satellite operator NewSat has lodged a proposal with the government to purchase the two Ka-band satellites that the National Broadband Network Company (NBN Co) has ordered from Space Systems Loral.
Under the plan, NewSat would acquire the…
Australian satellite operator NewSat has lodged a proposal with the government to purchase the two Ka-band satellites that the National Broadband Network Company (NBN Co) has ordered from Space Systems Loral.
Under the plan, NewSat would acquire the spacecraft and then operate them as a wholesale service provider to NBN Co, the public-private-partnership tasked with providing universal broadband across the country.
NewSat envisages NBN Co paying a fee for the wholesale service for the life of the satellites plus one renewal. The fee would be guaranteed to enable NewSat to service its debt and return a profit on the investment.
The company adds that given NBN Co’s requirements to provide broadband services to Australia’s rural population, the satellite service would have to be subsidised by the state-owned company to make the business case work.
NewSat argues that this privatisation would benefit NBN Co by “dramatically reducing debt and de-risking the provision of the service by introducing an experienced, efficient quality service provider. It is anticipated that this would also result in a significant reduction in staffing required by NBN Co.”
The satellite operator made its proposal to the government in December 2013 but has reiterated its plan as part of a submission to the panel set up by the Ministry of Communications to conduct a cost-benefit analysis and review of the regulatory arrangements for the national broadband network.
The panel is made up of industry experts led by Michael Vertigan, the former secretary of the Departments of Treasury and Finance in the states of Victoria and Tasmania and currently chair of the Australian Maritime College Board.
Alongside him are former eBay Australia chief executive Alison Deans, currently director of Insurance Australia Group; Henry Ergas, a senior economic adviser at Deloitte Australia and university professor who has been an outspoken critic of NBN; and Tony Shaw, a consultant on regulatory and competition issues who was a member of the team that undertook the NBN Implementation Study.
The panel is expected to provide its final report to the Australian government in June 2014.
In its submission, NewSat argues that privatising the satellites would provide the maximum efficiency and benefit for NBN Co and Australia.
It also strongly opposes extending the range of satellite services offered by NBN Co to include enterprise users, claiming that this would run the danger of negatively impacting the commercial satellite sector through artificially fixing prices and dumping subsidised satellite capacity into an already competitive marketplace.
NewSat suggested that this could in turn discourage satellite operators from investing in Australian coverage and might lead to their retreating from the market, with a consequent impact on competition and supply.
Instead, the satellite operator argues that if it were a successful bidder for the satellites, it could offer commercially viable services and return a percentage of the profit to NBN Co.
NewSat suggests that there is scope to use the Ka-band satellites to offer services beyond the subsidised services that NBN Co will provide and that these should be provided by a commercial satellite operator.
Ordered from SSL in July 2012 in a deal worth A$620m (US$630m), the high throughput satellites are slated to be launched by Arianespace in 2015, the same year that NewSat’s own HTS Ka-band bird, Jabiru-1 is due for launch.
