Vocus tees up Musk’s satellites to boost rural internet

Macquarie-owned telco Vocus Group has linked up with Elon Musk’s low-orbit satellite business Starlink to deliver high-speed internet to businesses that operate in remote or regional Australia.

The landmark new agreement will allow Vocus to compete against the NBN’s satellite services, which is the only option available to some regional and rural users.

The telco’s head of enterprise and government Andrew Wildblood said Vocus had already received interest in Starlink’s low-earth orbit satellites from businesses in the resources, agriculture and education sectors.

“There’s plenty of open space in the Australian landscape where there is no service and people still need to explore...and operate, either from an agricultural perspective or from a government perspective,” he said. “The predominant interest from our customer base has been in mining, oil and gas resource sector where they’re operating the most remote parts of Australia.”

Andrew Wildblood, Chief Executive of Enterprise and Government at Vocus.Credit: Louie Douvis

Musk, the co-founder of $1.3 trillion Tesla, rocket company SpaceX and owner of Twitter, began rolling out his satellite internet service, Starlink, locally in April 2020. The service provides internet using low orbit satellite constellations and promises speeds of between 100 Mbps and 300Mbps and is available for purchase across Australia.

For people in remote communities, Starlink has delivered a much-needed fix to longstanding issues with internet connectivity because it offers cost-effective coverage in hard-to-reach places. The NBN’s Sky Muster satellite promises speeds of 12 Mbps for the basic service and 25 Mbps for premium service.

Vocus’ new agreement is an expansion of its relationship with SpaceX, which began two years ago when it built the ground stations that allow Starlink’s satellites to connect to the broader internet. Under the agreement, Vocus will install the service, provide local support, and will have satellites in stock locally for dispatch or resolution of faults.

The enterprise satellite terminals cost about $US3700 ($5562) to purchase and more than $500 per month, depending on the plan.

Wildblood said the new deal could allow mining companies and farmers to gain access to reliable internet in areas they otherwise couldn’t, or improve connectivity in remote schools in the Northern Territory.

“We’ve actually done some consulting work into Northern Territory Government to work out how they can solve communication into remote schools, particularly Arnhem Land,” Wildblood said. “Now [Starlink] is commercially available, how do we construct solutions for them that enable them to get coverage across multiple sites not just one individual site.”

“In remote, regional communities, it’s a game changer in education, it’s a game changer in health and safety, it’s a game changer in agriculture, mining, oil and gas.”

Wildblood said there were also opportunities to use LEO satellites during natural disasters when telecommunications infrastructure is impacted by floods or fires. He said there was also a business case with the rise of cybercrime.

“Satellite is increasingly going to play a more important part in national security,” he said. “We’ve seen the situations that have gone on at Optus and Medibank...but if you think about nation state attacks in the state of war - the first thing to do is take our communication networks.

“If they take out the terrestrial communication networks, you’ve got to communicate somehow and satellite provides optionality.”

Wildblood said he did not expect the deal would lead to a material increase in earnings over the next few years, but believes it will allow Vocus to reach more people and take market share.

“We have about 10 per cent of the business market in data and IP,” he said. “We strongly believe this will give us opportunity to take market share from [geostationary orbit] satellite providers plus NBN services that might be operating on traditional satellites. Plus, it opens up opportunities to complement our fibre.”

Vocus is one of several telecommunications providers exploring ways to invest in LEO satellites, which sit about 300 km from earth (NBN’s satellites sit 36,000 km from earth). Telstra announced in September it was testing OneWeb’s LEO satellites in Australia (Vocus already has a relationship with OneWeb). In October, the federal government said it was looking at using LEO satellites to improve regional telecommunications coverage.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.