Keynote Address: CommsDay Summit 2021

It is a pleasure to be here this morning to address the CommsDay Summit – and to be here in person engaging with real people in the same room.

COVID-19 was a huge test for the telecommunications sector. You kept Australia going through the COVID-19 pandemic – when, almost overnight, millions of people moved to working and studying from home.

As Communications Minister, I am proud of the efforts of the hardworking people at NBN, at Telstra, at Optus, at TPG, at Vocus, at Aussie Broadband and right across our telecommunications industry. 

Just as the communications sector was critical in how Australia made it through the COVID-driven economic downturn, it also has a key role in our economic recovery. Driving that recovery is the Morrison Government’s central economic objective.

Today I want to argue that 2020 was a turning point for NBN.

Next I want to talk about how we will leverage NBN for economic and social benefit.

Last I want make the point that NBN is one network amongst many – and our government wants to foster innovation, competition and choice amongst these networks. 

2020 has been a turning point for NBN. 

There has been a noticeable change in the way the NBN is perceived by Australians over the past year.   Some of that simply reflects the fact that many more of us are using the network.  Since January 2020, the number of premises connected has risen from 6.5 million to 8.3 million. 

But another part of that change is undoubtedly because Australians really needed good broadband during 2020 – and in their hour of need the NBN came through for them. 

2020 was the year when having a good home broadband connection really, really mattered.  By May 2020 up to 46 per cent of Australians were working from home.  Very rapidly we all became familiar with videoconferencing apps such as Zoom, Skype, Teams, Webex, BlueJeans and many others.

Video conferencing of course needs not only good download speeds, but also good upload speeds - something simply not achievable on legacy ADSL networks.

But there were many other applications where connectivity was crucial.  For example, nearly half (46 per cent) of regional Australians who needed a health consultation in the April to June 2020 period did so using telehealth services.

As a nation we were fortunate that when the pandemic hit the NBN rollout was close to complete, with 98 per cent of premises able to connect. 

But it was not just good luck – it was the result of actions our Liberal National Government took when we came to government in 2013. 

The NBN we inherited was a train wreck.  After four years the project was in such hopeless disarray that barely more than 50,000 premises were connected to the fixed line network. 

If we had stuck with Labor’s rollout strategy, when the pandemic hit in early 2020, the number of premises able to connect would have been some five million fewer. 

As the historical record shows, we changed direction sharply – and since 2013 we have had a relentless focus on executing the NBN rollout.  Thanks to that focus, when Australia really needed it, the NBN was there – and it delivered. 

What really stands out is the way that the NBN handled the sharp increases in traffic volumes without missing a beat.   Traffic volumes during the day were up around 70 per cent on pre COVID levels; during the network busy hour (typically around 9 pm on a weeknight) they were up around 30 per cent.

COVID created a spike in demand – which NBN and its RSP partners handled effectively.  There were sharp increases in the number of people connecting to the network; at the peak there were some 40,000 new connections a week.   

Of course NBN Co also took specific management actions to better handle the COVID challenge – such as giving retail service providers a 40 per cent capacity boost at no extra cost.

2020 was also the year in which the rollout of the NBN was, for all practical purposes, completed. As at the end of 2020 there were just 34,100 premises remaining to be made ready to connect around Australia.  That number is now down to 23,400 and will be less than 10,000 by 30 June this year.  

I therefore judged it appropriate, at the end of last year, to declare that NBN had reached the stage of being ‘built and fully operational’ under the NBN Companies Act.   This is a significant milestone – although of course I recognise that at any given point in time there will always be a pipeline of premises waiting to be connected to the NBN, given that new homes are continually being built. 

Today there are 11.9 million premises which can connect to the network and over 8.3 million which are connected.  What that means, of course, is that today almost every home and business in Australia can order a service of at least 25 Mbps, much faster than what was available when the rollout began. 

In 2020 NBN reached a critical financial milestone: for the first time it was EBITDA positive.  Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), including subscriber costs, was positive $424 million in the six months to 31 December 2020. 

This was a $1.1 billion improvement on the corresponding period in the previous year, driven by revenue growth, maintaining operational expenditures, and declining subscriber payments to Telstra and Optus.  The growth in EBITDA came alongside strong growth in revenue, which at $2.26 billion was up 25 per cent over the corresponding period in the previous financial year.

2020 was also the year in which the NBN successfully tapped the private sector debt markets for the first time.  NBN has raised more than $12 billion in private debt over the last 12 months, and four billion of this was raised in the six months to December 2020.

This is powerful evidence of the success of NBN’s business model and the growing strength of its cashflows; it has also allowed the company to repay $3.0 billion of its loan from the Commonwealth government.

Of course, in 2020 the NBN announced the next phase of its growth – a $4.5 billion commitment to materially upgrade the network.  In my time as Communications Minister, I have said many times that our priority in this term of government is to leverage NBN for social and economic benefit.  This new investment is one of the ways in which we are so leveraging the NBN. 

The outcome of this $4.5 billion investment will be to make ultra-fast broadband – speeds of one gigabit per second – available to 75 per cent of the fixed-line network by 2023; to stimulate the business market; and to upgrade regional service by co-investing with other governments.

This major investment forms part of the Morrison Government’s focus on driving jobs and economic activity as our economy recovers from the COVID recession.  Economic analysis from AlphaBeta estimates it will create an additional 25,000 direct, indirect and induced jobs across Australia by 2022 (including 9,900 in regional Australia) and increase GDP by $6.4 billion per annum by 2024.

This investment strategy is much more capital efficient than Labor’s wasteful approach.  It builds on the multi-technology network investments already completed, uses efficient investment of new capital to achieve substantial speed upgrades by 2023 and produces a positive return, enabling NBN Co to make further network investments in the future.

As part of this strategy, NBN Co will spend $2.9 billion to take fibre deeper into the FTTN footprint. This will allow two million homes which are today served by fibre to the node (including 950,000 in regional areas) to order speeds up to 1 Gigabit per second (Gbps) by 2023.  NBN Co has already announced the first 200,000 homes that will benefit from this upgrade.

NBN today will release the list of suburbs and towns around Australia where an additional 900,000 homes and businesses are set to benefit from the extension of fibre deeper into communities. This includes communities in every state and territory of Australia – including, for the first time, communities in Tasmania, the ACT and Northern Territory that are currently served by Fibre to the Node (FTTN) where premises will become eligible for Fibre to the Premises (FTTP) upgrades.

Today’s announcement will bring to 1.1 million the number of homes to be passed by the Fibre extension, with plans to pass 2 million homes by 2023.

An important element of the NBN network investment is to make business grade broadband much more widely, and affordably, available. Following this investment, 90 per cent of business premises nationally are able to request an upgrade to Enterprise Ethernet, NBN Co’s fastest business product providing symmetrical business grade fibre with speeds of up to 1 gigabit per second, at no upfront cost.

In addition NBN Co has established 240 NBN Business Fibre Zones nationally, including 85 in regional centres, covering around 700,000 business premises.  Businesses within these zones can now order an Enterprise Ethernet upgrade through their retailer of choice at no upfront cost, and have access to CBD zone wholesale pricing, driving annual cost savings of up to 67 per cent.

I’ve discussed these opportunities with businesses in locations like Wagga, Launceston and Port Macquarie over recent months.  There has been a strong and enthusiastic response.  Small and medium businesses in particular see this as giving them exciting and much more affordable new options.

Another priority is driving for higher speeds across the network. Today, just over 70 per cent of homes and businesses are on a plan with a 50 Mbps or higher speed. 

What is particularly striking is the rate at which customers are taking up even higher speed plans, from 100Mbps up to 1Gbps.  That rate now stands at 17 per cent of customers – up from just 9 per cent just a year ago.

As I have explained, our headline commitment is that by 2023 three quarters of fixed line premises, or eight million premises, will be able to order speeds of one gigabit per second. 

But beyond this commitment, our government continues to look for opportunities for incremental expansions to the footprint of Australians served with particular technologies by the NBN.

Let me mention three pathways.

The first is through the use of the NBN’s $300 million regional co-investment fund. Through the fund NBN will partner with governments – federal, state and territory and local – to deliver access to higher speed broadband services to households and businesses in regional and remote Australia

Thanks to its strong financial position NBN has created this fund using money raised on commercial debt markets.

The second is through complementary government programs like the Regional Connectivity Program.  Recipients of funding under the first round of this $90 million program have just been announced.  There are several locations around Australia where this funding will see NBN connectivity upgraded, for example from fixed wireless to fibre to the premises. 

For instance in Geeveston in the Huon Valley in Tasmania, the Government has committed $1 million under the program to upgrade the access technology from fixed wireless to fibre to the premises. This will provide improved connectivity for a number of local industries as well as local schools and health centres.

And in Halls Creek in Western Australia, $1.7 million (GST inclusive) in Government funding will upgrade the community from satellite to fibre to the premises. This will greatly improve the broadband connectivity to the town and support the delivery of essential services, such as skills training, education and health services as well as supporting business opportunities in tourism, mining and civil construction 

The third is through NBN Co’s revamped technology choice program. As outlined in the Corporate Plan, NBN is making a number of improvements to the program.  A key aim is to reduce the cost to people wanting to use the program, particularly for ‘group switches’.

NBN is also making the program easier to use, through a simplified website, instant online quotes and the removal of application fees. Consumers can now request an online quote for most single dwelling premises via NBN Co’s website.

One important way in which we are leveraging the NBN for social advantage is through its capacity to provide connectivity in emergencies even when terrestrial networks are down.  The satellite network is entirely redundant from terrestrial fixed and mobile networks; that means it can provide life saving connectivity during floods, bushfires and other natural disasters.

In May 2020, I announced the $37.1 million Strengthening Telecommunications Against Natural Disasters (STAND) program. It includes a $7 million program for the deployment of satellite facilities at rural fire service depots and evacuation centres right across Australia, which can be used in emergencies to maintain connectivity.

STAND also includes a grants program to deploy temporary facilities that can be moved in when communications networks have been knocked out.

Having seen the devastation from the 2019-20 bushfires firsthand on my visit to the South Coast in January 2020, I wanted to move quickly to get equipment in place before future natural disasters.   The Government - in partnership with NBN Co - have already deployed five Road Muster Trucks, twelve satellite fly away kits and installed over 100 satellite dishes in key locations.

One of these Trucks was recently used in Western Australia to support the response to Tropical Cyclone Seroja to Geraldton. The local Telstra exchange in Geraldton was damaged and there was a loss of power, leaving very limited communication in and around Geraldton.

The SkyMuster truck provided Wi-Fi service via the Skymuster service to the emergency service team on the ground including supporting Wi-Fi calling. At one point, the SkyMuster truck was the only communications in Geraldton and emergency services relied on it very heavily.

In December 2020, I visited Namadgi National Park with NBN Co to inspect one of the SkyMuster Trucks and a fly-a-way kit. A STAND satellite dish had also been installed on the Namadgi Visitors Centre.

More recently, I visited Sorrell in Tasmania to inspect a STAND satellite installation on the Sorell Memorial Hall. The local Mayor, Kerry Vincent told me about how the hall was used as an evacuation centre during the Dunalley bushfire in January 2013.

The fires destroyed approximately 300 electricity poles on the Tasman Peninsula, causing widespread power outages, and leaving evacuated citizens without power or mobile coverage. The STAND satellite dish will mean future evacuees at the Sorrell Memorial Hall can stay in contact with friends and family, even if the power is down.

Of course while the physical availability of the network is one thing, the price at which wholesale services are provided is also a key policy issue. I recognise that NBN Co’s pricing construct has been the subject of debate across industry for some time

Late last year I issued a statement of expectations to the Australian Competition and Consumer Commission indicating that I would like to see a solution on NBN pricing that delivers certainty for all. 

In particular, I said I was looking for a new Special Access Undertaking (SAU) for NBN Co – one that incorporates all the technologies that NBN uses, and includes a building block cost model.

This approach would help deliver certainty for retailers on pricing, and certainty for NBN Co in terms of the returns it can expect. 

It is important that we look closely at the regulatory framework which applies to NBN pricing, particularly since we inherited a curious arrangement from our Labor predecessors under which the pricing on much of NBN’s network is today not subject to any regulatory constraint at all.

I’m pleased that the ACCC has responded positively to my expectations –and that the sector is supportive of the need for this significant change.

In recent discussions, ACCC Chair Rod Simms has indicated to me that he is open to taking clean slate approach to NBN pricing – and is keenly focused on substantial and meaningful consultation with industry as part of this process.   

This was emphasised last week in the ACCC’s call for broadband retailers and other relevant stakeholders to engage in a roundtable in June on NBN pricing regulation, as it moves forward with this important long term reform.   

I have spoken at some length about the NBN but in the last part of my remarks I want to make the point that the NBN is one network amongst many. 

The Morrison Government does not want to force Australians to use the NBN.  That was Labor’s mindset; we prefer competition.  Certainly the NBN will serve the needs of millions of Australians; but we want to see the maximum degree of choice and optionality.  Let me touch on three important developments in providing such choice.

The first is 5G. Last year I promised that 2021 would be the year of 5G in Australia – and we are meeting that promise.  Just over a week ago, the Australian Communications and Media Authority announced the successful completion of the 26 GHz auction, so that this critical spectrum can be put to work in supporting 5G services as quickly as possible.

Later this year we will hold the low band auction. The low band spectrum is well suited to providing wide-area and in-building coverage due to its unique propagation characteristics.  Just last week we released the exposure draft on the allocation limits direction for consultation.

The draft direction proposes limits of an aggregate of 82 MHz of spectrum in the sub-1 GHz band. This limit will prevent any one mobile network operator from acquiring more than 40 per cent of spectrum-licensed spectrum in the sub-1 GHz band. It aligns with the government’s aim of promoting competitive market outcomes for the long term benefit of consumers and supporting the deployment of 4G and 5G technologies.

The draft direction seeks to set-aside spectrum for Optus and TPG Telecom. Supporting continuity of services is one of the Government’s communications policy objectives underpinning the reallocation of spectrum in this band.

Optus and TPG Telecom rely heavily on their 900 MHz spectrum holdings to provide their services.  If they were to lose access to this spectrum, that could cause a significant disruption of service to existing customers – with the impact felt particularly heavily in regional and remote areas.

I expect to sign the final allocation limits direction mid-year, well ahead of the auction in the latter half of 2021.

I welcome the progress Australia’s telcos are showing in rolling out 5G networks, with all three operators now having 5G in the field. Telstra’s 5G network covers over 50 per cent of the population and will cover 75 per cent of the population by June; Optus has switched on more than 1,200 5G sites; Vodafone’s 5G network is available in more than 350 suburbs with plans for more than 1000 sites by the end of the year.

Australia has the fifth fastest average 5G download speed globally, according to data collected from October to December 2020 by mobile network analytics firm Opensignal.

It is important that this new technology is put to good use in areas like smart manufacturing and other commercial applications.  To help showcase and test such applications, the Government has established the $22.1 million Australian 5G Innovation Initiative.  

This is a competitive grants program with two rounds of funding over three years, designed to support private sector investment in 5G testbeds and trials. Grants under the first round of funding are expected to be awarded by June 2021.

The second development of significance is the growing role of private fixed wireless broadband providers in regional and remote Australia.  I have met with companies like Beam Internet in South Australia and CRISP in Western Australia, as well as Field Solutions Group and Pivotel.

On a trip to Adelaide in February, I had the opportunity to meet with Josh Helbig, the co-founder of Beam Internet which he launched in the Barossa region in 2015.

Beam Internet has about 20,000 square kilometres of coverage in South Australia, is the largest privately owned fixed wireless operator in the state and has experienced 100 per cent year on year growth for the last five years.

Beam Internet was recently awarded $2.68 million under the National Bushfire Recovery Fund’s Local Economic Recovery initiative to roll out open-access telco infrastructure to Kangaroo Island - around 50 per cent of Kangaroo Island was burnt during the 2019-20 bushfires. 

I am pleased that several fixed wireless broadband providers have received funding under the Government $90 million Regional Connectivity Program, including Pivotel, CRISP Wireless in Western Australia, Wi-sky in Queensland and NSW.

The third development I want to highlight is the contribution that low earth orbiting (or ‘LEO’) satellite operators are going to make, particularly in regional and remote Australia.

In recent weeks I have met with Myriota and StarLink, and later today I will meet with Lynk Global – all companies that are launching LEOs with coverage of Australia.

Myriota is an Australian company which provides secure, low-cost, long battery life satellite connectivity for the internet of things. It has partnered with another Australian company, Goanna Ag, to provide rainfall and tank level monitoring applications.

Starlink has recently launched beta services in central Victoria and southern NSW. Starlink has about 1,300 satellites in orbit, with a planned network of 12,000 in future.  Starlink’s latency is between 20 to 40 milliseconds, compared to 600 to 800 milliseconds for the NBN Sky Muster satellites.

Another interesting prospect is Lynk Global, which is developing a global satellite network that will connect directly to existing mobile phones, albeit presently only offering a message service. If this works as promised it could bring significant – and in some cases life saving – benefits in Australia, across the 70 per cent of our nation’s land mass that still does not have terrestrial mobile coverage.

Let me conclude by returning to my opening observation – that as Australia’s economy recovers from the COVID downturn, our communications networks are vital.

The Prime Minister has stated an ambition for Australia to be one of the world’s leading digital economies by 2030. Our communications networks are the vital physical layer over which ever more economic activity is occurring.

That is why it is important that bandwidth continues to increase, that their physical footprint continues to increase, and that the diversity of network offerings continues to increase.

That is the government’s policy objective – and as I have argued today, we are making significant progress on all of these fronts.