Speech to ACCAN 'Connecting Today's Consumer' Conference

It’s a great pleasure to join you at today’s ACCAN ‘Connecting Today’s Consumer’ Conference.

The communications sector is changing at an extraordinary rate. That has all kinds of implications – including for consumers who can find it very hard to keep up.

It also means the job of a consumer peak body like ACCAN is very important – in ensuring that the consumer voice is heard as industry adapts and responds to the change.

One of the critical issues in communications is getting as many people as possible connected to the network.

If a portion of the population cannot connect – because they live in remote areas where there is no network, or because they cannot afford the services, or because they are hearing impaired or have another disability – then they face a significant disadvantage.

That is obviously bad for those who are denied connectivity.

But it is also a bad thing for those who are connected.  This is because of the network effect: the more people who are connected to a network, the more useful the network is to everybody.

In the brief time available to me today, I want to touch on three points.

First, I want to argue that there has been longstanding concern about these communications equity issues – often summarised in the term, ‘digital divide.’

Second, I want to touch on the way these issues are evolving – not disappearing, but evolving – as the technology we use evolves.

Finally, I want to explain how key Abbott Government priorities in the communications space are directed at addressing equity issues.

Longstanding concern about the ‘digital divide’

Public policy in the communications space has always had a major focus on measures to ensure as many people as possible are connected: from the universal service obligation to specific funding for network rollout in uneconomic areas to the National Relay Service.

These policies are directed towards overcoming disadvantages in communications – or what is sometimes called the digital divide. 

This traditionally refers to the fact that those who are economically disadvantaged – on lower incomes, or on pensions – have a lower rate of internet take-up. With connectivity correlated to economic opportunities, a lack of connectivity can reinforce existing disadvantage.

There is often a geographic aspect to the digital divide – for example in Australia the cost of building network in regional and remote Australia means that broadband access, or mobile coverage, can sometimes be poorer in these areas than in the cities.

Governments have been grappling with variations of the digital divide for many years.

The original policy rationale for the universal service obligation was that no-one should be barred from being connected to the fixed line telephone network by reason of the high cost of the connection. 

Hence, wherever in Australia you happen to live, you can be connected to Telstra’s network for a connection cost which may not exceed a flat amount – today $299.

As my former industry counterpart in my Optus days, Dr Phil Burgess, then head of public policy at Telstra, was fond of saying, Telstra’s obligation extended to providing a connection to someone living in an abandoned car 200 kilometres out of Alice Springs – even if it cost over $100,000 to connect.

So there is a long tradition of public policy measures designed to break down the digital divide – and there is evidence of government concern about these issues going back many years.

For example, in a speech to the Consumers’ Telecommunications Network in 1994, then Communications Minister Michael Lee said that it was “unacceptable that when more than one million Australians now have a mobile phone, a million others don't have a phone at home.”

That quote incidentally reminds us how far we have come in twenty years. Today I suspect there are one million Australians under the age of fifteen who have a mobile phone – although I emphasise that is a guess, I have not checked that number!

Similarly when the government was going through the process of privatising Telstra in 2001, then Minister Richard Alston said the government had to look closely at the needs of people outside cities “to ensure that there isn’t this digital divide between metropolitan and rural Australia.”[1]

Equity concerns are evolving

The technology we are all using is evolving at a very rapid rate – and what this means is that the nature of the concern about equitable access to technology is also evolving.

As I mentioned in my last speech to ACCAN, when I joined the staff of then Communications Minister Richard Alston in 1996, amongst the issues we faced were people in the bush complaining that their internet speeds were hopeless – as low as 1.2 kilobits per second. 

To add insult to injury, internet was provided over a dial-up service – and for people in more remote parts of Australia there were no untimed local calls, meaning you were paying a timed call charge to dial up and get online.

In the nearly twenty years since that time, the technology that people use to go online – in regional and remote Australia just as in built up areas – has changed profoundly.

This message has been brought home to me very powerfully in the consultations I have been doing as part of the Coalition’s policy to spend $100 million on improved mobile coverage in regional and remote Australia.

In the last year I have attended over 50 community meetings in more than 30 electorates across regional and remote Australia: from Geraldton in WA to Dumbalk in Victoria; from Balranald in NSW to Clarke Creek in Queensland; from Gunns Plains in Tasmania to Renmark in South Australia.

I have heard a clear message – people without mobile coverage in their town feel significantly disadvantaged.

Safety is the first thing people mention in these meetings. Mobile coverage means a quicker response to car accidents; and greatly assists in fighting bushfires, floods and other natural disasters.

Tourism quickly comes up in the conversation. Guests from Australia’s big cities – or around the world – expect to have mobile connectivity wherever they stay.

A tourism operator in Narooma, in southern NSW, told me there is no mobile coverage in his park, and one in 10 of the people who drive up choose not to stay as a result.

Mobile connectivity has a big role in agriculture: it allows the use of technology to carry out many tasks remotely, such as monitoring soil moisture, supplying water to drinking troughs for cattle and opening and closing gates.

If they have mobile coverage in the paddock, farmers can productively use their time on the tractor to do business online.

The data supports the anecdotal impressions I have formed.

People in regional Australia are using their mobile phones to access the internet more than ever, with usage growing by 33 percentage points in the last four years.

In more remote areas, one in three people now use their mobile phone to go online, compared with one in 20 just four years ago.

It is clear that in regional and remote areas people are making very heavy use of mobile networks – particularly Telstra’s 3G network – for broadband access.

This is an expensive way to get online, when you compare it to fixed line services which are readily available in built-up areas.

So the nature of the digital divide issues has changed – but the importance of equitable access to communications has not.

Abbott Government policies to address equity issues

Let me turn therefore to some key priorities the Abbott Government is pursuing to maximise access to our communications networks.  I want to talk about the affordability of the NBN; access to fixed broadband services; and access to mobile voice and data services.

When it comes to the NBN, a key concern which the Coalition highlighted when in Opposition was that the previous government’s model meant very high capital costs – which in turn would feed through to high prices to end users.

When we came to office we directed NBN Co to carry out a comprehensive strategic review.  This confirmed our fears on this point: it found that if the previous government had proceeded with its plan for the NBN, the end result would have been monthly internet bills rising by up to 80 per cent, or $43 a month.[2] 

Given the evidence that affordability is the biggest barrier to broadband access in the home, this would have been bad news for access by lower income households. 

According to the Australian Bureau of Statistics, the bottom fifth of income earners are almost seven times more likely to have not accessed the Internet than those in the top fifth. [3]

Hence a key priority for the Abbott Government has been a rollout plan which is much less profligate in its use of capital. The so-called Multi-Technology Mix, of fibre to the node, fibre to the premises, and cable, which NBN Co is now using, will save over $30 billion in capital costs – and in turn feed through to materially lower prices to end users than would have been the case under the previous government’s plan.

Affordability is a particularly important issue in regional and remote Australia where broadband competition is not comparable to major cities, and where internet access can be prohibitively expensive, imposing a burden on lower-income households.

Median household weekly income in major cities in 2011 was $1322; while income in regional and remote areas was over $300 less. It is not surprising then that the take-up rate of broadband in these same areas is also lower. While 76% of households in capital cities had broadband access, the figure was nearly 10 percentage points lower in the regions.

Turning from affordability, to physical availability, of fixed line broadband, under the previous government there was quite a disconnect between what was promised and what was delivered.

As at the 2013 election, there were just under 260,000 premises which could receive an NBN service.  The previous government had spent $6 billion – around 15 per cent of its claimed total budget for the NBN – yet the network reached just 2.5 per cent of premises.

Hence a clear focus for the Abbott Government has been improving the rate at which the network is being rolled out.  A year after the election, the network passed over 520,000 premises – that is, roughly double.

We also have a clearer focus on improving availability to those outside the fixed line footprint – as part of our focus on breaking down the digital divide. 

In May this year NBN Co published the results of its review of the fixed wireless and satellite rollout.

The review found an estimated demand for fixed wireless and satellite services of more than 600,000 premises outside major cities by 2021 – three times as many as originally anticipated.

As a result, NBN Co has changed its rollout plan to double the number of fixed-wireless base stations from 1400 to 2700; extend the reach of the Fibre to the Node network to serve up to 25,000 premises which had been slated for a fixed-wireless or satellite connection; and shift up to 70,000 premises which would have received a satellite service onto other technologies to free up satellite capacity.

The third area of priority has been to improve mobile coverage in regional and remote areas.  Let me quote here from what ACCAN had to say prior to the 2013 election:

In the drive towards a National Broadband Network (NBN), mobile coverage has fallen by the wayside and many people in rural and remote Australia can’t even get a signal. ACCAN is calling for a new targeted and strategic approach by government to address the market failure of mobile communications in the bush.[4]

To address these concerns, the Abbott Government is providing specific funding support to extend mobile coverage and competition in regional and remote Australia.

The Mobile Black Spot Programme will improve coverage along major transport routes, in small communities and in locations prone to experiencing natural disasters, as well as addressing unique mobile coverage problems.

The $100 million investment will attract additional funding from industry, state and local governments, and communities, as well as leveraging the NBN fixed wireless rollout.

As well as improving coverage, the programme also aims to stimulate competition in the regional mobile market.  This is important because competition is a key element in delivering the best possible services and options to end users.

The programme guidelines are designed to facilitate the co-location of carriers and equipment on a tower, meaning that increased competition will be encouraged in regional and remote Australia.

In addition, there is scope to use NBN Co’s fixed wireless towers in many parts of the country.  NBN Co is currently looking at ways to make these towers available for use by the mobile network operators and the government has given strong encouragement of this direction.  

We are well advanced with the programme and expect to be commencing a competitive selection process within a few weeks – consistent with our stated time frame of commencing the competitive selection process in the second half of 2014, and of being in a position to announce the base stations which have been funded in the first half of 2015.

Conclusion

Let me conclude with the observation that the rapid rate of change has been the great constant in the communications sector in the nearly two decades in which I have been privileged to work in it.

But the importance of striving for the widest possible access to communications services has not changed – even though the technologies we are talking about certainly have.

As I have argued today, the Abbott Government has a clear focus on making access to communications networks available to as many people are possible.

I know this is also a priority for ACCAN – so I thank you for your work in this area and look forward to continuing to work with you on these issues.

[1] http://www.abc.net.au/worldtoday/stories/s246369.htm

[2] http://www.nbnco.com.au/content/dam/nbnco/documents/NBN-Co-Strategic-Review-Report.pdf, p 68

[3] http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8146.0Main+Features12012-13?OpenDocument

[4] http://consumersfederation.org.au/accan-releases-election-2013-wish-list/