Viewed 415 times
Speech to the CommsDay Summit
Well it’s good to be with you.
This CommsDay summit comes at a time when the Australian telecommunications sector is doing an extraordinary job keeping Australians connected as we work and study from home in response to COVID-19.
Today I want to speak first about just how the NBN is responding to this challenge.
Next I want to review how we got here – through determined strategic execution over the last six and a half years.
And finally, I want to speak about the way forward for the NBN – including its continuing role in our response to, and our resurgence from, COVID-19.
How NBN is responding to the challenge
How NBN is responding to the challenge of COVID-19 is certainly a great test for the NBN – and the entire telecommunications sector.
Millions of people are working and studying from home – meaning a lot more traffic over the network.
Many observers have been worried that this would swamp network capacity. After all, a home that in normal circumstances would not use its NBN connection during the day might now have two adults working from home and two children studying from home.
The consequence has been a 70-80 per cent increase in day time traffic levels since 28 February. But in fact the network has ample capacity during the daytime – because it is engineered for peak traffic levels, which in normal times occurs about 9 pm on a Friday night when millions of Australians are watching Netflix, Stan and other streaming video services.
In normal times, traffic levels during the day are only around half the levels of the 9 pm Friday peak. That daytime ‘headroom’ has been very important in helping NBN cope with the daytime spike that we have seen in the last few weeks.
Of course, we have also seen a rise in the traffic levels at the peak time – which remains around 9 pm on a Friday night. The peak time traffic of last Friday night was up about twenty per cent compared to the last week of February. Social distancing means even more people are now staying home and turning to the internet for entertainment rather than going out.
Of course NBN is watching its traffic levels carefully. We know that in countries which have had full-scale lockdowns, the increase in busy hour traffic has escalated quickly.
Obviously I want to be cautious in predicting what may happen in the future – but to date NBN’s leadership team has planned and responded well.
The company moved quickly to plan for likely traffic increases as it became clear that life was going to change in Australia in response to the COVID-19 outbreak. As part of the planning it contacted companies like Telecom Italia to be able to learn from their experience.
NBN Co established a cross-industry working group of key telecommunication network carriers to co-ordinate network performance management during this challenging time.
A key move by NBN Co was to ensure that its retail service providers had adequate capacity to deal with likely traffic increases. It provided 40 per cent more CVC capacity for retailers at no extra charge.
NBN has also been working to add extra capacity into its own network, and to respond to any emerging bottlenecks as quickly as possible.
Its moves have not been confined to the fixed line network. NBN has provided an additional 45 Gigabytes of monthly download to satellite customers at no extra charge during the COVID-19 outbreak – effectively doubling the average monthly download limits on retail plans offered by the Sky Muster service providers.
The working group between NBN and the retail service providers has also identified other key actions necessary to maximise capacity – such as asking the streaming video providers to reduce their bit rates.
In March, NBN Co held an RSP working group meeting to discuss the impacts of streaming video providers. As Minister, I then wrote to all the major streaming video providers asking them to reduce their bitrates, as part of a plan to manage the foreshadowed increases to network traffic. I thank Netflix, Google, Stan, Amazon, Foxtel and Disney - all of whom came forward rapidly with action plans.
Typically, streaming video services account for around 44 per cent of the total network traffic. Once the major streaming platforms implemented reductions to their content bit rate, this resulted in an overall reduction of network traffic by 4 per cent.
Now it is far too early to declare victory.
But we can certainly say that Australia has been far better placed to respond to this dramatic and unexpected increase in the number of people working and studying from home because the NBN rollout is 96 per cent complete. If we had been seeking to meet this challenge when relying mainly on earlier generations of broadband technology, things would have been very, very different.
How We Got Here
I want to turn then to how we got to this point – where 11.1 million Australian homes and businesses are able to connect to the NBN, and more than 6.8 million homes and businesses already have an active service — with up to 40,000 premises taking up NBN services every week. 
Let me make an obvious point: if COVID-19 had happened five years earlier, the NBN could have played at best a very modest role.
That is because, when government changed in 2013, we inherited a project in crisis. Only 51,000 premises had been connected to the fixed line NBN.
But our Liberal National Government has executed a very substantial turnaround in this project – and that hard work over the past six and a half years has put us in a much better position to deal with this very sharp increase in traffic as people work from home.
Let me remind you that under the previous government the NBN was a poorly conceived project; its implementation was rushed; its underlying policy rationale was not particularly clear; and many promises made about the project were not being met.
For example, then Prime Minister Rudd promised in 2009 that the NBN would attract private investment from households and institutions. This did not happen.
He promised that all homes, schools and workplaces would be connected within eight years. This too did not happen – in large measure because Labor made so little progress over the four years following Mr Rudd making that announcement.
And remarkably, there was no cost benefit study done before this extraordinary financial commitment was made.
When our Liberal National Government took responsibility for this project in 2013, we had a very clear objective – to complete the NBN rollout as quickly as possible and at the lowest possible cost to the taxpayer.
After rapidly conducting a strategic review, we determined to move the NBN to a multi-technology mix, as a far more effective strategy to provide high broadband speeds to premises across Australia at a reasonable cost.
Many at the time criticised this change of direction. But it gave us a clear strategy to get the rollout delivered – and over six and a half years we have executed on that strategy with a singular focus.
Under Labor’s plan the NBN would have not been fully delivered until 2024 – and it would have cost some $30 billion more than under our plan. As at today, under Labor’s plan, there would be only 7 million fixed line premises able to connect.
It is not just the fact that the great majority of homes can now connect to the NBN which equips it to serve the nation at this time of great need.
It is also the fact that the NBN is increasingly meeting Australians’ needs when it comes to the speeds they take, the prices they pay and the amount of data they download.
Today 68 per cent of existing customers and 80 per cent of new customers are choosing retail plans with peak speeds of 50Mbps or higher.
The way forward will see Australians moving to even higher speed plans. The NBN is technically capable of delivering speeds of 1Gbps to over half of all customer premises. This proportion will rise each year as we continue to build out greenfields sites which of course are fibre to the premises.
Obviously a very important lever to influence the speeds that customers take is the price at which particular speed plans are sold. The story here is very simple: broadband prices have dropped steadily.
The recently released 2018-19 ACCC Communications Market Report found real prices fell by 1.4 per cent in 2018-19 and are down around 13 per cent since 2014-15.
And the price cuts keep coming. For budget conscious households, NBN Co introduced a new entry-level product in October last year. This underpins 12/1 Mbps plans from retailers such as TPG, Internode and iiNet for $60 or less a month.
There are also new wholesale prices taking effect soon for higher speed plans, following NBN Co’s November announcement. I expect these will spark a material increase in the take up of higher speed plans.
For example, there is a new 100/20 Mbps bundle that is significantly cheaper than the existing 100/40 Mbps bundle.
There are also new ultra-fast bundles with peak download speeds of 250 Mbps and up to 1 gigabit per second (Gbps) respectively, at markedly lower prices than existing products.
The 250/25 Mbps and gigabit bundles are expected to be made available initially to the 4.4 million premises to be served by FTTP and hybrid fibre coaxial. This means almost half the NBN fixed line footprint will have access to these speeds at launch.
This combination of speed and price is reflected in another important feature of NBN usage – Australians are downloading more data.
The average volume of data downloaded over NBN services as at December 2019 was 293 GBs per month.
In 10 years things have changed enormously. In 2010, the average download per user over fixed line networks was just 11 GB per month.
Of course a major factor here is that most retail plans today do not have monthly download caps – whereas that was very common 10 years ago.
Let me mention one other aspect of how we got to this point – the fact that as NBN Co builds momentum in its operational performance, it is also building momentum in its financial performance.
The company generated $1.8 billion of revenue during the first half of fiscal 2020, largely driven by strong activations across both residential and business customers.
Average revenue per residential user has increased from $43 to $45 per month since December 2018, reflecting consumer demand for higher speeds.
NBN Co remains well placed to meet the financial and operational goals of its 2020-23 Corporate Plan – although of course we may need to factor in potential economy wide impacts from the COVID-19 event.
The company’s latest corporate plan indicates it is transitioning into a sustainable commercial enterprise and is expected to achieve positive cash flow from 2022-23. This is key to NBN Co being able to invest in upgrading the network over time.
The Way Forward
In the final part of my remarks I want to speak about the way forward for NBN Co – and the part it will play in our resurgence from COVID-19 as a nation.
As we have seen with the bushfires over summer, and now the COVID-19 pandemic, NBN is key to keeping Australians connected in bad times as well as good.
Now of course it is our policy – and it was Labor’s policy – that in due course NBN Co should be privatised. But as I have observed before, this is a number of years away.
At this point in NBN’s growth, we have other, higher priorities. We want to leverage the NBN for social and economic advantage – and the role it has played in responding to bushfires and COVID-19 is a good example of the social advantage I am talking about.
The Government fully supports NBN Co’s business objectives. We want to see the company continue its strong focus on delivering its business plan and driving take-up of services. This will enable consumers and businesses to maximise the use of the network to obtain the productivity benefits that digital connectivity can offer.
Minister Cormann and I, as joint shareholder Ministers, and our respective departments, will continue to work closely with NBN Co Board and Management.
I now want to describe three priorities for the way ahead.
Keeping Australia connected and responding to COVID-19
The first priority is to keep our nation connected – as we get through the immediate challenge of responding to COVID-19.
At a time of such extreme uncertainty, we are seeing more and more families around the country put their faith in the NBN by ordering a service. During the last fortnight we have seen more than 80,000 activation orders placed for NBN services. Over that same period, we have also seen around 20,000 orders for people wanting to upgrade their NBN plan to a faster speed tier.
I am very impressed by the collaborative efforts across the telecommunications sector to support Australians at this challenging time. I say thank you, on behalf of the government and the people of Australia, to NBN, to Telstra, Optus, Vodafone, Vocus, TPG, Aussie Broadband and so many other companies in the sector.
You have come together to offer pricing relief; provisioning of extra mobile data; upgrades to unlimited home broadband plans; provisioning of additional network capacity; additional data for Sky Muster users, to name but a few.
You have also worked very rapidly to support the shifts we have seen in education, tele-health, tele-working and many other areas – where several years’ worth of behavioural change has been telescoped into a few weeks.
One good example is the rapid shift to telehealth, following the recent announcement by Health Minister Greg Hunt of a major support package. As Greg said:
We are making telehealth a key weapon in the fight against the COVID-19 pandemic. Expanding the consultation services available by telehealth is the next critical stage in the Government’s response to COVID-19.
In Australia there are approximately 8,000 GP clinics with more than 36,000 GPs. Around 90 per cent of these practices are already embracing telehealth to support consultations during the COVID-19 crisis.
A significant player in this space is Sydney based primary health technology company, MedicalDirector, which provides software solutions to around 50 per cent of all GP clinics and specialist medical practices around the country. There are more than 70 million consultations annually through these software platforms.
But a survey by Medical Director of the doctors who use their software found that while 95% are offering telehealth services, or plan to, of those, 60% are currently using phone only. Many would like to offer video as well – but they raised hardware and connectivity issues as a barrier.
As part of their COVID-19 response, Medical Director announced last week that they would provide fully integrated telehealth capabilities into all of their clinical platforms at no extra charge. This will help doctors to video conference with their patients in a way that was not possible before.
Now such a widespread adoption of videoconferencing requires a fast, reliable broadband connection, particularly when you consider that there may be around 4 doctors operating from the same clinic, each undertaking consultations online.
To address this, MedicalDirector and NBN Co have been collaborating on a solution that will help support practices with the increased bandwidth requirements from doing many more telehealth consultations.
Matthew Bardsley, the CEO of Medical Director, said:
Without the support and collaboration of the NBN, our ability to respond to the needs of General Practice during this time would have been challenged. With this announcement today we look forward to enabling ideal General Practice services in Australia under the new social distancing requirements. Keeping patients healthy and our customers, the doctors, the nurses and staff as safe as possible.
Today, I am pleased to announce that the NBN will be offering any GP clinic in Australia the opportunity to upgrade their connection to a 50/20 service at no extra cost. This will be available for a period of six months, with opportunity for review.
This means that clinics that may have purchased a residential 12/1 or 25/5 service can speak to their retailers to get the extra bandwidth to support their increased online activity at no additional cost. A 50/20 service can easily support multiple video conferencing streams simultaneously.
Of course this will be available regardless of which practice management software or video conferencing tools the clinic uses.
This will be part of a broader raft of measures that NBN Co is currently finalising with retailers. The aim is to help Australian families through this difficult period and will include support for those who can’t pay their internet bills, and those who have lost their jobs.
There will be specific measures for businesses and also a program to help school children have broadband access at home. Ultimately this will result in NBN Co supporting retail service providers to support their customers to stay connected.
Consultations are currently underway with industry on these measures and we will have more to say on this shortly.
Completing the Rollout
The second priority I want to speak about is to complete the rollout.
The network is already available to 11.1 million premises, NBN Co is well positioned to reach its target of 11.5 million premises ready to connect during the course of this year.
As foreshadowed in last year’s Corporate Plan, much of the remaining construction will focus on complex builds such as culturally significant and heritage sites, airports and remote islands as well as regions recently impacted by natural disasters.
I have given the company a clear direction about the process I want to follow before the network is declared complete and fully operational under Part 3 of the NBN Companies Act.
I will require NBN Co to provide me as Minister with formal advice that in its judgement the volume rollout of the network has been completed.
This advice will need to be supported by detailed technical analysis. As Minister, I will need to assess this advice and evidence to be satisfied that construction and network performance targets, as outlined through the Statement of Expectations and the 2020-23 Corporate Plan, have been achieved.
One of the reasons for this careful process is to deal with the reality that the network footprint will never be definitively complete. There will always be a continuing pipeline of new developments to be connected to the NBN. But I will be expecting the analysis from NBN Co to differentiate between the substantive completion of the network rollout and the future pipeline of business as usual work.
I will take the time necessary to be satisfied on the evidence before I will be prepared to make a declaration under the NBN Companies Act. This is important because there are significant consequences which flow from making that declaration.
Making Australia More Productive
The third priority for the NBN is its growing contribution to making Australia’s economy more productive. Throughout the COVID-19 crisis, the bandwidth NBN supplies into millions of homes around Australia has been key to the individual productivity of Australians.
And over the past few years we have seen growing evidence of the productivity benefits that the NBN brings to the Australian economy. As our economy powers up again, those productivity effects will be enormously important. Let me mention three mechanisms by which NBN boosts productivity.
First, we know from comparative analysis done by consultants AlphaBeta that in areas where the NBN has rolled out there is more economic activity. This “NBN effect” supported an estimated $1.2 billion in additional economic activity in 2017 by helping create new jobs, new businesses and better productivity. By 2021, it estimated the “NBN effect” could deliver up to an additional $10.4 billion in gross domestic product and help create up to 31,000 additional jobs.
The research also shows that in NBN-connected areas there are higher rates of business growth and more digital jobs than in areas yet to be connected. In NBN connected areas the average rate of growth in digital economy jobs is outpacing the national average by a factor of five.
Secondly, the NBN brings more choice and lower prices to big business users of telecommunications – delivering productivity benefits that flow through the economy. Many smaller and challenger telcos are using the NBN to serve big customers on a national basis.
Australia Post selected Comscentre to manage its network upgrades and connectivity over the next five years. Westpac signed challenger provider Aussie Broadband to supply 950 of its branches and ATM sites, at the same time as choosing as Telstra for Westpac’s head office business – in each case using NBN infrastructure.
Coles switched providers from Telstra to Optus, with Optus making extensive use of NBN fibre to supply around 2,400 sites including shops, logistics sites and corporate offices.
Coles chief information and digital officer Roger Sniezek commented that:
the increased speeds and capacity of this new network give us the flexibility to rapidly increase the speed at which our stores can access and transfer data.
A third productivity boosting mechanism is that the NBN stimulates small business to invest more in digital technology - and there is a clear link between using such technology and productivity improvements.
Research by AlphaBeta also found that small businesses with a higher take-up of digital technology tended to be more successful in growing their revenues. Between 2015 and 2017, firms with the highest levels of technology spending growth grew their revenues 3.5 percentage points more than those in the bottom quartile of technology spending growth.
A specific productivity boost comes from the NBN making it easier for small businesses to use cloud based software, allowing them to operate much more efficiently. Such software can help tradespeople automate many of the processes in their businesses — such as scheduling jobs with staff and customers, communicating with employees and clients about jobs, recording compliance information, preparing quotes and invoicing customers.
We know therefore that small businesses can get big productivity gains from the NBN. But we also know, from research by AlphaBeta released late last year, drawing on anonymised business performance data from online accounting platform Xero, that there is still a gap in technology adoption by small businesses.
NBN Co has clear plans to help small businesses adopt technology. The company has established a team of community and stakeholder managers — “NBN local” — who deliver small business, stakeholder and community engagement programs across Australia.
The aim is to help educate and shift businesses to appropriate plans, improve customer experience, and support the expansion of small businesses.
NBN Co is also working with industry bodies to identify opportunities to engage with businesses and provide information to help to improve their digital capability by uplifting digital literacy.
Over the last month many Australians – including many small businesses – have learned very quickly about videoconferencing and other remote working tools. As we bounce back from COVID-19, these new skills and techniques will be just part of the way NBN helps small and medium businesses to build their productivity.
Let me conclude, then, with the observation that COVID-19 is a great test for our nation – and for the NBN.
The NBN is supporting Australians to respond to this challenge – and it will support Australians as we bounce back.
We have worked hard over six and a half years to drive the rollout of the NBN – and that work has left us much better placed to respond to these challenging circumstances.
The importance of a fully rolled out NBN to support the resilience, productivity and connectedness of our nation is increasingly evident.
We have seen it during the bushfires and we have seen it during COVID-19 – and I am confident we will see it even more clearly as we return to normality.
 https://www.nbnco.com.au/corporate-information/media-centre/media-statements/australian-data-demand (Note - website data is published weekly, the 70% is relevant to Friday 27 March – NBN are providing me with daily updates)
 https://www.nbnco.com.au/corporate-information/media-centre/media-statements/australian-data-demand (including unpublished recent internal data received from NBN Co)
 NBN Weekly Metrics – internal data – yet to be published on NBN website
No direct reference – info based on a conversation I had with the CEO.
 Stephen Rue, NBN Co Half Yearly Results Speech, https:/www.nbnco.com.au/content/dam/nbnco2/2020/documents/media-centre/NBN%20Co%20Half%20Year%20Results%20Speech%20FY20.pdf.
 AlphaBeta, Connecting Australia: How technology is levelling the playing field for small business, October 2019, p. 16.