I acknowledge the Traditional Owners of the land on which we meet and pay my respect to Elders past and present.
Thank you again for the opportunity to contribute to this forum.
Today I would like to cover two things: a contemporary checklist against what I consider to be the principles and strategic imperatives of Australia’s communications sector, which I articulated at the CommsDay Congress in October 2016; and to advocate some policy directions that Labor has been considering since.
I frame my comments today within the prism of the Communications portfolio as a critical determinant of national prosperity and identity. The portfolio is overarching and should be driving a whole-of-economy narrative about the type of country we want to be, and the quality of life we want for our citizens.
I’m certainly not the first to hold this view. And I know members of this audience have heard, as well as delivered, compelling commentary on phenomenon and challenges of the digital economy over many years.
My starting point is this: Australia’s communications agenda should be about creating a more equal society.Never has this mission been more important in the face of a rising wealth inequality gap; the enduring power of the postcode, which many of us thought would have diminished by now; a labour market where wages growth is stagnant and work is becoming more insecure.
This is a value proposition as much as an economic one. The transformational power of ICT has long been my passion.
Why do I choose to start my comments with these sentiments?
It’s because while we focus on the big ticket items in the communications sector, we must not forget that they are never an end in themselves. I was reminded of this a few months ago in the Parliament when I quoted Paul Keating, who noted this very fact in relation to the cross-media ownership regime which he instituted.
Likewise, I will offer comments today in relation to some contemporary developments in the sector, including the National Broadband Network (NBN). Whatever your views about broadband policy, it is also a fact that the NBN is not an end in itself.It never was and it never will be.Rather, it is a means to an end:
•a platform to drive the digital economy and enrich the quality of our lives;
•how we consume education and develop new skills as our economy evolves;
•how it may benefit an ageing population and people with a disability;
•how we do business and deliver services more efficiently and cost-effectively.
His comments were made in the context of dispossession, but Keating’s vision for Australia rings true for the role of the digital economy:
“I always hoped and believed that Australia could be a great country. Not a mediocre country.But a great country.But to be a great country you have to have a great idea about yourself – in our case, a new idea about ourselves.”
I ask you to reflect on the question: what great idea does Australia now have for itself today?
And, what role does communications policy play in making that idea a reality?
We know that technology has consistently fostered economic growth and will continue to do so. A ten percentage point increase in broadband penetration can raise annual per capita growth by up to 1.5 per cent.[1] However, growth in and of itself cannot be the indicia of success. The measure must be inclusive growth.
And if you are cynical about the importance of a national vision to drive our sector and inclusive economic growth, you may wish to compare these two scenarios:
Quote 1:
“We are being swept into a new, high-growth e-economy, one powered by the Internet and other infocomm-related technologies…The Singapore government recognised the vast economic potential of the Internet economy several years ago…we have invested heavily in the Internet infrastructure to give Singapore the first-mover advantage in the region.”[2]
Quote 2:
“You are going to find…you will be so excited with the Digital Transformation Office you won’t have time to laugh. You will be quivering with excitement”.[3]
Who said what?
The first was the Singapore Minister for Communications and Information Technology, speaking in 2000. That’s 17 years ago.Singapore had just opened its communications sector to full competition and declared its aim to be the info-communications hub of the Asia-Pacific, a policy reinforced throughout its regulatory instruments and decision-making and accomplished several times over.
The second was then Communications Minister Turnbull in March 2015. I note that the name has since changed to the Digital Transformation Agency and yet another CEO was appointed last week.Aside from a litany of non-starts and stuff ups, there is not much excitement to behold in this government’s digital agenda.As I have said before, an expensive buzzword advertising campaign does not make for a strategy.
As the evidence bears out, Keating was onto something.
Government has a critical role to play in setting the scene for that great idea. Whatever you think that is, government should be ensuring that as technology and digitisation become more deeply embedded into society, they improve the quality of lives through inclusive growth.
Against this scene, I turn to a contemporary evaluation of the principles-based approach to communications policy I previously outlined.
Piecemeal policy is poor policy
Whilst the superiority of joined-up policy is widely appreciated, particularly in the context of fulfilling a national communications vision as I have discussed, there remains scant evidence of the political will to implement it in Australia today.
I was buoyed by the speech delivered by Departmental Secretary Smith, a few weeks after my own address to the CommsDay Congress last October, which included a statement that the Minister has requested a holistic communications policy roadmap centred on a principles-based framework.[4]
That would be a wise development. It is folly to assume one can break off a piece of communications policy, fiddle with it, and then neatly fit it back into the jigsaw later.
The irony of the government adopting the same principles-based policy approach I had advocated is not lost on me, considering some of the challenges in this space are fast crystallising:
•The rise of telcos as content providers and the entry of digital players in competition with existing broadcasters (free to air and subscription alike) for lucrative sports rights is now well entrenched overseas and has begun to take hold in Australia. These developments beg the question as to the appropriate policy response. On one hand, FreeTV’s Harold Mitchell is correct to note that a new competitive tension is driving the market. But what does this mean for the current ecosystem of existing regulation, or even the very definition of what constitutes a broadcasting service, or content service, and the rules that should apply? In turn, what should Government be doing to facilitate the evolution of broadcast technology standards, so that when consumers are faced with a choice of what to watch over that black screen in the lounge room, the viewing experience won’t be determined by a difference in the quality of transmission via digital television as opposed to broadband?
•While it may be that ‘distribution is queen’, content will always be king irrespective of the path and pace of convergence. However, it is difficult to ascertain a coherent content policy direction from this government. Recent headlines suggest an intention to free up local content quotas for free to air broadcasters as part of a review, or even expanding their rules to include online streaming services.[5] It is apparent after three and a half years of this government that there is a policy vacuum in content reform, with disparate processes having led us nowhere. This is despite the fact that the Department’s own 2014 Deregulation Roadmap identified specific content policy issues in need of reform, and we’ve had the benefit of the ACMA’s Broken Concepts and Enduring Concepts work for some time now.
•Over a year ago, the government proclaimed it would be enacting, “the most significant reforms to our media laws in a generation”. Disappointingly, the proposed reforms offer only fragmented deregulation, nothing in terms of a rethink of the policy or tools for strengthening the public sphere in the contemporary media ecosystem. Zero delivery has eventuated, despite Labor offering to support strengthening local content obligations and repealing the 75 per cent reach rule - regulatory spring cleaning, which could have been achieved last November. I’m not surprised that regional broadcasters recently vented their frustration.[6]
•So we have a Minister who instructs his Department to develop a principles-based framework for policy; yet refuses to acknowledge the indisputable fact of Australia’s highly-concentrated media landscape; and the need for policy to be informed by a holistic inquiry into inter-related issues such as content rules, licence fees and the contemporary digital media environment as a whole.
•Recent developments in online advertising further reinforce the strengths of traditional media. Recent figures show the Google/YouTube advertiser boycott has contributed to the first decline in digital media ad spend in nearly eight years.[7]Google’s response to this crisis has been to institute a ‘three-tier overhaul of Google’s advertising policies, both on YouTube and on the company’s wider ad products’[8] - an interesting development when considered against the Government’s recent proposal to extend copyright safe harbour to Google and Facebook. The Government’s foray into the digital media arena was brief, with that schedule of the Copyright Bill shelved last month[9]. Again, another area that deserves and demands a solid evidence-base.
•Consider another example of policy not guided by the evidence, with the Government introducing a bill into Parliament to repeal Part XIB of the Competition and Consumer Act, which has been an effective and proportionate feature of the telecommunications-specific competition regime.
I don’t doubt that the regulatory and policy arms of our bureaucracy would appreciate holistic guidance on a roadmap for the sector. What I do doubt is the political will of this government to articulate where it actually wants to take us, and to exercise conviction to lead on these important issue.
In each of these areas I think it is proper to ask:
•By the time anything eventuates, will it be a genuine program of work with a shared vision to facilitate Australia’s transition to the desired future state?
•Will the transition be based on well-considered review of policy options, underpinned by rigorous evidence on how best to achieve the policy aim?
•And what does this mean for your average Aussie consumer who doesn’t expect to pay to watch the footy finals, who would like a variety of Australian news and current affairs perspectives, some community broadcasting content that isn’t impossible to find, and Australian children’s content that isn’t just from the ABC?
The legacy world must be confronted
My view is that our sector’s biggest legacy world confrontation is upon us in the form of universal service.
With the Productivity Commission review of the USO scheduled to report this month, Labor has a sincere desire for long-term policy resolution in this area to remedy what feels like a genuine exhaustion for reform borne by both the sector and consumers. A reformed, relevant and sustainable USO policy is integral to the mission of inclusive growth.
In some thoughts to ACCAN a few years ago, I examined three aspects of what I contend to be the principles and challenges of affordability: choice, disruption, and equity. In addressing these factors, I discussed potential policy directions in the areas of new models for extending affordability and accessibility, capitalising on what’s working, and debunking the notion of NBN unaffordability.
These themes remain relevant, as evidenced in many of the submissions to the current inquiry and the last Regional Telecommunications Review, but if I were to distil them into a single question today, it would be this: what approach will deliver the best value?
Whilst this may appear self-evident, consider the following:
•The reality is that the current USO arrangements are the construct of a deal, not targeted public policy, the result being a political and contractual scheme. This has led to it becoming inefficient by design as much as the passage of time, but how do we ensure that greater efficiencies do not erode affordability and accessibility goals?
•Maintaining legacy services is an expensive exercise. Telstra continues to provide legacy infrastructure and services in some cases in excess of its regulatory obligations, particularly in regional and remote areas, largely because it can and there is an expectation that it should do so. How will those arrangements change under a new USO regime?
•If we offered a notional consumer a cheque equivalent to the annual amount it currently costs to fulfil the USO, would they really choose to apply it in the same way as how it is currently expended?
These are indeed questions worth asking, particularly in terms of the potential for achieving more with the same; and giving consumers the ability to innovate according to their needs in terms of access options and outputs sought.
USO policy is also a prime example of how not every reform challenge will have an objectively right or wrong answer. One of the simplest notions of equality of access is one of the most complex in that different approaches have their own trade-offs, the decisions for which are ultimately political judgements for government.
In this respect, USO is also instructive in terms of the process for regulatory decision-making. A key component of success is derived from how those trade-offs are assessed, how the intent is communicated, and how this aligns with the broader view of where we want the sector to go.
The problem we face is that such direction from this government has been absent, save for a flawed NBN approach and the highly politicised and independently criticised scheme to subsidise mobile tower construction.
Communication of intent has been hollow slogans and scant political consideration of where this fits within a policy roadmap.
The end game should, of course, be universal access to broadband because of what can be done with it, not because of what it is. However under this government, even the promise of all interactions with government being achievable online by 2017 looks less likely by the day.
Consumers must be at the policy core
The right of universal access to broadband is about more than statistics of how many premises are active or activated. There are two other criteria relevant to consumers:
•Quality: speed, fit for purpose, value for money; and
•Confidence: in both the network and the services provided over it.
The shortcomings of the NBN under the current multi-technology mix have been well-documented and reflected in complaints data. A near 150 per cent increase in new complaints to the Telecommunications Industry Ombudsman (TIO) about NBN faults and a near 50 per cent increase in new complaints about speeds are not teething issues.
There should absolutely be increased transparency and access to information to remedy the current knowledge gap faced by consumers when making an informed choice of provider and plan. So whilst the recent announcement of a broadband monitoring program by the ACCC is welcome and should have been instigated long ago, it is not in itself the solution. The TIO expects complaints about the NBN to double from this year. The evidence already reveals that the regions with the highest levels of NBN-related complaints are primarily those in the FTTN footprint.
I do not consider either of NBN nor the RSPs to be blameless in the face of these consumer failings, and neither will I apportion a blanket statement of more blame to one over the other. But the Minister’s lamentations that the NBN is being unfairly criticised is grist to the mill for consumers. The current issues of poor experience will not be resolved if the monitoring program is a politically-motivated exercise designed to mitigate criticism of NBN and the government.
In all of this, there are two issues not being discussed:
•the need to confront a key consumer issue in the legacy world, to define a more meaningful customer service guarantee with back-to-back service levels as between wholesale and retail; and
•what is the best role the co-regulatory regime can play? Indeed it was at this very forum that ACCAN alerted us to the fact that they were receiving a high level of complaints from frustrated consumers about these very issues, and that this would worsen over time, and that policy needed to prioritise this.
A customer-first mentality in the face of systemic problems needs admission and ownership. This government has come very late to the party on both fronts on NBN consumer complaints.
For months Government MPs have been saying in the Parliament that their NBN is functioning just fine, and complaints are to be expected.
I warn of a trend in declining consumer confidence in the NBN that the government would be wise to heed. As a local Member, broadband ranks as the highest unsolicited complaint I receive from my constituents. This has been almost consistent in nearly seven years, the main request about the NBN being, “when am I going to get it?”
Now as the Shadow Minister, it is undeniable that feedback from around Australia has shifted from impatience about when consumers will be able to access the NBN, to utter frustration and even anger when they become connected and suffer a pitiful experience from the outset.
Meanwhile, the customer’s assessment is to wish a pox on both houses of RSP and NBN. They are exasperated by the whole process.
The outcomes of broadband monitoring scheme need to be meaningful. The ACCC states it will enable it to determine whether consumer complaints are being caused by the NBN’s performance, or by RSPs failing to purchase sufficient capacity.
It is of course legitimate for regulators to investigate and take action where consumers are not receiving the services they paid for, in terms of both speed and quality, or whether the representations about those services are misleading or deceptive. But I question whether the delineation will be a straightforward inquiry that can be answered accurately, particularly given the range and complexity of faults and complaints.
Finally, the reality is that the root cause of many complaints is precisely a product of the complexity of the NBN rollout and the technology choices. This is by no means an excuse for RSPs to give poor customer service, but since the ACCC has specifically stated that it will be examining purchased capacity in the mix, it is of utmost relevance. The primary factor that RSPs control is how much CVC they provision and how efficiently their business processes interface with NBN Co.
Therein lies the biggest challenge: an NBN which not only costs more but does less, with RSPs who can’t offer their customers a reliable service with guaranteed speeds as a result.
As I said six months ago, the effect of the current CVC design is to discourage usage. It needs to be reviewed.
Which leads me to a contemporary examination of developments in the NBN.
National Broadband Network
Since 2009, Labor has been committed to a fibre-to-the-premises NBN. Today, our commitment to a fibre-to-the-premises NBN remains unchanged.
From a technology perspective, there is no doubt that fibre is superior in terms of speed, reliability and scalability.
For this reason, the NBN debate has focused on the question of how much Australia should invest in exchange for the digital capabilities we need:
•Should we invest in a cheaper technology now and hope we will not have to incur greater costs to upgrade in the future?
•Or should we invest in better technology now and trust this is a prudent economic decision for the long-term?
I acknowledge all those here today for the contributions you have made to this debate.
The irony is the passage of time has made the debate around the trade-offs somewhat a moot point in the eyes of the public.
Just look at the results.
If someone had told you back in 2008 that Australia would spend $50 billion on an upgraded copper and HFC network, slipping outside the top 50 in the world for broadband speed rankings, you would have fallen off your chair
Unfortunately the NBN that is being rolled out is not cheaper or faster. It’s slower, less reliable, and ultimately more expensive.
You don’t have to take it from me. Maurice Newman, not the world’s greatest Labor supporter, says thus:
“He [Turnbull] recommended the model be fundamentally changed from fibre-to-the-premises, to a multi-technology-mix network based on copper. It was a fateful decision rooted in politics.
Turnbull ignored New Zealand’s experience of falling costs for FTTP connection. He dismissed expert opinion that claimed FTTP was operationally cheaper and generated more average income.
Instead, he went for immediate popularity by promoting a dubiously cheaper, faster rollout…
Turnbull’s decision has saddled Australia with a second-rate network…
Its relative inadequacy will become increasingly obvious over time.”[10]
As the financial basis for the multi-technology-mix eroded, the government did not seek to defend its policy. Instead, their strategy boiled down to one objective: keep moving the goalposts to make a fibre NBN seem as unrealistic as possible.
In the end, this didn’t fool the public.
Soaring consumer complaints and the sentiment of lost opportunity is palpable wherever you go.
As I have noted, current CVC price signals are at odds with the inflated cost base and deflated capabilities of the multi-technology-mix.
As I have detailed, this is no longer an abstract debate because consumers and small businesses are living the consequences.
If you require a demonstration of just how difficult the outlook is for copper, look no further than the somewhat odd commentary by NBN Co about how their FTTN nodes can be repurposed as “extremely valuable assets” once rendered redundant.[11]
The tacit admissions of failure are now becoming more explicit.
During Senate Estimates hearings in February NBN Co conceded there is no capital set aside in the current 30-year NBN business case to upgrade the copper network.[12]
This unfortunately demonstrates the already low 3.4 per cent internal rate of return in the 2017 Corporate Plan is based on FTTN being used to 2040 and beyond.[13]
International experience tells us that an FTTN network produces three times as many faults as a fibre network.
The head of NBN Co has also conceded that of the seven technology footprints, FTTN is the most exposed to the threat of competition from 4G and 5G wireless. [14]
So not only is FTTN a liability to customers in the copper footprint, it is a liability to Australian taxpayers.
In exchange for an upgrade from copper to fibre, households and small businesses will be asked to pay higher prices.
You will recall it was Malcolm Turnbull who said that only half the capital invested in an FTTN deployment could be carried through to a fibre upgrade.[15] This does not even account for the costs to consumers and RSPs who would have to endure another challenging migration.
The critical point here is the government’s approach will require customers or taxpayers to pay for billions in wasted upgrade costs that could have been avoided if the right technology choices were made at the outset.
That is unless you take the view that copper will meet the nation’s needs for the decades to come. It is clear the majority of experts do not share this sentiment, and neither does the Australian public.
As I’ve emphasised, when political and policy direction is lacking, important initiatives lose coherence. Things may appear to make sense in isolation, but they do not join-up to the whole. The multi-technology-mix is a case in point:
•Short term thinking.
•Complexity and fragmentation.
•A pricing design no longer matched to the capabilities of the network.
•Consumer discontent absorbing the energy of policy makers, when more of that energy could be directed at using the digital economy to support a vision for a more creative, productive and inclusive nation.
This inevitably leads to the question: where to from here?
From the outset we need to be realistic about the options before us.
A Labor election win in 2013 or 2016 would have resulted in a broader set of reform options, of a network closer to the original intent and design.
However, from 2018 or 2019, the next time Labor could form Government, the constraints on a new policy direction are considerable.
From Opposition, our task is to both limit the damage by this Government, and call for action to improve the technology-mix where there remains practical scope to do so.
Labor took a robust policy to the 2016 election to scale up the rollout of fibre to the premises and phase out the rollout of fibre to the node.
This would have delivered FTTP to up to 2 million homes and business that would otherwise be stuck on fibre-to-the-node.
But since the election we have seen the Government scale up its flawed rollout of the copper network, making it harder and more expensive for households and businesses to upgrade to fibre.
Information provided by NBN Co at Senate Estimates indicates there are a modest segment of premises scheduled to be connected with FTTN that have not yet entered into an NBN design or construction pipeline.[16]
If Labor was elected last year, these homes and small businesses would have been connected to fibre to the premise.
Of course, Mr Turnbull has opposed fibre to the premises for over six years and we don’t expect this to change at this stage of the rollout.
So can anything be done to salvage what remains of the rollout?
There has been ongoing debate about the merits of taking Fibre to the Distribution Point, or Curb, instead of to the Node. In 2015 my predecessor, Jason Clare, predicted that NBN would begin rolling out Fibre to the Curb.[17]
This has of course happened and has been confirmed even today as being expanded.
Moving fibre deeper into the network and preserving the option of an economical upgrade to full fibre is an important step forward.
At a minimum, it remains possible to take fibre to the curb for these targeted premises without disrupting timelines for the overall rollout.
This won’t fix the NBN - and it’s not fibre-to-the-premises– but it will salvage something better for those households, guarantee better speeds and modestly improve the economics of the NBN.
As we learnt from evidence in recent Senate Estimates hearings, the additional up-front investment would be comfortably absorbed within NBN Co’s capital contingency buffer, and that ensures there would be no increase to the peak funding target of $49 billion.[18], [19]
This investment would mean better speeds for consumers and better value for both the taxpayer and economy.
The incremental investment of $500 per home to take fibre to the kerb would save double that amount in future upgrade and migration costs avoided.
Whilst I note NBN Co’s announcement today, at a minimum, the Government should be scaling up the rollout of fibre to the curb for all the remaining premises not currently in the design and construction pipeline, who will otherwise be stuck on a copper network.
This time-limited opportunity should not be squandered.
What is proposed here is a modest interim measure to improve the technology mix. But it will by no means fix the problems with the NBN.
This is why Labor is continuing its work on a consumer-focused NBN policy to take to the next election.
Conclusion
There has recently been a lot of commentary about the shortcomings of the “jobs and growth” mantra which offered nothing of substance to guide a policy agenda that could be explained to the public.
It’s emblematic of the lack of a national narrative, for which communications policy should be playing an integral role.
At some point, this government will have to say what it stands for. It might even need to articulate its own great idea.
Going into the 2010 election, Grahame Lynch was astute in his assessment of the importance of imagination and vision to the electorate:
“For observers who have an interest in information and communications technology but are uninterested in ideological nuance, the Coalition’s disdain for mixing imagination and government spending is no match”.[20]
Broadband has always held the promise of being the “great leveller”, for what it can enable us to do rather than for what it is.
For all the discussion about technology, the purpose of this contest is about what best positions us to create a more equal and prosperous society.
It remains fundamentally a question about what vision we have for the future of this country.
The world is changing, technology is disrupting labour markets, and the proximity of global competition is closer than ever before.
The question in ten years’ time will not be whether machines can think.
It will be how we responded to the disruptive challenges that presented themselves to us.
I’d like to think the answer will be grounded in a creative, connected and coherent communications policy.
And I welcome an ongoing dialogue with you about how we should take that forward.
ENDS
Footnotes
[1] Czernich N, Falck O, Kretschmer T, Woessmann L (2011), “Broadband Infrastructure and Economic Growth”, The Economic Journal 121(May): 505-532.
2 “Strategies to Develop Singapore into an Infocomm Hub”, Mr Yeo Cheow Tong, Minister for Communications & Information Technology, Address - Opening of Comdex Asia 2000, Suntec Singapore, 5 April 2000.
3 “Turnbull’s Digital Transformation Office to ‘leave you quivering with excitement’ ”, 27 March 2015 at http://www.theregister.co.uk/2015/03/27/turnbulls_digital_transformation_office_to_leave_you_quivering_with_excitement/.
4 Dr Heather Smith PSM: A public address to IPAA by the Secretary of the Department of Communications and the Arts, 27 October 2016.
5 Mitchell Bingemann, ‘Kids TV content under federal government review’, The Australian, 27 February 2017.
6 “Mitch still not switched on Media Reform”, radioinfo.com.au, 3 April 2017.
7 Arvind Hinkman, ‘YouTube boycott leads to first digital ad bookings slump in eight years – SMI’, AdNews, 3 April 2017.
8 Alex Hearn, ‘Google to overhaul advertising policies after growing boycott’, The Guardian, 21 March 2017.
9 Senator Mitch Fifield, ‘Improving Access to Copyright Material’, 22 March 2017.
10 Maurice Newman, The Australian: The White Elephant NBN started life on a Coaster Plan, 16 December 2016.
11 NBN Co, Setting the facts straight on Fibre to the Node, 8 March 2017.
12 Senate Estimates and Environment Committee, 28 February 2017, p.133.
13 NBN Co, Corporate Plan 2017, p.54.
14 Senate Estimates Environment and Communications Committee, 24 March 2017, p. 59.
15 Coalition NBN Policy Background Paper, p.15, April 2013.
16 Senate Estimates Environment and Communications Committee, 28 February 2017, p.131.
17 Speech to CommsDay, 14 October 2015.
18 Senate Estimates Environment and Communications Committee, 24 March 2017, p. 64.
19 NBN Co, Corporate Plan 2017, p.54
20 “NBN is welfare for tech-heads”, The Australian, 13 August 2010.
