SPEECH - ADDRESS TO ACCAN NATIONAL CONFERENCE 2017 - 20 SEPTEMBER 2017

Good afternoon everyone.

I would like to begin by acknowledging the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to their elders past and present.

It’s a pleasure to be speaking at the conference here today.

I would like to begin by congratulating ACCAN for organising this event. 

The live captioning and Auslan available for the attendees here today truly underscores what it means to make communications accessible. 

Teresa Corbin is now into her eighth year as CEO. 

The fact we are here today, talking about these issues, is a testament to her candour and passion. 

And I also wish to acknowledge Johanna Plante, not just for her contributions as ACCAN Chair, but for her contributions to this sector over the last three decades. 

I also know many staff at ACCAN have worked tirelessly over the years to advocate for universal access to communications.

You can certainly take satisfaction in the legislation before Parliament which seeks to ensure all Australians will have certainty of access to high-speed broadband, irrespective of where they live, as well as the progress on USO reform which is taking place on a separate track. 

Prior to the establishment of ACCAN in 2009, consumers were represented through a group of predecessor bodies, including the CTN, SETEL and TEDICORE. 

However, with the birth of the smartphone in 2007, and the increasing dependence on connectivity more generally, it was clear the existing approach to consumer protection was not keeping pace. 

In this context, there was a clear need to ensure consumers had a stronger and more unified voice. 

ACCAN was formed in 2009 to achieve this objective, and this filled an important gap. 

Recent debates on the Government’s media ownership changes have reminded me of other areas where advocacy on behalf of Australian consumers and citizens in the broadcasting space has been sorely lacking. 

There was no voice such as ACCAN to represent citizen and consumer interests during the recent changes to media laws. Changes which are set to reduce the diversity of media voices in Australia, already one of the most concentrated media markets in the world, and changes opposed by 61 per cent of citizens. 

Last year a review into ACCAN got underway. The public consultation process attracted 65 submissions, the majority of which supported their ongoing role.

The Minister has been sincere in his support for ACCAN, and I was very pleased that, in February, the Government expressed its support, and accepted the recommendations of the review to extend funding until 2022.

Theme: your place in the connected world 

Now the theme of this year’s conference is ‘your place in the connected world’. 

This envisages a time where everything can and will be connected. 

According to Gartner, that time is not too far away. The firm forecasts indicate that by 2020 more than 20 billion devices will be connected. 

This is why we must increasingly focus on what the network can do for Australians, and not just what the network is. 

The application layer is where the benefits lie. 

The network layer is the enabler. 

This is why I have argued the NBN should never be considered an end in and of itself. 

For Labor, the NBN has always been a means to an end — that end being a vibrant, world-class, internationally competitive digital economy. 

This feeds into 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 want to touch briefly on the digital divide. 

Labor is deeply concerned about evidence of growing inequality around digital inclusion, as reported in The Australian Digital Inclusion Index, released on 1 August 2017 – a joint initiative of Telstra and RMIT University and Roy Morgan. 

Across the nation, Australians with low levels of access, education and employment are significantly less digitally included. The Index shows that people aged 65+, people with a disability and indigenous Australians are particularly digitally excluded. There is still a ‘digital divide’ between rich and poor Australians. 

The index shows that even while internet services are becoming less expensive as the cost per gigabyte of data continues to fall, Australians are spending more time online and a growing proportion of their income on internet services. 

So, as the internet becomes increasingly central in the lives of Australians, declining affordability has a disproportionate effect on households with less discretionary income to spend – already the more digitally excluded groups. 

Inequality is not some abstract concept – it is an economic problem. Unless action is taken, the digital divide will continue to widen. 

We believe government can play a constructive role in using the levers of public policy to make things better. 

Just yesterday, the Government announced a consultation process that will – as my colleague Ed Husic put it – hopefully, possibly, just maybe, lead to a strategy for the digital economy being released in 2018. 

If the Strategy wants to engage with issues of substance it will recommend the Government dusts off and acts on the ‘Game On’ report which has been trapped on the Minister’s desk for over 500 days. 

Last year, in April 2016, the Senate Committee tabled a report – Game On: more than playing around into the future of Australia’s video game development industry. The report contained eight unanimous recommendations to advance this industry, which Labor understands has the capacity to solve high-value problems across our society and economy. 

The Government is yet to respond to the report, but that is a necessity because of what games can do for Australian people from all walks of life – across all professions, ages and abilities. 

As the Game On report notes, the video games industry is at the forefront of developing applications that do much more than entertain. Already ‘serious games’ are used in a variety of sectors – including health, education, defence, emergency planning and urban planning, to name just a few. 

Application areas are as diverse as engaging a person recovering from stroke in repetitive rehabilitation arm movements, to delivering critical incident response training to emergency personnel, through to educating a child living with cancer about the impact of chemotherapy on their health. 

Game-based applications can help people with MS improve their balance and mental skills as well as assist in dementia care. 

Sound Scouts is a game that helps to identity hearing problems in pre-school aged children. This hearing game is a successful diagnostic tool that children enjoy playing and which drives a targeted, cost-effective health sector outcome. 

The potential for games will only increase, with developments in virtual and augmented reality technology, and the mainstream deployment of this technology in a connected world. 

Placing the consumer at the centre 

I would now like to move onto consumer protection. 

Labor’s strong advocacy for consumers derives from the enduring principle of fairness.

 The early iterations of Australian consumer laws reflected motivations such as including fairness, basic quality standards and fair prices. 

By the mid twentieth century expectations changed. 

Increasing volumes of trade and cheap manufacturing led to a new mass of consumers who were increasingly aware of their emerging rights. 

These consumers were eager to see those rights extended, and understood the pitfalls facing them in a rapidly changing market. 

This is not all that different to the smartphone revolution which led to an increase in product complexity and bill shock. 

Indeed, it was the election of the Whitlam Government in 1972 that brought urgency to the recognition of the role of consumers in ensuring effective markets. 

As noted by the Australian Treasury: 

“Under the guidance of the Attorney-General, Senator the Hon Lionel Murphy, it enacted consumer legislation, along similar lines to the state fair trading legislation, but with a more ambitious scope, and emphatically linked the interests of consumers with the competitive operation of markets by combining consumer protections with competition law in the Trade Practices Act 1974.” 

I recount this history to emphasise that pro-consumer policies are not a zero sum game. 

This is in our DNA because we believe it’s good for consumers and good for the economy. 

When values determine your actions it gives you authenticity, consistency and a sense of priority. 

So let me provide a contrast. 

In recent months NBNCo were asked two questions in Senate Estimates: 

One question asked - 

How much was spent on the NextGen marketing campaign since January 2017? 

A separate question asked - 

How much was spent on consulting engagements relating to customer experience and customer service in the previous financial year? 

$9.5 million was spent on one of these initiatives. 

$2.6 million was spent on the other. 

I’ll let you guess which was which. 

It says a lot about what is going on. 

Values play an important role in what you focus on. 

Labor is out there listening to consumers. 

The Government is seeking to steer blame from a distance. 

Labor is focused on the lived experience of consumers. 

The Government is focused on spinning rollout statistics as the only indicator of success. 

This is why so many Australians are frustrated. 

A recent CHOICE survey found that NBN users reported experiencing slow speeds and dropouts 76 per cent of the time. 

A separate survey by the NSW business chamber found 43 per cent of NSW small businesses are dissatisfied with the NBN, with poor connections costing them $9,000 on average. 

I can tell you first hand small businesses across the country are suffering. 

And I’m not simply talking about coffee shops and accountants. 

I’m talking about stand-alone professionals and consultants. 

The nature of work is changing. 

More work is done on a project basis, and we need infrastructure and connectivity people can rely on to work remotely or from home. 

Not just for one day here and there – but for a decade if they choose to. 

Meanwhile, complaints to the TIO are also hitting new highs. The TIO receives almost five times as many complaints as the Financial Services Ombudsman. 

The sense of consumer discontent is palatable wherever you go. 

For many years, no matter how politely we may want to say this, the Government was a disinterested spectator. 

They are now being pressured into action. 

This brings me to a juncture. 

Some of these problems have been framed as arising from an NBN ‘land grab’ by retail providers. 

The emergence of this land grab – which would be more accurately described as intense price-based competition - is no accident. 

It was man-made – just look at the evidence. 

A fibre-to the premise NBN, as originally envisaged, would have cost $45 billion and be complete by 2021. 

The rollout would have passed over 27,000 brownfield premises per week at its peak, and remained largely steady at that level until the end of the rollout. 

However, with the change of policy at the 2013 election, the rollout was forced to pause, at substantial cost, to enable the multi-technology mix to scale from scratch. 

To make the 2020 completion target the rollout had to ramp-up sharply in FY17 and FY18. 

The impact of this can be seen in the sharp increase from a steady 27,000 brownfield premises per week under an FTTP rollout, to 70,000 brownfield premises per week in 2018 under the multi-technology mix. 

That is almost a three-fold increase in capacity. 

The reason I am running through these figures is because they tell a story about the flow-on impact to consumers. 

Surely, if a Government received a Corporate Plan which forecast such a sharp increase in the operating profile, and you are genuinely looking out for the consumer, it would be prudent to ask a few questions: 

-       What impact will this have on the consumer? 

-       What steps can I take today to mitigate these impacts? 

-       What are the consequences if we don’t act? 

-       Will this supply of customers in a condensed period intensify price based competition? If yes, what does this mean for the variable CVC cost and in turn the experience of the consumer? 

This Government never asked these questions. 

These questions should have been asked in 2014 and 2015. 

Not in April 2017. 

NBN Consumer issues 

On Monday night I attended an NBN forum with Dr Anne Aly, the member for Cowan in Western Australia. 

Anne had recently undertaken a broadband survey and wanted to provide some feedback to her community about the concerns they had articulated. 

We need proactive MP’s like Anne, to be open and honest with constituents about what they need and what they expect. 

Something which has struck me is that constituents are very consistent in speaking about the things they value in a broadband service. 

These include: 

-       Speeds 

-       Price 

-       Customer service 

Service-levels and reliability 

I want to touch on each of these because they are all in the NBN spotlight and worthy of discussion. 

Price and speeds. 

NBN pricing continues to be a controversial topic. 

In competitive markets we often see a trade-off between price and quality. 

In using the mobile market as an example, the ACCC Chairman made some useful observations on this point. 

Mr Sims argued that having new entrants to the mobile market who cannot compete with Telstra on coverage should not be of concern, because not every consumer wants to pay the premium Telstra charges for its coverage advantage. 

Having mobile networks that differ from each other in terms of coverage, quality and customer service will produce a range of offerings that cater to the needs of different segments. 

This means not every offering has to be the gold-standard — and that is a good thing – so long as the offerings are transparent and consumers have choice. 

This is a better outcome than the banking industry where there is little differentiation between the big four. 

The tension between quality and price is relevant to the current NBN debate. 

NBN pricing is currently based on a two-tariff design.   

One element is known as AVC, which is fixed. 

The second element is known as CVC, which is a variable. 

The fixed charge gets you access to the network, and the variable charge allows you to configure the quality of your service over the network. 

One feature of this pricing design is it provides scope for differentiation, whilst creating a framework where competition can cater for affordable entry level prices. 

This approach has merits if the underlying economics are sound and consumers have good information.

 The underlying economics of a fibre rollout were sound. 

This is why the ACCC approved the pricing framework for a $45 billion network, and left NBN to manage its demand-side risks.   

A fibre NBN was well-suited to this task because it preserves an indefinite performance and reliability edge. 

However, we now have a $49 billion multi-technology mix that costs more to maintain, delivers slower speeds, and will require expensive upgrades that could have been avoided. 

This network is also more exposed to wireless competition, generates less revenue from those willing to pay, and infuses an enormous amount of systems complexity into the project. 

Critically for the taxpayer, none of these costs or risks are reflected in the $49 billion price tag.  

The long-term economics of the NBN have been compromised, and we have a pricing design that is increasingly not matched to the capabilities and economics of the network. 

There are no simple choices here, and difficult choices will have to be made. 

But in the interim, we need the ACCC broadband speed monitoring program in place and operating soon. 

Good information is critical. 

Service providers must be clear and honest with their advertising. 

The promises they make must be backed-in by the wholesale inputs they receive. 

We have a co-regulatory approach in this sector but general consumer-law still exists for a reason. 

Consumers are telling us they cannot understand why broadband is treated like some separate or special category of service. 

They want the ACCC to take a stronger stand because they expect truth in advertising. 

To be clear - taking action on advertising will not solve the underlying economics of the multi-technology mix, but it will mean the product better matches the label. 

One we have that, the market can operate more efficiently than it does now. 

If some providers are charging a high price, but are not delivering better than average speeds, the monitoring will make that transparent. 

In contrast, if few providers are delivering optimal performance, the speed monitoring can differentiate those who choose to step into that void, or are already doing so. 

We have learned the ACCC presented a proposal for the speed monitoring program to Government in February 2016. 

It could have been up and running at the start of this year. 

Instead the Government sat on it for 14 months. 

Consumers are suffering and we need to get this moving. 

Customer service 

I now wish to move to customer service. 

There are two common complaints I hear regularly about customer service. 

-       The first is the blame shifting between NBN and retail providers. 

-       The second is the inability of the TIO to cut through this blame shifting. 

This leaves the consumer stuck in the middle with nowhere to go. 

NBN Co and the industry must do better. 

This comes down to the basics. 

Across the supply chain, we need more clearly defined roles and responsibilities. 

Parties need to be accountable for their areas of responsibility. 

Retail providers are accountable to their customers and in some respects to the TIO. 

Admittedly, it is really not clear who NBNCo is accountable to, and this is not sustainable in my view. 

The TIO has explained it does not have formal powers to coerce NBN and retail providers to resolve issues. 

Labor has been pressing this issue for some time. 

So I was pleased to hear the Ombudsman recently put forward that: 

“having the authority to require all the relevant parties in the supply chain to cooperate with the TIO and to provide information to the TIO would assist with the resolution of complaints”. 

The proposed changes to the terms of reference are a step in the right direction. 

In cases where the solution to fixing a problem is outside the scope of a retail provider, and within the control of NBNCo, it would be appropriate for the TIO to engage the entity best placed to resolve that problem. 

This just makes sense. 

We don’t need to get caught up in the semantics of who has a contract with the customer. 

Let’s just focus on the outcome and the least costly way to achieve it. 

Our framework should provide incentives for that to happen. 

Accountability should align with responsibility. 

Amidst this discussion about complaints handling, we should not lose sight that improving how complaints are handled is not a substitute for fixing the issues that generate complaints in the first place. 

The TIO is a tool of last resort, and should not be seen as a solution of first-resort. 

We need to tackle the root causes and this is where industry is best placed to lead. 

Behind the public debate sits an important reality. 

Customer experience is a collective function of the systems, processes and people which the industry uses to coordinate its interactions. 

This is an operational endeavour, where regulatory or co-regulatory signals can tilt the balance when parties cannot agree on a sensible way forward. 

Telstra has developed extensive experience in designing systems and processes to enable efficient interactions with access seekers on its network. 

The new network owner can learn a few things here. 

And it would be best served to learn them sooner rather than later. 

NBNCo should not be insisting on business rules which make it unreasonably difficult for service providers to escalate legitimate problems. 

This is not a recipe for success, because those problems will not go away. 

I am confident the industry can move in a better direction. 

This may require some creativity and give-and-take in terms of how we get there, but it certainly remains possible. 

Service levels 

Lastly, I wish to touch on service levels. 

Service levels can arise in two ways: between a provider and the customer; and between the wholesale network operator and a retail provider. 

The former is typically achieved through regulatory or co-regulatory mechanisms, and the latter through commercial contracts or standard forms of agreement between network owners and access seekers. 

It is no secret that customers have had extremely poor experiences during the installation and connection process, as well as encountering difficulties when attempting to have faults with their NBN service rectified. 

I sense what has left many people stunned is not so much that these problems have occurred. 

Australians are reasonable and recognise there will be disruption with an undertaking of this scale. 

But the public simply does not accept the lack of accountability in getting problems sorted once they have been reported. 

Promises being made that are not kept. 

Technicians being booked that do not arrive. 

Blame shifting at every turn. 

This has a reputational impost on the industry, and an economic impost on those who do not have service or are giving up personal or business time to make appointments that do not materialise. 

We have had service-level regulation for the standard telephone service. 

Under these arrangements, there were minimum performance requirements, such as connection and fault repair timeframes. If these timeframes were not met there was a remedy for the customer. 

At present, there are no meaningful service-levels on the NBN. 

As the Regional, Rural, Remote Communications Coalition has argued: 

“In an environment where consumers are passed between retail service providers and NBN, it is vital that lines of accountability between the wholesale provider and a consumer are established. In order for consumers to use and benefit from services, there must be a minimum level of service. Establishing this would provide the transparency and accountability which is currently missing.” 

ACCAN has also noted that while there are contractual arrangements between RSPs and NBN these do not provide a safeguard for consumers and their services. Its submission to the NBN Joint Standing Committee argued: 

“There needs to be clear lines of responsibility and standards which set out acceptable levels of network operations and services. Creating lines of accountability between the wholesale provider and a consumer is more likely to create a network responsive to consumer needs.” 

There is a common theme running through all these issues. 

It’s a theme which I have talked about in every corner of the country. 

Transparency. 

Accountability. 

Getting back the basics. 

We need clear standards so consumers know what to expect. 

Right now too much of it remains a mystery. 

Conclusion 

I started this presentation with some basic principles. 

The challenge, for any government of course, is how to apply its principles in practice. 

The industry has good intentions and they want to deliver a better experience for their customers. 

Making improvements across a project as complex as the NBN is not easy. 

If it were, we would have achieved those improvements by now. 

So I want to be clear that no one expects perfection. 

But we do expect less buzzwords and more progress. 

Start with the consumer. 

What information would help them? 

What information do they reasonably expect? 

What information would build trust and understanding? 

Define clear roles and responsibilities.

Who is responsible for what? 

Are they best placed to solve the problem? 

Then put accountability mechanisms in place. 

How can we better align accountability with responsibility? 

What incentive do you have to be accountable? 

What incentive do you need to be accountable? 

What action is needed to bring this about? 

Labor will continue to advocate for consumers. 

We will apply these questions to issue as they arise. 

We will continue to pressure this Government into action where we judge that advances the legitimate interests of consumers. 

And finally, we will continue to listen to the public, industry and stakeholders as we formulate policy to promote the long-term interests of end users. 

Thank you to ACCAN for organising this event. 

You are doing a great job.

I look forward to your ongoing success.