I acknowledge the traditional owners of the land on which we meet and pay my respects to their elders past and present. Good morning, it is great to be here. And thank you to Graeme Lynch and his team for the invitation.
The last time I spoke at this conference, it was put to me that the Government would have to write-down the NBN or the market – namely commercial developments in 5G – would do it for them.
So today is a good opportunity to examine spectrum developments more broadly.
With the imminent deployment of 5G in Australia and the burgeoning Fourth Industrial Revolution now upon us, a paradigm shift is occurring in the already complex and rapidly changing communications environment.
This is an exciting time, full of promise – and not only because of Australia’s history in being at the forefront of innovation in the mobile industry on the global stage.
It is also because the range of activities supported by spectrum is opening up before us – as is the potential economic and social wellbeing that goes with it.
As the Director General of GSMA said:
“5G is more than just a generational step; it represents a fundamental transformation of the role that mobile technology plays in society”.
As a corollary, this is also a fateful time. The decisions we make, indeed the attitudes and assumptions we now hold, will have repercussions for decades to come.
In February 2016, the ACMA released an occasional paper on 5G and mobile network developments as ‘emerging issues’. In it, the ACMA states that:
“The ‘anytime, anywhere, anyone and anything’ capability of 5G is expected to support the forecast increase in device connections as part of the widespread rollout of the Internet of Things in Australia”
and that -
“While technology capability enhancements such as 5G may be possible, commercial decisions about where and when to deploy new technologies are informed by estimates of possible market demand and network utilisation”.
Indeed 5G is still an emerging issue, but a hot one.
A year later, the UK Government announced a 5G strategy, stating that, “as part of their modern Industrial Strategy, the UK must be a global leader in the next generation of mobile technologies and digital communications” and that “The Government’s job is to create the environment for this to happen”.
While the UK Government notes that ‘the development and deployment of 5G at a commercial scale is still some way off’ – ‘such is the opportunity presented by 5G that the UK Government is acting now to set out a bespoke 5G Strategy’.
I commend this attitude – this disposition. By setting itself an ambitious goal, the UK may well take early advantage of the potential of 5G and create a world-leading digital economy. And to the comparison I drew in my previous comments about Singapore deciding at the turn of the century to become the ICT leader in the Asia-Pacific, I ask you to compare
How do we set up Australia to leverage our clear strengths in the mobile arena? What is the attitude, the vision, of our Government?
As noted by AMTA in July 2017:
“Australia’s 5G future will require Government to work collaboratively with the mobile telecommunications industry to provide optimal policy settings to support the deployment of 5G mobile networks. The allocation of new radiofrequency spectrum as well as updated regulation to support efficient mobile network deployment are two key Government responsibilities that are critical to the success of 5G”.
Against this backdrop, I would like to reflect on the Spectrum Reform process now underway.
Like the NBN, spectrum reform is an area where much of the discussion and focus is on the means to an end, rather than the ends themselves.
To an extent this follows: Spectrum is an input – it is the spectrum-using services which generate final output; and the spectrum reform process is focussed on the policy and regulatory framework that will govern the spectrum input.
But what something is, and what it is intended to achieve, are distinct concepts – though inextricably linked.
What the national broadband network is, does indeed impact the benefits it will enable to be realised. Similarly, what the new Radcomms Bill is (or will be) will impact that realisation.
The challenge, as you are building something new, is to ensure your vision shapes what it is you are building, not the other way around.
There is a need to picture the better future – its outcomes and benefits – and have that vision shape what you build to realise it.
Terms of reference
Since the Terms of Reference that initiated the Spectrum Review were released, back in 2014, there has been a focus on simplifying the regulatory framework, reducing complexity, improving the flexibility of the framework, ensuring efficient allocation, use and management of spectrum and clarifying institutional arrangements.
This is good and proper. The effectiveness of the spectrum management framework itself, will, in part, shape the degree to which benefits are realised.
But that’s not where the Terms of Reference ended. They also mentioned that the Review would consider ways to:
- develop an appropriate framework to consider public interest spectrum issues;
- develop a whole-of-government approach to spectrum policy; and
- develop a whole-of-economy approach to valuation of spectrum that includes consideration of the broader economic and social benefits.
These elements of have been addressed, to a degree, in the Department’s recent consultation package, but the promise of the Terms of Reference is yet to be fulfilled.
Even at this late stage, a few years later, a number of fundamental questions hang over the Exposure Draft of the Radiocommunications Bill 2017.
While progress on the reforms to date is commendable, a number of the submissions to the recent consultation on the Exposure Draft articulate questions and concerns that are, in my view, symptomatic of a focus on the means rather than the ends; and on processes rather than outcomes.
Consider the objects of the bill, for example. Key stakeholders are concerned that the object of the Bill: “to promote the long-term public interest derived from the use of the spectrum” is confusing, unclear or may lead to unintended consequences.
Further, at least one submission states that the object for the regulation of equipment is focused on “a means to an end and not an outcome” and that, without further explanation, this object does not add any value and should be removed.
Even at this late stage, there is still a real question about whether the idea of consolidating the objects actually provides the greater clarity intended.
While the Department’s Information Paper states that the object of the current Act is confusing, because it has eight separate elements that have no hierarchy, I am sympathetic to the views of a submitter who stated that they “do not accept that the inclusion of multiple objectives (if clear and precise) is difficult to give effect to or confusing” as “it is not uncommon for legislation to contain a number of, at times competing, objects and there is clear case law setting out how these are to be weighed up”.
It would be a shame if simplifying the objects were based on an over-simplified understanding of the role they perform, and served to obfuscate rather than clarify the framework, or if the confusion amongst industry about the objects were owing to a lack of clear policy guidance from Government.
Ministerial Policy Statements
Turning to Ministerial Policy Statements, a number of which are foundational at this stage of the process but have yet to be articulated.
In something of a chicken-and-egg scenario, the Department is consulting in the absence of draft Ministerial policy statements that go to matters as foundational as the single licensing system, including licence issue and conditions and end of licence term processes and renewal rights, for example.
To facilitate consideration of the exposure draft of the Bill, the ACMA has helpfully supplied materials intended to provide stakeholders with a greater understanding of how it envisages key aspects of the Bill may operate, should it be enacted, however much of this thinking remains subject to Ministerial policy statements.
That issue aside, there are valid concerns amongst submitters about the “whether the role of the Minister and Ministerial policy statements helps or hinders the objectives of the reform process and the key principles of reform”.
One submission notes strong concerns that, under the Bill, and even though they can have a highly legislative character, Ministerial policy statements will be notifiable instruments, not subject to disallowance or usual Parliamentary scrutiny, and are not expressly required to be consulted upon prior to finalisation.
Role of the ACMA
The respective roles and discretions of the regulator is another area of concern for industry.
While the principles of certainty and flexibility are not seen to be mutually exclusive, there is clearly a level of disquiet about the ACMA’s broad powers, under the Bill. The concern is that the inefficiencies of the current regime may creep back in over time, contrary to the objectives of simplicity, flexibility, certainty and efficiency, and reducing incentives for investment and innovation.
Here, one shortcoming is seen to be the lack of ‘a set of overarching principles that reflect the stated objectives of reform to guide the exercise of the ACMA’s powers’, a ‘statement of regulatory policy’ or ‘clearly articulated decision-making principles in the Bill’. This ‘creates a real risk that, over time, many of the inefficiencies that characterise the current regime will be replicated, preventing the potential benefits of reform from being fully realised’.
Obviously it is critical that this outcome is avoided.
From where I stand, questions are also: What does Government understand the role of the Minister and regulator to be with respect to different levels of policy development within the bounds of the Radcomms Bill?
What is the right balance to be struck in decision-making by a democratically-elected Minister and the independent, expert, regulator in the future spectrum management system?
And what are the strengths and weaknesses of the new framework from the perspectives of the different actors in the framework.
Now of course, there is debate about the Exposure Draft. That is healthy, and there is much agreement from submissions with the Government.
What I have touched on are just a few interrelated concerns raised in submissions to the Exposure Draft which point to the need for strong and clear policy direction that goes beyond regulatory theory and articulates a vision.
It is one thing to articulate principles. The challenge for any government of course is how to apply its principles in practice.
I would now like to move onto the NBN.
There is no shortage of issues which could be discussed at the moment.
Pricing is still up in the air.
We have the NBN levy being proposed by Government.
And of course, there is the technology mix.
But today I am going to focus squarely on consumers.
Nothing of what I will say is new.
Indeed, I have said much of this previously.
But I believe it’s important enough to keep repeating.
Consumers are in Labor’s DNA because we believe that fairness in commerce is good for the economy.
When values guide your actions it gives you authenticity, consistency and a clearer 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 GenNBN 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.
Labor is out there listening to consumers.
The Government is seeking to be invisible.
Labor is advocating to improve the lived experience.
The Government is penning opinion pieces to explain the state of broadband in Kenya.
But it is not just consumers.
Small businesses are at the end of their tether.
And retail service providers, especially smaller ones, are under significant commercial pressure.
The sense of discontent is palatable wherever you go.
For many years — no matter how politely we may want to put this — this Government has been a disinterested spectator when it comes to consumers.
This is despite the Minister saying at this very forum 6 months ago that 2017 would be the ‘year of the customer’.
They are now being pressured into action.
Some of these problems have been blamed on a ‘land grab’ by retail providers.
The emergence of this land grab – which would be more accurately described as intense price-based competition – did not appear out of nowhere.
This land grab was man-made.
Look at the evidence.
A fibre-to the premise NBN, as originally envisaged, would have cost $45 billion and be complete by the end of 2021.
This 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 then 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 FY18 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.
Now I just want everyone to reflect on this for a moment.
You have just been handed an NBN Corporate Plan which forecasts a very sharp increase in the operating profile in a few years’ time.
Surely, if 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 during the migration period 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
I would now like to touch on a few issues which include:
- Speeds and pricing
- Customer service
- Service-levels and reliability
Price and speeds
NBN pricing continues to be a controversial topic.
And to be frank - I would need a separate speech to unpack this.
But there are a few points I want to reiterate.
In a recent speech at the ACCAN conference I noted that in competitive markets we often see a trade-off between price and quality.
This means not every offering has to be the gold-standard, so long as the offerings are transparent and consumers have choice.
NBN pricing is based on a two-tariff design.
The fixed charge gets you access to the network.
The variable charge allows you to configure the quality over that network.
This framework provides scope for differentiation and can cater for more affordable entry level prices.
This approach has merits if the underlying economics are sound and consumers have good information.
The 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 preserved 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 significant amount of systems complexity into the project.
Next generation mobile wireless networks appear to be on track to outperform sizable segments of the Fibre to the Node footprint on the dimensions of speed, latency and reliability in the not too distance future.
So the question becomes how much data will mobile offerings make available at price points comparable to the NBN?
In the short term, this is a value proposition to low usage and low income consumers — and I wouldn’t expect the technology factor to be decisive.
But in the medium term, that dynamic will change.
The key point is from the perspective of 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 implemented soon.
Good information is critical because it enables consumers to make choices and will ensure providers are accountable for the speeds they deliver.
The industry must be clear and honest with their advertising, and if they are not the ACCC should take action — as it would for any other good or service in the economy.
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.
Once we have that, the market can operate more efficiently than it does now.
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.
It didn’t have to be this way.
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.
We need to bring this back to the basics.
Across the supply chain, there needs to be more clearly defined roles and responsibilities.
Parties need to be accountable for their areas of responsibility.
On one hand retail providers are accountable to their customers and in some respects to the TIO.
On the other hand it’s not clear who NBNCo is accountable to — and I am strongly of the view that this is not sustainable.
Labor has called for the TIO framework to be changed and we will stay on this until there is an outcome.
Now I don’t simply mean a change in wording that has no effect in the real world.
I mean an outcome that delivers genuine change.
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 have the necessary powers to engage the entity best placed to facilitate resolution 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.
We need to focus on the outcome and the most efficient way to achieve it.
As policy makers we need to remember 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.
Root causes need to be tackled and this is where industry is best placed to lead.
This brings us to an important reality.
Customer experience is a collective function of the systems, processes and people which the industry uses to coordinate its interactions.
I acknowledge the hard work of Communications Alliance and John Stanton, whose members continue to make progress on this front; and Teresa Corbin and her team at ACCAN who warned at this forum last year that NBN consumer complaints were nearing a tipping point – the runaround between NBN and RSPs was driving them to ACCAN.
This is an operational endeavour, where regulatory or co-regulatory signals can tilt the balance when parties cannot agree on a sensible way forward.
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.
Lastly, I wish to touch on service levels.
We have retail service levels and we have wholesale service levels.
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.
Australians migrating to the NBN have had a very frustrating experience.
The assertion that 90 per cent of them go smoothly would not pass a pub test in any corner of this country.
I sense what has left many people stunned is not so much that these problems have occurred.
I have always said that 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.
At present, there are no meaningful service-levels on the NBN.
ACCAN has 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.”
I am encouraged to hear the ACCC is signalling it has similar concerns in this area. Under challenging circumstances, the regulator has been striking a sensible balance on a number of fronts.
Whether it is speeds or customer service – I hope you agree there is a common theme in the issues I have touched on.
It’s a theme which Australians raise with me wherever I go.
Restoring confidence in our arrangements.
We need clear standards so consumers know what to expect.
Right now too much of it remains a mystery.
It is one thing to articulate 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.
I want to be clear that no one expects perfection.
But we do expect less buzzwords and more progress.
In the conversations I’ve had with communities around Australia a clear narrative which has emerged with respect to what should be done.
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 place consumers at the core of its policy development process.
We will apply these questions to issues as they arise.
And we will continue to press the Government if we judge that is what is needed to advance the long-term interests of consumers.
Australia is on the cusp of a fourth industrial revolution and I am an optimist about where technology will take us.
My colleague Jim Chalmers, and the former NBN CEO Mike Quigley, have recently published a thought provoking book about the impact of technology on jobs, and with it our institutional capacity to respond.
It was timely reminder that in the midst of technological disruption the main game has not changed – it’s about delivering inclusive growth and improving quality of life.
The NBN and our mobile networks are critical enablers of this next phase.
But ultimately it’s the applications that will enrich our lives.
Presumably, that is why we are all here.
Because we are passionate about what communications networks can help us do.
But for now – the focus of my message today – is we need to get the basic settings right.
Digital inclusion strategy
So what’s common thread here?
It is digital inclusion.
Australia doesn’t have a digital inclusion strategy, but clearly needs one. We know that the digital divide is widening and will get worse unless we arrest the slide.
Earlier I made reference to the fact that the original Terms of Reference for the Spectrum Review reference a whole-of-government approach to spectrum policy, and I mentioned the UK Government’s 5G strategy.
That strategy mentions the need for “everyone to be able to use the digital services enabled by 5G applications so they can reap the financial, health, social and other benefits they offer. This means ensuring that people and businesses have the digital skills necessary to use them”.
In my view, a Strategy and Framework for digital skills across businesses and the public is a necessary component of any whole-of-government approach to spectrum policy in the new environment.
Ultimately it is the use to which the spectrum and NBN will be put that will deliver benefits, and the scale of those benefits relies on the level of digital inclusion across the nation.
It is on these ideas of inclusion and access that I will end my comments here today.