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Today marks my sixth visit to CommsDay as the Shadow Minister for Communications and it is always a pleasure to be here.
I have used this forum as a recurring opportunity to reflect on my values and principles, and translate these into themes and ideas which I believe should govern the communications sector.
I fondly recall waddling up to the stage for my first CommsDay address in October 2016, seven months pregnant.
And then, in my first week back from maternity leave, another CommsDay summit had arrived!
It never ceases to amaze me how quickly time passes and how the anniversaries come and go.
Interestingly, it was on this day, exactly six years ago, that Malcolm Turnbull and Tony Abbott announced the Coalition NBN policy.
There was a lot of fanfare that day.
There was a lot of hype.
I even recall a hologram of Sonny Bill Williams.
Some very significant promises were made.
Yet six years on, none of those promises were delivered.
LABOR’S PLAN TO IMPROVE THE NBN
I come here today to present Labor’s responsible plan to improve the National Broadband Network.
Australians are reasonable and recognise there will be significant difficulties with the rollout of any project of this scale and scope.
What they don’t accept is the buck passing when things go wrong.
Promises being made that are not kept.
Technicians being booked that do not arrive.
Blame shifting instead of taking ownership to get problems resolved.
They expect accountability and their expectations are fair.
More than anything else, I sense they want their governments to think long-term.
For all that has been said and done, we cannot undo the past.
But we can look to the future.
In the case of the National Broadband Network, we must look to the future.
This requires the honesty to acknowledge there are realities we cannot undo, whilst knowing that with the application of will and initiative we can try make the best of the NBN and position it for the future.
The NBN matters to the Labor Party because the original mission is the embodiment of our core values.
Improving quality of life.
In the not too distant future, we will have a network that spans an entire continent.
Every home and business will have access to broadband.
The Australian taxpayer will have made a significant investment, and the task of public policy will be to make the best of the asset we have.
This brings me to the starting point for our policy.
1 – LAUNCHING A DIGITAL INCLUSION DRIVE
The first element of Labor’s plan will be to address the digital divide and get more Australians online.
It is my enduring passion to ensure that every Australian, regardless of income or age, has the means and skills to realise the benefits of broadband.
According to the latest available data from the Australian Bureau of Statistics, there were up to 1.3 million Australian households not accessing broadband at home.
The estimates vary, but this accounts for up to 13 per cent of occupied Australian households not participating digitally.
These households are not using ADSL.
They are not using the NBN.
They are not using wireless broadband.
Herein lies a critical opportunity.
There has been a significant public outlay in the NBN and we must undertake every effort to leverage that for the public good.
This is why a Shorten Labor Government, if elected, will launch a landmark Digital Inclusion Drive, to be led by NBNCo, with the aim to increase broadband take-up among the over 1 million Australian households who do not use any internet at home.
This will be the most focused and sustained digital inclusion effort undertaken by any Australian Government.
The first phase of the Digital Inclusion Drive will develop a much deeper understanding of the challenges across the key segments of Australian society which remain offline, in collaboration with key stakeholders.
When the UK government examined digital inclusion barriers, they identified four main kinds of challenge that people face when going online:
- Access – the ability to actually go online to the internet
- Skills – to be able to use the internet
- Motivation and value – knowing the reasons for why the internet is a good thing and how it can improve your quality of live; and
- Trust – not knowing where to start to go online.
Of course, ensuring that access costs are within reach of digitally excluded low-income households must feature in any solution.
The Digital Inclusion Index, developed by Telstra, RMIT and the Swinburne Centre for Social Impact, reports that while the digital divide is improving, the gap between the digitally included and excluded is widening for key groups.
Among these key groups are the elderly and low-income households.
To tackle this problem, we need deeper insights about the barriers specific to the key segments of Australian society which are missing out.
We need to be creative in our approach, and we need to be intelligent in how we frame the problems we want to solve.
In 2008-09, when the household take-up rate of broadband was nearly 20 percentage points lower than it is today, Australians over the age of 65 comprised just over 1 in 3 of people not on the internet at home.
Yet according to the latest ABS statistics on household internet use, Australians over the age of 65 now make up 6 in 10 of households not on the internet – that’s nearly two thirds.
This issue resonates with me on a personal level.
My dad is 87 years old, he’s lived alone and independently for the past 30 years. I’ve witnessed the profound difference that connectivity has made to his quality of life, but that kicked off not when he installed his first desktop computer.
It was when he joined Computer Pals Blacktown. It wasn’t just that he learnt about email, or a new hobby to explore our family tree. Even so late in his life, he has become a far more informed and critical thinker than most people I know.
He is a prolific consumer of news and opinions, is constantly exploring ways to deal with entities more efficiently, and is healthier than he was a decade ago. These factors bear a remarkable correlation to his utilisation of broadband.
This affirms my belief that that an important part of any solution is to create trusted experiences and touch points to help individuals discover the value of broadband, and what it could mean for their own quality of life.
This is why design thinking will play a key role in Labor’s strategy.
We want to take the best design thinkers from the private and public sectors and put them to work on this problem.
They will provide the human-centred insight - the lens of empathy - that contemporary program design and policy making needs to lift participation. On that point I want to acknowledge ACCAN for its ongoing advocacy on affordability issues facing low income households.
To obtain a better understanding of the affordability and take-up challenges facing low income and digitally excluded households, a Labor Government would also facilitate enhanced collaboration between NBNCo and the Department of Social Services. I believe this arrangement will play a critical role informing affordability discussions, which will always be paramount for Labor.
The second phase of the Digital Inclusion Drive will formulate affordability responses, and digital literacy initiatives, in response to the insights and findings of phase one.
We have no interest undertaking studies for their own sake.
Our commitment to taking action is real.
The third phase will be to establish targets, measure progress, and make adjustments in response to what is working and what isn’t.
The social and economic dividend here is a positive one.
A World Bank study found that a developed economy would enjoy a 1.21 per cent increase in per capita GDP growth for every 10 per cent increase in home broadband take-up.
According to Standard and Poor’s market intelligence unit, the household take-up of the top ten ranked countries ranges from nearly 100 per cent in Singapore and Switzerland, to 99 per cent in New Zealand, to 95 per cent in France and the United Kingdom.
The proportion of households using broadband in Australia is 86 per cent based on the latest available ABS data, with take-up rate on the NBN sitting at around 73 per cent.
So we put a question to the researchers in the Parliamentary Library: what would be the economic benefit to Australia if household broadband take-up was on par with nations ranked in the top ten?
Based on the World Bank modelling, the Parliamentary Library found that the Australian economy would realise an $800 million per annum benefit by 2028 for every additional 100,000 non-broadband households which connect to fixed-line broadband.
Another way to look at this is: the broadband penetration rate in the UK is 95 per cent according to S&P Global, and in Australia it is 86 per cent according to the ABS.
If we were able to leverage the NBN to help bridge half this gap — just half — this could produce an economic benefit of $4.2 billion per annum by 2028.
If we are successful in improving take-up then we — as a nation — have everything to gain.
2 — IMPROVING SPEEDS AND RELIABILITY FOR FIBRE TO THE NODE HOUSEHOLDS
The second part of Labor’s NBN plan is to improve the speeds and reliability of Australians connected to the copper-based Fibre to the Node network.
One of the problems currently affecting the already limited performance of Fibre to the Node technology is in-home cabling.
This refers to the copper wiring that runs to, and between, the telephone sockets which exist in many homes.
These in-home wiring arrangements, designed for voice and broadband services delivered over the lower-frequency legacy Telstra copper network, are now encountering problems with the higher frequency signals used over the NBN Fibre to the Node network.
As noted by NBNCo in 2017:
“VDSL is more susceptible to issues caused by internal wiring because it is more noise sensitive – this is because it is operating in a higher spectrum range. For example, a home with multiple phone outlets will create additional paths that a signal can travel down, which will increase the level of electromagnetic interference.”
It is precisely this interference which leads to poorer signal quality, which in turn leads to increased dropouts and reduced speeds.
To address this problem, Labor, if elected, would direct NBNCo to work with retail providers to fix these in-home wiring problems at no cost to the end-user.
According to the NBN wholesale broadband agreement, it currently costs consumers $150 to have this problem rectified under a standard installation, but under Labor there will be no cost if a Fibre to the Node household is identified as being affected by the issue.
The program will be funded by NBNCo through an increase in peak funding of up to $125 million, and it could be less depending on the number of affected households.
The program will be delivered in partnership with retail providers, and could benefit up to 750,000 households.
The allocated funding assumes that up to 1 in 5 Fibre to the Node premises could be experiencing performance limitations due to this issue, with this estimate based on a combination of ACCC and NBNCo data.
A trial by NBNCo found that installing a signal splitter in identified households delivered an average speed improvement of 11 megabits per second.
More importantly, for premises reporting service instability and unreliability issues, the trial found that 70 per cent became stable after the work was completed.
We know too well reliability is a source of frustration for many Australians on Fibre to the Node, because an analysis of industry data by the Australian Communications and Media Authority found that consumers on Fibre to the Node were reporting twice as many faults and make 3.6 times as many complaints as households on Fibre to the Premises.
The fix to this problem is not complicated. It requires a licensed technician to attend the home and install a signal filter, or re-cable poor internal wiring.
Advanced software has also made it possible for network operators such as NBNCo to remotely identify which homes have a cabling interference problem and which do not.
This is important because there are currently 183,000 premises on the Fibre to the Node network who are currently not able to achieve minimum speeds of 25 megabits per second.
On the current trajectory, this number could grow to 230,000 as the rollout nears completion.
It is our view that these households on underperforming lines should be prioritised if they are found to have a detectable in-home wiring issue that is degrading performance.
Will this fix every shortcoming with the copper network?
But it will make the experience better for some – and that is a start, especially when it comes to dropouts.
Some will ask why Labor is taking steps to patch up problems with the copper network it has so vigorously attacked over the past six years.
The simple fact is that our priority is improving consumer experience.
Of the proposals we have examined over the past 18 months, addressing in-home cabling stood out as the most pragmatic and cost-effective option to deliver near-term improvements to reliability and speed.
It is the right thing to do by the customer and they are our priority.
3 — DELIVERING A BETTER EXPERIENCE FOR CONSUMERS AND SMALL BUSINESS
This brings me to the third element of Labor’s plan: delivering a better experience for consumers and small businesses.
In July last year, Bill Shorten and I announced our plan to implement an NBN Service Guarantee.
This will establish wholesale standards for fault rectification timeframes, installations and missed appointments, enforced through financial remedies that apply to NBNCo.
A key design feature of our policy is that stronger penalties will apply when a small business is impacted, and that rebates will be designed to increase in response to periods of excessive downtime.
In particular, a key focus for Labor will be to better safeguard small businesses against unreasonable and excessive periods of NBN downtime.
The fact is downtime is not only stressful, but it also costs small businesses money.
A survey by the NSW Business Chamber found that disruptions in the rollout of the NBN were costing NSW businesses, on average, more than $9,000, with 39 per cent of businesses reporting having to wait more than four weeks to get their service up and running.
The House of Representatives Standing Committee on Economics also handed down a report last week on impediments to business investment. One of the 12 recommendations of this report was to enhance NBN customer outcomes for business.
On the broader issue of safeguards, the problem we identified was that while retailers were accountable to the consumer and to the TIO, it really was not clear who NBNCo was accountable to.
So we do feel strongly that there needs to be a framework in which NBNCo is adequately accountable to the retailer, so the retailer can be more accountable to the consumer.
This is an important part of reducing the buck-passing that consumers experience, particularly in instances where a given fault has dragged on for an unreasonable period of time.
The goal here is not to punish telecommunications providers, but rather to incentivise more responsive service.
As I have said on many occasions - less downtime and greater accountability - that’s what we want to achieve.
I do want to acknowledge that telecommunications complaints appear to be coming down, and that is certainly welcome from my perspective.
The industry has played an important role in improving their processes, and regulators have played an important role in putting on the pressure to accelerate these efforts.
Despite this progress, there is no room for complacency.
Australians expect much better service than what they are currently receiving.
I have spoken to so many Australians over the past few years who are so frustrated with their past experiences, they have given up on raising issues with their retailer or the Ombudsman and prefer to suffer in silence.
On this point, I want to make a brief comment about Part B of the Government’s Consumer Safeguards review.
The proposed sea of regulation appears to be a misguided attempt by Minister Fifield to look tough on consumer safeguards.
This is the same Minister who:
- who was caught napping as NBN complaints soared;
- sat on an ACCC recommendation to establish a much needed NBN speed monitoring program for 14 months; and
- initially opposed the introduction of NBN wholesale service standards to deliver a fairer go for consumers.
Part B is an ill-judged over-reaction to these failings.
The case for the complex and costly retail regulation proposed in Part B has not been made.
As such, Labor sees no case to progress it.
If it becomes apparent that retail providers are not making adequate progress, then the first step will be to consider enhanced transparency measures to compare the complaints and customer service performance of retail providers, building on the industry initiatives which are taking place.
We will also work with industry to ensure there are industry-led initiatives in place to help limit the future supply of demonstrably underperforming modems, with consideration also given to endorsing modems that are performing well.
4 — A RESPONSIBLE APPROACH FOR TARGETED CO-INVESTMENT IN FIBRE UPGRADES OVER THE MEDIUM TERM
This brings me to the fourth element of our NBN plan.
The question I’m most often asked is: what plan does Labor have to deliver more fibre?
So I want to be honest and speak plainly on this point.
Labor will not be offering a quick fix.
Nor will we be making promises we cannot keep.
Over 99 per cent of the planned NBN footprint will be built or in construction by the middle of this year.
The rollout is forecast to be mostly complete by mid-2020, with the migration forecast to take until early 2022 to complete.
These are realities that cannot simply be undone.
On top of these challenges, the Coalition’s current NBN business plan out to 2040 sets aside no funding for wide-scale upgrades of the fibre to the node footprint.
Labor’s focus, therefore, is how to position the NBN for the future. And that includes a pathway for future upgrades.
My view is that before any future government can credibly consider options for additional investment it will need to first earn its stripes, and approach the task in a sensible way.
This requires a realistic assessment about the future cash flows NBN might generate.
It also means being intelligent in identifying and prioritising investment to areas that need it the most.
As a first step Labor will, if elected, direct NBNCo to undertake a series of targeted upgrade trials to validate costs and assess the feasibility of co-investment mechanisms to deliver more fibre over the medium term.
This initiative will be funded by NBNCo through an increase in peak funding of up to $60 million.
These upgrade trials will focus on the Fibre to the Node footprint, and will used to test new methods and construction practices to reduce costs.
The number of homes will be quite modest – estimated at 20,000 or less – but sufficient to provide reliable data.
This body of work will be supported by an NBNCo led geospatial study to identify where the most under-performing clusters of the copper network are located.
An additional part of our strategy is also to place NBN on the COAG agenda to facilitate a more co-ordinated conversation between the Commonwealth, NBNCo and the States about opportunities for partnership and co-operation, and data sharing.
Initial engagement through COAG will then transition to ongoing bi-lateral engagement as every state will have different interests and priorities.
This is particularly important as according to NBNCo, the multi-technology mix will fail to meet the Government’s own national NBN speed quality mandate of 90 per cent of premises capable of achieving 50 megabits per second in 5 out of 8 States and Territories.
Now I expect our opponents might come out with desperate hyperbole claiming the field trials are a precursor to Labor forking out billions to upgrade the entire copper footprint to fibre.
That is complete nonsense and we have proposed nothing of the sort.
We have to be intelligent, we have to be patient, and we have to do the right analysis in order to understand what is and what is not feasible.
5 – REVIEW OF THE ECONOMICS OF THE NBN
Finally, I wish to turn to the economics of the NBN.
The multi-technology mix has created some very serious challenges.
Regrettably, the decision in 2013 to abandon fibre, and instead rely on ageing copper and HFC infrastructure, has resulted in an unnecessary loss of consumer and taxpayer value.
I was disappointed that the NBN Chairman, with no substantiating evidence or analysis, claimed the multi-technology mix was worth $50 billion.
I remind you that the Coalition first promised to deliver their version of the NBN for $29.5 billion.
Then it became $41 billion. Then $49 billion. Now it is $50.9 billion.
That’s a $21.4 billion cost increase.
Do we honestly expect the electorate to believe the value of the NBN magically increases every time there is a cost blowout?
This is simply not reasonable.
While there has been a lot of focus on peak funding, the true consequences of the multi-technology mix are best understood by examining the structural cash flow position of NBNCo.
Cash flows have an important impact on public entities, in the same way that budgets can empower or constrain governments.
If cash flow is healthy you can invest more, be flexible on prices and provide services that the market would otherwise not deliver.
If cash flow is not healthy, these objectives become all the more difficult.
The cash flow story is what concerns Labor the most.
The ongoing cost to run the NBN has gone up.
The ongoing cost to remediate the NBN network has gone up.
The revenue potential has come down.
The result is that the cash flows of NBNCo have been materially reduced.
Not only has the Coalition’s approach cost more to build and not provide consumers with the same speed or reliability of the original plan, but according to their own figures the multi-technology mix leaves the cash flow position, and by extension, taxpayers, at least several hundred million dollars a year worse off, potentially over half a billion per year worse off over the medium term.
On top of this, the network requires funding for future upgrades in the fixed-line footprint that would not have been needed under the original plan.
Rather than trying to tackle these challenges, the Minister for Communications has spent three years doubling down and persisting with the ridiculous claim that the multi-technology mix is $30 billion cheaper and 6 to 8 years faster to deploy than the original fibre plan.
Mr Mike Quigley has rejected this claim.
Mr Bill Morrow has rejected this claim.
And Mr Stephen Rue has also rejected this claim.
The only three people to lead NBNCo have given evidence before Parliamentary Committees demonstrating this claim is false.
Our opponents promised to deliver the NBN for $29.5 billion.
Today it’s $50.9 billion.
In contrast, the original fibre rollout had a peak funding requirement of $45 billion with a completion date by the end of 2021.
Just about every key assumption underpinning this forecast has stood the test of time.
If we had a less capable network that was significantly cheaper to build, we could sit here and have genuine debate about the merits of one approach versus the other.
But we don’t.
So I want to reiterate the point I recently made at the Sydney Institute.
When Mr Abbott and Mr Turnbull announced their policy in 2013, I’m sure they believed their approach would be cheaper.
The challenge was the NBN was more complex than anyone outside of NBN management could have understood it to be.
There were so many integrated layers — engineering, construction, financial, legal — and the fact it takes years to scale up any new technology — that it would have been near impossible for any Opposition party — no matter how determined or genuine in their efforts — to grasp what they were tinkering with.
Once the tinkering began in late 2013, the show fell apart pretty quickly.
The irony of this situation is that the Liberal Party promised its multi-technology mix would be faster and cheaper, yet we now have a business model that is in more need of cash flows — but actually has less capacity to generate it because of inferior technology and higher costs.
The lesson we have drawn from this in Opposition is to tread carefully.
Don’t make significant decisions without the right data and analysis before you.
And don’t risk your long-term credibility in pursuit of a short-term political win.
The economics of the NBN are fraught with risk and must be approached in a responsible manner.
I know that many of you in attendance here, and the industry as a whole, has a very legitimate concern about pricing and retail margins.
I am particularly concerned that the lack of price certainty is making it difficult for mid-sized and smaller providers to construct viable NBN business cases.
When these providers tell me they might have to restructure their businesses away from the NBN because there is no margin - that is a problem.
This is contrary to why the NBN was setup in the first place, to provide retail competition over a national piece of utility infrastructure.
It is critical for mid-sized and smaller providers to be in the market, because they deliver the competitive tension that drives value and lower prices for consumers.
I have engaged extensively with retail providers on wholesale pricing and I reiterate this is not an area that lends itself to making responsible calls from Opposition given the information gaps and costly trade-offs involved.
For these reasons, to examine this issue, as part of a broader suite of issues, I can announce that Labor will conduct an immediate review of the economics of the NBN.
We will ensure we have good quality analysis and advice, in order to assess the costs and trade-offs of different options going forward.
The review will examine the implications of the multi-technology mix on NBNCo’s long-term cash flow position, capital structure, pricing evolution, options to grow revenue, options to reduce cost, and the capacity of NBNCo to co-invest in future infrastructure upgrades under a range of market scenarios.
This process will also help inform judgements about the purpose of the NBN going forward, the price and quality dimensions in which competition occurs, and the market settings best suited to that purpose.
Naturally this is a big and complex exercise – and arguably the most critical piece of work in the NBN policy in terms of future direction. In every respect, this is the main game.
The review will help us make a better informed assessment of where we are, and the costs and trade-offs of different options going forward.
In addition to this review, Labor will also commence a review of the future capacity and funding requirements for the fixed-wireless network.
There needs to be a better strategy to manage congestion and this will require NBNCo, industry, departments and regulators to put their problem solving hats on.
For its part, NBNCo will need have a more earnest conversation with the community about the fixed-wireless network and its performance characteristics.
We recognise the experience is not meeting the expectations of many consumers and are committed to working through the issues and delivering better outcomes.
In closing, I would like to summarise the commitments we have made here today.
If Labor has the privilege of forming Government our commitment is that we will:
- Launch a landmark Digital Inclusion Drive with the aim to increase broadband participation among the over 1 million Australian households not using any internet at home.
- Direct the establishment of a $125 million program within NBNCo to reduce dropouts and improve speeds for up to 750,000 Fibre to the Node households by rectifying identified in-home cabling issues that are degrading performance, at no cost to the end user.
- Establish an NBN Service Guarantee to set service standards and better safeguard consumers, and in particular small businesses, against excessive periods of NBN downtime.
- Position for the future by undertaking field trials to assess the costs and feasibility of responsible co-investment in future fibre upgrades. We will also place NBN on the COAG agenda to explore opportunities for partnership and future cooperation.
- Commence an immediate review of the economics of the NBN to obtain a more informed picture about where we are and the options going forward. We will also review the future funding and capacity requirements of the fixed-wireless network and use this as the basis to have a more honest conversation with the public about options to address congestion challenges.
This plan is the culmination of the conversations I have held with consumers, stakeholders, experts and industry over the last three years.
Over this period I have taken part in over fifty NBN forums and small business roundtables around Australia. I’ve listened to hundreds of citizens face to face. I can tell you the public has a very good instinct for what is going on.
In these proposals, we have sought to present a responsible plan to improve the NBN while being honest about the challenges.
I sincerely appreciate the opportunity to speak here today.
I have been very fortunate to be entrusted by Bill Shorten with a portfolio that is my passion and was my professional life before public office, and with the federal election only weeks away, I am mindful that I am putting myself forward to the public and the industry as the alternative Minister for Communications in a Labor Government.
The National Broadband Network is but one of many big issues in the portfolio that will need to be addressed by future governments.
Irrespective of the issue, promoting inclusion, addressing inequality and improving the lives of working people is Labor’s defining mission.
Growth and innovation is the goal, and it must be inclusive.
These are the values and principles which will govern our approach if we have the privilege of being elected.
We have done the hard work in Opposition and we have put forward our ideas for scrutiny by the public.
As Bill Shorten noted in his budget reply last week, this Government used its Budget to deliver an exercise in numerology.
A recitation of numbers. No passion, no national story, no vision laid out to steer where the country is going and why.
In contrast, we’re talking about people, about their livelihoods, and about their quality of life. We are not rattling off statistics, void of empathy, or real world enlightenment.
The choice at the next election is clear: a plan for the future or more of the same?