Senator the Hon Stephen Conroy

Minister for Broadband, Communications and the Digital Economy

DEPUTY LEADER OF THE GOVERNMENT IN THE SENATE

Address to ATUG Conference

Wednesday, 12 March 2008

Good morning everyone.

It is great to be here once again at this very important event on the telecommunications calendar.

As always, this conference provides the perfect forum to discuss the interests of end users.

I know that over the past year ATUG has been holding a series of Future Forums and has gathered some excellent feedback and what is required to improve telecommunications policy and services.

The views of end-users are vital to defining the requirements of our future technical and regulatory platforms, and as with the industry, we welcome their input.

This year is a very exciting year and there is lots of activity in the telecommunications sector.

We have a number of issues to address.

Not least is the issue of competition in the telecommunications sector.

A question that is sometimes asked about the telecommunications sector is ‘Shouldn't we give priority to investment over competition?'

The underlying assumption here, however, is that investment and competition are mutually exclusive.

As many of you here are aware, that is the wrong place to start any discussion on telecommunications.

Competition provides consumers with choice and it drives innovation; no company—big or small—has a monopoly on good ideas.

And competition also leads to investment in new infrastructure.

We have seen this happen with mobile networks and DSLAM roll outs.

We now have more mobile services than there are people, and more consumers are now using broadband than dial-up services.

It is estimated that competition in telecommunications benefitted consumers by $900 million in the last financial year alone.

Competition will remain a cornerstone of telecommunications policy.

However, we cannot rely on market forces alone to deliver modern telecommunications services to all Australians no matter where they live.

Currently, the free market will simply not deliver a minimum 12 megabits per second to 98 per cent of Australian homes and businesses.

Sometimes direct intervention is required.

Labor recognised early on that Australia 's telecommunications infrastructure was falling behind that of countries we consider as international peers.

That is why Kevin Rudd took our broadband policy to the 2007 federal election.

There is little doubt that broadband is becoming the fourth utility behind water, gas and electricity.

It has the potential to transform the way we live and interact.

The deployment of broadband infrastructure offers significant potential to increase business performance and reduce the costs of doing business.

High speed broadband networks can enhance service delivery, and offer new means of communicating including VOIP and high definition video conferencing.

Broadband services will have enormous impacts on key sectors including health, education, government and emergency services, as well as small to medium enterprises and home business.

As a result of high speed broadband access businesses can become more competitive, allowing them to become more dynamic and responsive to customers, more able to attract and retain staff and to reduce their environmental impact.

Increasingly businesses will purchase IT services from external providers, a move that will make the availability of ubiquitous, affordable and reliable broadband even more important.

To this end, the Government has committed up to $4.7 billion, plus regulatory changes, to facilitate the roll-out of a new, high-speed fibre-based broadband network in partnership with the private sector.

The national fibre network will be rolled-out progressively over a five year period and offer minimum speeds of 12 megabits per second to 98 per cent of Australian homes and businesses.

The Government's preference is for symmetrical broadband services that enable users to take better advantage of the emerging generation of digital applications, such as high definition video conferencing.

There is little doubt that the use of applications such as this are going to increase into the future, increasing bandwidth demands of end users.

I note with interest that participants in ATUG's Technology Forum recognised fibre to the home, farm and business as the future for our national fixed infrastructure.

The Government has announced that the network will be rolled out using fibre-to-the-node infrastructure, however, we would welcome fibre-to-the premise proposals.

While it is up to the industry to develop a business case the Government believes fibre-to-the-node should be seen as a stepping stone to fibre-to-the-premise technology.

Process

Needless to say, the Government is moving quickly to implement the National Broadband Network.

Yesterday I was pleased to announce a Panel of Experts whose job it will be to assess proposals to build the National Broadband Network.

The Panel will be headed by Patricia Scott, Secretary of the Department of Broadband, Communications and the Digital Economy. She will be joined by:

• Dr Ken Henry AC, Treasury Secretary.
• John Wylie, Lazard Carnegie Wylie CEO.
• Tony Mitchell, Allphones Chairman.
• Laureate Professor Rod Tucker, University of Melbourne .
• Professor Emeritus of Communications, Reg Coutts, University of Adelaide .
• Tony Shaw, former Australian Communications Authority Chairman.

This team brings a blend of technical, regulatory, business, investment and policy skills and experience to the process.

Specialist advisers will assist the Panel in relation to economic regulation and technical, legal and financial and commercial issues.

It will be supported by the Department of Broadband, Communications and the Digital Economy, with support from other key departments and specialist advisors.

The Australian Competition and Consumer Commission will provide advice on pricing and competition issues, providing a written report to the Panel.

The Panel will run an open, competitive assessment process with a view to providing me with its recommendations.

The timeframe will be short but reasonable.

It is the Government's intention to have a build partner in place and to begin construction by the end of 2008.

Industry has had long notice of the Government's intentions, and in turn we have had a long time to listen to the needs of the industry.

While progressing the National Broadband Network it is vital that we reflect on the importance of competition in the telecommunications sector.

Regulation

Strengthening competition and maximising benefits to consumers are key aspects of the project and we are committed to providing genuine open access to the network.

The new network will be required to facilitate competition through open access arrangements.

The network operator must provide for equivalence of access charges and it must allow access-seekers to differentiate their product offerings.

These arrangements will ensure that the Network facilitates the delivery of innovative products and services to consumers.

In addition to committing to open access arrangements, proponents will be required to define the regulatory changes necessary to implement the National Broadband Network, as a part of the competitive assessment process.

Industry participants and the general public will be invited to submit ideas and comments on the regulatory framework that will underpin the National Broadband Network.

Funding

As I stated previously, the Government has committed to providing up to $4.7 billion and will be looking for a significant private sector contribution.

The Government indicated before the election that it envisaged using money from the Communications Fund to partially fund the National Broadband Network.

The Government introduced a Bill in the House of Representatives on 13 February that positions the Government to fund part of the network from the Communications Fund.

Let me make it clear that the Communications Fund will be used for the purpose for which it was intended – to improve telecommunication services in rural and regional Australia .

While the Bill does not prescribe any particular form of investment or funding, the Government expects to earn a return from its investment.

While the Government has indicated its preference for an equity investment, it will consider other funding approaches that are put forward.

What is important is getting the best overall outcome for the people of Australia .

The two per cent of Australians in areas that are not covered by the National Broadband Network will not be forgotten and will receive an affordable broadband service delivered by the best available technology.

This includes the use of wireless and satellite technologies.

The Government is currently funding a wide range of terrestrial and satellite Internet service providers under the Australian Broadband Guarantee.

Yesterday I was pleased to announce that the Government has provisioned $95 million to continue the Australian Broadband Guarantee until June 2009.

We would like to build on this into the future and look at ways to improve the level of service currently offered to rural and remote Australia .

When the request for proposals for the National Broadband Network are issued, the Government will also call for comments on policy and funding initiatives to improve access to affordable broadband in remote Australia.

The Government recognises that it is important to continue to look at innovative ways to bring high speed broadband to hard-to-reach places.

We need to ensure that all Australians receive an equitable service, which keeps pace with that offered in metropolitan areas, regardless of where they live.

Universal Service Obligation

While we role out the National Broadband Network it is important that all Australians continue to have access to essential telephone services, and that this is achieved in the most efficient and effective way.

The Universal Service Obligation is a key consumer safeguard, established to ensure that all Australians, regardless of where they live or work, have reasonable access to a reliable telephone service.

Since the USO was introduced, the structure of the telecommunications market and the range of services offered to consumers have undergone significant change.

The USO regime is under review.

Forty-six stakeholder submissions were received and made public, including that from ATUG.

The Department is analysing the submissions that were put forward and I am looking forward to considering its analysis.

Role of consumers

For the remainder of this talk I would like to change tack and focus on consumer issues.

I am thankful for the role of ATUG representing the interests of communications users in Australia .

The Government is looking to industry stakeholders and consumers to remain actively involved.

I am strongly committed to engaging with all stakeholders, and I believe this is the best way to develop and implement policy.

There is no doubt increased competition, investment in infrastructure, and the introduction of new technologies will provide many benefits.

The National Broadband Network will impact profoundly on the lives of all Australians by changing the way we access education, health and government services.

It will also deliver key social benefits, providing new forms of interaction and entertainment.

However, a sustainable telecommunications industry ultimately relies on maintaining a healthy relationship with consumers.

According to a recent OECD paper on Protecting and Empowering Consumers, informed consumers are a necessary part of the mix.

They are able to stimulate innovation and competition, improving quality of service and prices.

In balancing the needs of industry and consumers, self-regulation is a key element of Australia 's current telecommunications regulatory regime.

Indeed, self-regulation has resulted in many benefits, including:

• the development by industry of codes of practice that confer consumer protection
• the participation of consumer representatives in the development of industry codes, and
• a successful independent dispute resolution mechanism in the form of the Telecommunications Industry Ombudsman, or the TIO. 

Consumer complaints

However, if industry self-regulation is to remain a viable form of regulation for telecommunications, it is incumbent on the industry to ensure that the interests of consumers continue to be adequately represented and protected.

Unfortunately, there are signs that the interests of consumers are falling behind in the current environment of increasing competition and product complexity.

I am concerned about the recent increase in complaints to the TIO.

In its 2007 annual report, the TIO noted a 31 per cent increase in the overall number of complaint issues from the previous year.

Spikes in complaints have recently resulted in a backlog with significant delays in investigating issues, causing more pain for consumers.

It is clear that industry members need to take greater responsibility for dealing promptly with consumer complaints.

And they must be seen to be doing so by consumers, or risk undermining confidence in the independent complaints resolution mechanism.

Industry codes of practice

Development and implementation of industry codes of practice is another area of concern.

From my perspective, industry doesn't appear to be in a hurry to ensure these vital consumer protections are in place.

Some codes are taking up to 18 months to be implemented.

In an industry as dynamic as the telecommunication industry, it is disappointing that industry codes take so long to develop and it is frustrating for consumers.

Industry members need to be much more responsive to the interests of consumers, and respectful of the needs and experiences of individual consumers.

To ensure that self-regulatory mechanisms continue to adapt to emerging technologies and services, consumers need to be given a strong voice in the development of codes and other protections.

And new arrangements need to be made quickly as issues emerge, and they must be reviewed regularly as services evolve.

The Government is also looking at what it can do to enhance overall consumer protection.

In particular I want to look at ways to give consumers a more powerful voice in the development of telecommunications policy, and in particular, industry codes.

The first step in this process will be for me to hear views directly, and I have asked my Department to arrange a forum for interested stakeholders.

My preference is for this to happen sooner rather than later.

If you are interested in attending, please contact my office or the Department.

Conclusion

In conclusion, the Government recognises the benefits of reducing the regulatory burden on Australian industries, and self-regulation is preferred by both Industry and Government.

But if industry fails consumers, the Government will have little choice but to consider a more interventionist approach to regulation.

This Government is committed to ensuring that the long-term interests of telecommunications consumers are protected.

We will do this by facilitating competition, by encouraging investment, and by protecting consumers.

Thank you very much for this opportunity to outline this Government's policies and I look forward to working with many of you in this vital and dynamic industry.

Thank you.