Monthly Archives: November 2012
Some 1400 delegates from across the world, including 10 from Australia and 5 from New Zealand, are on their way to Dubai in the United Arab Emirates to deliberate on the first revision of the International Telecommunications Regulations in 24 years—an action some fear will lead to the introduction of new regulation that will change the Internet as we know it. Major fissures between nations on the proposals could lead to balkanised Internet governance and regulation, effectively ending the global consensus that has underpinned international telecommunications to date.
The World Conference on International Telecommunications convenes for 11 days beginning Monday and will consider hundreds of pages of proposed revisions to the existing regulations. The final regulations will take the form of a treaty that could provide legal cover for countries to introduce major changes to the way Internet communications are priced, governed and secured.
The conference is being convened by the International Telecommunications Union which has fought a rearguard action against a US industry and political campaign charging it wants to “take over the Internet.”
LEAKED DOCUMENT: However, a leaked document from an ITU management retreat held in September outlined major policy disagreements between the US, Western Europe and Asia on one hand and Africa, the Arab states and Russia on the other. The US is clearly viewed as most hostile to the WCIT agenda.
The document posits, as most likely, scenarios where the world effectively breaks in two on Internet regulation: as the US and its supporters, estimated as ranging from a few to 40 in number, persist with the status quo and up to 100 countries, mainly from the developing world, sign on to a new treaty. The ITU document regards consensus on a new treaty as “unlikely”, describing US resistance to the proposals as “ferocious.”
Most observers finger Russia as the source of the most contentious proposals, one of which would seek to establish ITU and national governmental control over Internet regulation. Proposed revisions would also legalise government deep packet inspection of private communications carried over IP networks as well as provide for government regulation of Internet routing between countries.
Other proposed revisions, backed by African & Arab nations and European telcos, would see the re-introduction of the old settlement regime for Internet transit, based on a “sender pays” model.
The US regards the implications of the conference with utmost seriousness, sending a massive delegation of over 115, including not just State Department representatives but also executives with major Internet-exposed businesses including Cisco, Google, Verizon, AT&T and Inmarsat. Most of the other national delegations are primarily comprised of government officials.
Australia’s ten strong delegation is comprised of five delegates representing the Department of Broadband, Communications and Digital Economy—headed by Keith Besgrove, as well as representatives from the ACMA, APNIC and the .au Domain Administration. Interestingly, two Commonwealth Bank representatives including technology security expert Gary Blair are also in the delegation.
New Zealand’s five member delegation includes representatives of the NZ Ministry of Business, Innovation, and Employment, NZ Ministry of Foreign Affairs and Internet NZ.
Although the conference will be chaired by a representative of the host nation, a key appointment to be determined is who controls the chair of the working committee—the so-called Committee 5—that will debate the fine print of the proposed regulations. The leaked ITU document says that there was sentiment that an European should chair this committee for reasons of “balance” but that Russia—keen to ensure maximum consideration of its proposals—was pushing hard for this position. CommsDay has learned that the Asia caucus—of which Australia and New Zealand are members—is pushing for its own candidate to take the chair of this committee. A key objection to Russia taking the role is that the committee needs to be seen to be impartial.
CommsDay understands that Australia worked energetically within Asia at a preparatory meeting last month to moderate Asia’s potential support for the contentious revisions to the treaty—specifically influencing China to accept milder language on cyber-security.
Senator Conroy, when in New York giving his famous “red underpants” speech, predicted Australia would generally support the United States position at the Dubai conference writing new rules for the ITU. Australia’s proposal is now out and his prediction has proven true. Ambassador Terry Kramer, the head of the US delegation, confirms “We are very pleased with the Australian proposals.”
The details in the proposed revisions to the new ITR treaty are often totally obscure until translated. Australia and the US above all else fear that the rules might affect Internet companies. The US strategy is to limit the regulations and who they apply to so severely that they have almost no effect. The ITRs would just be “principles,” generally so vague as to be almost meaningless.
Above all, the UN wouldn’t delve into “security,” where the ability of the US to intercept communications worldwide is non-negotiable. Even coordinating work across nations to reduce child pornography brings the UN too close to vital American interests.
Australia is building a government-controlled National Broadband Network; The US powers that be are generally opposed to any government action in telecoms. Agreement would seem hard to achieve. But both countries agree they want the U.N. out of the business.
For example, Australia wants the treaty to apply only to “recognised operating agencies.” This corresponds to one of Kramer’s Five Points, “Continuing to apply the ITRs only to recognised operating agencies or ROAs.” The ITU wants to apply the treaty to all “operating authorities.” The US and Australian position is based on the fear that the term “operating authorities” might cover many Internet companies who don’t want the UN making rules for them.
Unfortunately, the term ROA is now obsolete and also excludes most of the telecommunications carriers. Most of the competitive carriers and even many of the incumbents are not “recognised.” It’s been a meaningless term.
Here are the five US points compared with the Australian positions:
- From US: Minimal changes to the preamble of the ITRs;
From Australia: “This provision is an enduring principle that does not require change,” repeated several times. Only obviously needed changes, such as “ITU” rather than the since-changed name “CCITT,” are proposed.
- From US: Alignment of the definitions in the ITRs with those in the ITU Constitution and Convention, including no change to the definitions of telecommunications and international telecommunications service;
- US: Maintaining the voluntary nature of compliance with ITU-T Recommendations;
- US: Continuing to apply the ITRs only to recognized operating agencies or RoAs; i.e., the ITRs’ scope should not be expanded to address other operating agencies that are not involved in the provision of
authorised or licensed international telecommunications services to the public;
Australia: Also ROAs, although that means most “telecommunications” are not covered by the regulations.
- US: Revisions of Article 6 to affirm the role played by market competition and commercially negotiated agreements for exchanging international telecommunication traffic.
Australia: several provisions implementing same,
The US paper states “It is important that the ITRs continue to reflect high-level principles.” Australia agrees “The continued relevance of the current ITRs in a changing telecommunications environment demonstrates the success of a principles-based approach.”
Dave Burstein is the New York based editor of Fast Net News and Net Policy News. He will be reporting on WCIT for CommsDay from Dubai over the next two weeks.
The Commonwealth Bank of Australia has forecast that telcos will stump up $5.5 billion or more for new and relicensed spectrum in the next three years, as a result of communications minister Stephen Conroy’s move to shore up auction prices.
Conroy’s removal of control of reserve spectrum auction pricing from the Australian Communications and Media Authority, has left the industry expecting that he will personally lay down reserve prices. And with VHA signalling it won’t be competing full-tilt at the auction, coupled with the pressure on the federal government to deliver its promised budget surplus next year, those prices could be set relatively high.
In a newly released equities analysis, CBA forecast Telstra alone to shell out just under a billion dollars at the auction, at a base case spectrum cost of $0.20/MHz/pop for 2.6GHz and $0.75/MHz/pop for the prized 700MHz band. Assuming Telstra and Optus both go for 2x20MHz and VHA for 2x5MHz of 700MHz, the CBA analysts put the total industry spend at auction at $2.2 billion.
But the analysts’ bear case forecast, with reserve prices set in line with the 850MHz renewal prices from the start of the year, put 700MHz at 1.25A$/MHz/pop and 2.5GHz at A$0.45 – and would see Telstra spend almost $1.8 billion at auction, with the bill for the entire industry coming in at $4.05 billion.
“We had been increasingly hopeful there could be downward risk to spectrum auction prices given Vodafone’s reluctance to spend (as long as reserve prices were reasonable),” commented CBA analysts Alice Bennett and Nathan Burley (pictured). “However, it now looks more likely prices will be forced higher by the minister.”
850 PRICE EXTREME? “In spectrum relicensing costs announced in February 2012, the crucial 850MHz band was priced at $1.23/MHz/pop. In our view, this was extreme on almost every measure and global comp basis, however, the telcos had no choice but to pay. After numerous digital dividend spectrum auctions in Europe and North America, the average price is ~$0.6/MHz/Pop (significantly below what is required to achieve lofty auction expectations outlined in the media). While it would have been difficult for ACMA to set 700MHz reserve prices above this sort of levels, we suspect the minister will be more willing to set prices that deliver his preferred revenue outcomes.”
Of course, the renewal fees themselves – set in February, also by Conroy – will add substantially to the capex outlay. CBA estimates the total relicensing cost for the mobile operators at $3.3 billion between FY13 and FY15. On the base case forecast for the dividend spectrum auction, that would bring total spectrum spend to $5.5 billion over the same period: $2.2 billion for Telstra, $1.5 billion for Optus, $1.6 billion for Vodafone and $180 million for other spectrum users. And should the auction reserve prices be closer to CBA’s bear case, total spend would be correspondingly higher.
Nevertheless, CBA suggested that both Telstra and Optus would push considerable resources into at least getting the full 2x20MHz of 700MHz spectrum, even if they shelled out for less than the maximum allowed in 2.6GHz, and that VHA would still bid “as long as reserve pricing is not prohibitively high.”
“Telstra has generally historically spent almost whatever is required to get the maximum spectrum allowed under the rules. Despite Telstra’s large FY13 spectrum relicense bill… this is likely again, especially given VHA’s strong spectrum in metro 1800MHz and Optus’ Vivid Wireless purchase giving it lots of metro TD-2.3GHz,” noted the analysts. “Prior to its purchase of Vivid, it was more important for Optus to acquire digital dividend spectrum than the other carriers, given past under-investment and less spectrum overall. However, now with significant metro 2.3GHz spectrum, it will be most focused on 700MHz given existing lack of low frequency spectrum bands and regional spectrum.”
Deutsche Bank analyst Vikas Gour, meanwhile, has estimated the 700MHz auction price at around $1.2/MHz/pop and 2.5GHz at A$0.20, which would put Telstra’s auction bill at some $1.5 billion.
Goldman Sachs has tipped VHA’s two parent companies – Vodafone Group and Hutchison Whampoa – to continue to pump significant capital into the local operation to fund its multi-year turnaround strategy. And it suggests that given VHA\’s significant spectrum holdings, a vastly improving network and experiences from other three-operator markets worldwide that it can start to show investment returns by 2016.
In a report to investors, Goldman Sachs Australia analysts said that the A$2 billion VHA has already committed over 2012/13 will see its network vastly improved. “We see a stronger network position and streamlined cost base as prerequisites for a more aggressive customer acquisition strategy in 2HCY2013. While VHA is unlikely to engage in a price war, we believe it will differentiate its pricing through greater inclusions/subsidies, potential new price models and aggressive targeting of segments where it has low share,” GS analysts said.
Those segments include wireless broadband, where VHA\’s market share has fallen from around 25% to 13% in the last three years, and the SMB/corporate/government sectors, where Goldman Sachs estimates the company\’s shares as inordinately low.
While both Telstra and Optus have benefited from the decline in Vodafone numbers, GS analysts believe VHA can tap into the improved network to build back scale into its customer base. It notes that by the end of 2013 the network will have significantly greater number of base stations, largely infilling current network coverage, along with improved backhaul and sharply lower network utilisation rates as a result of lower customer numbers and greater network coverage.
Spectrum assets could also play to VHA\’s advantage. “One area we believe VHA holds a competitive advantage is its depth of spectrum holdings in the 1800MHz band which Australia’s mobile operators are using to deploy 4G services,” the researchers said, noting that VHA holds significantly more spectrum in the capital cities and double Telstra and Optus in Melbourne/Sydney.
“Theoretically, greater spectrum depth should deliver greater speeds/capacity to a greater number of customers at a lower cost (e.g., with fewer number of base stations). We expect VHA will be able to deliver LTE 1800MHz services over 2 X 20 MHz of spectrum compared with 2 X 10 MHz for Telstra and Optus.
However, we note VHA maybe be constrained by the amount of higher capacity backhaul it has in the short to medium term,” the report said.
The analyst also tipped the company to invest around A$1bn in 2013 on renewals and new digital dividend spectrum, despite speculation that VHA might not participate in the coming spectrum auction in April next year.
Goldman Sachs also conducted an analysis to compare Australia with other offshore three-player mobile markets and found VHA was the only operator of those reviewed to be unprofitable. But it expects the two parent companies to address the issues to turn the carrier around.
“We expect they are willing to be patient and have little choice but to invest capital in the near term to improve the business’ trajectory in order to increase medium-term returns and the value of the business. We expect both parents will need to inject capital into VHA over the next few years to fund: (1) its multi-year turnaround strategy; and (2) likely free cash burn we expect the company to generate from a combination of lower operating cash flow, network/spectrum investment and high debt burden,” the report stated.
Visionstream has told NBN contractors to steer clear of using high-pressure air or water in pit and pipe infrastructure which may contain asbestos – a reminder that the dangerous material remains a hurdle for the NBN rollout to tackle.
The extent of asbestos in the aging network infrastructure is not precisely understood, making it difficult to estimate accurately the expense or man hours required to remove it. However, Telstra, which bears responsibility for duct remediation under its deal with NBN Co, says that the cost and time in removing asbestos has already been factored into NBN negotiations.
Meanwhile, NBN Co’s most recent request for capability statements lists asbestos removal as one of the skillsets it is looking for – suggesting that the network builder is looking to either augment and expedite Telstra’s efforts in this area, or establish some contingency capacity.
In a memo sent last month, Visionstream laid down an “immediate prohibition” against “the use of compressed air or high pressure water for blowing rope or cable down underground conduits which are potentially composed of asbestos containing material.” NBN Co, however, emphasised that this was a reminder for safety reasons.
“New Commonwealth health and safety regulations in relation to the handling of asbestos and an accompanying code of practice were released late last year. This code said that high-pressure water spray and compressed air must not be used on asbestos or asbestos containing material,” an NBN Co spokesperson told CommsDay.
REMINDER: “Visionstream tell us they recently sent a reminder about this to their contractors, though we are advised that they have not used this method in relation to the rollout of the NBN…. NBN Co has robust policies and procedures in place for the management of asbestos hazards that may be encountered in the workplace. NBN Co’s engagement processes require contractors to have certified management systems, work procedures and detailed management plans, which are verified as being complaint with contractual and legislative requirements. NBN Co has also implemented monitoring programs as a means of verifying our contractors’ ongoing compliance with OHS requirements regarding work practices, which include asbestos.”
Telstra, which has primary responsibility for remediating the existing pit and pipe infrastructure that NBN Co will use, takes very seriously the safety precautions around removing asbestos. Its procedure document for managing the material is extensive, and lays down “the presumptive test that all fibre cement pits and conduits must be treated as asbestos-containing material.”
“Telstra’s network was built over many years and historically asbestos was used for some of our pits and ducts infrastructure. We have strict OHS&W guidelines in place for its removal as it is identified and this includes any remediation work we are carrying out on the network under the NBN agreements,” said a spokesman. “The cost and time involved in removing asbestos during remediation was considered as part of the NBN negotiation.”
Meanwhile, NBN Co itself has been looking for qualified contractors with the ability to carry out “toxic waste and asbestos removal,” among other functions, in its September request for capability statements. At this stage, it’s not clear whether the network builder is looking to expedite Telstra’s asbestos removal efforts or simply add its own capacity.
Australian marketers are outspending their Asian counterparts in both volume and sophistication when it comes to digital media, according to a new survey.
The Digital Marketing Performance Dashboard 2012 research conducted by the CMO Council in partnership with Adobe, found that 41% of participating Australian marketers spend 25% or more of their total marketing budgets on digital media. The figure puts Australia well ahead of its Asian neighbours in Hong Kong (28%), China (24%), Singapore (24%), India (20%), and Korea (20%), who spend a comparable percentage of their marketing budgets on digital initiatives.
Australia also leads in sophistication when it comes to digital marketing, with 84.5% of marketers adopting digital marketing analytics and reporting, compared to 84% for Korea, 75% for Singapore, 63% in India, 61.5% in Hong Kong, and 33% in China.
“The research shows that companies across Asia Pacific understand the value of investing in digital marketing but are struggling with low budgets. Australia has realised the benefits of digital early compared with the rest of the region and has invested accordingly,” said Mark Phibbs, senior director for Marketing, Asia Pacific for Adobe.
“Optimism is high right across the region about the business benefits of digital marketing with 93% of marketers surveyed believing digital marketing could create competitive advantage for their company, while 52% felt digital marketing was crucial in helping create a customer-centric, responsive organisation.”
Despite the adoption of digital mediums, operators have so far been left out of the ecosystem. According to the survey, the majority of the investment in digital is still web-based, with 83% of budgets going to website content development and optimisation, followed by 66% for search engine optimisation, and 54% on email campaigns.
The predominant metrics for gauging digital marketing success likewise centred on web-based data, such as website traffic (76.5%), click-through rates (74%), response rates (72%), and conversion rates (64%).
NEXTDC shareholders will today vote on a plan that will see the company’s three datacentres in Melbourne, Sydney and Perth sold off to a new entity – the Asia Pacific Data Centre Trust – in order to raise fresh capital. Under the proposal NEXTDC will lease back the facilities on fifteen-year leases, while APDC Trust will plan for an IPO on the Australian Stock Exchange.
The planned launch of APDC, planned as Australia’s first listed datacentre property fund, follows an earlier capital recycling initiative the company undertook with its Brisbane data facility, which had a similar sale and lease-back arrangement. NEXTDC is expecting to initially hold between 20-30% equity ownership of the proposed APDC fund, which will be a separately and independently operated entity.
According to a rationale presented to shareholders, the proposed transaction would allow NEXTDC to focus on the delivery of data centre services while giving funding certainty to explore other opportunities. It said an alliance proposed between APDC Group and NEXTDC would allow it to consider further sale and leasebacks to APDC for any future date centers constructed or acquired.
The company told shareholders that NEXTDC \’s future activities and strategic direction will not change following the disposal of the three data centres. “NEXTDC will remain a data centre operator and it will have received the capital proceeds from the sale of M1, S1, and P1 and will be able to continue to grow its footprint as a data centre services provider,” the company said.
NEXTDC officially opened the M1 Melbourne facility in July this year. S1 is currently under construction and the base building is expected to be finished in May 2013. The company is also about to commence construction in Perth on P1, with the base building anticipated to be completed in December 2013.
VHA CEO Bill Morrow (pictured) made a significant splash in the media on Friday as he implored a Sydney lunch audience to heed his message that competition in the Australian mobile telecommunications market was affected by similar structural issues to those that had beset the fixed telecommunications market.
His message is nothing new. His regulatory chief, Matthew Lobb, said similar things at our CommsDay Melbourne Congress last month, specifically focusing on complaints such as Telstra’s regular propensity to win tenders for government-funded rural infrastructure and the predilection of the Australian Competition and Consumer Commission to regulate mobile termination rates to lower and lower levels.
Indeed, there are genuine structural issues that affect VHA/Vodafone’s position in the marketplace: it\’s just that they are issues that government cannot really do much about.
Vodafone’s biggest problem is its 20 year old adherence to a mobile-only model in an era of convergence, triple play, quad play and even an NBN that, as its sponsor minister cheerfully admits, will play a major role in providing de facto Wi-Fi backhaul access for mobile device users. Vodafone made the mistake of consigning itself to a digital mobile niche upon market launch in 1993, sticking to a GSM only policy when the network and handsets weren’t yet up to scratch against a strong AMPS incumbent.
Optus didn’t make the same mistake, taking up its rights to AMPS resale and, thus, as early as 1996 was a strong player across fixed telecomms, pay TV and mobiles. Now it is arguably the most successful challenger domestic telco in the world against one of the more successful incumbents. This is a complete indictment of two decades of failed strategy at the Australian no 3 telco.
Fast forward to the present and it’s clear that the Vodafone brains trust half gets the problem. Over in New Zealand, where Vodafone is a much more successful entity, it entered the fixed market some 6 years ago, and with its recent acquisition of TelstraClear, it now has all the trappings of a full-service telco competitor to Telecom that can properly compete on the level playing field afforded by the Chorus and UFB developments there.
In Australia, Vodafone has made various supportive noises regarding the NBN and the potential for it to use the FTTH network as a launch pad into the fixed market.
But the war for market share grab that will determine who wins and loses on the NBN will not be fought in the future: it is being fought now in the DSL/HFC world. Over the next few years, Telstra and Optus will be cashed up with compensation while iiNet and TPG will be snapping eagerly at their heels. You’d have to be an optimist to see Vodafone getting more than a single digit market share of NBN connections as soon as 2022 in such an environment.
It\’s obvious where Vodafone Australia now needs to head: it needs to become an aggressive no 3 full service telco with scale and not starting in 2022. As with NZ, the only way it can do that is through speedy acquisition or merger.
Now over in the fixed market, we have the two aggressive challenger telcos to Telstra and Optus facing their own \”structural\” playing field issues. iiNet and TPG do provide resold mobile services from Optus, but in terms of revenue profile, they are still primarily fixed telcos and they face a distinct disadvantage up against the cashed-up \”quad play\” might of Telstra and Optus in a higher speed NBN/LTE world.
iiNet, TPG and some of the other remaining challenger telcos have demonstrated an amazing ability to put aside their competitive differences to collaborate on matters of mutual interest in the recent past. Only three years ago, several of them allied to mount a bid for NBN Mark 1 under the Terria brand name, prior to that under the G9 moniker their joint lobbying efforts convinced the parliamentarians of the day that an open tender for Australia\’s future fixed network was a viable proposition.
Of course, many of those Terria/G9 members—TransACT, Primus, PowerTel, Internode—don’t exist as independent companies anymore but this surely makes the collaboration task easier. And there is already one major common bond on which to forge some synergy: TPG’s backhaul unit Pipe is a major provider to Vodafone and iiNet already.
A combined force of Vodafone, iiNet and TPG would be a significant entity. It would have about $5.5 billion of revenues, with about $4 billion accruing to mobile but more significantly, in terms of realising the \”full service\” opportunity, over $400m in business and corporate fixed billings.
Add to this to the synergies of Vodafone’s TelstraClear NZ and Cable & Wireless global assets, and a new Vodafone-iiNet-TPG entity would be a significant player across the spectrum of telco services, especially in the higher end enterprise, government and corporate space where Vodafone Australia is currently a non-starter. Add in Macquarie Telecom as a fourth partner with its $220m of annual revenues in the business market and there is an even stronger story to tell here.
The NBN/LTE world is likely to be device-driven with FTTH/FTTN tails driving much of the heavy lifting of data traffic in the short term but with the mix moving back towards the LTE networks as small cells and the rise of mobile app functionality drive demand for better services out of home. Telstra and Optus are beautifully positioned in this new world, while smaller challenger telcos with a pure-play cellco background such as Vodafone or a pure-play ISP background face a disadvantage.
A strong third full-service telco would demand to be taken seriously at the regulatory table, at the content rights table and, alas, even at the government tender table!
VHA’s best hope might lie with siphoning off some of the rumoured $2 to $3 billion capex budget it is preparing for Australian mobile investment and dedicating it to an aggressive industry merger push. Bill Morrow complained on Friday that Telstra gets synergies from its access to a fixed telecom revenue stream that are denied to VHA. Well if you can’t beat them, join them!
This would surely lead to a better outcome for VHA than the forlorn hope that it can become a slightly less inferior no 3 three pureplay cellco with a few billion dollars in extra costs to show for it.
The digital revolution is transforming the way we live our lives, delivering productivity improvements and growth in high value jobs. With one of the highest smart phone adoption rates in the world, and the lowest population density, more Australians now connect to the internet via mobile devices than fixed line. We are a savvy nation with an insatiable appetite for technology.
With the right tools, the Australian economy can compete globally and continue to prosper, but providing for the nation’s thirst for technology is no easy feat.
Strong effective competition is the reason why service improves; why products are innovative; pricing is fair; and, where technology provides efficient solutions to economic and productivity challenges.
Australia is looking to the telecommunications sector to drive the digital economy and play a key role in shaping the future. Every telecommunications provider in the country has a role to play – and it’s fair to say none are doing it with particular finesse. While the onus is on the leaders of these businesses to lift the game, there are significant roadblocks that must be overcome.
The Australian market is unlike any other in the world. The high price dominant fixed line legacy provider reaps more profit from consumers than any other comparable incumbent in the world, despite mobile phone usage overtaking fixed line services. This is evidence of serious structural imbalances in the Australian market.
Policy makers in Australia have rightly focussed on the structural separation of Telstra and the creation of a nation-wide superfast broadband project. However, little focus has been given to the mobile market. The need for reform in mobile is as significant as the NBN.
Many policy responses to the mobile industry, in particular questions of coverage and regional equity, have failed to acknowledge the importance of competition and its role in providing consumer choice and economic innovation.
Government-led improvements in the mobile market have generally focussed on tax payer funded subsidies for the incumbent’s infrastructure in regional areas. While it is appropriate for Government to provide services to consumers where it is not economically viable for industry to do so, it is perverse that tax-payer funds would only benefit one mobile operator and thereby limit consumer choice.
Successive governments have awarded more than $450 million of taxpayer funds to Australia’s dominant incumbent; the large bulk of which was used to build mobile and fixed wireless infrastructure that only benefits its customers. Why should all taxpayers not be able to choose their own carrier and benefit equally from their tax dollars? Consider, for example, $39.2 million recently provided by the Western Australian Government to increase mobile coverage that will only benefit one provider.
By funding a single provider without requiring cost based access to all providers, people in these areas are left without choice and the incumbent no incentive to reduce costs and improve service. This policy response has entrenched the incumbent’s monopoly power and makes the case for coverage expansion by other networks even less economic.
Australia is rightly concerned about being left behind as the rest of the world looks to take advantage of the benefits of technology, productivity and the digital economy. There is a real risk that, without a new approach, Australia will suffer at the hands of a digital divide. Governments are right to consider policy approaches to this challenge, but any response must enhance, not inhibit, competition and choice.
In meeting the challenges presented we must take bold steps toward building a new policy and regulatory framework for an industry that will be integral to the economic prosperity of Australia in the future.
While the NBN is a good first step, more needs to be done to ensure we take full advantage and deliver mobile competition to benefit all Australians. An urgent reassessment of competition in the Australian market is required and the time is right. Without this, the vision of a telecommunications market that is built on economic productivity and innovation, better services, choice and cheaper prices will be beyond our reach.
Chief Executive Officer, Vodafone Australia
The Department of Broadband, Communications and the Digital Economy has told a joint parliamentary committee that that skills shortages won’t hamstring the national network rollout – despite the concerns expressed by unions, a number of contractors, and others.
The Communications Workers Union and its parent, the Communications, Electrical and Plumbing Union, have been warning of possible skill shortages related to the NBN rollout for four years. In a submission to the joint committee on the NBN earlier this year, the CWU said that the structural changes in the telecoms workforce over the last decade and more would exacerbate the skills issue, with many former employees becoming subcontractors and sometimes lacking “the means or the incentives to undertake retraining for the NBN project, especially where significantly higher skill levels are required.”
Meanwhile, the Communications and Information Technology Training organisation – while seeking support to help skill up the telco workforce – has warned that “many telecommunications workers do not have recognised and current technical qualifications and are part of a mobile and transient workforce, which makes it difficult for them to undertake formal training.” And some subcontractors have complained that the prime NBN contractors – including Visionstream, Service Stream and Silcar – have set rates for work on the network that, in some cases, are so low that the subbies can no longer afford to actually retain skilled staff.
However, in a new response to questions on notice from the joint committee, DBCDE remained adamant that the NBN wouldn’t be crippled by a skills crunch. “The Australian Government is committed to ensuring there is a well-trained and accredited workforce for Australia’s largest infrastructure project and the government is confident that NBN Co and its service delivery partners will be able to source expertise and resources to fulfil their obligations,” said the Department. “NBN Co’s analysis suggests that the implementation of a variety of resourcing and skilling strategies will ensure that there are enough people in the industry to meet the skills requirement for the construction of the network.”
DBCDE noted that NBN Co and the Department of Education, Employment and Workplace Relations were working closely with stakeholders such as service delivery partners, the industry skills board and training organisations to help build a skilled workforce to support the rollout. It also referenced the government’s A$100 million agreement for Telstra to retrain employees in new fibre-related skills.
In addition, DBCDE cited NBN Co forecasts that the construction of the network would create between 16,000 and 18,000 jobs. It said that the network builder had identified that 80% of the workforce would be spread between NBN linesworkers, installers, labourers, splicers and earthmoving plant operators, and that it was using workforce modelling using the national rollout schedules to forecast demand for workers by region, occupation and time. “This modelling has recently been refreshed and reviewed against the current three year rollout plan,” said DBCDE.
According to its most recent corporate plan, NBN Co is aiming to hit a run rate of over 6,400 premises passed per day by FY2015.