Thanks to CommsDay founder Grahame Lynch and Editor Petroc Wilton for having me back again.
This marks my third speech to the CommsDay Summit as Minister for Communications, and it's amazing how quickly the landscape has changed in those three years.
Last year marked three significant anniversaries for the telecommunications industry in Australia.
It was 25 years since the Radiocommunications Act was passed in 1992.
It was twenty years since the 1997 market reforms formally introduced competition to the sector.
And ten years since the words 'National Broadband Network' were first uttered by a politician.
I'm optimistic that 2018 will be a year where more landmarks are laid down.
The passage of telecommunications reform package, currently before Parliament.
And the passage of a new Radiocommunications Bill, set to be introduced into Parliament later this year.
Just as the 1992 RadComms Act and the 1997 market reforms laid the foundation for the past two decades, these new laws have been designed for the decades to come.
In 2020, the NBN rollout will be completed.
5G networks will be commercially available.
The landscape will be different again.
And so today, I'd like to talk about the future of the telecommunications industry beyond 2020.
It's not very far away at all.
Those of you who've heard me speak before would know I enjoy 1980's pop music, so I'm reminded of Prince's '1999'—which he actually released in 1982.
And just as Prince was planning his 1999 party almost twenty years in advance, we're laying down the foundations for the new century of telecommunications in Australia.
'Tonight we're gunna regulate like it's 2039.'
So first up this morning, I'll look at Australia's fixed-line telecommunications market beyond 2020, as the NBN rapidly approaches completion.
Next, I'll look at Australia's mobile market beyond 2020, when 5G will be commonplace and the vendor hype-cycle for 6G will doubtless be ramping up.
And finally, I'll look to the future of the regulatory environment beyond 2020, as the existing regulations designed for the PSTN world rapidly approach their use-by date.
So first—to look at the future of fixed-line, let's do a quick status-check on the present.
Last year I said that Australia is on-track to become the first fully-connected continent by 2020.
Today, we remain on-track to meet that goal.
Today, more than 6.4 million premises are 'Ready to Connect' and more than 3.7 million homes and businesses have already done so.
By the end of the year, around three-quarters of the nation will be able to get onto the NBN, and the foot will be back on the accelerator following the pause in HFC sales.
As I noted in my first CommsDay Summit speech back in October 2015, there is no point airbrushing the risks in such a complex infrastructure build.
The NBN is utterly unique, and as such has been one huge learning process for all involved. Even as milestones are ticked off—and co-ordinating a 30,000-strong workforce is considered business-as-usual—other issues have invariably emerged.
The HFC sales pause has clearly impacted this year's activations profile. And there will be adjustments to the timing of revenue as a consequence.
However, the threshold question is whether the consumer experience should be the priority when switching to the NBN.
That is clearly this Government's—and nbn's—focus. Last year I told this forum that 2017 would be the year of the consumer—and I meant it.
The Government is confident that when nbn pushes the restart button, the HFC network optimisation work will deliver an excellent experience and make for a much smoother migration for the remainder of the footprint.
Importantly, the pause has allowed more in-fill lead-ins to be built, which will ultimately make the connection process less complicated.
The flexibility of the multi-technology mix, and Bill Morrow's relentless focus have enabled the rollout to remain on track for completion in 2020.
Bill Morrow has done an incredible job at the helm of nbn since 2014. His cult-like status inside the company is richly deserved and it will be a great loss to the business when he departs later this year.
Rollout and activation targets that were mocked as 'heroic' several years ago have been surpassed.
The ready-to-connect footprint has grown more than tenfold to 6.5 million.
And cost per premises and opex have remained within forecast tolerances—outcomes largely unheard of in infrastructure projects of this scale and complexity.
Significantly, three technology variants—satellite, FTTN and HFC, have been operationalised. All under Bill's watch.
And just yesterday I joined the Treasurer, Scott Morrison, in his electorate for the formal launch of the fourth technology—grown fibre to the curb (FTTC).
FTTC didn't even exist when the NBN rollout started under our predecessors.
Today it is a live technology which can deliver the same 100Mbps speeds as fibre-to-the-premise (FTTP), minus the household inconvenience and exorbitant civil works costs.
It's interesting that public discussion about the NBN has finally begun to turn to the underlying business model.
The Coalition has always maintained that the difference in broadband policy approaches was more about business models than technology choices.
Recent changes to nbn's wholesale pricing strategy underline a key point about broadband affordability and the robustness of the NBN business case.
Those who are pondering nbn's business model based on peak funding of $49 billion and completion in 2020 should pause to consider the Opposition's alternative.
It's plainly obvious today that claims about the economics of FTTP were never sufficiently scrutinised.
An FTTP-based rollout was always a house of cards—predicated on the assumption that households would be willing to fork out more than double the price of ADSL for all-fibre.
Tellingly, average revenue per user was meant to double in just a handful of years and sail past $60 in 2021.
Against that backdrop, we promised to deliver fast broadband at least cost to taxpayers and more affordably for consumers.
The lower rollout costs and faster activations of the multi-technology mix, are the only means by which fast broadband can remain affordable for Australians.
Which brings me to the current 'Focus on 50' campaign through which nbn is offering pricing incentives for retailers to unleash the latent speed and capacity of the new network.
This pricing revision required a trade-off between near-term revenues for nbn and the wider economic and social benefits of very fast internet speeds and a congestion-free user experience.
nbn's 'Focus on 50' pricing campaign has seen the take-up of 50Mbps plans increase from just 4 per cent of services in November last year to over 20 per cent today.
More than half of the new fixed line plans sold over the NBN are now for 50 megabit speeds. And over the next week or two we will see the number of users now on the '50' tier top one million.
These users are now enjoying internet speeds more than five times faster than the average speed on the pre-NBN network.
The new pricing strategy has also allowed retailers to relieve congestion. Since 'Focus on 50' commenced, average congestion has plummeted from almost 5 hours per week to just 12 minutes.
This puts paid to the politicised myth that FTTN was the reason for slow speeds.
I should, at this point, commend the retail service providers for responding so positively.
And this brings me to the theme of the fixed-line broadband market beyond 2020.
I was pleased to see the findings of a recent report by the Bureau of Communications and Arts Research which found the NBN's capabilities will continue to meet consumer demand well into the next decade.
The report forecast that 98 per cent of Australian households will require broadband speeds of up to 49Mbps in 2026—meaning only 2 per cent of households are expected to require speeds above 50Mbps to meet their usage requirements eight years from now.
The NBN being rolled out today will be more than enough to cater to this demand.
By 2020, 100% of premises will be able to access speeds of at least 25 megabits per second.
87 per cent of premises - including fixed wireless and satellite—will have access to speeds of 50Mbps and faster.
More than 70 per cent will be able to access speeds of 100 megabits per second.
And close to half of Australian premises will have access to speeds of 1Gbps—well in advance of anticipated demand.
So with the NBN set to exceed consumer demand in 2020 and beyond, I come to my second point—the future of Australia's mobile market beyond 2020.
Australians are amongst the world's most prolific users of mobile services.
The fact that more than 99% of Australians have mobile coverage in a country as wide and sparsely-populated as Australia should be read as a sign that our light-touch regulatory regime is working.
This was reflected in the 5G Directions Paper 'Enabling the Future Economy', which I released late last year.
The paper highlighted four key actions for Government to take to support the timely rollout of 5G in Australia—each of which essentially enables industry to take the lead.
The paper highlights that the Government will support 5G by:
- making spectrum available in a timely manner,
- actively engaging in international standardisation processes,
- streamlining planning arrangements to allow mobile carriers to deploy infrastructure more quickly and at lower cost,
- and reviewing existing telecommunications regulatory arrangements to ensure they are fit-for-purpose in the 5G era.
Progress has already been made on each of these.
First, the Government is already making spectrum available.
Just last month, after careful consideration and in consultation with the ACMA, I announced 125 MHz of spectrum in the 3.6GHz band would be sold at competitive auction later this year.
We are also actively engaging in international spectrum harmonisation activities.
In March, for example, we hosted the third of five meetings of the Asia-Pacific Telecommunity (APT) Preparatory Group ahead of the World Radiocommunication Conference in 2019.
We are fortunate to be a part of a region able to speak with a united voice on so many of the critical spectrum harmonisation and satellite coordination issues under consideration — not the least of which is additional spectrum for 5G mobile.
The Government is also continuing its efforts to reform telecommunications carrier powers and immunities.
Industry analysis has estimated reforms to carrier powers and immunities will deliver productivity benefits to consumers and regulatory cost savings for industry worth tens of millions of dollars each year.
Just last month I announced that the key regulatory instruments underpinning powers and immunities would be reformed to allow more efficient deployment of telecommunications infrastructure.
As a result of constructive consultation with the telecommunications industry and with property owners, we have been able to advance 10 important reforms.
We are continuing to work on a further 11 reforms, and I have asked my Department to continue consultation on this second tranche.
And finally, we are reviewing and streamlining existing regulatory arrangements to ensure they are fit-for-purpose in the 5G era.
In October last year, I announced a 5G Working Group to bring together industry and government.
A key focus of the group is to identify regulatory enablers and barriers for 5G's use in Australia.
The group is currently focusing on the autonomous vehicle, agricultural and health sectors.
And today, I am very pleased to release a new paper that examines the potential impact of 5G on productivity and economic growth.
This Bureau of Communications and Arts Research paper was one of the first items considered by the working group when it first met earlier this year.
The paper finds that 5G could increase multifactor productivity and real incomes, raising GDP per capita in 2030 by up to $2,000.
This estimate of the economic benefit is likely to be conservative, in that it does not fully take into account the consumer and non-market benefits that are not captured in economic statistics.
Telecommunications-intensive industries are likely to experience the benefits of 5G more quickly.
The value of 5G is reflected in recent announcements made by Australian mobile network operators.
Both Telstra and Optus have announced their intention to roll out consumer offerings for 5G in 2019, and hardly a week goes by without an announcement about the latest breakthroughs in 5G trails.
I look forward to seeing the outcomes of the 5G working group as we rapidly approach the time when these networks will be commercially available.
So with the telecommunications landscape in a period of transition in both fixed-line and mobile, I'll turn to my final point—the future of the regulatory environment beyond 2020.
At last year's CommsDay I said 2017 would be the year of the consumer. We have delivered on that promise.
nbn recently released its first monthly customer experience progress report, which shows:
- 89 per cent of NBN installations were completed 'right the first time' in February;
- 92 per cent of installations were completed on time;
- 85 per cent of faults were repaired within the agreed timeframe, and;
- the network is experiencing around 1 fault for every 100 services across a month.
Just as NBN is doing its bit to improve the customer experience, the Government is also playing a role to support consumers migrating to the new network.
Last December, I announced that the Government would provide ACMA with $8.7 million over three years to implement a range of new consumer protections.
ACMA has already started putting these new protections into place.
I know Nerida O'Loughlin is speaking here tomorrow and I wouldn't want to steal her thunder. So I'll leave it to her to update you on the great work underway by the ACMA.
The ACCC is also playing a role, with the recent release of its first Measuring Broadband Australia report showing that consumers are most certainly getting the NBN speeds they are paying for.
The report shows that retailers are delivering high speed broadband on the NBN even at peak times, at around 90% of the headline speeds advertised—well above ACCC's guidance.
The industry should be congratulated for this positive result.
While these are important measures to ensure consumers have a NBN positive experience today, further reforms will be required to ensure the regulatory environment is right for the long-term.
Last year the Government introduced an important telecommunications reform package into Parliament.
The package has three parts that work together.
First, it will provide a legislated guarantee that all Australians will have to access high-speed broadband through the Statutory Infrastructure Provider rules.
Second, it will provide greater structural flexibility to network providers, improving competition through new level playing field reforms.
And third, it will establish a sustainable funding mechanism to fund regional broadband through the Regional Broadband Scheme.
This reform package is designed to set the regulatory foundation for the telecommunications market beyond 2020, when the NBN is complete and the industry is through the huge period of upheaval caused by the rollout over the past decade.
The package is currently before Parliament, and I look forward to its passage in the near future.
And we can't talk about the future of the regulatory environment without mentioning reform of the Universal Service Obligation (USO).
The Productivity Commission inquiry concluded the USO was 'anachronistic and costly' and recommended it be wound back following completion of the NBN.
But in recognition of the fact that the NBN will not be completed until 2020, we are taking a 'belt and braces' approach to reform.
No changes will be made to existing USO arrangements until alternatives are available.
Late last year, I announced plans to establish a Universal Service Guarantee (USG).
The Guarantee will ensure all Australian premises, regardless of location, have access to voice and broadband services. This will be underpinned by the Statutory Infrastructure Provider framework currently before Parliament.
It will reflect changing customer preferences, particularly the increased usage of broadband; the high penetration and use of commercially-available mobile services; and the declining use of payphones.
In developing options for implementing a future Universal Service Guarantee, the Government will examine the feasibility and cost implications of issues such as:
- alternative means of providing voice services to premises in NBN Co's satellite footprint, recognising that Sky Muster was designed for broadband, not voice
- the potential impact on NBN Co's costs and network design as premises currently served by Telstra under the USO migrate to NBN infrastructure, and
- where and when it may be appropriate for Telstra to reduce the number of existing payphones provided under the USO.
Alongside these reforms, we have also committed to review consumer safeguards regulations.
We have seen from our experience with the NBN just how important it is to have the right consumer protections in place.
Just as existing regulations like the Customer Service Guarantee and Network Reliability Framework provided protections in the PSTN world, we want to ensure that users on the NBN can access appropriate complaint handling and fault resolution processes, should they be needed.
I look forward to saying more about this work in the near future.
Our objective is to have the infrastructure in place by 2020 alongside the regulatory, funding and policy frameworks, to ensure all Australians have access to voice and broadband services.
In conclusion, there is clearly a substantial amount of work ahead as part of the Government's reform agenda as we look to get the networks and the regulatory settings right, beyond 2020.
The rollout of the NBN is on-track to deliver universal high-speed broadband by 2020.
And we have legislation before Parliament which will establish the level-playing field rules and sustainable funding for regional broadband service beyond 2020.
We are on-track to see 5G mobile networks rolled out by 2020, and the Government continues to work to ensure the right settings are in place to allow operators to make these investments.
And finally we are on-track to have a new regulatory regime in place by 2020 which ensures consumers are able to access high-speed broadband and voice services, regardless of where they live.
Along with a new consumer protections regime built for a post-NBN-rollout world.
This is a huge body of work.
And I look forward to continuing to work with the industry to get it done.
 NBN Co Ltd Corporate Plan 2012-2015, Exhibit 8–11, p.69.