Senator the Hon Helen Coonan
Minister for Communications,
Information Technology
and the Arts

Deputy Leader of the Government
in the Senate

ATUG Celebration of Open Competition in Telecommunictions: 10 years on

Canberra
Wednesday 13 June 2007

Good evening it is a pleasure to be here with you to celebrate the 10th anniversary of open competition in Australian telecommunications.

It is indeed an auspicious anniversary and of particular importance to ATUG given that competition and the interests of consumers is front and centre of its focus.

Ten years of competition

Ten years ago the Howard Government spearheaded the liberalising of the telecommunications sector and encouraged competition.

When the Government was elected in 1996, it inherited a near duopoly in the telco industry.

Back then people were just embracing dial-up internet. Broadband was a distant concept.

Competition was limited and consumers were the loser.

Open competition works on the premise that strong infrastructure and service based competition produces real benefits.

These include significant price reductions, service choice and flexibility, and greater levels of efficiency in the telecommunications sector.

This is essential to maximise the efficiency of the telecommunications sector, its contribution to our economy and to protect consumers’ rights and guarantee them fair access to 21st century telecommunications services.

The Government’s work in liberalising the telecommunications sector and encouraging competition has had direct results for the Australian economy and for consumers.

The role of the ACCC has also been important in enforcing the new competitive framework and administering the open access regulation regime.

Since the Government’s telecommunication reforms of 1997, there are now 167 providers vigorously competing on the telecommunications field.

And there can be no argument that consumers have been the major beneficiary of competition reforms.

Fixed line prices have fallen by 18.9 per cent and mobile service prices have fallen by a whopping 36 per cent.

In fact, since 1997, the overall average price of telecommunications services has fallen by 26.2 per cent.

The Australian economy has grown by $15.2 billion since 1997 due to the Australian Government’s reforms of the telecommunications sector.

In the 2005-06 financial year alone, flow-on effects from the changes in the telecommunications sector included the creation of 17,550 additional jobs and more than $660 million in additional investment.

Although not without its difficult moments, the sale of Telstra was also a key reform as part of the long march to a competitive market where the Government was not trying to wear three hats as owner of the asset, umpire of the game and legislator of the framework.

Also since 1996 there has been a dramatic change in the service offerings in the market, with fixed telephony now joined by new mobile, internet and broadband services.

Voice over Internet Protocol—VoIP—services were not really on the radar in 1997.

The number of VoIP providers has risen from around 25 in 2004-05 to around 240 providers at present. An amazing 750,000 services are now estimated to be in operation, representing about 4.8 per cent of the population.

The consumers’ love of the mobile telephone appears to know no bounds, with the number of mobile services rising from about 5.9 million at the end of 1998 to a staggering 19.76 million in 2005-06.

Over the last 10 years, four major carriers have built competing mobile networks, with the competitive tension driving great choice and lower prices for consumers.

In fact, earlier today I tabled in the Senate two ACCC reports on the Telecommunications Competition Safeguards and the Changes in Prices paid for telecommunications services in Australia last financial year.

These reports again indicate that the competitive framework is delivering real benefits to telecommunication users.

Investment in communications grew from $6.3 billion in 2004-05 to $6.9 billion in 2005-2006.

Most importantly, the average price paid by consumers for telecommunications services fell in real terms by 6.5 percent.

These are the signs of a framework that is generally very healthy – with increasing investment levels and increasing productivity leading to falling prices.

These are just some examples of the benefits brought about by open competition in telecommunications.

But what about tomorrow?

With technology evolving and converging so fast, there are always new challenges being faced by government - policy in this area is never a ‘set and forget’ exercise.

But I firmly believe the direction the Government has taken has been justified. The regulatory regime is all about understanding market drivers, encouraging industry to innovate and take advantage of what new and emerging technology offers while ensuring that consumers are protected and able to get the benefits of a thriving, competitive environment.

Government’s broadband plan

But it is broadband, particularly to residences, small businesses, farms and communities, that continues to be front of mind in Australia at the moment.

And for good reason, as it is communications technology and broadband that are transforming the way we work, the way we interact and the way we learn.

They are critical for all sectors to operate in a modern economy, whether it is the government, private or the not-for profit sector.

Broadband and information technology will underpin Australia’s productivity gains and help to lock-in Australia’s continuing economic prosperity.

The Australian Government is tackling the challenges facing industry on a national level.

Our national broadband policy is not one dimensional nor static and most importantly it is fully costed and deliverable.

Indeed, the Government has a long and proud history in the provision of services to underserved areas regional and rural Australia.

The Government has been acting to ensure that regional and rural Australians enjoy equitable telecommunications services for many years.

In fact, the Government has been funding the rollout of broadband infrastructure across Australia since 2004.

Through programs such as Clever Networks and the Coordinated Communications Infrastructure Fund the Government has been supporting projects which deliver metro comparable services to people, even in the remotest parts of Australia.

The fundamental philosophy behind the Government’s on-going broadband work, is to allow the market to invest in commercial areas and to target taxpayer funds at underserved areas.

Through the Higher Bandwidth Incentive Program and the Broadband Connect subsidy scheme the Government has already extended broadband coverage to a further 1.3 million premises with more than $500 million in direct subsidies.

Back in August 2006, we announced the $600m Broadband Connect Infrastructure Program, a significant new policy approach that changed focus from a customer subsidy for a broadband connection to an investment toward building a new competitive national wholesale network for regional and rural Australia.

The Government’s aim was to leverage a high level of commercial contribution towards building the new national wholesale network, with the Government’s contribution assisting the business case for rolling out to non commercial areas and premises.

The Government is strongly committed to the proposition that all Australians, regardless of where they live, should have access to high speed broadband.

We will not be picking technology winners, but allowing the industry to put forward the best mix of technologies to meet the varying needs across Australia’s vast land mass.

It is a very brave person who would say that they knew all the technological answers for Australia over the next 5 years.

For example, it was only a few years ago Labor’s only foray into the internet was a policy to mandate a dial-up rollout for $5 billion.

If this sounds improbable it also sounds familiar as they are at it again, this time picking fibre as the one size fits all solution.

The reality is that a mix of technologies will be required and will need to be capable of scaling up to deliver the services that Australians need both today and into the future.

For instance, for built up areas, VDSL running off fibre to the node may well be the best solution. That is a commercial decision for a builder of a new fibre network.

However, when you get out into the more regional and remote areas, there are a limited number of nodes and even less kerbs for fibre to run to, so the extended reach of a fixed and fast wireless solution may be the appropriate technology.

The Government has a coordinated national solution that ensures we will not be leaving regional and rural Australia behind.

In Rural and Regional Australia the Broadband Connect Infrastructure program will leverage private sector investment to transform the way communities access broadband.

In Remote Australia – and anywhere a commercial broadband service is not currently available – affordable subsidised broadband is already available via the $163 million Australian Broadband Guarantee.

Crucially, our commitment to the future of regional and rural consumers is underpinned by the $2 billion Communications Fund that will provide an income stream of around $400 million every three years.

Indeed, the Government’s comprehensive broadband policy will be a new leap forward for regional Australia.

Our objective is to build a new wholesale national broadband network that will enable rural Australians to access high speed broadband at prices equivalent to metropolitan Australia.

The network will be open access so that it promotes competition and provides a choice of services for regional Australians.

Conclusion

Ladies and gentlemen while tonight is about celebrating 10 years of competition, in the political climate that we are in today, I am sure you would expect me to provide some comment about why, in my opinion, Labor’s single broadband announcement is an inferior and incomplete answer to Australia’s broadband needs.

Labor’s plan to waste $5 billion of taxpayer’s funds on a Fibre-to-the-Node network that industry will fund itself is fiscal irresponsibility of the highest order and highlights the risk that Labor poses to the Australian economy.

If Labor can’t even manage a broadband rollout without helping themselves to $5 billion of public funding then every taxpayers must ask, how can you risk Labor managing Australia’s trillion dollar economy?

By contrast, the Government remains firmly committed to investing taxpayer dollars where the market does not invest and we will ensure that high speed broadband is available to all Australians, regardless of where they live.

We will not stop at just 98 per cent coverage leaving the neediest Australians in rural and regional Australia without a fast and scaleable broadband service.

We will be able to offer affordable and metro comparable prices to all Australians regardless of where they live.

Labor has refused to make any commitment on affordability at all.

We will have a comprehensive but appropriate plan, but not a one size fits all solution that will inevitably leave some Australians behind.

Our proposal will be fully costed.

Labor’s plan has been estimated by industry to be out in its costing by at least $8 billion dollars and likely to blow out to somewhere in the order of $16 billion.

Most importantly, we are committed to the open competitive framework that we are celebrating tonight.

It is yet another example of this Government’s tough decisions yielding productivity gains while the human dividend is the ongoing benefit to consumers.

Finally I want to thank ATUG for all the good work that it has done in this field in the interests of consumers.

I appreciate and acknowledge the constructive role played by ATUG in your dealings with me.

A collaborative approach has, I believe, resulted in improved policy outcomes and I look forward to continuing to engage with ATUG.

Thank you for inviting me to your commemoration of 10 years of open competition.