Senator the Hon Stephen Conroy

Minister for Broadband, Communications and the Digital Economy

DEPUTY LEADER OF THE GOVERNMENT IN THE SENATE

Address to ACMA RADCOMMS Conference, Melbourne

Wednesday, 30 April 2008

This conference is a great opportunity to discuss the future trends and spectrum requirements for existing and emerging services.

Input from today will inform ACMA in developing its regulatory policies on evolving spectrum issues.

This is vital because there is no slowing the pace of change in the world of communications.

As Chris Chapman has emphasised this morning, the efficient allocation and use of radiofrequency spectrum can promote economy-wide productivity gains.

He spoke strongly of acting in the national interest.

Spectrum is used for key communications in the modern world—television, mobile telephony, wireless broadband, satellite broadband, emergency services, security, logistics tracking to name but a few.

It is a core plank of our national infrastructure.

It is therefore no exaggeration to say Australia 's future prosperity will be closely linked with our success in harnessing the potential of spectrum to support emerging technologies and applications.

Developed economies are already dealing with issues such as spectrum availability, positioning of infrastructure and the development of content.

We of course need to recognise overseas developments as well as contribute to work that fits in with our own requirements.

Over the past 11 years, Australia has been slow to prepare for major spectrum decisions.

Well, not any more.

The Rudd Government recognises the importance of spectrum and intends to make sure that we maximise the potential benefits for Australian consumers and industry.

Radcomms a ‘hotspot' of convergence

In today's world, radiocommunications services are a hotspot of convergence.

There is growing demand for yet more broadcast space, diverse wireless services and increased mobility.

These trends have been driving a rapid increase in demand for finite spectrum resources.

Fortunately, the technology sector has a strong innovative streak and emerging technolgies are helping to increase the efficiency and productivity of spectrum.

Google is the latest company to propose that the United States regulator consider use of the so called ‘white space' between existing television channels to deliver its products.

I understand there will be a presentation from Google later, and I look forward to hearing their views.

Clearly, these sorts of developments have the potential to enhance the supply and efficiency of spectrum, and also to boost access to all sorts of wireless services.

Old services are meeting new

Today we are also seeing traditional services meeting new services in the wireless space.

Broadcast and telecommunications are sharing spectrum with the delivery of internet services such as video, web browsing and email.

Content traditionally delivered to televisions is being delivered to consumers often by their mobile phone providers.

Mobility versus fixed

Not only are these lines blurring, but consumers are making it clear that they want access to their services anytime, anywhere.

While fixed network services are likely to hold a capacity advantage for the foreseeable future, consumers will sacrifice bandwidth and quality of service as a trade-off for complete mobility.

We have already seen this with mobile phones, which have a far greater drop-out rate than fixed phones but consumers are (within reason) willing to accept this, for the sake of convenience.

Spectrum will drive economic productivity

There is no doubt that every developed economy will want to maximise the productivity benefit possible from new and emerging wireless technologies.

Australia has been an early adopter, and in this case, there will be some major economic and social benefits.

Spectrum already provides a huge economic benefit to a developed economy.

A recent study estimated that radio spectrum contributed 42 billion pounds to British economy in 2005–06.

There is no reason to believe that the benefit would be any smaller here as a proportion of the economy.

In any event, there is no question that we are talking about key infrastructure where any improvements will drive major gains throughout the Australian economy.

Government roles

Government has a number of roles in this area.

It has a role to help industry deliver and help consumers get access to the services they want.

And, in terms of acting in the national interest, it is clear that the buck ultimately stops with the Government.

Spectrum-enabled services are a vital part of Australia 's defence, security and law enforcement and other public safety activities.

These vital interests need to be protected and developed.

To choose the right options in all of these roles, the Government requires accurate and reliable information.

Moving forward in a structured way

Many other economies have already completed reviews on key radio spectrum issues and are moving into a decision-making phase.

The Australian Government also wants to progress spectrum reform.

Considerable work is now required to position ourselves so that we—and I emphasise ‘we' (this is not just about the Government)—can make informed judgments.

In particular (though not exhaustively) we require:

• technical assessments on spectrum requirements for digital television
• advice on how to maximise the benefit from the expiry of mobile licences.

Major Government considerations

Digital switchover

As you know, December 31, 2013 has been set as the date for completing the switch-off of analogue TV.

Andy Townend, Head of the Digital Switchover Taskforce, will be speaking later in this conference, so I will leave the detailed discussion related to digital TV to him.

However, suffice to say that decisions on a range of digital switchover issues must be made well before the switch-off date.

Digital dividend

The first of these issues is what to do with the spectrum freed at switchover?

The key questions include:

• How much spectrum could be freed-up in the digital dividend, while maintaining television services?
• Can the utility of the freed up spectrum be improved through ‘re-stacking' to make larger contiguous blocks of free spectrum available?
• How should the digital dividend be allocated?
• What are the leading international trends?

The process of information gathering, public and industry consultation and firm decision making should have commenced in Australia years ago.

Indeed, overseas, these questions are already being answered.

For example the United States has recently finalised its auction process and is well ahead on the path to allocation of the digital dividend.

United States spectrum sales for the digital dividend raised more than US$19 billion for over 1000 licences, with the two main successful bidders being Verizon Wireless and AT&T.

Australia is clearly lagging behind.

Nevertheless, this Government is committed to putting in the hard work and resources required.

We will undertake a comprehensive examination of the digital dividend that will allow us to make informed decisions.

15-year spectrum licences

Another key spectrum consideration relates to the renewal or re-allocation of a series of 15-year spectrum licences that are now used for mobile phone and wireless broadband services.

In particular, licences in the key bands—800 Mega Hertz, 1.8 GigaHertz, 2.1 GigaHertz and 3.4 GigaHertz—are due to expire in the 2013–2017 period.

In the 1990s, Australia was at the forefront of countries that adopted auction mechanisms to allocate spectrum for terrestrial wireless telecommunications services.

In fact, in many ways the then Labor Government pioneered the approach of granting long-term spectrum licenses to mobile operators.

This provided them with a level of investment certainty and flexibility to develop new applications or services in the knowledge they had access to this valuable spectrum resource for a defined period.

Although licence expiry is still a number of years away, it is important that work is undertaken now.

The issues are complex, and a substantial lead time is required to plan appropriately and consider the views of all stakeholders.

Being an early adopter of auctions means there is relatively little international experience on the best approaches to mobile licence renewal or reallocation.

Role of DBCDE, ACMA and the Consultation process

The future of the digital dividend and the 15 year spectrum licences are major policy decisions that need to be made on an informed basis.

This can only go forward in a transparent and consultative way.

We anticipate an extensive consultation phase where we will engage fully with consumers and industry and allow for comprehensive public comment.

So what are we actually doing about it?

My Department and ACMA have formed a high-level working group and are meeting on a regular basis.

The purpose of the group is to consolidate a strong information base and identify any additional research that is required.

This group will provide input to the Inter-Departmental Committee on digital television switchover that will be chaired by Andy Townend.

This work—together with comprehensive industry consultation—will provide Government with a detailed set of options well before the 2013 analogue switch-off.

Department studies

Additionally, my Department and ACMA have commenced work on both the digital dividend and the 15-year spectrum licences.

Mr Keith Besgrove will be speak on this issue later today. Without pre-empting Keith, I would however like to give a brief overview of what this work entails.

Firstly, my Department and ACMA have already commenced an initial technical assessment of the spectrum that could be available from the digital dividend.

The aim of this is to present a number of options, each with its own implications for the size and value of the dividend and implications for current and future consumers and industry.

The technical study will also need to assess which existing Government programs may be affected.

The allocation of the ‘freed' spectrum is a question for when we have scoped the potential size and value of the dividend.

There will we expect be vigorous debate from incumbents and potential new users and we are happy to engage with all stakeholders.

The technical study will be followed-up with further information gathering on possible allocations, uses and economic value of the digital dividend.

There will also be work undertaken with both agencies conducting technical and economic analysis throughout the rest of the year.

After this information gathering period, the Department will proceed with extensive industry and consumer consultation in 2009 to ensure any decision made is fully informed.

15-year licences

We are also making progress on the 15-year spectrum licence expiry.

Some key services are involved in this, including 2G and 3G mobile services

As I mentioned, these will expire between 2013 and 2017.

While this sounds a long way off, I am sure you would agree that the key services in these spectrum ranges require long-term planning from both Government and the private sector.

My Department and ACMA are commencing a process to identify issues and options that might be considered for both renewal and re-allocation of the existing spectrum range.

Again there will be the opportunity for both industry and consumer participation in what will be a robust and transparent process.

Wireless access services and the spectrum plan

ACMA has been consulting with industry and stakeholders to canvas options for addressing anticipated increases in demand for wireless access services.

I am sure many of you here today have actively contributed your views to that process. 

ACMA has identified the 2.5 and 3.6 GigaHertz bands as two early candidate bands for possible replanning.

ACMA is aiming to complete its analysis of responses to its consultation process by mid-year.

2.5 GigaHertz in particular raises important issues. 

It is currently licensed to the three commercial TV networks and ABC for vital electronic newsgathering, or ENG services and outside broadcasts.

However, the band has been harmonised internationally for IMT services, and has been allocated—or is in the process of being allocated—for this purpose in many major markets.

The most recent auction occurring in Sweden earlier this month.

This international harmonisation is evidence of the rising value of spectrum in this band.

Meanwhile, broadcasters in Australia have lacked any certainty about the future spectrum arrangements for ENG.

This is not a healthy environment for business investment.

In planning for future services, the Government will ensure the adequate provision for a long-term home for ENG.

This will take into account the needs of the broadcasters, the pros and cons of any transition strategy and developments internationally.

Of course, in order to make effective decisions, clear information and co-operation from industry on their requirements and careful consideration of alternative spectrum options for supporting ENG services is also required.

During the course of 2008, ACMA will also be revising and updating the Australian Radiofrequency Spectrum Plan, which will take into account the outcomes of the 2007 World Radiocommunication Conference.

Drivers and principles of new framework

Of course, we also recognise that the Broadcasting Services Act was drafted in the early part of last decade, at a time when no digital broadcasting services were on the horizon.

And that while the Radiocommunications Act broke new ground and was at the forefront of world developments in 1992, little has been done to update it in the years since.

Other countries have been moving forward in this area, and some may ask whether we need to update the existing spectrum management and regulatory framework.

This is something that the Government is considering.

Potentially, options that could be taken into account in an update include:

• a more market-based approach to spectrum allocation
• lighter touch regulation
• amendments to regulation such as treating all spectrum on the same basis through, for example, consistency in pricing for spectrum based on value, technology and service neutrality
• more publicly available data on spectrum sales to encourage development of secondary spectrum markets.

Conclusion

And so, in conclusion, it is clear that there are challenges ahead.

• We have a mix of industry interests—mostly represented in this room.
• We have consumers who are, in large part, not aware of the complexities of the issues but know this is very important to their future.
• And we have a tight timeframe in which to make some important decisions.

But what we also have is a Government that is committed to confronting these challenges.

We will conduct the analysis, engage with industry and consumers and carefully examine the options in the national interest rather than the vested interest.

I look forward to working with you all as we undertake to develop this process for spectrum policy reform.