Good morning everybody and thank you to
CommsDay founder Grahame Lynch and Editor Petroc Wilton for inviting me to
This CommsDay Summit marks something of
an anniversary in Australia’s telecommunications industry history.
It is just over ten years to the day
since March 21, 2007 when then-Leader of the Opposition Kevin Rudd announced
that a Labor Government would deliver the NBN, by fibre-to-the-node, at a cost
of $4.7 billion, offering minimum speeds of 12 megabits per second to 98 per
cent of the population.
How far we have come in the past ten
In the policy debate which has raged
non-stop since that announcement, we have all spent a lot of time talking about
technology and regulation.
But today, I want to focus on a topic
which needs to retake its rightful place at the centre of the debate - the
It was the customer’s need to access fast
broadband which launched the whole NBN debate in the first place.
And it is the customer’s need to access
fast, reliable and affordable broadband as quickly as possible which is at the
heart of the Turnbull Government’s approach to broadband policy.
So at this year’s CommsDay Summit, I’m
going to discuss three facets of the government’s policy approach that are
relevant to the customer experience:
First, the nature of the
broadband upgrades being delivered
Second, the question of broadband
affordability in the context of competing business models
And finally, the management of
the transition from legacy networks onto the NBN
While the NBN debate has raged for ten
years, we’re only now at a point where there are enough users on the network to
actually judge what the real-world experience is like for customers.
When I spoke at the 2016 CommsDay Summit,
fewer than 2 million premises were able to connect to the network - today there
are more than 4.5 million.
When I spoke at the 2016 CommsDay Summit,
there were 890,000 active NBN connections - today there are more than 2
Around 30,000 customers are purchasing
NBN connections every single week.
The NBN has rapidly shifted from a
political debate to a working reality.
Over the next 18 months we will go from
more than 1 in 3 homes with nbn access, to 1 in 2 homes, and then to 3 out of 4
homes able to connect.
It took six years to connect the first
million users to the NBN, and less than 11 months to hook up the second million
— a milestone nbn achieved just a couple of weeks ago. And nbn is forecasting
being able to switch on over two million more homes and businesses in the next
With a critical mass of users connected
and coming online — a customer-centric approach is taking on even greater
The nature of the broadband upgrades being delivered
So, let me turn to the first issue: what
upgrades are being delivered by the nbn and are they meeting customer needs?
Research undertaken by the ACCC found
that 80 percent of customers are confused about broadband speed claims, and
want information to be presented in a way which is easy-to-understand.
It is incumbent on the sector to help
consumers to understand the change. The former ADSL service, at any particular
address, was a fairly vanilla offering.
The nbn now comes in a range of flavours.
And retailers are jostling to get new customers without sufficiently helping
households understand what they need and can expect from their service.
This is why the Turnbull Government has
announced a new program to provide consumers with better information on the
retail speeds and experience they can expect from fixed-line broadband services
delivered over the National Broadband Network.
The Broadband Performance Monitoring and
Reporting (BPMR) program. To be implemented by the ACCC, it will source
performance data from around 4,000 volunteer customers of retail service
providers across the country.
Following a successful pilot program in
2015, approximately $7 million over four years will be provided to the ACCC to
implement the program.
The program, which is modelled on similar
successful programs in the UK and the US, will provide consumers with
independent reporting of real-world broadband speeds.
This information will be much more useful
to customers than confusing statements about theoretical maximum speeds or
wholesale download speed tiers.
Performance information is a key factor
for consumers when purchasing a broadband plan from a retail service provider.
And the Government acknowledges that this
will be vital as demand grows.
Our goal is simple. Broadband consumers
should be able to identify and choose what they need, and then get what they
By measuring and publishing information
about the performance of broadband packages, consumers will be better placed to
choose a plan that is right for them.
It will also encourage retailers to
compete on the quality of their broadband services.
The next step for the implementation of
the scheme will be for the ACCC to conduct a tender process to appoint an independent
provider to run the program. Consumers will be invited to volunteer to have
their NBN-based service monitored.
Participation will involve the
installation of a small device on the customer’s modem, which will provide data
on the performance of their service throughout the day.
Performance information will be made
publicly available for the benefit of all Australians.
The performance monitoring program
complements the ACCC's announcement in February of six principles to assist
retailers to ensure their marketing of broadband plans is consistent with
Australian Consumer Law.
I also want to applaud the efforts of
retail service providers which have undertaken to provide better information
about the real-world speeds their customers can expect.
While the work of retailers is important
and to be encouraged, individual efforts to publish actual performance data are
complementary to the independent broadband monitoring program, rather than an
Further to the question of what the NBN
upgrade means in network design terms. It may be useful to compare the
wholesale speed tiers which customers are purchasing from retailers on the NBN,
compared to the line speeds which are available.
Across nbn’s Fibre to the Node and Fibre
to the Basement networks, the national average attainable rate - that is, the
rate each line is technically capable of delivering - is 70.4 megabits per
And while the network speed baseline is
nominally set at 25 megabits per second, nbn estimates that by 2020, 45 per cent
of premises nationwide will have access to peak speeds of 500 megabits per
By comparison, when we look at the 2 million active services on the network,
across all technologies:
29% of users have purchased
services on the 12 megabits per second wholesale speed tier,
56% are on the 25 megabits per
second speed tier,
4% are on the 50 megabits per
And 12% are on the 100 megabits
per second tier.
Interestingly, technology type does not
appear to be a factor in the customer’s choice of speed tiers.
Across all NBN technology types,
including in areas where FTTP is readily available, over 80% of users are
purchasing broadband plans offering speeds of 25 megabits per second or less.
Almost 50% of FTTP users are choosing 25
megabits per second plans - while under 20% are choosing 50 or 100 megabits per
And while the FTTP portion of the network
is capable of 1 gigabit per second, this wholesale speed tier is not being
offered by RSPs. This is likely due to the fact that such services are priced
accordingly to make a return on investment.
This fact should be a wake-up call to
critics who believe that Australia’s broadband speeds are somehow being “held
back” by not pursuing an all-fibre rollout. Even where higher speeds are
readily available, affordability remains the critical factor for consumers.
And no doubt all retailers are acutely
aware of the threat of new entrants and changes to business models being
wrought by the NBN.
This is a once-in-a-generation industry
transformation, and the dust has far from settled on the new market
In fixed wireless areas, typically in the
locations which have not had access to reliable broadband prior to the NBN
rollout, 78% of users are opting for the 25 megabits per second speed tier.
Just 5% are paying for 50 megabits per
second on fixed wireless.
Now we can’t have a conversation about
customer experience without discussing nbn’s pricing model.
As announced by nbn in February, the new
retailer-based discount model for capacity charges commences on the first of
The changes mean the more CVC a retailer
provisions per customer, the less they will pay per unit. It rewards RSPs that
provision greater capacity for their customers, and provides a release valve on
price pressures from rising traffic volumes.
Previously, the discount applied to how
much CVC the entire industry purchased on average per customer, offering no
incentive for individual RSPs to compete on peak hour performance.
nbn has consulted with industry and
received a broadly supportive response to the new pricing structure. The new
discount model does not increase costs for voice-only or low-end users.
It’s worth remembering too, that a
detailed regulatory framework governs the price caps under which nbn operates.
This framework allows for a modest return
on the Government’s $29.5 billion equity investment, calculated out over an
extended period out to 2040.
Indeed, it is the ability of Government
to take on the high capital investment risk and accept a low return that has
meant Australia’s retail telecommunications sector can benefit as a whole from
the investment in new infrastructure, as well as the changing market structure.
Broadband affordability in the context of competing
This brings me to the second question
central to the customer experience: is fast broadband being delivered at a more
Behind this question lies an inconvenient
truth which is often forgotten in the ideological wars over broadband
technology: the NBN has to be paid for.
To keep broadband prices down for
customers, this government is making the NBN rollout as cost-efficient as
As far back as the 2013 Strategic Review,
it was revealed that a gold-plated NBN rollout would force users to pay more on
their broadband bills each month for services they had not shown much appetite
If nbn was required to deliver the 7.1
percent rate of return envisaged in that Corporate Plan, it would have had to
increase wholesale prices by between 50-80%.
This price would have ultimately been
passed on to consumers through retailers, and would have added up to $43 per
month to typical household broadband bills.
That’s over $500 added to internet bills
Under this Government’s policy, the
capable management at NBN has brought costs under control, while bearing much
of the capital investment risk and moving as quickly as possible to adjust the
pricing framework in response to data consumption patterns.
And as a result, customers are
transitioning to an upgraded network at price points that remain affordable and
with significant increases in data inclusions.
The latest ACCC report into
telecommunications price changes found that while prices paid for NBN services
increased in real terms by 4.4 per cent in FY16, data inclusions for plans sold
over the NBN jumped by 75 per cent.
And by another measure, basic retail
plans on the NBN are proving more affordable than ADSL services.
The Productivity Commission’s draft
report into the Universal Service Obligation found that “basic NBN packages
currently on the market are at least 25 per cent cheaper in metro areas and 14
per cent cheaper in non-metro areas than the cheapest ADSL2+ plans.”
A quick market scan today shows there are
low cost plans, providing 100 gigabytes for $50 a month, all the way up to
high-capacity, high-speed plans with unlimited data for $90 a month.
At the cheapest end of the market there
are plans available for just $30 or $40 a month.
Perhaps the most striking differences in
broadband prices will be for customers living in regional and remote areas.
In recent weeks, nbn announced an upgrade
path for fixed wireless services to offer 100Mbps download speeds and 40Mbps
upload early next year.
Today, the Fixed Wireless network reaches
nearly 500,000 premises across regional Australia with 170,000 premises already
In many of these areas, users have often
had no fixed-line broadband access at all, or the only option besides satellite
has been 3G or 4G mobile broadband - which carry a substantial price premium
over fixed line services.
Importantly, the rollout in regional
Australia is more advanced than in urban Australia. 70% of premises covered by
the NBN today are in regional and non-metro areas.
The management of the transition from legacy networks onto
The third matter of pressing interest for
us all here today is the consumer experience during the transition to the NBN.
My attention is keenly focussed on how
the NBN rollout is progressing, and what nbn is doing to meet its very
challenging rollout targets while making the transition for consumers as smooth
The Government made this very issue a
priority in our updated NBN Statement of Expectations, saying:
together with retail service providers should work to ensure a high quality end
user experience through the migration and ongoing service periods. This
includes working closely with retail service providers to proactively manage
With any project of this scale, there
will inevitably be issues to be worked through, and to date the industry and
nbn have been working together to improve migration processes and resolve
customer connection problems.
But we must double-down on our commitment
to the customer if we are to deliver on the promise of the NBN.
As retailers jockey for market share it’s
important to remember that the customer is the prize, and should be treated as
First and foremost, nbn and RSPs must
improve the service activation process for customers. With 30,000 customers
connecting to the NBN every week, and that number set to climb even higher in
the coming months, it should come as no surprise that some short-term
investment will be needed to manage the high-touch interactions.
The industry must adjust to the joint
accountability that is required. There is growing evidence of an air-gap
between nbn’s processes and that of the retailers’, which has a tendency to
result in buck-passing if connections don’t run exactly to plan.
Too much of this remains unresolved, and
it has occurred from all sides.
In response, nbn has embarked on a
strategic program of work focussed on improving the end to end customer
This initiative will look at all of the
parts of the NBN experience – placing an order with retail service providers,
selecting service plans, installation and activation, and the everyday
experience on the network.
The initiative has been designed based on
feedback from retail service providers and end-users, and global best practice.
nbn’s overarching goal is to enable a
seamless, consistent connection with minimal disruption for consumers.
I have also asked the Department of
Communications to enhance its efforts in working with industry, Communications
Alliance, the Telecommunications Industry Ombudsman, the ACCC, the Australian
Communications and Media Authority.
The Department has recently restructured
its Infrastructure group to bring together the areas with responsibility for
the NBN, regional broadband, NBN migration, and consumer protection.
It has also established a new branch focussed
specifically on broadband consumer issues.
The Government’s Migration Assurance
Policy and Framework also set out our expectations for arrangements that
support the smooth transition to the NBN.
Work is underway to update that framework
to ensure the central tenet will be a customer-centric approach.
As I mentioned earlier, consumers have
expressed serious concerns about the handballing of complaints between industry
Clarity of roles and responsibilities –
and each party being committed to fixing problems quickly in the interests of
the consumer – is key to a smooth, straightforward and seamless migration
In coming months, the Government will be
closely monitoring the activities of retailers in this migration process to
determine whether the Migration Assurance Framework is sufficient to provide a
positive experience for consumers.
The Federal Election
Given this is the first CommsDay since
the last election I’d like to make one brief point that relates to this
audience in particular, and that is in regard to policy and regulatory
As you know, the Coalition Government
went to the election with an NBN and Mobile Black Spot Program policy that had
been in the marketplace since 2013, had been tried and tested over three years,
and that provided policy and regulatory certainty in what is otherwise a highly
disrupted commercial environment.
In comparison, our political opponents
put forward an NBN policy proposal that claimed to be able to install Fibre to
the Premises to an extra 2 million homes, at “exactly the same amount of public
But we know that FTTP costs nearly twice
as much per premise than FTTN. Further, it was claimed that this could be done
by 2022 – an optimistic assessment to say the least.
On the Mobile Black Spot Program, our
opponents avoided making any commitments of their own, only stating that Labor
would support the Coalition's third funding round for the program - but not
confirming if they would continue the rollout of rounds 1 and 2.
This Government believes that the
communications sector and its customers not only deserve better than that from
an alternative government, but that thousands of jobs and billions of dollars
in investment are threatened, if not frozen, by such an approach.
So to conclude, just in case I haven’t
rammed home the message enough, 2017 is the year of the customer, and all of
our efforts must be focussed on this.
Central to the customer experience are
the key questions:
Are consumers armed with good
information to understand what they need from a broadband service?
Are consumers getting what they
pay for, and is the market differentiating to cover a wider range of segments
from the affordable end to the premium services?
And are there adequate safeguards
to ensure continuity of service and limited disruption while transitioning to
As the rollout of the NBN continues to
gather pace, I look forward to working with all of you to ensure that the
answer to each of these questions is a resounding “Yes”.
NBN Strategic Review p68