[LINK] Review of the Rollout of the NBN. Second Report

[stephen at melbpc.org.au]

The Parliament of the Commonwealth of Australia

"Review of the Rollout of the National Broadband Network. Second Report"

Joint Committee on the National Broadband Network. November 2011
http://www.aph.gov.au/house/committee/jcnbn/report2/fullreport.pdf (snip)

Chair’s Foreword

This Second Report of the 57-member strong oversight committee of the 
National Broadband Network (NBN) is the first report that examines 
detailed performance measures provided by the NBN Co and Government, and 
allows for a direct comparison of the foundation documents of the NBN Co 
Corporate Plan 2011-2013 with the Shareholder Ministers’ letter to NBN Co 
dated 17 December 2010.

While there are several differences between these foundation documents 
and the recently provided performance update, it is evident that 2012 
will see NBN Co transition from a company working through the frustrating 
and tangled regulatory stages, and the testing of first release sites, to 
provide the NBN rollout a broader engagement with retail providers and 
communities.

Compared to the NBN Co Corporate Plan, a lower than expected capital
expenditure (capex) and higher than expected operating expenditure (opex) 
result, will be watched closely by the committee. This could be an early 
warning that it is costing more to do less .. (snip)

It is understood by most that Australian telecommunications is currently 
not a level playing field. It is also understood this historic imbalance 
means decisions are being made on the front-end of this infrastructure 
project to eventually achieve a more competitive environment and better 
consumer result for the future, even if decisions may look anti-
competitive in the short term.. (snip)

It is also understood and acknowledged that this is initially challenging-
challenging for regulators like the ACCC, challenging for some existing 
business models like those wanting to both wholesale and retail in 
Greenfield sites, and challenging for those looking for investment 
opportunities in the new markets that are coming with the NBN
rollout. Even with this all being understood, however, it should also be
understood by the relevant stakeholders involved in these regulatory 
decisions that challenging does not equate to delay, and should not be an 
excuse for delay.. (snip)

If these matters can be addressed quickly and thoroughly, 2012 has great 
potential to be the Year of the NBN..  

Well done and thanks once again.
Robert Oakeshott MP Chair

(snip)

Digital Divide

4.165 The Australian Communications Consumer Action Network (ACCAN)
referred to a study by the Australian Communications Management
Authority (ACMA) that showed that 2.6 million Australians did not have
access to the internet, either via mobile phones or a fixed service at 
home.

This study also showed that, of the people studied:

 62 per cent of the total had incomes of less than $25 000 per year.
 53 per cent were aged 55 years or more.
 Most lived in rural or remote areas.
 One third accessed the internet outside their homes.
 Forty-two per cent reported that cost was a factor, and that connecting
the internet at home was too expensive.164

4.166 The Asia Pacific Consulting Group (APCG) stated that the digital 
divide in Australia is economic, not geographic. The APCG’s submission 
put the view that higher socioeconomic groups will embrace the NBN 
because:

 They will recognise productivity benefits: information, savings of time,
inclusion, access to retail opportunities.
 There is an attractive cost/benefit trade-off.
 Their rapid adoption of ADSL, mobile phones and dial-up.165

4.167 The APCG believed that the take-up of the NBN is likely to be 
magnified in favour of the higher socioeconomic households and 
discriminate against lower socio-economic households. The NBN may not be 
as positive for the latter because costly pricing programs may limit
participation and further marginalise them. There will, therefore, be a
greater challenge for the NBN to create benefits for such households,
because:

 The productivity benefit is not easily identified, e.g. time savings
compared with the access costs.
 The cost/benefit trade-off is likely to be challenging in difficult
economic circumstances.
 Their adoption of ADSL, mobile phones and dial-up is slower.166

4.168 The APCG noted that households at the top income levels have
‘consistently high’ rates of broadband access, regardless of whether they
are metropolitan, regional or remote. The APCG also observed that
regional and remote households with higher income levels have higher
rates of broadband access than lower income metropolitan households.167

4.169 The APCG noted that, where funds were available, there was a
willingness to purchase broadband. Investment in broadband by some
regional and remote households becomes ‘a natural part of existence.’
While speed is a ‘major concern’ to all users, the gains in speed in 
moving from dial-up to broadband was such that most consumers are willing 
to make the investment, and suggested, the satellite option was 
also ‘gaining traction.’168

4.170 The APCG suggested that there would be differences between income
groups in their approach to fast broadband. Households with the highest
incomes ‘would be interested’ in 100 Mbps and while they could afford to
pay for it, the APCG believed that ’only a minority’ would be likely to 
use the full bandwidth regularly. The next income level would be 
interested in faster bandwidth, but may see 30 to 50 Mbps as satisfactory 
and affordable. Lower income households do not need, and could not afford,
100 Mbps, and are likely to be satisfied with inclusion at current speeds 
at lower price points.169

4.171 The APCG recommended the establishment of a ‘basic broadband
account’, similar to public transport concession and seniors’ cards. Such 
an account would need to be a simple card; means tested and designed to
promote inclusion.170

4.172 The ACCAN noted that there had been ‘a lot of statements about
affordability’ of the NBN. The ACCAN believed that ICT affordability was
not about cheap services, but about making sure that the digital divide
was not increased, especially for people on low incomes. The ACCAN
believed that internet access is ‘a practical necessity in daily life.’171

4.173 The ACCAN’s assessment was that entry level offers for access to the
NBN would be comparable to what is currently available, and that
download speeds would improve. If people have problems affording the
Internet now, these would ‘probably’ continue under the NBN. The
ACCAN stated that 15 per cent of people chose to have a mobile service
only, but it did not provide a breakdown of why those people made that
choice. The ACCAN believed that ‘a significant proportion’ of those
people had only mobile services because of cost.172

4.174 The ACCAN was interested in developing a ‘broadband low income
measures scheme’, somewhat like the low income measures for phone
services that Telstra is required to provide. Such a scheme could involve
NBN Co providing a discounted wholesale price to RSPs who would then
retail a cheap internet service targeted at low income earners. Under this
proposal, people with health care cards, for example, would be able to
access these services.173

4.175 As well as special price packages, the ACCAN’s proposed broadband 
low income scheme included the provision of public access points 
especially for people with lower incomes. There is a need for a greater
understanding about where such access points are used.174

4.176 The ACCAN noted that, after the rollout of the NBN, the home line
budget service would continue at the current price. Expansion of services
for low income consumers would allow them to choose a supplier, where
at present they have to go to Telstra for access to benefits.175

4.177 The ACCAN also noted that it receives demands for information about 
the NBN. The response to a guide it has prepared demonstrated ‘a great
hunger’ for clear information, and it has been observing NBN Co’s plans
for a public information campaign. There are clearly matters of
importance to consumers that are ‘not very well explained, so that, at
present, most of the public lack important information.176

4.178 In February 2011, the ACCAN had raised with NBN Co a proposal for a
quarterly, high level consumer round table including peak bodies of
consumers and end users. The ACCAN was ‘keen’ to establish such a
body, because of the preparations for the public education campaign. The
ACCAN believed that it had ‘significant expertise’ in this area and wanted
to participate in the development and rollout of that campaign to ensure
that it was managed effectively.177

Concluding Comments

4.179 The NBN’s importance for regional and remote Australia is so great 
that the committee believes it is necessary to draw attention to issues 
that have been raised, including some that were included in the First 
Report.

Benefits for Regional and Remote Australia

4.180 The committee was impressed by evidence taken at Broken Hill,
particularly about likely benefits for that region from the NBN. Several
organisations emphasised the technological disadvantages under which
people in the region live and work, providing valuable insights into
potential benefits from the NBN for regional and remote Australia.

4.181 Potential benefits in health and education, especially in remote and
regional Australia, have been expressed to the committee many times
already in this review process. Such expressions were often tempered, for
example, by uncertainties about the timing and likely quality of both
interim and permanent satellite services.

Satellite Services

4.182 A number of issues are yet to be resolved about the provision of 
satellite services, including:

 The reliability of these services in differing climatic conditions.
 The priority to be given to the 7 per cent of users who will receive 
fixed wireless or satellite services.
 The timing of access to this service for regional and remote
communities.
 Any processes to enable these services to be replaced by fixed wireless
or fibre technologies.

Government Readiness for the NBN

4.183 While the committee is aware that its development is not complete,
limited information was available on subjects such as Government
readiness for the NBN.

4.184 The POAAL presented a case for the extension of EPOS facilities to 
small LPOs that, because of insufficient transactions, are prevented from
installing them. It would undoubtedly assist small communities if their
post offices were able to provide a comprehensive range of services. The
committee is aware of the importance to their local communities of small
LPOs but, just as these are restricted by local commercial realities, so
AustPost must consider the potential to upgrade these facilities at each
location.

Extending the Fibre Footprint

4.185 Communities are understandably interested to know when the NBN will
be connected in specific areas. The committee notes the NBN Co’s view
that costing of extensions to the NBN rollout divert valuable resources
from planning the overall rollout, and that it would only provide costing
for locations close to its rollout via a ‘properly defined process’. Such 
a process does not yet seem to have been addressed. The committee believes
that it would assist both NBN Co and interested parties if an effective
process were to be defined and publicised widely.

Community Consultations

4.186 The committee noted NBN Co’s plans for community consultations, and
the material subsequently provided by NBN Co on its PIM activities. It
believes that, at least until July 2011, NBN Co’s consultations with
organisations in the Broken Hill region were deficient. This was
demonstrated by the confusion between the rollout of the Network and
the RBBP.

4.187 The committee notes NBN Co’s advice that this confusion has been
resolved, but is concerned that similar confusions may have arisen, or may
arise in the future, in other regional and remote communities. The release
of the 12-month rollout plan, and the three-year indicative view of the
rollout, may reduce uncertainty in some areas.

4.188 Comments by the ACCAN about the lack of important information about
the NBN support the committee’s concerns about the lack of consultation
by NBN Co, and the need for an effective public education program.

4.189 The NBN Co stated that it has plans to inform communities about the
Network ‘prior to, during and after’ its rollout. The NBN Co must have
been aware of confusion about the rollout of the Network in some regional
and remote communities. The committee is concerned that there will be
more unnecessary, and perhaps widespread, confusion if detailed and
appropriate plans for consultations are not devised and released
promptly, especially for remote and regional communities. To this point in
the rollout, there seems to have been more planning than action in this
important area of NBN Co’s operations.

4.190 The release of the 12-month national NBN rollout plan in October 
2011, in addition to the public education program (to be launched in 
2012), show that the NBN Co is undertaking activities that, perhaps 
belatedly, will provide basic information about the rollout. The 
committee believes that it is regrettable that more information was not 
provided to communities earlier in the rollout process. While it would 
probably have been subject to changes for operational reasons, earlier 
publication of a program of consultations would have been useful, 
especially for remote and regional communities.

Digital Divide

4.191 Ensuring that lower socioeconomic groups have access to the NBN does
not seem to have received the attention it deserves, and needs. Choosing
between a basic broadband account or a broadband low income measure
may not be the only or the best way of ensuring that lower socioeconomic
groups have increased access to the NBN. The committee believes,
however, that increasing the access of such groups to the services to be
provided by the NBN requires attention early in the rollout.

4.192 Such a scheme may be the only way to make adequate provision for the
inclusion of lower socioeconomic groups in the benefits of the NBN.
Unless there is a mechanism to do this, the digital divide may increase
during the rollout of the NBN.

Continuing Review

4.193 Based on the concerns set out above, the committee intends to 
include the following issues in its continuing review of the rollout of 
the NBN:

 The provision of satellite services, interim and long term, to regional
and remote Australia.
 The adequacy of Government preparations for use of the NBN to
deliver services to the community.
 The policy and process for extending the NBN fibre network.
 The adequacy of NBN Co’s consultations and its public education
campaign, especially in regional and remote areas, during the rollout of
the NBN.

Recommendation 3

4.194 The committee recommends that, as a matter of urgency, the NBN Co
formalise and publicise its policy for the provision of costing extensions
to its planned National Broadband Network fibre footprint, especially
for regional and remote Australia.

Recommendation 4

4.195 The committee recommends that NBN Co:

 finalise and publicise its plans for community consultation
with regional and remote Australia;
 in its report to the committee include:
 details of the progress of its consultation plans;
 issues raised; and
 numbers of participants.

Recommendation 5

4.196 The committee recommends that the Department of Broadband,
Communications and the Digital Economy and the NBN Co:

 undertake a study of methods to improve access for low income
households and other disadvantaged groups to the National
Broadband Network and report its findings to the committee;
 in conducting the study, include examination of community
proposals for measures which would support a basic
broadband account and a broadband low income measure
scheme.

Robert Oakeshott MP
Chair
22 November 2011

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Cheers,
Stephen