Chapter 7 - Conclusions and recommendations
7.1
Reliable, high tech telecommunications services are one
of the key foundations upon which any modern nation is built. Bearing in mind the country's size and
relatively small population, the Committee has found that Australias
telecommunications network is generally able to deliver adequate basic services
to most Australians. Nevertheless, the
Committees inquiry has revealed some significant weaknesses in the Australian
network. The principal weaknesses relate
to the inability to provide universal, reliable high speed access to the Internet;
the incomplete coverage provided by the mobile phone networks; the existence
within the network of outdated equipment such as pair gain systems, inadequate
repair and maintenance by Telstra of the network; and declining investment.
7.2
As discussed earlier in this report, the Committee is
concurrently conducting a separate inquiry into broadband competition. The Committee's report on that inquiry will
examine issues relating to the state of competition in the broadband market and
the proposals to enhance competition.
The recommendations in that Report should be read in conjunction with
the recommendations below.
7.3
Although the problems identified by the Committees
inquiry occurred throughout Australia
they are generally worse in the more remote rural and regional areas. While disruption to telecommunications
services is an inconvenience to Australians wherever they live, it is these
areas where access to reliable communications is often crucial. People in these areas are being forced to
place increasing reliance upon telecommunications services because of the
declining physical presence of many businesses and government agencies. Unfortunately many people in these areas find
that they are unable to compensate for the lack of local services by using
modern communications because the local telecommunications infrastructure is
not capable of providing adequate data services.
7.4
The evidence from regional areas also stressed the
importance of good telecommunications services to the economic development of
these regions. Many businesses will not
consider relocating to a regional area if the telecommunications network in
that area is unable to support their needs.
As the importance of telecommunications services to existing businesses
in regional areas grows many of them may also be forced to consider relocating
to other areas where the telecommunications network is more reliable or offers
access to better services.
7.5
One witness, a resident of Bendigo
in regional Victoria,
emphasised the social dimension of having access to the most up-to-date
telecommunications services:
Twenty years ago I completed an
electrical engineering degree at the then Bendigo College of Advanced
Education. I had no choice. I had to
leave the area to get a jobI want the option for my 10- and 12-year-old sons
to, if they want, live in Harcourt North, where I live, on 44 acres overlooking
20,000 square miles with a broadband connection so that they can videoconference
with their employer in Germany, get paid in deutschmark, and clear it through
the local bank. That would be a lovely
vision.[419]
7.6
In its report in September 2000 the Telecommunications
Service Inquiry said that:
a significant proportion of those who live and work in rural
and remote Australia
have concerns regarding key aspects of services which, at this stage, are not
adequate. Their concerns relate primarily to
-
the timely
installation, repair and reliability of basic telephone services;
-
mobile phone coverage
at affordable prices; and
-
reliable access
to the Internet and data speeds generally.[420]
7.7
The Committee's inquiry confirmed that these remain
issues of concern, particularly in rural and remote Australia.
7.8
When the current telecommunications regime came into
effect in July 1997 it was designed as a light touch regulatory regime relying
largely on competition and self regulation to promote the long term interests
of end users and to produce an efficient and internationally competitive
industry. Some eight years down the
track, the Committee's inquiry has shown that the current regime has failed to meet
expectations in many important respects.
7.9
While finding that the Australian telecommunications
network delivers a basically adequate level of services, the Committee notes
that consumers do not enjoy universal access to services appropriate to a
modern community at the start of the twenty first century. There is substantial evidence that Telstra's
fixed line network is deteriorating due to reductions in staffing and
inadequate capital expenditure. Mobile
telephone coverage, although improving, remains patchy. Universal access to fast reliable data
services, so vital to a modern economy, is not available. Although some significant progress has been
made by some new entrants, especially in the mobile market, the competition
regime has failed to produce a strongly competitive environment for most
telecommunications services. Telstra
remains the dominant carrier on whom almost all Australians are forced to rely for
some or all of their telecommunications needs.
7.10
Compounding these problems, the Australian
Communications Authority has been a reactive regulator. It has not been in a position to be proactive
in important areas, such as monitoring the state of the Telstra network and
requiring that infrastructure be upgraded where necessary.
7.11 The
Government's attempts to address these issues have been piecemeal. A plethora of short term programs and new
licence conditions have been initiated to try to remedy individual
problems. These programs have often been
operated in conjunction with Telstra, reinforcing
its dominant position in the market, and do not provide consumers with
universal access to the full range of modern telecommunication services.
Renewing the network
7.12 The
Committee's inquiry brought into sharp focus the rapidly approaching obsolescence
of the ageing copper based consumer access network (CAN). It has undoubtedly served Australia
well over a lengthy period, especially as Australia's
core public telecommunications asset, but its characterisation as 'steam train'
technology[421]
by telecommunications analyst Mr Paul
Budde seems apt. Despite the development of technologies such
as ADSL, which has been described as the 'last sweating' of the copper network[422], it is
clear that the existing copper fixed line network will not be able to provide
the level of services which the public and businesses will need in the not too
distant future. While developments in
wireless technologies are interesting, especially for services within CBDs and
higher density population centres, there is a general consensus that fibre
optic holds the key to the future. Clearly,
replacing or upgrading the network with fibre will be a major and costly undertaking. The Committee notes that it was only as this
report was being finalised that Telstra CEO, Dr Ziggy Switkowski, was reported
to have announced for the first time that the company is gearing up to replace
its ageing copper network with fibre-optic lines. Even that commitment was muted, representing
only $300 million over an unspecified period.[423]
7.13 The
Committee does not believe that Telstra has given sufficient weight to its role
as the guardian of the CAN in the past on which all other access is
essentially dependent and to its obligations to the Australian public as the
USO provider. The CAN is a key part of
the public infrastructure, and accordingly the public expects that it should be
maintained to a high standard.
7.14 The
Committee also does not believe that the Government's hands-off attitude to
this issue is acceptable, with its patchwork of programs falling far short of a
clear, unequivocal policy position in relation to the roll-out of fibre. The Committee believes that it should play a
leading role in facilitating and driving that process.
Recommendation 1
7.15 The
Government should publicly confirm its acknowledgement that the existing copper
fixed line network is becoming increasingly obsolete. Government policy should focus on the
objective of having this network replaced with a fixed line network based on
fibre to the home technology, or alternative technologies offering similar
capacity, over the next decade.
Access to services
7.16
The Committee's inquiry has demonstrated that, while
access to services such as mobile telephony and data services have improved,
many Australians and particularly those living in rural, regional and remote
areas, do not have affordable access to a reasonable standard of service. The 'Digital Divide' between city and bush is
narrowing, but is still unacceptably wide.
7.17 The
evidence indicated that mobile phone coverage has improved over recent years,
but coverage is not universal.
Throughout Australia
there are significant gaps in mobile phone coverage. These problems exist both in some outer
metropolitan areas and in many rural, regional and remote areas of Australia. The lack of coverage in such areas is of
particular concern from social, economic and safety perspectives.
7.18 The
situation with regard to data services is similar. Decisions about the roll out of broadband in Australia
have largely been made on the basis of commercial considerations. This has resulted in a lack of uniform access
to affordable broadband. While this
problem occurs throughout Australia,
once again it is especially problematic in rural and regional areas.
7.19 While
the Governments programs to improve access to broadband have been welcome,
they are inadequate and represent a piecemeal approach to the problem. The Digital Data Service Obligation and the
Special Digital Data Service Obligation impose an obligation on Telstra to
provide a 64 kbps service to all Australians.
However, this speed is clearly inadequate for anyone needing a broadband
connection. It appears to have been
based on the capabilities of Telstras ISDN network and imposes no real
incentive for network upgrade on Telstra, nor any real benefit for most
Australians. Even Telstra now markets
this technology to home users at twice the minimum speed specified.
7.20 The
Governments other programs to improve access in rural and remote areas have
helped users in some areas but have resulted in the creation of a doughnut
area in which neither affordable commercial services, nor government supported
services, are available. While numerically
few in number, these Australians appear to be the most disadvantaged by current
arrangements.
7.21 It
is likely that the importance of dial-up access to the Internet will decline
significantly as broadband services become more readily available and broadband
prices fall. However, it remains an
important means of accessing the Internet for many Australians and the
Government has not taken sufficient action to improve access to dial-up data
services. The 19.2 kbps speed specified
by the Government in response to the recommendations of the Regional
Telecommunications Inquiry is clearly inadequate. It is based on the speed already being
achieved under the Internet Assistance Program and does little to ensure that
consumers have access to an adequate service.
Nor has the issue of line drop outs been seriously addressed.
7.22 Access
to data services is most important in rural and regional areas where access to
the Internet can help to overcome some of the problems caused by isolation and
the difficulty of accessing other services.
Witnesses agreed that it could be the saviour of declining
communities. Unfortunately the evidence
shows that it is those areas which have the most need which often have the least
access to these services.
7.23 Another
problem facing users of the network is the extensive use of outdated pair gain
systems which impose technological limitations on customer services. As a result of the extensive use of these
systems Telstra is providing many of its customers with an inferior service. This is clearly unacceptable.
7.24 It
is the Committees view that universal
access to fast, affordable, reliable data services is just as important to
Australians as access to voice services.
The regulatory regime should be reformed to recognise this.
Recommendation 2
7.25 In
recognition of the importance of data services to all Australians the
Government should require Telstra to remove from its network as soon as
practicable all pair gain systems which do not support broadband services or
which restrict dial-up connection speeds.
Recommendation 3
7.26 While
acknowledging the interim nature of dial-up Internet services, the Committee
recommends that the Government should place a licence condition on all carriers
providing voice telephony services requiring that their networks support a
minimum speed for dial up services. That
speed should be progressively increased over the next two years to at least 40
kbps.
Recommendation 4
7.27 Consumers
should have a legislated right to access, on demand, to information
about whether their services are provided via a pair gain system, and about the
full range of services which can be supported to their address.
Recommendation 5
7.28 The
Government should place a licence condition on the Universal Service Provider
specifying that a broadband service providing a minimum data connection speed
be made available to all Australians within twelve months.
Recommendation 6
7.29 The
dial up and broadband speeds specified above should be reviewed and updated
every 12 months to ensure that they remain contemporary to the needs of users. The specified speeds should be based on the
capacity of telecommunications networks operating at international best
practice standards, not on current services offered by Telstra or by other
carriers, or the existing capabilities of the Telstra network.
Delivery
of reliable services
7.30 The
Committee received considerable evidence from both the users of the network and
the workers in the industry about problems with the network. These problems are the first obstacle to one
of the key requirements of all customers: a reliable telephone service.
7.31 Leaked
Telstra documentation tabled in the House of Representatives on 10 March 2004 confirms the
company's recognition of the serious deterioration of the network. It is clear to the Committee that the problems
with the network flow from underinvestment by Telstra in
network maintenance and repair, and cutbacks in Telstras
workforce. The evidence given to the
Committee indicates that the effect of these measures will be long term and may
not show up fully for many years. While
these measures may have improved Telstras profitability in the short term,
they have done so at the expense of the long term reliability of the
network. Telephone services are unacceptably
vulnerable to heavy rainfall and lightning storms as a result of poorly maintained
cables that need to be kept in service with gas bottles, and cables badly
corroded by Telstra's failed seal the CAN program.
7.32 The
Government continues to allow Telstra to evade its customer
service guarantee obligations through the mass service disruption notice
regime. This allows
Telstra to blame failures in its poorly maintained cables on weather conditions
and thereby escape responsibility under the customer service guarantee regime. There are very few checks on this process, as
the Australian Communications Authority has acknowledged.
7.33 While
these problems exist across the whole Telstra network they appear to be most
obvious and serious in rural and regional areas.
7.34 The
Committee is also concerned about the declining level of capital expenditure on
the Australian telecommunications network.
The reduced investment in infrastructure can be expected to have a
long-term impact on innovation, the development of new services and the
maintenance of existing infrastructure.
As returns on capital are lowest in regional, rural and remote areas
these areas will be the worst affected by any pressure on a fully privatised
Telstra to enhance its short term profitability by reducing capital
expenditures.
7.35 This
effect has already been seen in Telstras roll-out of ADSL. Decisions about which exchanges to enable for
ADSL have been made on commercial grounds, denying new services to Australians
living outside the major population centres.
7.36 There
is clearly a need for long term government involvement and leadership in
telecommunications infrastructure, particularly in relation to rural and
regional Australia. The future development of Australias
telecommunications network is too important to be left solely to the decisions
of profit-driven private businesses.
7.37 The
current regulatory regime is clearly failing to ensure that Australian
consumers have universal access to a full range of affordable and reliable
telecommunications services. The
introduction of some new initiatives, such as the Network Reliability Framework,
have been useful but fall far short of what is required. In addition to the measures set out in the
Committee's specific recommendations, the role and powers of the Australian
Communications Authority need to be generally reviewed and enhanced.
Recommendation 7
7.38
The Universal Service Obligation should be revised to
incorporate a guarantee that customers will always be able to obtain a dial
tone.
Recommendation 8
7.39 The Universal Service Obligation should be
revised to incorporate a guarantee that dial-up Internet connections will not
drop out.
Recommendation 9
7.40 The
Government should require the Australian Communications Authority (ACA) to
conduct an independent inquiry into the state of repair of Telstras customer
access network and the Government should, if necessary, use its powers to
direct Telstra to bring the network up to an acceptable operational
standard. As a part of the inquiry the
ACA should examine technical standards and regulations, including those
relating to preventing the ingress of water into CAN cables, and amend those
standards and regulations so as to protect the physical integrity and ensure
adequate maintenance of the customer access network.
Recommendation 10
7.41
The role and powers of the Australian Communications
Authority (ACA) should be urgently reviewed and enhanced so that it can
effectively and proactively regulate the Australian telecommunications network. In particular the ACA should have the power
to investigate the condition of the Universal Service Provider's network and require
the Universal Service Provider to make improvements to its network where the
expenditure can be justified in the public interest. The Government should respond promptly to the
recommendations of the Department's Universal Service Obligation and Customer
Service Guarantee Review.
Recommendation 11
7.42 The
Government should immediately review the operation of the customer service
guarantee regime to ensure that it provides a high level of protection for
consumers and that mass service disruption notices cannot be used by carriers
to avoid their obligations to properly maintain their networks and provide an
acceptable standard of service to consumers.
Recommendation 12
7.43 The
Government should direct the Australian Communications Authority to regularly
monitor the level of faults on data services.
Access for people with disabilities
7.44 The
Committee is generally satisfied that the needs of people with disabilities are
being given appropriate priority.
However, the Committee remains concerned that further privatisation of
Telstra and increased competition in the industry may result in the needs of
people with disabilities being overlooked.
7.45
The Committees inquiry identified the provision
of disability equipment as a potential weakness in the current regime. People with disabilities are largely reliant
on the Telstra disability equipment program to meet their needs and the
evidence given to the Committee suggests that this may be limiting their choice
of carrier and the choice of equipment available to them. Further, the Committee is
concerned that carriers fail to give adequate consideration to the needs of
people with disabilities in planning for the introduction of new technology,
resulting in people with disabilities effectively being shut out of access to
such technology when it is introduced.
7.46 Following
the conclusion of the Committee's hearing program, the Australian
Communications Authority reported to the Minister for Communications,
Information Technology and the Arts on its review of the provision of payphones
in Australia. The ACA recommended that:
-
the payphone industry and disability peak bodies
should consult through an ACIF working group, and work together to develop a
Payphone Accessibility Code for endorsement by HREOC; and
-
Telstra should continue to increase payphone
numbers and that other specialist payphone firms should provide TTY payphones
when they are replacing an existing Telstra TTY payphone.[424]
7.47
The Committee has not had the opportunity to examine
the detail of these proposals. However,
it supports the general thrust of the ACA's recommendations.
Recommendation 13
7.48 The
Committee commends the findings of the Payphone Policy Review as it relates to
services for the disabled for close examination by the Government.
Recommendation 14
7.49 The Government should fund the establishment of an
independent disabilities equipment program using funding from the
Universal Service Levy.
Recommendation 15
7.50 The
Government should require carriers to engage in extensive consultations with
representatives of people with disabilities at an early stage in the planning process
for the introduction of new telecommunications technology to ensure that
appropriate disability equipment will be available in conjunction with the
introduction of new technology.
Facilitating competition
7.51 The
current regulatory regime has failed to deliver a strongly competitive
environment in many key areas. Telstra
still remains the dominant carrier and, as the ACCC has acknowledged, the
progress of competition is slowing.
Importantly, the benefits of competition have largely flowed from the
retail market rather than from the development of competition between
infrastructure providers.
7.52 An
issue which was repeatedly raised with the Committee was the unavailability of information
on the location of existing infrastructure.
At present there is no comprehensive inventory of infrastructure
operated by telecommunications carriers.
This is a significant obstacle for small and medium carriers,
governments and other organisations which are trying to plan the development of
new infrastructure.
7.53 At
present the Federal Government is not using its own programs and contracts for
telecommunications services to promote competition. The frequent involvement of Telstra in
Government programs has seen Commonwealth funds flowing into Telstra and
helping to cement its position as the dominant carrier. The Committee believes that Government
programs aimed at enhancing telecommunications services for consumers should
not also have the effect of inhibiting the development of competition. The Government could also use its own buying
power, as a major user of telecommunications services, to foster a more
competitive industry.
7.54 The
Committee will discuss other aspects of telecommunications competition in more
detail in its report on its inquiry into broadband competition.
Recommendation 16
7.55 The
ACA should be empowered and required to develop a comprehensive inventory of
all significant telecommunications infrastructure, including geospatial data on
Telstra's existing customer access network and mobile phone coverage, and make
that information available to other carriers
and service providers, local government, and other interested parties to
facilitate planning for new infrastructure.
Recommendation 17
7.56
Future Government programs aimed at enhancing
telecommunications services should be designed to prevent Telstra from using
those programs to maintain or strengthen its dominance of the
telecommunications market. Where
necessary this may involve restricting Telstra's participation in some aspects
of those programs.
Recommendation 18
7.57
In contracting for telecommunications services, government
agencies and departments should be directed to design tender processes which
facilitate participation by small and medium carriers, and to take into account
the policy objective of developing a more competitive telecommunications
industry in assessing tenders.
Recommendation 19
In contracting for
telecommunications services in rural and regional areas where there is limited
infrastructure competition, government agencies and departments should be
directed to participate where possible in demand aggregation arrangements with
the objective of improving the incentives for the development of competitive
infrastructure.