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STANDING COMMITTEE ON INFRASTRUCTURE AND COMMUNICATIONS
05/04/2011
Role and potential of the National Broadband Network

CHAIR —The committee will resume. Thank you to those who appeared in the morning. I welcome our next witness. Although the committee does not require you to give evidence under oath, I should advise you that the hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. We do not have a written submission from you, although we do have a reference to some newspaper articles which have sparked the committee’s interest in some of the activities around using online marketing and resourcing. I invite you to make some opening comments and then we will have a question and answer session.

Ms Forrester —I have not prepared a formal submission. My knowledge is quite limited. It is about the community that I work with. Have any of you been to McLaren Vale? I will just describe it physically because it is kind of important to some of the comments that might come up. Obviously the wine industry works in the field, so although it is a long, narrow town most of the business activity is actually out of the town. That is where the tourism activity, the manufacturing activity and the agricultural activity are. So one of the key issues for us is going to be where the footprint is. It also informs some of the things I might say later. There is a very scattered delivery right now around broadband, and that influences what people think about what the future might look like, if that makes sense.

I know a little about what the anticipation might be of the people I talk to. They are grape growers. Farmers generally do not even think about broadband. But I certainly have spoken to winemakers, wineries, the marketers in those businesses and the accommodation sector. Although I can imagine what the restaurant people would think, because that is my business background, I did not actually talk to them much. They are going to need a lot of help to get to that next stage. I do not have a lot of technical knowledge—in fact, none. As an ex-restaurateur I am a real Luddite. You do not really turn on a computer when you are working in a restaurant; you are serving the wine. So my technical knowledge is quite limited, but my interest is in what this can do for business.

CHAIR —That is fine. Would you like to make some comments along those lines?

Ms Forrester —Just briefly, yes. I did put some thoughts down. I do not know whether you would like me to give you those.

CHAIR —Yes, that would be great.

Ms Forrester —In my discussions with people I have found a real mixed expectation and a mixed understanding of what broadband could do. In McLaren Vale there are some quite sophisticated businesspeople in terms of running good businesses and international businesses with quite strong export activity. The sense I got from most people was that speed is the thing that is going to make the big difference, but many of the small businesses did not really think that it was going to make a big difference to them.

The answers I got depended a bit on where they were. If they were already getting ADSL2 that is okay but they are looking for more. There are some who cannot even get ADSL2 and they are desperate for more. There is one company I know that I actually used to work for that is way outside of the town and is one of the key brands in McLaren Vale that cannot get anything but satellite and they are internationally owned, they deal internationally all the time and have got no broadband at all. So for them what this might look like will be critical.

I will go through and talk about the things they thought broadband will deliver for them. The nature of the wine industry is that they are often working on different sites, so the winery is in one place, the cellar door and the offices are in another and then they have got three different vineyards with sheds where they need to be in contact. A lot of their equipment is run electronically and by internet, so the connectivity between their business sites is important to them. So for the larger businesses that was what they felt would really help them. At the moment they can only have four external sites and they are looking forward to having more.

The tourism sector accommodation part relies very heavily on the internet for its bookings. There is anticipation that businesses will be able to have a better, more sophisticated website, which means they will be found more easily, particularly from internationals but all over the country. Their booking engines will work better. They often use three or four different booking engine sites. They will get that information more quickly. The quicker they can deal with their customers the more customers they will get. One of the businesses I am aware of, a small art gallery tourism business and also entertainment, get a lot of information, big files of art, of video of performers, dancers and whatever. That is a business cannot get ADSL2, so they really want to get it. It takes forever to get their information downloaded. For her, speed was critical. She wants to be able to work faster.

For the wine industry it is linking businesses to businesses. One business is setting up two or three kilometres apart a processing area to the core business function. They want to have one computer site and at the moment they cannot do that or, if they can do it, it will not be very efficient. They are looking forward to broadband to be able to run from one computer the whole business. Direct online sales, particularly in the current climate for wine businesses, online sales or you might know them as wine clubs, that sort of thing, it is really important that the customer can access the website and download quickly and the information can be dealt with quickly. Most of them say their customers lose interest, as one would, can’t be bothered, next site, so it is important for them that they get speed for that.

I have been asking questions about this for the last couple of months and lots of people say the new world is working from home, working remotely. They want to be able to work from home and access the internet from home. It is really important to secure VOIP. Some of them use it now but it is not very secure. Many of them that get this see this as a really incredibly good way to save a lot of money. A lot of them do a lot of international work, international phone calls, but also phone calls to these remote sites. They are all on the phone constantly. So they see VOIP as being one of the really big advantages, Skype and other like technology. I did put someone on to Chester Osborn. Did you get his story?

CHAIR —We had heard about the remote wine-tasting.

Ms Forrester —His presentation at an innovation forum switched the light on from me, a Luddite. I really did not understand all this until Chester talked about having a bunch of restaurateurs or agents or buyers in New York, he is in his lab, they have got the wines, he has got the wines, and this is how they conduct wine-tastings. ‘Have a look at this cabernet, you will taste this and that,’ and then they have a look—have a look means have a taste in wine speak—‘have a look, what do you think, what do you see.’ He is already doing it and they have got a huge market in the States. The d’Arenberg brand is very well-known in America and Canada. He gets them fine but he comes across as pixellated and breaks up. His comment would be, ‘We just need to catch up with the rest of the world. We are too slow, we’re being left behind.’

Mr HUSIC —Amanda Rishworth has mentioned this as well and raved about how the business was really excited about—

Ms Forrester —Very. That is quite a big and sophisticated business. I think for some others—we will get into that—they really do not see the opportunity. Someone like Chester is really in that space much more than others, but the others will get there.

The other key point is about backup, and how valuable it would be to have automatic fast backup. At the moment most people need to have an external drive. Human nature being what it is, you forget to turn it on and you have to take it home or whatever. To have external backup by pressing a button to have all of your day’s activities downloaded is another thing that the businesses feel is really valuable.

Another comment I got was that at the moment there is a thought—whether it is real or not—that you can only purchase from Telstra. So there is a restriction in where you can get your services from, apparently. Broadband will make it much more evident that there are other people out there in the marketplace—

CHAIR —Is that people saying that the only company marketing and attempting to sell to them is Telstra? So they are not seeing a presence?

Ms Forrester —I think there is a perception out there that Telstra is dominant and anybody else will be too expensive and unreliable. There is not enough information out there about the other opportunities. With broadband there will be more awareness of the other options. For these businesses it is about making money and saving money.

There is another thing that the wine industry does, and it is a bit like the Chester Osborn story. If they can have a really efficient skyping system it is a really good way to build customer relations, particularly when you are dealing in a foreign language. With just voice on the phone it is very difficult. If you can see the person you can see their face and eyes and you can get a much better sense of what is going on. If that is easy, fast and efficient, the marketing sides of these businesses see that as a big opportunity.

I will finish by saying what I started with. I think there is a complete misunderstanding of what the opportunities are now—never mind what they might be in the future. Again, that is about how sophisticated they are in their business model and what they are already getting now. I think there is a complete lack of education around what broadband can do for small business. Even though some of these businesses, like d’Arenberg, are quite sophisticated, at the end of the day they are small businesses.

CHAIR —For something that you have had to put together pretty quickly that was great information for us. We very much appreciate it. You have encapsulated there part of the challenge we have had in regional areas and with particular industry sectors. I am very conscious that in the tourism space and also in the specialised retail space, such as the wine industry and so forth, people are so often under the pump. They are continually working and do not give themselves the space and time to look at some of these issues.

I think your more switched-on sector probably understands that it is not going to be a choice. If the international customer base wants to book your B&B and visit your restaurant while they are in town, but they cannot download some video before they leave to work out where they are going then they will not come. There is a real change in that market. How do you think governments, and perhaps organisations like yours, could best do some programs that start to provide that information and support to these sorts of sectors?

Ms Forrester —This is going to sound a bit parochial, but I think one of the key things is to deliver the information to where the people are. McLaren Vale is only an hour from Adelaide. To effectively get the information out, go to the core and use the people on the ground to make sure the right people are there. I guess, more formally, you need to do some really good networking.

Our organisation has got about 600 members with whom we are in touch constantly. We have got a regular newsletter and that sort of thing. So we use the networks that are on the ground. A person I spoke to during my research—call it that—was one of the people who looks after some of the businesses. I spoke to him to get a sense—a shortcut, to be honest—of how much information we could get in a short time. He is the sort of person that probably would be good to use because he can deliver the information to his customers in a way, in a form and at a time that he knows they will understand. It is about language. I say it a lot when I am talking about business and government that we speak different languages. Neither is wrong nor right but somehow we need a translator. That is the key.

CHAIR —That is a lovely expression: some translators employed to undertake this. The interesting thing too for us is exactly what you have described in terms of the savings to be made for businesses and the management of information. We are talking about putting in sprinkler systems that minimise water usage for maximum output, but it all has to be hooked up and information driven. How well do you think people in the sector are coming to terms with that side of it, with the actual utilisation for your own efficiencies and cost savings, rather than the marketing export focus?

Ms Forrester —They are the people I did not go to. What you are talking about now is the agricultural stuff. Particularly in McLaren Vale, the bulk of the 380 growers we have in our region are really keen to be environmentally friendly. We are hanging our marketing and branding position on being sustainable. We have done a lot of work around water. Water is very expensive in the state. Needs will drive that economical ways are found of delivering that. If that can be done using the internet they will be right onto it. I suspect, because they are scientists really, that they are going to be ahead of it more so than the guys who are trying to sell a bottom-line.

CHAIR —And they are probably connected to some of the information web based services like the Bureau of Meteorology and so forth. They are familiar with using all that.

Ms Forrester —They rely on that absolutely, particularly this year. They very heavily rely on that. I think the agricultural farming side will very much get it. There are always going to be some, the early uptake or whatever that expression is, who will already be there. They are already doing it. They are the ones who are saying that the connection between the wineries and the vineyards, which might be four or five kilometres apart, requires broadband to make it work more effectively.

Mr NEVILLE —We have talked about how you can use the internet for things like virtual tastings and how important it is to get the pixellation out of international presentations, which will only come with higher speeds. Having said all that, that is just one aspect of the marketing of wine—isn’t it? What are the other uses to which it is put? You were saying you are not familiar with the agricultural side, so we will put that to one side. What about wine data: monitoring wine in casks, acid levels and all that sort of stuff?

Ms Forrester —As to the technical aspects of winemaking, none of those I have spoken to—and I have spoken to quite a few winemakers—talked about broadband influencing how they make wine. Sorry, that is an area I know nothing about. Joy has pointed to differences such as the fact we are quite small, not in terms of the number of businesses but the size of those businesses. There are probably five companies that are of a fair size who would be heavily technically equipped. For them to be ahead of the game they will make use of the opportunities.

Mr NEVILLE —Have any of them mentioned how the internet might be used for logistics: for the better transportation of wine around Australia?

Ms Forrester —No.

Mr NEVILLE —Door-to-door stuff and that sort of thing?

Ms Forrester —No.

Mr NEVILLE —They did not mention that?

Ms Forrester —No. But, as you know, you get the answer you want. Perhaps I did not ask the right question.

Mr NEVILLE —I am not with you.

Ms Forrester —I did not ask them the right question, is what I am saying.

Mr NEVILLE —I see what you mean.

Mrs PRENTICE —I understand some of the wine brokers, for example, have this connectivity so that when their stocks are sold and you run the sale through the cash register at the bottle shop, it lets the wine broker know that we can now do the next order, which is back to the wine producer.

Ms Forrester —Yes, I am sure. Again, in our particular community there are not many big companies but, yes, for some of the bigger ones, where they have got warehousing and they have that warehouse connected to a broker internationally and locally in the Australian system, it would be connected out of warehouse and into retail outlets or into restaurants through their distributors.

Mr NEVILLE —In your verbal submission you talked about having 600 members and you have also said that you have only five major wine companies. How many minor ones do you have?

Ms Forrester —Our membership is made up of grape growers, of which there are around 380—the maths is not going to add up, but it is around 380—and there are about 120 wine companies. So often there is a bit of a connection there. They could cross over.

Mr NEVILLE —Are other people members—for example, tourism operators?

Ms Forrester —Yes. The rest of it is made up of accommodation providers, restaurants, tour operators and attractions.

Mr NEVILLE —Has the internet been used to any great extent in terms of a presence on the web or a special tourism profile of the district?

Ms Forrester —Very much so, yes. The sector probably most advanced in their understanding of how dependent there business is on the web is the tourism sector. The accommodation sector would get a high 90 per cent of its bookings through the internet. And that is the worldwide web that they rely on to get their bookings.

Mr NEVILLE —The high 90s?

Ms Forrester —Yes.

Mr NEVILLE —That is very high.

Ms Forrester —In that sector it is very high. As to the restaurant and food delivery parts of that, I do not know of any business of any note in this area that does not have a website. The organisation I work for has a website which they are very dependent on.

Mr NEVILLE —Is there a website for McLaren Vale itself?

Ms Forrester —Yes.

Mr NEVILLE —Is it sectorised?

Ms Forrester —It is www.mclarenvale.info.

Mr NEVILLE —Does that website drill down as far as B&Bs, for example?

Ms Forrester —Yes.

Mr NEVILLE —Do they get good occupancy as well?

Ms Forrester —It was the B&Bs that I was talking about. We have 110 properties in the region and they are mainly B&Bs. Only five of the properties have more than 15 rooms.

Mr NEVILLE —So they are boutique motels or B&Bs?

Ms Forrester —They are mainly B&Bs or larger houses. We have three or four larger businesses in the accommodation sector.

Mr STEPHEN JONES —Can I just clarify what that 90 per cent figure was for?

Ms Forrester —That was for accommodation bookings. I am talking about the B&Bs. They rely really heavily on the internet. There are various websites—one is called Stayz.

—I am familiar with them.

Ms Forrester —Of all the people that I speak to, they are the ones who know how important this broadband is going to be. They are very small businesses. They might only have one room.

—This is an important point. Are you saying that 90 per cent of the bookings they get come from the internet or are you saying that they get to a level of 90 per cent occupancy as a result of the internet? They are two different things.

Ms Forrester —No, 90 per cent of their bookings come from the internet, because they would very rarely—

Mr NEVILLE —That does not necessarily mean that you have 90 per cent occupancy.

Ms Forrester —Exactly. I am not saying that. I am saying that as a source of work, 90 per cent of it comes from the internet, which is why they are keen on broadband coming in, because they will get more. They will get their occupancy rate up.

CHAIR —They would not know how much they missed out in terms of bookings if somebody finds they cannot access their website well enough to check it out. I know that if I am booking to go somewhere I will check the website out, and I want to see good quality pictures of the rooms. If I cannot see it I just will not book it. They will not know that, will they?

Ms Forrester —No. There are two aspects to this. One is the booking websites that people book through. One person I spoke to said they will get 20 referrals a day from these other websites. The speed with which they come in and the speed with which they can deal with those will affect their occupancy rate. The other aspect is: how sophisticated my website is? Is it a click or whatever, so that I can have the right photographs and the walk around the room to see where the bedroom is in relation to the bathroom? This is another aspect that is really important for that sector. And they get it; they understand it and they are looking forward to it. The sorts of things people are saying to me are, ‘We do not know what we don’t know. We do not know what kind of technology is going to be enabled by the broadband.’ So they understand that this is something that is really important to them. We are talking about the people who get it. The accommodation sector absolutely gets it, because their business is so much rooted in the internet.

Mr NEVILLE —Having said all that, you have flagged difficulty in getting fibre to all these farms and areas. Has your association got a strategy to extend the fibre or have you got plans to put to NBN on the points of presence that you want with fibre?

Ms Forrester —No, not at this stage.

CHAIR —Can I just clarify that. I think you said that you are just not sure how far the footprint will go beyond—

Ms Forrester —I do not know what the footprint is—

CHAIR —It may be all fibre, but you just do not know yet?

Ms Forrester —It could be that we are well serviced. But you have asked me a question that I will now go away and find out about. It is a good question. If when we see what the footprint is we see that a substantial number of our businesses are not going to get fibre, we need to make a presentation.

Mr NEVILLE —In Tasmania they told us that, while it might not be the plan for here, in Tasmania they would go out to the farthest point with fibre and then put a WiMAX solution that would give about another 15 kilometres in range.

Ms Forrester —If that is the solution here, that would cover the bulk of us.

Mr NEVILLE —Pretty well everyone, would it?

Ms Forrester —Yes.

Mr STEPHEN JONES —I am interested in the percentage of wine sales that are made online. Does your association have collected data on that?

Ms Forrester —Sorry, no. We represent these businesses in a marketing role more than anything else. But, anecdotally, the more they can do directly, the happier they are. It is a significant part of their business, particularly with the taxation arrangements, because that becomes a sale from their cellar door. Are you familiar with that?

Mr STEPHEN JONES —I understand.

Ms Forrester —So they are all very keen to do as much direct selling online as they possibly can. It is a much more profitable way for them to sell their product. It would vary from business to business. Some businesses have got the customer loyalty programs, so it is really difficult to answer. But it is certainly not the substantial way for most of them. One business sells all its wine in one weekend, another might sell 90 per cent of its wine online and another might sell 10 per cent of its wine online. But, the faster the broadband the more they can do it.

Mr HUSIC —You made a number of references today to businesses not really being completely familiar with how they could maximise the benefit to them, not just from a marketing perspective, but how they might be able to integrate opportunities presented by high-speed internet access into the way they work. There were also references to people out there in the local community. They were referred to as digital champions and there were other references as well. I think you were referring to the need to localise information. What do you think is the best way to get businesses to become aware of what they could do with NBN? What would work from your perspective, drawing on some of the problems that you have raised today?

Ms Forrester —I am probably a good person to ask, because my level of knowledge about the technical side of this and what the opportunities are is fairly limited. As such, I think I reflect quite a few of the smaller businesses, particularly the tourism businesses. This goes back to the comment I made about language and the standard communications—deliver the information in as many ways as you can. That means a town hall type thing where you come into the region and have someone deliver the opportunities in a clear way. Other ways might be to persuade us to put some information on our website, because our website is about the consumer but it is also about the member use. We could use our communication strategies and various other communication strategies.

I know you have had a presentation today from the City of Onkaparinga and the Southern Adelaide Economic Development Board. They all have networks, organisations and communication strategies, but it is about delivering it in written form, in verbal form and in presentation. This is really obvious, but one of the challenges is to get people to lift their heads out of their soup pots and say, ‘This is actually really exciting and this is a way for me to grow my business.’ The more sophisticated businesses, the businesses that can afford to have a marketing manager and a full-time accountant, will lift their heads out of their pots and see what is going on. If I were trying to think of ways to communicate this, I would look at the businesses and I would think, ‘For these businesses I need to do this and for these other businesses I need to do that.’ Work out who they are, how big they are and who the right people are. That is why I am thinking of some of the service people in the communities. It may be that a lot of the small businesses rely on IT guys. Who are they and how can we get them to deliver the messages for you? It is in their interests to do it. They are going to make money out of it.

CHAIR —Thanks very much for that. It is very interesting information for us. We have heard a lot from the regional development and economic development organisations and councils, so it is very useful to us to hear from an industry sector as well. Thank you for your attendance here today. If we have asked for any additional information, please forward it to the secretary of the committee.

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