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Speech to the Telecommunications Industry Ombudsman 20th Anniversary Reception

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The Hon Malcolm Turnbull MP

Minister for Communications

Telecommunications Industry Ombudsman 20th Anniversary Reception

3 April 2014

Thank you Simon Cohen for hosting this anniversary event and congratulations to all the TIO staff both past and present who have worked so diligently over two decades to deliver a highly professional dispute resolution service for Australia's phone and internet users.

I am very sorry my friend Warwick Smith was unable to attend as he was the very first telecommunications Ombudsman and of course a former Liberal Member for Bass and Minister in the Howard Government.

Australia's Telecommunications Industry Ombudsman was a world first when it opened its doors in December 1993. And recent developments at the TIO, including the transition to a unitary governance structure, new KPIs, and the roll-out of a nationally-recognised dispute resolution qualification for TIO staff demonstrate this organisation's commitment to improving its service and keeping pace with consumer expectations.

The TIO is synonymous with the liberalization of the telecommunications industry. Of course there was a time in our long-forgotten telecommunications past, when a home owner had to be grateful that the Postmaster-General had accorded them the rare privilege of allowing him to rent one of his fine Bakelite Telephones - and make sure you don't chip it! In the words of Optus CEO Paul O'Sullivan: "Telecommunications was a vertically integrated monopoly and a sleepy one at that"1.

Of course there was no need for a TIO back in those days - if you wanted to make a complaint, the first port of call was often your local MP.

As it will no doubt be again when the NBN is rolled out - yet another downside of the Commonwealth Government owning a telecommunications company.

Of course the world changed when competition was first introduced to the market, when the then Labor Government granted Optus the country's second carrier's licence in November 1991 as part of a larger National Competition Policy that was implemented throughout the 1990s.

The TIO has weathered the myriad changes in the telco sector remarkably well. Only three companies were participating in the scheme back in 1994 and Australia's first ISPs, including and Ozemail, were in their infancy. Today the TIO's membership numbers around 1,360.

A 1994 speech by the then Minister for Communications, Michael Lee gives a sense of the transformation that has occurred over the past 20 years. And regrettably, of the intractable issues with which Ministers for Communication continue to grapple.

In addressing the annual conference of the Consumers' Telecommunications Network the Minister noted that it was "unacceptable that when more than one million Australians now have a mobile phone, a million others don't have a phone at home."2

By June of last year there were 30 million mobile services in operation out of a total 51 million telecommunications services nationwide. And fixed line telephone services may now have peaked as the total number of lines actually fell by 1% between 2012 and 20133, in stark contrast to smartphone ownership in Australia which expanded by 15 per cent during the same period.

Later in his speech, Minister Lee highlighted the important work being undertaken by the then 'Broadband Services Expert Group' which was charged with examining "the social and economic issues associated with the possible extension of broadband services to the community, schools and businesses." "Clearly", he said, "broadband services will be one of the key elements of future communications services and Australia needs to position itself now to maximise the benefits and manage the challenges that these services will bring."

No doubt the TIO is acutely aware that many broadband challenges remain 20 years on and the Government clearly has a role to play here as well. It is a travesty that in this country there are still 1.6 million households either with no fixed line broadband or with speeds so poor you could barely download a YouTube video. One of the key objectives of the Government's NBN policy will be to prioritise these areas and close the 'digital divide' as soon as possible.


Taking the crown as Australia's busiest Ombudsman scheme, naturally, is a mixed blessing. On the one hand it underscores the TIO's accessibility to consumers, and utility for telcos and ISPs. However, the quantum of complaints - some 158,000 annually, reminds us of the need to tackle the systemic and structural issues in Australia's telecommunications sector which are hindering innovation and frustrating consumers.

In a recent speech about cybersecurity I made the point that the term 'digital economy' is almost redundant. The reality is that the economy is thoroughly dependent on the connectivity afforded by our telecommunications services. There is an economy and it is digital. But when we examine the Australian situation there is clearly a lopsidedness to this connectivity.

Australia is basking in a flourishing mobile ecosystem which has seen us elevated to top spot in mobile broadband penetration among OECD nations after being ranked 21st out of 34 countries just five years ago4. By contrast, the much-vaunted step-change promised by a giant government broadband monopoly has failed to materialise. And amid the barrage of hyperbole and dashed hopes we are left with a national broadband network which has already swallowed up many billions of taxpayers' dollars while reaching less than one-fifth of the original rollout targets.

Our NBN policy is one which puts the consumer back at the centre of Government policy.

Our objectives for the NBN include:

a. Delivered Sooner - the NBN's Strategic Review found that our rollout would be completed four years sooner than if there were no change at all. We will also prioritise poorly served areas. A recent initiative of which I am particularly proud is the Department of Communications' MyBroadband website, which allows Australians to find out the relative ratings of broadband availability and quality in their local area based on analysis conducted at the end of last year.

The website is a result of the Broadband Availability and Quality Report, which contained findings based on a spatial analysis and analytics of the coverage of broadband customer access networks, along with an estimate of their likely performance taking into account known constraints such as distance from the exchange and pair gain services. This analysis measured broadband availability based on the infrastructure currently in place and used the possible speeds achievable over that infrastructure as the measure of quality. As the NBN is rolled out, this data will be updated to reflect the rollout's progress and —most importantly —the data in that Report will guide the rollout as we prioritise the least well served areas. b. Delivered Cheaper - if left unchanged the NBN would have increased average

Internet bills by up to 80 per cent, or around $43 a month. We are determined to turn this situation around and deliver a fairer NBN by dramatically reducing the cost of building the network. The Australian Bureau of Statistics found that those households in the bottom 20% of income earners were 10 times more likely to have no access to the Internet at home than those in the top 20 per cent. Lowering the network construction cost will result in more affordable prices for end users. c. Offers Choice to Consumers - we agree with the goal of structural separation and that

that enables the best prospect for a 'level playing field' for RSPs. While the previous Government got this right at a macro level, the key now will be ensuring that it is a level playing field in real life - so the Government is very conscious of smaller RSPs complaining that they don't have the scale to go into certain Points of Interconnect and are being asked to buy too much Connectivity Virtual Circuit.

In short, the Coalition will complete the NBN but in the most cost-effective way using the technology best matched to each area of Australia. The fibre to the premises part of the project is being built faster than ever since the Coalition Government took office and trials have started in Epping here in Melbourne, and elsewhere to test other technologies such as Fibre to the Node and Fibre to the Basement which will dramatically lower the cost and time it will take to deliver fast broadband to all Australians.


One final thing I would touch on is the common assertion that regulation is always introduced to benefit consumers and that the natural flipside is that deregulation is anti-consumer.

This is simply not true. The Coalition is absolutely committed to an ambitious deregulatory agenda, but we have done so by consulting with all stakeholders, including consumer advocates such as ACCAN.

The idea that regulation is always to the benefit of the consumer often misses the point - burdensome imposts on businesses mean that they are often less nimble to cater to evolving demand; it means that smaller companies are less able to compete; and it imposes unnecessary costs which inevitably are passed on to the consumer.

So while we are committed to cutting red tape, we believe this can be done in a way that will protect consumers and make businesses more responsive to their changing tastes.

So I congratulate the TIO on its milestone and I hope that whether it is via the NBN transformation or telco sector reform we can play our part in contributing to a continuing decline in consumer complaints to the TIO.

1 O'Sullivan, P., (2011), "Celebrating 20 Years of Competition", available online here: ocuments/11.11.18%20Optus_CEDA_CEO_Keynote_20Years_FINAL-delivered.pdf

2 Hon Michael Lee MP, Minister for Communications and the Arts, speech to the Consumers' Telecommunications Network annual conference, 19 August 1994.

3 Australian Communications and Media Authority, Communications Report 2012-13, p.19.

4 Covec Report, "Economic drivers and contribution of mobile communications in Australia, February 2014, p.5