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Role and potential of the National Broadband Network

CHAIR —We now come to the last, but I am sure not least, of our witnesses today. I welcome the representative of Lateral Plains Pty Ltd to today’s hearing. For the benefit of Hansard, could you state the capacity in which you appear before the committee.

Mr Fong Wah —I am the executive director of a small IT company called Lateral Plains, which is based in the University of Ballarat Technology Park in Ballarat.

CHAIR —Thank you. Although the committee does not require you to give evidence under oath, I should advise you 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, George, but you can make an opening statement of a couple of minutes. As you have probably seen, we are very keen to ask questions, so we will then go into a question and answer session.

Mr Fong Wah —I guess I wear a number of hats. As you may have heard, I have also worked with Helen Thompson from the CeCC with the ICT strategies for council. I have also had a relationship with the regional and rural internet and IT sector dating back to the early nineties. We had an ISP here. Over that period of time we have spent a lot of time developing strategies and a small business around the delivery of ICT to regional and rural businesses. That process has been at best challenging and perhaps part of the reason we are still in the business are the challenges. Over time, I think it is fair to say that one of the things that has reinvigorated our business is the prospect of getting much expanded broadband into the regional and rural areas, especially the almost irrevocable change of thinking, discussion and debate that has now occurred amongst businesses and communities in regional and rural areas about what could possibly be. We are very pleased to be on the cusp of that and to be assisting small businesses where we can.

CHAIR —You are obviously connected to the Ballarat ICT as well. I understand you are involved around the human side of the ICT.

Mr Fong Wah —Yes, very much so.

CHAIR —A small example is the one you might have heard me mention in the health sector where a gentleman who worked with the Irish project which developed fibre for health services and the experience they had where people are keen to interact and how they draw lines where their concerns lie. Could you give us a bit of insight into that side of what your company does?

Mr Fong Wah —We are sometimes referred to as ‘Geek central’. The young people who work for me are very orientated towards the technology but are also communicators. In our business, we try to take away the issues of technology process and look at those outcomes for businesses. Many of them come to us somewhat intimidated by technology. It does not matter where you are, whether you are in a city or metropolitan area, small businesses tend to be intimidated by technology. Our job is to refine some of the outcomes for those businesses and, if there is a technical logical solution which we think is efficient, we try to fit that solution to the businesses which come to us.

One of the examples of a suite of products which we had not expected to be so popular is email filtering. A lot of clients came to us and said, ‘We are trying to run a business and we are full of spam. What do we do?’ We spend a lot of time cleaning up their emails and delivering it to them in a fashion they can use without having to go through all the rubbish they get. Other examples are the ability to do online buying services with their clients, to find an economically feasible way of doing that and also trying to assist clients who have multiple offices across regional areas. While we do not think it is a new concept, the concept of the cloud has become quite fashionable recently. Although it has taken on a marketing phrase, we have been doing that sort of thing for a long time. Businesses are increasingly saying, ‘If we have an office here and we have an office there, can we communicate and how do we do it? Please do not give us any technical jargon. Is it possible and can you give us an outcome and let us know when you have done it?’ Increasingly we are finding that we have done a lot of stuff which in technical terms is reasonably advanced but at the same time the market seems to be coming up to meet us in a new generation of businesses which are saying, ‘We think this is useful to us. We think this can expand the way we do business. Can you help us with the technology?’

CHAIR —One of the private education providers who gave evidence to us in Canberra indicated that basically his whole business was run by people from home around the country. Indeed, even he himself had a head office at home or close to home and he said he does a lot of his work from home. Are you seeing a growth in those sorts of business opportunities?

Mr Fong Wah —Very much so.

CHAIR —Can you give us an example of the sorts of things you are seeing—not naming them, remaining confidential?

Mr Fong Wah —For instance, on multisite offices, a company came to us and said, ‘We provide consultancy services to business and we have multiple locations now. We have joined with other companies to create a single company. One of the constraints we have is that when we worked from one location we had all our files and all our information in one place. Now we have to share that information.’ In a metropolitan area it is a fairly easy thing to do but when you have offices in places like Naracoorte and Hamilton or further afield and, in some cases,  one-person offices, the challenges become greater. As time has gone by, that information has become more comprehensive. There is increasing use of laptops all over the place, so there is a need to synchronise all that documentation. With the speed of business now, if that document is updated, members of the business have to use it very quickly.

We are having to work around how we synchronise that process, how we get them to communicate in a unified way, where we can bury the technology behind what they need and they can work rather than having to worry about the technology. It is a particular challenge in terms of the way people work. There is no getting away from the fact that they are pushing away from the limits of the broadband services they have.

CHAIR —Would you describe it as a fast-growing sector? Would you be willing to put your own professional assessment on it? Is that a slowly expanding sector? What are we dealing with here?

Mr Fong Wah —I think there are two parts to it. The first part is that the businesses that we deal with are, if you will forgive the phrase, of my generation—of the 40 or 50 mark—and they have been grappling with technology full stop; it has not been part of their generation. What has happened is that the younger generation—my sons—are coming through with a completely different attitude. So we are seeing this disruptive change. The older generation take time to adapt to the technology. I think we are also very good at adapting to the constraints: we will work within what we have got. There was a very good example on the eastern ranges of Melbourne. There was a company that said to me: ‘Yes, we’re doing quite well. We do a lot of online services. We don’t have a lot a problems with the technology.’ I asked for some examples of where they run into problems. He said: ‘Oh yes, every now and then when it rains, both exchanges get drowned and we get cut off. But that is okay. We just work around that.’ There was a simple acceptance of the fact. But what is increasingly happening is that we are getting younger people coming through who are not accepting that. They want better, faster solutions. And we are being pressed to come up with them. Part of our role is to aggregate. We know the providers, we know the people who have the technology and can supply it. But these people do not. So what we do is bring all that together and try to find a solution for them. I think it is becoming increasingly challenging.

CHAIR —I have one last question before I go to my colleagues. One of the things that I think is evolving in the evidence we are receiving is people’s expectations. In the Sydney based example, a lot of things are already presumed. With a lot of the business models and service delivery, people are presuming they should be able to get things. In major regional centres such as Ballarat some really leading edge things are happening and people are pushing the boundaries. They are saying, ‘I know these things should be able to happen, so let’s get about doing it.’ And then there are the more remote areas where the digital divide occurs. My concern and I suppose the concern of the community is the equity side of what we are trying to do. What do we put in place for those small regional and remote areas, as best we can, not just in terms of infrastructure but also in terms of support for them to overcome exactly what you are talking about: ‘We want the outcomes but we do not understand the technology and the arguments.’ Do you have any comments you would like to make to government about things that could facilitate that?

Mr Fong Wah —That divide between the outcomes and the technology is very important. The issue for us is: ‘We’ll deal with the technology so long as we understand how to speak English to the business community and the communities out there that are doing it.’ The process of the NBN being announced and pushed through has created a few things in terms of thinking. Firstly, there has been, if you like, a release of some of those constraints in the thinking around what could be done. Secondly, there has been the fear: ‘Do we really understand what this technology is?’ But when we get down to talking to people like councils and small businesses, when we remove the technology, there is a clear outcome. So I think one of the processes in terms of communication is to look at the businesses and what they are receiving and dealing with their business services and articulating that and looking at the potential beyond that. A lot of us are actually doing that with business now.

CHAIR —So we should leap the technical discussions to get them to talk about what they want in terms of outcomes and then backfill with the technological expertise?

Mr Fong Wah —I think that is an important part of it. At the end of the day, we need to find the technology to fill it in. But it is not just for now. We do not want to do it in small bits. We want to do it for the long term.

Mr NEVILLE —You said that people work around the fact that they do not have a connection when there is rain. Presumably a lot of people in the region are still on copper.

Mr Fong Wah —Yes.

Mr NEVILLE —Where do you see this region moving? Does it need to be all fibred up or can it be done with a combination of fibre and wireless?

Mr Fong Wah —Again, I will answer the question in two parts. The first part is about outcomes. There are some businesses that have been there for a very long time. As recently as yesterday we were talking about the example of farms, which are regarded as multi-million-dollar businesses, struggling with what they have now. It is not meeting their needs. And when they do try to chase a solution, it is very often hard for them to articulate their needs.

In terms of the technology, since the early nineties I have been a part of the ISP industry. We had at regional/rural ISP here and we worked very, very hard to try and find ways around the infrastructure to get things in. We had local call zones covering very small areas, whereas if you were in metropolitan Melbourne you had a big area you could service. We used things like CDNO to extend the call centres—there was call forwarding to do that sort of thing. We kept doing those little things and finding different ways of doing it. My answer would be, yes, the fibre is a high preference because it will give us a long-term solution to look at what we can do now but then expand over the years. So instead of thinking about the technology all the time, we have the capacity to grow without worrying about running into those roadblocks again.

Mr NEVILLE —What is your view on wiring up new estates with fibre?

Mr Fong Wah —We have also had some history here in Ballarat, taking the example of Brad Winters’s model, which was in Whittlesea. One of the things that we introduced as part of the Ballarat ICT committee was to actually encourage them to look at local planning regulations that would allow a second conduit in. We think is very important now, more than any time before, that when new estates are built there is the option to run that fibre in. The phrase I think now is ‘fibre ready’. The bottom line is that there are still estates out there with no provision for that sort of thing and basically it is going to be retro fit. That is expensive and time consuming.

The reason for that is you have developers who are saying that they need to work on every penny that we have in the estate and you still have, if you like, a threshold of consumers that are coming through that are not quite grasping the fact that that might be something they are looking at. We are seeing increasing numbers. The younger couples are actually looking at that. What we are finding now is that increasing numbers of councils are saying, ‘What about greenfields?’ Bear in mind that the further up through the Western Highway you go, the less likely it is you will have large greenfields estates. There are established populations there and in some cases they are declining. But in areas like Ballarat and the Moorabool shire and other areas we think that there is a strong preference for saying to them, ‘You must put that second conduit in.’

Mr NEVILLE —Is there a case for mandating the connection of fibre to a new estate? It must be infinitely cheaper to put down fibre when you are putting in your other services.

CHAIR —Or at least the conduits for fibre to make it ready.

Mr Fong Wah —We approached the issue with developers about three or four years ago. We had a roundtable of developers, infrastructure providers and everybody else. We came up with what was a fairly elaborate plan of saying that the developers need to do this, this, this and this and also provide initial fibre into the buildings. Both the providers and the developers came to an agreement. The providers said, ‘It’s our job to run the fibre.’ The developer said, ‘It’s our job to run the conduit.’ That was the simple compact that we came to with them. As far as that is concerned, while we would like to mandate the fibre straight through at this point in time, the reality is that developers do not have the capacity to do it, and once the relationship between the developers and the infrastructure providers is struck, that is a point in time when it can occur.

Moving down the line, talking to developers, as we have, over time there is an increasing acceptance that in order to make your development or the greenfields estate viable, they are going to have to bite the bullet and do these sorts of things and they are going to have to, increasingly, develop relationships with people to put that estate into a position where it is either fibre ready or fibred up.

CHAIR —It is interesting: I still get in my own area professionals who relocate from Sydney to the coast who then ring me and say, ‘I can’t get ADSL.’ People, when they buy existing housing stock, are only now starting to check what broadband connection is actually available to it.

Mr Fong Wah —In the studies that we have been involved with, tree change is a particular issue. There have been some comments made to us where people have turned up in places in the Moorabool sire where they have actually genuinely gone into a tree change, found their mobile was somewhat difficult to use and that the broadband was either not there or not very good. They simply assumed that it was going to be there. Increasingly, there are decisions made that we are hearing about that say, ‘Before we go in, let’s check to see whether these sorts of services are available.’ While there is some reticence from people of my generation to talk about that sort of thing, you have a younger generation that is coming through and that are becoming decision makers, employees and house buyers that are going to simply say, ‘If it’s not there, we’re not going.’

CHAIR —Certainly, George, the Rural Health Alliance in Canberra said to us that they cannot get young doctors to go out into the bush. They are happy for the lifestyle change as long as they have got their telecommunications connections.

Mr Fong Wah —Lifestyle change is something that now integrates communications technology with the younger generations. We have to meet that.

Yesterday we had the opportunity to talk to some people on the south coast and one of the things that concerned us greatly was the fact that in terms of young people, people were actually saying to us—and these were representatives of councils—that small towns were dying because the young people were leaving because they could not get connectivity.

Mr NEVILLE —Okay, just playing devil’s advocate for a bit, we got evidence in those areas of Tasmania that were wired up early that 70 per cent of the houses accepted the connector boxes but only 15 per cent have actually connected up to a provider.

CHAIR —To be fair, we also had evidence that many of the people were already in contracts that would not allow them to change over.

Mr NEVILLE —Yes, some were in two-year contracts on copper and on wireless, that is true. But if the young people are this keen wouldn’t you think it would be reflected in the take-up of the NBN?

Mr Fong Wah —It would very much depend on the demographic that we are looking at in terms of those people who are actually the house owners and the people who are accepting those connections. A great deal of the reticence that we hear about comes from my generation and slightly further down. My son has not bought a house yet. We are hoping he is going to move out of home soon—it could be a little while yet.

Mr NEVILLE —Fingers crossed!

Mr Fong Wah —Wherever he goes, he is connected to the net. Both of my sons are connected to the net and there is a simple assumption that the technology is there. So I think you will find that, as that demographic moves up through the decision-making, the salary-earning and the house-buying cohort it is going to be increasingly important and the pressure will be there. I have not looked at the demographics of what happened in Tasmania, but it would be interesting to look at who were the house owners, what ages they are and what sort of technology take up there is.

CHAIR —Some research came out from one of the major survey organisations only last week while we had our hearing going about the usage of the internet by 12- to 14-year-olds. It was around the 80 per cent usage levels—quite amazing.

Mr Fong Wah —The Tasmanian issue is very much in the limelight. Everybody is being watched. People we know, like Simon Hackett from Internode, are busy pushing that model very, very hard. He knows it is a new market; he knows that nobody has ever been there before. It is very hard to say, ‘This is going to be normality for the whole period.’ I think there needs to be a time of settling. Certainly from the information that we have and from what we have been told from the regional and rural areas here, there is a pressing need to increase the level and reliability of connectivity way above what it is now. What we try to do very often in our discussions is separate the technology from the outcomes, but at the same time, as a technologist, looking at those outcomes. What we see in terms of the potential of the NBN is what we would like to see go out very soon.

Mr SYMON —This has been a very interesting discussion so far. There are a couple of areas I would like to go back over. Connectivity to a household would now seem to be, from this discussion, essential, just like power or water—

Mr Fong Wah —Yes.

Mr SYMON —and I think it will become a negative for a house owner to be selling a property that does not have it.

Mr Fong Wah —We agree.

Mr SYMON —Do you think a driver for the older generation to take up that sort of connectivity might be something like being able to call for very little cost compared to paying fixed line rental and payment per call? Is that something that might change attitudes in the older generation?

Mr Fong Wah —We have already seen some of that. Certainly if we talk about generations above us, we know that one of the drivers for increased connectivity is keeping in touch with families. As recently as yesterday people were talking about older members of the community having to move into larger conurbations to keep in touch with their families. One of the things that we found is that the driver for older people is to look at pictures of their family, to be able to Skype them, to be able to email them regularly to keep that family unit together.

It is not just a nice thing to happen, it is essentially about the maintenance of rural and regional communities ensuring that that sort of communication process is viable. It also means that the family units are kept together as well. Not only will it be desirable, I agree, but it is probably going to be detrimental if we do not make sure that we meet that standard that is coming through, especially with those new generations moving into that area.

Mr SYMON —In relation to the discussion we were just having regarding the trial site in Scottsdale I found of interest there some of the evidence put forward about the number of people that were connected prior to the NBN coming through. I am certain the figure was between 18 and 22 per cent. What we could not get was a figure of households that actually had a computer in them. It was a demographic as you say that was different, we got that evidence. It was older and it was semi-regional. I suppose that is the right description. I also looked at the figures that Mr Neville has described in that only 15 percent have taken it up even though it had gone through. To me it came across at the Tasmanian hearings that a lot of that was the lack of understanding about what it was and what could be done with it. Again, I think it comes back in many ways to a generational understanding.

Mr Fong Wah —I think so and this is where typically the councils have taken the role of the facilitators of those processes. We have been involved in things like the Ballarat Televillage and the Portland Televillage. This was at the beginning of 2000. The whole idea of those projects was to try to create if you like non-threatening environments where people could find out and explore things and be guided, in some cases, by younger people about what this technology can do. Once that occurs we find that people do come back. In our private role as providers and facilitators very often you will get a client who walks in and says, ‘I do not know about this internet stuff, but we know that we need email and we’re not sure how to do it properly.’ By the time we have finished explaining the outcomes for them and we have them pursue those outcomes it becomes a lot easier and you find the uptake of other services follows from there.

CHAIR —Have you seen the Broadband for Seniors program operating locally and the seniors kiosks and things like that?

Mr Fong Wah —I have not been involved in that sort of thing recently but when we were ISPs we did assist with those sorts of things. I think in Tasmania there was a group of seniors who were so involved with the technology that they were actually teaching younger generations how to use it. Those sorts of things are quite enabling processes.

Mr SYMON —I suppose it really comes down to the fact that we need it to get to the point where people can use it without having to understand it. If I can draw a parallel, you can turn on a light switch and a light comes on. You do not have to understand what happens behind that, it just does it.

Mr Fong Wah —I think probably as a parallel to that about 10 years ago I was very privileged to give a talk to a western Victorian business organisation. It was somewhat intimidating. We were lauded as some sorts of heroes coming in delivering the internet service and stuff like that. A chap in the background, who I knew, was sitting in the corner. He was a member of a business and nobody really took any notice of him. Here I was, a small ISP from Ballarat and he ran half of western Victoria’s electricity grid. Nobody noticed him and his comment was quite simple—‘We have got to the point where you need to go and that is that nobody notices until it goes wrong.’ That is the parallel for this technology that we need. We have not quite reached that yet. A lot of businesses are struggling because they are working with constraints. There is a generational change that is coming through and, if we do not deal with that, we are going to go behind in spades as a result of that because people will be dissatisfied and they will say, ‘Unless I can get that sort of service, that sort of facility and that sort of utility I am not moving there.’

CHAIR —It is an interesting analogy when you consider the proliferation of power points now required in modern homes which probably go far beyond what they ever imagined people would require when they were first talking about rolling electricity out to every household.

Mr Fong Wah —Obviously we are concentrating on rural and regional constraints. The increasing concern we have is that those businesses have the freedom to decide where they are going to be based. We know that businesses are making decisions that are outside of economic strategies.

CHAIR —So it could drive a decline in rural and regional growth, which would be quite contradictory to what we are trying to achieve.

Mr Fong Wah —From what we have heard from the studies that we have conducted so far, and a lot of it is anecdotal, there are clear indicators that businesses are saying, ‘We are feeling increasingly frustrated.’

CHAIR —Would you have a little bit of written evidence you could provide through to us about exactly that story you are encountering?

Mr Fong Wah —Yes.

CHAIR —That would be very useful. Thank you for your attendance. You can forward the additional information to the secretary. You will be sent a copy of the transcript of your evidence to which you can make corrections of grammar and fact. Thank you for your useful information.

Resolved (on motion by Mr Symon, seconded by Ms Bird):

That, pursuant to the power conferred by section 2(2) of the Parliamentary Papers Act 1908, this committee authorises publication of the evidence given before it and submissions presented at public hearing this day.

Committee adjourned at 12.40 pm