Fletcher lays down NBN strategy to address communications "equity"

Multi-technology mix to save more than $30 billion in capital costs: Parliamentary secretary to communications minister, Paul Fletcher
Parliamentary Secretary to Minister for Communications, Paul Fletcher.

Parliamentary Secretary to Minister for Communications, Paul Fletcher.

Parliamentary Secretary to the Communications Minister, Paul Fletcher, has outlined the government's strategy to address "equity" through government policy and the rollout of the NBN.

Fletcher examined the "longstanding concerns" with regard to communications equity issues or the "digital divide" in a speech to the Australian Communications Consumer Action Network National Conference.

Fletcher said equity concerns were evolving with changing technologies and the emergence of mobile connectivity.

He highlighted three areas of government focus: the affordability of the NBN; access to fixed broadband services; and access to mobile voice and data services.

"When it comes to the NBN, a key concern which the Coalition highlighted when in Opposition was that the previous government’s model meant very high capital costs – which in turn would feed through to high prices to end users," he said.

"When we came to office we directed NBN Co to carry out a comprehensive strategic review.

"This confirmed our fears on this point: it found that if the previous government had proceeded with its plan for the NBN, the end result would have been monthly internet bills rising by up to 80 per cent, or $43 a month."

He said there was evidence that affordability was the biggest barrier to broadband access in the home.

"This would have been bad news for access by lower income households," he said.

According to the Australian Bureau of Statistics, the bottom fifth of income earners are almost seven times more likely to have not accessed the Internet than those in the top fifth.

He said the key priority for the Abbott Government was a roll out plan which was much less profligate in its use of capital.

"The so-called 'multi-technology mix', of fibre to the node, fibre to the premises, and cable, which NBN Co is now using, will save over $30 billion in capital costs – and in turn feed through to materially lower prices to end users than would have been the case under the previous government’s plan," he said.

"Affordability is a particularly important issue in regional and remote Australia where broadband competition is not comparable to major cities, and where internet access can be prohibitively expensive, imposing a burden on lower-income households."

The Government is in the process of rolling out the multi-technology mix which allows the company to use fibre-to-the-node technology, which relies on Telstra’s copper network and delivers slower internet access at a lower cost.

According to Fletcher, median household weekly income in major cities in 2011 was $1322; while income in regional and remote areas was over $300 less.

The take-up rate of broadband in these same areas was also lower.

While 76 per cent of households in capital cities had broadband access, the figure was nearly 10 percentage points lower in the regions.

Fletcher said there was quite a disconnect between what was promised and what was delivered under the previous government's fibre-to-the-premise NBN.

"As at the 2013 election, there were just under 260,000 premises which could receive an NBN service," he said.

"The previous government had spent $6 billion – around 15 per cent of its claimed total budget for the NBN – yet the network reached just 2.5 per cent of premises."

The network has now passed over 520,000 premises – that is, roughly double.

However, the NBN has hit some turbulence after the Australian Competition and Consumer Commission last week said it would not stop TPG's plan to connect half a million urban apartments and businesses with services similar to the NBN.

This is depite NBN Co's protest that the competition was illegal.

This will add to NBN Co's challenge of cross-subsidising remote NBN users from the more lucrative city users as TPG takes a slice of the high density city market with fibre-to-the-basement technology.

Fletcher said the government had a clearer focus on improving availability to those outside the fixed line footprint – as part of its focus on breaking down the digital divide.

In August, Shadow minister for communications Jason Clare, revealed data which showed the NBN roll out was passing an average of 4,290 brownfields premises per week, 10 weeks prior to the election.

"Yesterday (August 26), it was revealed that under Malcolm Turnbull that average had plummeted to only 3,631 premises per week," he said.

"With the release of new data, the 10 week average has fallen even further to 2,707 premises per week.

"Whilst Malcolm Turnbull is trying to explain his broken promises and spinning reports written by his former advisers, the NBN rollout gets slower and slower."

In May this year NBN Co published the results of its review of the fixed wireless and satellite roll out.

The review found an estimated demand for fixed wireless and satellite services of more than 600,000 premises outside major cities by 2021 – three times as many as originally anticipated.

As a result, NBN Co has changed its roll out plan to double the number of fixed-wireless base stations from 1400 to 2700; extend the reach of the fibre to the node network to serve up to 25,000 premises which had been slated for a fixed-wireless or satellite connection; and shift up to 70,000 premises which would have received a satellite service onto other technologies to free up satellite capacity, according to Fletcher.

Fletcher said the third area of priority had been to improve mobile coverage in regional and remote areas.

"The Abbott Government is providing specific funding support to extend mobile coverage and competition in regional and remote Australia," he said.

"The Mobile Black Spot Programme will improve coverage along major transport routes, in small communities and in locations prone to experiencing natural disasters, as well as addressing unique mobile coverage problems.

He said the $100 million investment would attract additional funding from industry, state and local governments, and communities, as well as leveraging the NBN fixed wireless roll out.

"As well as improving coverage, the programme also aims to stimulate competition in the regional mobile market," he said.

"This is important because competition is a key element in delivering the best possible services and options to end users.

He said there was also scope to use NBN Co’s fixed wireless towers in many parts of the country.

"NBN Co is currently looking at ways to make these towers available for use by the mobile network operators and the government has given strong encouragement of this direction," he said.

"We are well advanced with the programme and expect to be commencing a competitive selection process within a few weeks – consistent with our stated time frame of commencing the competitive selection process in the second half of 2014, and of being in a position to announce the base stations which have been funded in the first half of 2015."