Can the NBN spark a rural and remote mobile revolution?

The Regional Telecommunications Independent Review Committee chaired by Deena Shiff has provided a report that highlights the need for a new approach to how telecommunications including broadband is provided in regional and remote areas and in Business Spectator the discussion focuses on how change might occur that benefits people living in Australia's often forgotten outback.

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A report containing a review of telecommunication services in regional and remote areas of Australia was tabled in Parliament on October 22  2015. The review was conducted by a Regional Telecommunications Independent Review Committee (RTIRC) that is established every three years under Part 9B of the Telecommunications (Consumer Protection and Service Standards) Act 1999. On the same day at an American Chamber of Commerce business lunch held in Sydney Vodafone Australia CEO Inaki Berroeta told The Australianthat “people want to have mobile phone services in regional Australia. They don’t want payphones or fixed-line phones in their house, they want to use mobiles the same way that people use mobiles in Melbourne or Sydney.”

Now you might think that the remarks by Berroeta were echoed in the RTIRC report but that’s not the case. Berroeta’s focus was on how to ensure that mobile cellular operators gain access to a larger slice of state and federal government funds spent in regional and remote Australia and for the universal service to become mobile cellular based rather than utilising fixed-line, fixed wireless and satellite technologies.

Meanwhile, the RTIRC report highlights issues and opportunities that emerged from the public consultation process including “the importance of mobile coverage, the potential to maximise benefits from the rollout of the NBN and the need to develop consumer safeguards for the future to support regional Australia.”

The RTIRC chair Deena Shiff stated that the “report focusses on those areas of regional Australia where less choice is leading to poorer consumer outcomes. As the NBN rolls out, people living in regional Australia can expect improvements in fixed broadband capability. There's also significant mobile network investment in regional Australia, although mobile coverage gaps are likely to persist in areas that are uneconomic to serve.”

Shiff highlights the potential for the NBN Co to facilitate “new market entry” by adopting a more flexible range of product offerings “to respond to the needs of regional Australia, recognising that diverse solutions may be required.”

One such “diverse solution” might be for NBN Co to offer mobile cellular and wireless communications operators increased access to NBN infrastructure in regional and remote Australia to facilitate increased competition and to reduce reliance on Telstra’s networks.

Berroeta stated that “the government has decided to invest a lot of public money on fixing the digital divide for fixed-line services with the NBN but we don’t believe this is fixing the whole problem. It’s not because of a lack of money but because of the way that this money is being spent. We need to look at how the ­government can enhance its investments and scope to deliver not only fixed-line connections but more technology-agnostic solutions that can help mobile competition.”

The report identifies significant mobile network investment in regional Australia and highlights the opportunity for NBN Co to provide equal and fair access to infrastructure in regional and remote areas to the three mobile cellular operators. State and Federal governments currently allocate significant funding for regional and remote mobile blackspot programs but over the past 20 years the lion’s share of this funding has fallen to Telstra.

Black spot limitations

Earlier this year the latest Federal Government black spot program committed $100 million dollars to fund telecommunications infrastructure in outer metropolitan, regional and remote Australia and a Round 1 allocation was made for “499 new and upgraded mobile base stations across regional and remote Australia – 429 Telstra base stations and 70 Vodafone base stations.”

A key aspect of this program was the new requirement that access to the infrastructure would be available to the three mobile cellular operators irrespective of which companies were allocated funds to build the infrastructure.

While the government’s aim might be to ensure there is equal and fair access to the infrastructure there are limitations to what this means and for Optus and Vodafone Australia the cost and practicalities of utilising Telstra’s mobile cellular infrastructure is still seen to be far too beneficial to Australia’s largest telco.

Berroeta argued that “NBN is investing in a fixed-line network and a satellite network but it also has a fixed-wireless solution that could be used very well to provide mobile services to regional Australia. It’s something we need to work on now because it’s a huge opportunity to have a common infrastructure that all players can access equally.”

Optus and Vodafone have previously identified the exorbitant cost of Telstra’s backhaul as a major reason for not proceeding to utilise the previously inaccessible Telstra infrastructure. But with the NBN being linked to two or more backhaul providers at the 121 Points of Interconnect there is an opportunity for the NBN to provide the common infrastructure that Berroeta mentions in his presentation.

Berroeta extended the mobile cellular centric view of Vodafone Australia when he argued that “some of the $300 million spent each year to fund the Universal Service Obligation (USO) to provide essential telco services to the bush should be diverted to improve mobile coverage and choice in regional Australia by co-funding infrastructure in remote areas and by creating incentives for the industry to invest in and share mobile networks.”

Berroeta supported his remarks by identifying that “the majority of transmission infrastructure in regional Australia is owned by one provider, which has received more than $1 billion in public funding over the years.”

While the exact amount of state and federal government handouts to Telstra for regional and remote telecommunications infrastructure over the past 30 years is not publicly available there is a justifiable concern that the telecommunications industry will not be balanced, open and competitive until a new approach is found for the provision of telecommunications services in regional and remote Australia.

How this should happen is where the RTIRC and Berroeta diverge to some degree because the RTIRC report argues for substantive change but does not specify that mobile cellular should become the new focus for the delivery of a revamped Universal Service Obligation.

Shiff states that “the rollout of the national broadband network and increasing consumer demand for data is leading to the rapidly declining relevance of the Universal Service Obligation. We urge the phased introduction of a new Consumer Communication Standard for voice and data. We also advocate the establishment of a new Consumer Communication Fund that can replace the existing telecommunications industry levy and underwrite over the longer term, necessary lossmaking infrastructure and services in regional Australia. An accompanying monitoring regime is also needed to improve our understanding of infrastructure availability and affordability in a rapidly changing market environment.”

There is a clear need for the Universal Service Obligation to be updated to provide every Australian with access to a telecommunications service that includes access to telephone and data. The USO guaranteed standard telephone service (STS) that is currently provided over the Public Switched Telephone Network (PSTN) is losing relevance as the PSTN is replaced by the NBN and alternate forms of communication increase including mobile cellular, Voice over Internet Protocol (VoIP) and social media applications.

The cost effectiveness of the former government’s contract with Telstra in 2012 for the provision of the USO for 20 years is correctly identified in the RTIRC report as being “questionable.” How the government would be able to convince Telstra to put this agreement aside is anyone’s guess but there is a need for the government to find a way if a revamped USO is to be put in place over the next couple of years.

While the 20 year contract for Telstra to provide the USO in its current form was undoubtedly one of the former government’s sweeteners offered to Telstra to sign on the NBN deal with NBN Co the current government has nothing to crow about with its decision to force NBN Co to take on the multi-billion dollar cost of telecommunication infrastructure remediation and asbestos removal from Telstra.

The RTIRC report suggests that the design of a new Consumer Communications Standard for the provision of telecommunications services including voice and data to regional and remote areas should be based on the principles of technology neutrality, contestability, transparency, economic efficiency and sustainability.

The challenge for the government is to find a way to review and implement an updated USO that encompasses the post PSTN telecommunications market and how this translates into service provision in regional and remote Australia.

Mark Gregory is a senior lecturer in the School of Electrical and Computer Engineering at RMIT University.