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Discussion Paper

Determining funding arrangements under the Commonwealth's $50 million general mobile phone program
Department of Communications, Information Technology and the Arts, Canberra - 21 August 2001

1. Introduction

As part of its $163.1 million response to the Telecommunications Service Inquiry (TSI) Report, the Commonwealth Government has allocated $50.5 million over three years to be used to provide greater access to affordable mobile telecommunications in areas currently without terrestrial services.

The purpose of this Discussion Paper is to invite views on priorities for spending and on the method to be used to allocate funds.

The Commonwealth Government has sought equal funding from State and Territory Governments to improve the scope and community benefits of projects that receive funding under this general mobile phone program. Where funding is to be provided, the Commonwealth proposes that it and the relevant State or Territory Government would jointly determine priorities and allocation arrangements.

Where funds are not being provided by State and Territory Governments, the Commonwealth proposes to take responsibility for determining priorities and allocation arrangements itself.

Comments on the priorities or process for the allocation of funds can be sent to:

Comments should be provided by 7 September 2001. Comments may be of a general nature or in response to the specific issues in the Discussion Paper where comments have been sought.

2. Background

Mobile phone coverage in Australia is available to about 97 per cent of the population, covering over 12.5 per cent of the Australian landmass. The remaining 3 per cent of Australia's population does not have access to terrestrial mobile phone services, although satellite mobile phone services are available across Australia.

The Commonwealth Government is allocating $50.5 million over three years to provide improved affordable coverage for those communities unable to access terrestrial services. This general mobile phone program is one of a number of programs that have been established to improve terrestrial mobile phone coverage. Other programs include:

3. Principles for achieving the objective of the program

The objective of the program is "to provide greater access to affordable mobile telecommunications in areas currently without terrestrial mobile services".

While it would not be economically viable to provide terrestrial mobile phone coverage to all of Australia (since, as described above, almost 90 per cent of the landmass still requires coverage), the goal would be to use the funds to improve access as far as possible.

Two key principles are proposed for determining priorities and allocation arrangements to best achieve the program's objectives: value for money and sustainability of services.

Value for money

In considering value for money, issues include:
- the number of people who will benefit from the service per dollar spent;
- other benefits such as

Sustainability of services

Sustainability is a key issue. It is important that services will continue to be provided on an ongoing basis after the Commonwealth funds have been expended. Accordingly, Commonwealth funding will be provided only:

• Comments are invited on these principles (including the potential benefits identified under the "value for money" principle and on whether other principles should be considered.

4. Priority areas

Program funds could be applied to a range of options, such as: (a) providing coverage for a region;
(b) extending coverage to particular population centres not already served;
(c) addressing blackspots in areas already served;
(d) extending terrestrial coverage on State/Territory highways; or
(e) subsidising or otherwise supporting the use of satellite handsets.

Other options may also be proposed.

Coverage could be provided for an overall region. For example, the Western Australian WirelesSWest project, to be funded jointly by the Commonwealth, Western Australian Government and Telstra, provides coverage for the entire South West Land Division of Western Australia, roughly as far as a line between Esperance and Geraldton. While the coverage will not be universal, it will substantially cover most of that area, enhancing the utility of mobile phones for those who travel widely in the region.

(b) Extending coverage to other population centres

The Commonwealth has provided $37.7 million to fund mobile phone coverage in population centres of 500 and above, subject to community need and economic viability. Towns eligible to receive funding under this program have been identified based on advice from carriers as to existing and proposed coverage and using population information from the Australian Bureau of Statistics 1996 census.

This $37.7 million program will not provide funding to towns that do not meet these criteria, such as smaller towns, including those with a larger seasonal population. Funding could be provided under the current program for the extension of coverage to such population centres. As an example, funding could be provided to population centres above 300.

(c) Addressing blackspots in areas already served
Funding could be provided under the current program to address blackspots in areas already served (including providing infill around population centres where existing coverage is patchy), while noting that in some areas the surrounding topography would restrict the ability to extend coverage.

(d) Extending terrestrial coverage on State/Territory highways

The Commonwealth Government has provided $25 million to extend mobile coverage on a number of key highways across Australia. The Mobiles on Highways tender, awarded to Vodafone, will extend coverage over 9000 kilometres of highways across Australia and, in several instances, coverage will also be provided to population centres close to these highways. There are a number of highways that will not receive coverage under this program. Funding could be provided under the program to extend coverage to such highways or to improve any blackspots on highways, which have existing coverage.

(e) Subsidising or otherwise supporting the use of satellite handsets

As it is not possible for all Australians to be able to receive coverage for terrestrial mobile phones, funding could be provided to subsidise or otherwise support the use of satellite handsets. Satellite coverage is currently available across Australia. Assistance could be provided, for example, through the provision of a rebate on the cost of purchasing a satellite handset where there is a demonstrable community benefit. For example, a program established by the Western Australia Government provides a handset subsidy to individuals, community organisations and small businesses residing or working in the more remote regions of the State.

• It is likely that the priority that is placed on each of these options will vary between different States/Territories. Options would also need to be evaluated against the principles for achieving the objective of the program (see Section 3 above). Comments are sought on these funding options and on whether other options should be considered.

5. Allocation process

Comments are also sought on a suitable allocation process for the funds under the $50 million general mobile phone program. Two different types of generic allocation process are discussed below: a "bottom up" and "top down" approach. A mix of these approaches may also be appropriate.

"Bottom up" allocation process

Under this approach, program guidelines would be established, but a decision would not be made in advance as to which priority areas would be addressed. Instead, for example, an applications process could be established, with applications being sought from organisations, community groups or local government authorities for funding for a specific project. The process could be similar to that currently undertaken by the Networking the Nation program. Those submitting an application would have to demonstrate that their project meets the program guidelines. To promote value for money, applicants could be required to run a tender process for the selection of a carrier to provide the required service. All applications would be considered against the program guidelines. While these might include principles along the lines of those outlined in section 3 above and may identify some priorities such as those in section 4, the exact distribution of funds between priorities would not be determined in advance.

A "bottom up" process may allow for a wider range of projects to receive funding, as communities may submit applications for projects that may not have been included in any identified list of priorities.

"Top down" allocation process

Under this approach, a decision would be made in advance as to the allocation of specific priorities for each State/Territory. For example, a decision may be made to allocate half the funds to highway program and half to a satellite handset program.

A process could then be run to implement these programs. This could again involve an applications process as discussed above or could involve the Commonwealth running a tender process for the provision of services for specified projects. A tender process has been adopted for the $37.7 million program to provide mobile coverage to tender population centres over 500.

A "top down" process is not as flexible in providing for a range of projects to be funded, but it may provide benefits in terms of regional solutions or promoting value for money in enabling larger scale projects, for example by aggregating projects.

• Comments are sought on these proposed generic allocation processes.

6. Amount of funding available in each State/Territory

The Commonwealth has allocated funding under the $50 million general mobile phone program between the States/Territories pro rata on the estimated number of persons without access to terrestrial mobile phone services, after taking into account the implementation of the $37.7 million program for towns over 500. It equates to about $100 per head, as follows:

* This includes the $7 million, which has already been committed to WA under the WirelesSWest program.
** The Commonwealth contribution amounts to $49.9 million since the $50.5 million program includes $0.6 million for administration costs. Since these costs were based on equal funding being provided by States/Territories, where equal funding has not been provided, the Commonwealth will incur additional costs associated with the administration of the program in those States/Territories.

Funding is available over a three-year period, from 1 July 2001 to 30 June 2004.

7. Program timelines

Submissions will be considered in relation to the application process and priorities for each State/Territory. These comments will enable the Commonwealth (or the Commonwealth and State/Territory government jointly, in the case where funding is being provided by State/Territory governments) to select appropriate priorities and mechanisms for providing funding to address those priorities. The Commonwealth anticipates being in a position to decide on the priorities and allocation process by October 2001, enabling an early start to program implementation.

Further information

Telecommunications Service Inquiry Report (Besley Report), 2001

Commonwealth support programs for mobile phone services FAQ

Networking the Nation

• Document ID: 7820 |
• Last modified: 6 February 2008, 2:00pm