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Chapter 2 - State of Play and Government Initiatives
2.1 Recent Growth
Australians have been quick to adopt earlier generations of communications technology such as faxes, mobile phones and the internet. Like most developed nations we were slow to start with broadband but we are now beginning to climb the broadband adoption curve for second generation services.
OECD research indicates that in December 2001 Australia was ranked 18th in broadband penetration out of 30 OECD countries[1]. However, as the graph below illustrates, Australia is in the middle of the pack and there are very few countries that have achieved a high rate of broadband penetration.
Source: http://www.accc.gov.au/telco/fs-telecom.htm
According to the Australian Competition and Consumer Commission (ACCC), which tracks broadband take-up there was a 162 per cent increase in broadband take-up in Australia between 31 July 2001 and 30 September 2002. Over the same period the number of business customers increased by 333 per cent (now 71 500) and the number of residential customers increased by 97 per cent (now 204 900). Significantly, there was a 23 per cent increase in take-up in the June to September 2002 quarter.
Recent growth has been fuelled mainly by increased take-up of DSL and ADSL technology and reflects a broader consumer awareness of broadband services. A more detailed discussion of the measurement of take-up and success is provided in the findings against the terms of reference (Appendix 1).
2.2 Government Initiatives
The Commonwealth Government has implemented measures to guide the development of the broadband environment. The foundation for an advanced communications market was laid in 1997, with the introduction of full and open competition that changed the telecommunications market to deliver positive outcomes for consumers, including improved choice and lower prices.
There are now more than 80 licensed carriers in Australia, with many of these providing competitive broadband services. According to a recent ACA/Allens Consulting study the Australian economy was $10 billion larger in 2001-02 than it would have been without the Government's telecommunications reforms[2]. The study estimated the reforms had led to the creation of 100,000 new jobs in the Australian economy, consumer benefits of between $595 and $878 per household, and $900 million in increased profits for small business.
The Government has also made considerable investments in broadband and other telecommunications infrastructure through targeted programs:
- The $50 million National Communications Fund - to deliver broadband infrastructure and applications to improve education and health services delivery to regional Australia.
- The $36 million Advanced Networks Program - to support the development, testing and demonstration of advanced networks that will deliver long term benefits to the Australian economy.
- The $464 million Networking the Nation Program - to help bridge the telecommunications gap between urban and regional Australia.
Compelling digital content will be a key driver of demand for broadband services. Recognising this, the Government has taken steps to promote the development of broadband content:
- The $2.1 million Broadband Content Fund - to provide seed funding for Australian content producers to pursue opportunities in new broadband applications.
- The Copyright Amendment (Digital Agenda) Act 2000 - to reform intellectual property rules to protect the rights of content developers.
- Projects to improve interoperability - to enable the transfer and use of business-critical information across multiple organisations and technology systems, and builds confidence in technology's ability to meet these aims.
- $12.4 million for a new Cooperative Research Centre for Interaction Design to undertake research into human interaction with emerging technologies and design, with focus on sectors such as computer games, interactive television and digital media art.
- The $68.2 million Le@rning Federation - to develop online educational content for schools (50 per cent contributed by state and territory governments).
In addition, most state and territory governments have plans and initiatives for broadband services, reflecting the significance of broadband infrastructure for regional economic development and the delivery of health, education services and general government services. For example, the NSW Government is evaluating expressions of interest for the supply of broadband solutions for government agencies that encourages private sector use of state owned fibre assets and other state owned telecommunications infrastructure. It also recently awarded tenders to provide a new $247 million broadband system to nearly 2400 schools and TAFEs, making Internet connections more than 30 times faster for students.
Similarly, the Victorian Government established the Telecommunications Purchasing and Management Strategy to provide a strategic framework for the procurement and management of telecommunications services across the whole of government, linked to a Regional Connections Strategy. Queensland has implemented the $172 million REEF network deploying 1820 km of underground fibre from Brisbane to Cairns to improve communications services in regional areas, particularly where services were previously unavailable. In relation to education specifically, the Western Australian government is investing $90 million over three years to connect all schools to broadband and in the ACT all schools have been connected to the local broadband network operated by TransACT.
2.3 Feedback on initiatives
The Networking the Nation (NTN) program was deliberately designed to be responsive to local circumstances and local initiatives in rural and regional communities, and decision-making was required to be at arm's length from government and to take account of rural and regional contexts. During consultations, state and territory governments and industry stakeholders confirmed the positive outcomes from this initiative, such as concrete services and increased communications, as well as increased awareness and training in rural and regional areas. However, a number observed that following the completion of the NTN program there will be scope for a second stage of coordination.
Many stakeholders praised the catalytic effect of the National Communications Fund. The process of negotiating consortia and preparing applications encouraged collaboration between agencies in state and territory governments. Similarly, the Advanced Networks Program was viewed positively. Some stakeholders called for another round of funding to join regional universities to the advanced network available to universities in capital cities.
Overall, the BAG noted that outcomes from funding initiatives of Commonwealth, state and territory governments will be enhanced if they go the next step to achieve higher-level outcomes and potential network effects from investments as part of a strategic, coordinated national plan.
2.4 International approaches
Canada
The Canadian government's Connecting Canadians strategy outlines a commitment that all Canadian communities will have access to broadband by 2004 as part of its broader commitment to make Canada the most connected country in the world.
The Canadian National Broadband Taskforce set out a range of recommendations for government funding of initiatives to achieve this goal in July 2001. The Canadian Government has not formally responded to the report, however it has implemented a broad range of strategies to assist broadband deployment and take-up, including:
- establishing up to 10,000 public Internet access sites in rural, remote and urban communities and helping to connect Canada's public schools and libraries to the Internet
- supporting the deployment of broadband services to Canadian communities that currently have no high-speed Internet access through the Broadband for Rural and Northern Development Pilot Program
- developing CA*net, a broadband network linking Canadian research institutions and universities
- support for the development of on-line content and broadband demonstration projects
Individual provinces have also been active in developing local networks.
United Kingdom
Recognising the potential provided by broadband for the health and education sectors, Prime Minister Blair recently announced that the Government will deliver:
- broadband connections to every school by 2006
- broadband connectivity for every GP surgery, every hospital and every Primary Care Trust in the country.
The United Kingdom has set a national target for the UK to have the most extensive and competitive broadband market in the G7 by 2005. This strategy was outlined in the Government report UK Online: The Broadband Future, which established a Broadband Stakeholder Group to develop a detailed strategy for meeting that target. A framework of 16 detailed recommendations was put forward, including supply-side measures such as infrastructure sharing, competition measures, local loop unbundling, measures to promote content development, fiscal incentives to accelerate take-up and public sector demand aggregation measures.
The key principles of the Government's initiative include:
- providing a stable macroeconomic environment and flexible and efficient labour and capital markets
- ensuring a stable and predictable regulatory environment for communications providers, which promotes competition wherever possible and effective regulation where not
- leveraging European regional development funding to assist broadband development
- establishing more effective procurement of the public sector's broadband requirements to improve value for money and the availability of broadband.
The strategy involves encouraging broadband rollout in rural areas without providing financial incentives.
France
In 2001 the French government set itself a target to provide a 2Mbps connection at an affordable cost to anywhere in the country by 2005. According to some estimates, 20 to 25 per cent of the population will not have high speed access to the Internet within this time through the existing telecommunications providers.
The French Government has developed a three-pronged approach to address this issue:
- encouraging local authorities to invest in telecommunications infrastructure and in content development that is likely to drive demand
- providing a mandate to the state owned bank Caisse des Dépôts et des Consignations (CDC) to support new telecommunications infrastructure and content projects
- encouraging the use of electricity networks to facilitate the provision of fibre optic networks between areas outside cities.
Sweden
The Swedish Government's aim is for all citizens to have at least 5 Mbps to the home by 2005. The strategy is based on improving access and addressing the digital divide. Approximately
US$1 billion was earmarked to support a fibre optic network with a four-level hierarchical structure.
- Backbone network - the top level of the network, linking the principal town in each of the 289 administrative areas.
- Regional networks - a network within each of the 289 administrative areas to connect the local communities in those areas and interconnect with the backbone network.
- Local access networks - a fine meshed distribution network within a local community intended to give private and commercial subscribers access to the higher level networks.
- Private access - private access networks serving, for example, a residential building or an industrial campus. This assistance is provided through tax deductions.
United States
The United States has a multi-faceted approach to assisting broadband deployment. The Federal Government's approach is underpinned by providing a competitive regulatory environment and removing hurdles to broadband deployment. Initiatives also include:
- providing grants, loans, and loan guarantees to improve access to broadband telecommunications services in rural areas through the 2002 Farm Bill
- extending the Internet tax moratorium and research and experimentation tax credit
- modifying tax depreciation schedules to allow companies to depreciate the capital costs associated with broadband roll-out over a shorter time period
- making broadband demand a priority of the President's Committee of Advisers on Science & Technology
Korea
In 2002, South Korea's Ministry of Information and Communication announced a plan to deliver Internet connections of at least 1 Mbps and preferably 20 Mbps to every household by 2005. South Korea already has over 10 million broadband Internet connections giving it the highest penetration rate of such services. Over the three-year period, the government's plan involves:
- encouraging the industry to invest US$10.9 billion in their broadband networks
- providing loans to the industry to increase the number of homes passed by broadband from 55% of Korean homes to 70% by the end of 2002
Other recent initiatives have included:
- investing US$1.2 billion in high speed networks
- providing free broadband connections to schools
[1] The Allen Consulting Group Benefits Resulting from Changes in Telecommunications Services Report for the Australian Communications Authority October 2002 p v.
[2] OECD Broadband Access for Business, May 2002.