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Networking Australia's Future - Chapter 4
Overview
The ability to communicate and the right to have access to information are fundamental to a democratic society. Access to digital information and the ability to communicate electronically may become just as fundamental in the future.
Access to broadband communications networks may become part of the basic community infrastructure - as essential as roads, electricity or water. The consultation process undertaken by the Group reinforced its belief in the importance of access and affordability of new services.
But before we make the considerable commitment to providing widespread, equitable access we need to be clear about the potential benefits and costs. Broadband services are at a very early stage in their development and the community's basic communications requirements will evolve as the services evolve.
Because of this the Group considers that it is premature to attempt to define basic broadband services requirements - at this stage, it is more important to develop and implement a strategy that links the evolution of services to the evolution of the community's communications needs.
The Group also considers that the massive cost limits the relevance of the traditional universal service approach to broadband services, particularly at this early stage of development. It is simply not practicable to make interactive broadband services available to all households at this time. Instead the Group proposes to use a concept of 'universal reach' as a way of describing how to make broadband services accessible to as much of the community as possible as quickly as possible. This approach is central to the Group's strategy for community access.
Three aspects of access need to be examined in formulating a strategy:
- identifying how the community's needs might evolve and be met;
- devising a regulatory environment that allows service providers the opportunity to meet users' requirements;
- establishing a framework for dealing with questions such as privacy, copyright and censorship.
Universal reach
Since the interim report was published several further announcements of significant investment in the provision of broadband content and infrastructure have been made. These investments, the upgrading of the telecommunications network (for enhanced communications services such as ISDN) and other elements such as ADSL trials suggest that a significant proportion of the community may be in a position to use enhanced communications services in the near future.
Despite this massive investment, however, there will still be people who will not be able to use broadband services for some time to come, if at all. Among them will be people who already face disadvantages and inequities as part of their daily life, those who are unable to pay connection or usage costs, those living in areas without broadband infrastructure, and those not able to use the interface equipment through disability, lack of literacy or computer skills, or because the equipment is not sufficiently easy to use.
The Group believes that these groups should not be isolated from the benefits of the communications age. Although there are important equity and social welfare aspects to this belief, we should also recognise that denying access to productive sections of the community will be costly to us all. Providing access to markets for rural users, greater independence for older people or access to employment for disabled users will provide benefits for both the users and the community in general.
The crucial questions are how and when widespread access can be made available.
A number of people we consulted with responded to the threat of isolation for some people in the community by calling for broadband services to be included in the current universal service arrangements contained in the Telecommunications Act 1991. The Consumers' Telecommunications Network submitted, '...there is a need for an explicit process and mechanism in Australia for universalising socially beneficial broadband service and other new communications technologies.'
We need to be clear, however, about the implications of this proposal and realistically assess our needs for new communications services.
This proposal could imply expanding the current standard telephone service definition from a requirement for telephone access to a requirement for access to a broadband link. In infrastructure terms it could mean large-scale replacement of copper wire links with coaxial-optical fibre. In financial terms, it could mean expenditure of up to $40 billion.
Such an expenditure would be a considerable drain on the resources of both private and public investors, and ultimately consumers and taxpayers. Moreover, we need to ask whether the community would want to spend such sums on a communications system in preference to other expenditure options such as roads and hospitals.
The Australian Telecommunications Industry Association response to the interim report reflected concerns about the cost of universal provision of broadband services when it stated that the '... ramifications of such an approach, if adopted could be considerable. Potentially the losses from supplying loss making broadband services could far exceed the current net loss Telstra incurs in its role as universal service carrier'.
Requiring universal service could be a major impediment to broadband services development. The Group considers that the massive cost limits the relevance of the traditional universal service approach. It is not financially feasible to provide interactive broadband services to all Australian households at this time. As an alternative, the Group proposes a concept of universal reach as a way of describing how to make broadband services available to as much of the community as possible, as quickly as possible. This approach underpins our strategy to provide access to the community in the near term.
Apart from the cost, another important question is whether we can in fact now define what the community needs as a standard communications service. There is already great diversity in communications requirements. Rural users who cannot get access to some specialist health services, for example, may need some form of high-speed interactive information flow; disabled people may need full-motion two-way video to communicate effectively; and some people may simply want to watch pay television.
Community expectations will probably grow and change dramatically as people become aware of an ever-increasing variety of communications services. Nevertheless, while all consumers may eventually aspire to use broadband services, we should not forget that right now there are people who just want a working telephone at an affordable price. Many people are not interested in contributing financially to a range of new services that they consider will be of little use to them.
Thus it is premature to try to define a single basic broadband services requirement for widespread community access. In its response to the interim report AUSTEL submitted that 'universal access is a debate more appropriate after substantial community take-up rather than before the technology has matured'.
However, even in the future a single basic service requirement defined as a particular service or piece of technology may not be appropriate. A more flexible concept of a standard communications service capable of being adapted to a range of user requirements and to the evolution of services over time may be more appropriate than attempting to define a 'one size fits all' standard communications service.
One possible approach could be based on the principle that the community has a right to an effective standard of communications rather than a standard piece of technology. The objective would be to reduce barriers to accessing communications services, and as much as possible provide all users with an equal opportunity to communicate effectively.
The adaptability of the new technology can allow for customised solutions, using different types of communications infrastructure and different capacity to meet differing community needs. For example, blind people will require audio features on their communication services or deaf people will need services such as captioning; delivering these features would probably call for different amounts of bandwidth and user interface capability.
The community is unlikely to be able to afford high-capacity communications for all users in the short term. But if we focus on an effective standard of communications, it may be possible to deliver equality of opportunity to communicate at a reasonable cost by matching the needs of the user with the communications capacity provided, rather than giving costly uniform capacity to all users.
In its submission, the Association for the Blind expressed concern that policies that treat those with disabilities differently from the wider community may result in a 'disability ghetto' approach based on the assumption that specialised services and/or training equipment are all that is required. The definition of an 'effective standard' of communications will obviously be critical (and no doubt controversial) to addressing these concerns and those of the wider community in delivering appropriate, affordable communications services to all.
To achieve these goals the concept of an effective standard itself will require further research and refinement. The Group considers that a Commonwealth government research agency, such as the Bureau of Transport and Communications Economics, would be appropriately placed to conduct this research. The results of this research together with input from consumers, from carriers and service providers and from government will provide the basis for a clear and comprehensive view of the community's communications requirements in the communications age.
The Group recommends that a Commonwealth government research agency, such as the Bureau of Transport and Communications Economics, should be funded to co-ordinate a program of social research to identify the needs of particular groups of telecommunications consumers that are not currently being met.
The question of funding is fundamental to how and when new services might be delivered to the wider community.
Cross-subsidies have been used for the provision of standard telephone services. Profitable services have financed the extension and maintenance of communications infrastructure in unprofitable areas, which are typically rural and have lower population densities. A number of community groups and the Kelty taskforce report, Developing Australia - a regional perspective, have called for the continued use of cross-subsidisation to fund infrastructure roll-out for enhanced communications services.
In discussions with the Expert Group, community groups questioned why those who will not receive broadband services in the near future will be cross-subsidising the roll-out of broadband services in other locations. Rural and remote users have been particularly opposed to extending broadband services in metropolitan areas at the expense of upgrading what they see as inadequate facilities in outlying areas. Community groups argued that the current universal service funding arrangements (a form of cross-subsidisation) should be expanded to finance the roll out of broadband services to areas of low population density.
If broadband services become a basic communications requirement, consideration will need to be given to how to fund the roll-out of these services to areas of lower population density. Essentially, the options involve either some form of cross-subsidy or direct government funding. Since this question is directly related to the industry structure and regulatory environment to operate after the telecommunications duopoly ceases in 1997, the Group considers that it should be examined as part of the 1997 Telecommunications Review being conducted by the Department of Communications and the Arts.
National seminar series - future communications technologies:
Issues and opportunities
During October 1994 the Broadband Services Expert Group and Telstra sponsored a series of seminars on future communications technologies. The seminars, which were open to the public, sought to engage the community and small business sectors in assessing the issues and opportunities associated with these technologies. The seminars were held around Australia and involved a wide cross-section of groups from the community. Particular attention was paid to exploring the needs of groups often marginalised in the discussion of future communications services, such as small business, the disabled, rural and remote users, people from non-English speaking backgrounds, low income groups, older people and Aboriginal and Torres Strait Islander peoples.
The seminar participants used workshops to explore issues associated with particular groups in the community, and to discuss broad policy issues relating to future communications technologies.
Access and affordability were themes repeatedly stressed during the seminars by both residential consumers and small business participants.
Throughout the seminar process, participants expressed concern about the possibility of social inequalities being increased through the limited availability of new communications technologies. Groups who felt they had limited access to existing technologies, such as low-income consumers and rural and remote users, were particularly concerned that they would be left behind.
Many participants were enthusiastic about the potential for new services to meet the special needs of particular population groups. New opportunities for disabled people to work from home, or for people from non-English speaking backgrounds to keep in touch with their communities, were seen as significant enhancements to lifestyles. Older users and rural and remote consumers saw possibilities for reducing isolation, while small businesses saw possibilities for improved customer service and new types of business. Lack of awareness of the availability of new services and lack of technological literacy were widely seen as hampering the extensive use of new communications services throughout the community.
Participants from a range of backgrounds showed a strong interest in being consulted by government and by providers of services and products. Accessible, properly structured information and education programs were seen as vital, and the lack of such information was seen as a significant gap in the present environment.
There was a strong sense among participants that social equity and access issues should be at the core of public policy. A flexible definition of the basic services that should be universally available, taking into account developments in telecommunications and changing expectations, was seen as the key means of addressing these issues. Provision of advanced telecommunications technologies at community access points was also seen as an important way of extending services to groups that might otherwise be neglected.
Shaping the evolution
If we are to maximise and distribute the benefits of the communications society we must seek to anticipate and shape its evolution. Inevitably, this will involve some trade-offs between the risk of going the wrong way and the risk of doing nothing.
Broadband services will probably be a key medium of our social and economic life within 10 years. Different sections of society will, however, use networked services at different stages of their evolution. Younger generations will doubtless adapt to, and even revel in, the new electronic environment earlier than older generations. Those employed in information-based occupations will have a far greater opportunity to use the new services than those employed elsewhere. Higher income earners will be able to buy into the communications age before those with lower disposable incomes.
The Group considers it is vital that we encourage participation by all sections of the community in the use of enhanced communications services, not just the 'information rich'. Small business and community groups placed heavy emphasis during the consultative process on the need to provide easily accessible information and training. This was seen as particularly important in encouraging women to use the new technology. The task is to provide the opportunity for the entire community to become aware of, to use and to train with new communications services.
The Group's concept of universal reach involves making broadband services available to as much of the community as possible as quickly as possible. To do this, the Group proposes a strategy based on developing community access points in schools, libraries, medical and community centres.
Education will be a key element in training for the communications age. By providing enhanced communications links to schools throughout Australia we can invest in the future of the next generation and put in place a valuable broadband training mechanism that will permeate society as they replace their parents in the workforce. At the same time we can ensure that education of the highest quality is delivered to our students regardless of their location or the wealth of particular schools.
Communications links to libraries will also be critical. Libraries are an essential community access point for the delivery of information. Already larger libraries are making electronic information a basic tool of the trade. Providing enhanced communications links to all libraries will vastly increase access to the common store of knowledge and demonstrate the value of participating in the communications age.
There is also an argument for the linking of health and medical facilities. Evidence from overseas suggests that the use of imaging technology and the digitisation of patient records has significantly reduced costs and improved the quality of care. In Australia there are already a number of initiatives to develop high-capacity communications links to overcome isolation problems faced by doctors in both urban and rural areas. Links to health and medical facilities in an Australia-wide network (utilising wherever possible existing State and Territory medical network facilities) could bring significant improvements in the quality of health care while reducing the cost of delivery.
Finally, community access points outside schools, libraries and medical facilities will be necessary in urban and rural areas. As with the early days of the telephone, there will need to be places where the general public can go to use the information network, to communicate with others and participate in social, cultural or economic information flows. These places could take the form of community information kiosks which offer client services and could be located in public centres, council buildings or retail areas within a locality. Community groups emphasised the importance of such facilities for low-income consumers.
They could also become important commercial centres, improving employment prospects and income-earning capacity for urban and rural users through telecommuting. The centres should be linked into State, Territory, Local and Commonwealth government initiatives for small business, regional development, community services, and even the political process. This would offer considerable scope for an improvement in the quality and effectiveness of the delivery of government services at a greatly reduced cost.
These proposals raise many implementation issues, including the types of communications links, the location of such links, cooperation between State, Territory and Commonwealth governments and costs.
Connections to community access points are likely to be the most expensive initial outlay in providing enhanced communications services. The Group considers that these links are a basic infrastructure requirement that will provide an essential service while at the same time offering the opportunity for improved government services at a reduced cost.
The Group therefore believes that the State and Territory and Commonwealth governments should contribute equally to the provision of these connections. Preliminary estimates by the Communications Futures Project of the Bureau of Transport and Communications Economics, based on advice from Telstra, indicate that the additional capital funding costs for an ISDN link to all Australian schools would be $60-90 million. This includes only the additional capital investment that would not normally be recovered by connection, rental and usage charges and primarily relates to rural and remote schools. In addition to these capital costs, there will also be costs in developing appropriate applications for use in schools, providing user interface equipment, and ongoing teacher training to ensure that the opportunities presented by the technology are used to best advantage.
In considering this task it is also important to recognise that this is not just an exercise in training for the communications age. While there will be great benefits in adopting a cohesive national implementation process, each of these proposals stands on its own merits as a socially and economically rational infrastructure investment if we are to continue to provide quality basic services to the community.
The effectiveness of these links in delivering current services does not depend on a terrestrial broadband connection. While a broadband link is likely to be the ultimate goal, most communications services that are currently needed can be delivered over the existing narrowband telephone system (particularly on-line services such as the Internet), with the use of extra capacity services (such as ISDN) or with satellite services.
Existing communications options should be used to satisfy current demand with infrastructure availability evolving to match service requirements.
The Group recognises that these are major proposals involving considerable effort and expense. We are convinced however that if we do not take the initiative Australia will go into the communications age unprepared and divided. There could be few more practical and symbolic objectives for Australians to set themselves than to have these national links in place by the celebration of 100 years of Federation in 2001.
Going to class on the superhighway
It may be the largest school in the world, stretching from Thursday Island to Coober Pedy and on to Exmouth. The pilot of Open Net has allowed 140 tertiary students around the country to submit assignments, receive feedback and advice, and discuss issues with fellow students on a one-to-one basis or in groups. They accessed information services such as library catalogues and course information.
Open Net currently makes use of narrowband services - electronic mail, file transfer, and access to bulletin boards and information services - but it is anticipated that as broadband technology becomes available more sophisticated services will be made available. The pilot was started in September 1994, with the full service expected to come on-line in March 1995. It initially targeted participants in the government funded Open Learning Australia, an initiative to enable people to participate in tertiary education regardless of their academic background. But it will be available to all sectors of education and training as well as being a vehicle for delivering government information. To this end additional funding has been provided to link universities, schools and TAFE colleges.
Open Net is expected to be self-financing, although key to its success will be access and affordability. To keep costs down, existing infrastructure will be utilised wherever possible. Students will be able to access Open Net from their homes (if they have a personal computer and communications software), workplace, public libraries and telecentres. There is also potential to deliver educational services internationally.
The Expert Group recommends that, with the spread of broadband infrastructure, broadband links be provided to all schools, libraries, medical and community centres by the year 2001. The Cooperative Multimedia Centres should also be linked to this network.
In the interim, the Group recommends that schools and libraries be connected to available narrowband digital links for access to information services such as the Internet.
The Group recommends that connections be funded on a dollar-for-dollar basis by the State/Territory and Commonwealth Governments.
Bringing new opportunities to the bush
The struggle to maintain viability in conditions of tough climate and even tougher competition means farming communities are becoming increasingly sophisticated in their use of new technology. A major initiative of the Commonwealth Government is now providing access to computer technology so that farmers can further enhance the management of their businesses.
Some 40 communities already have access to telecentres, where modern farmers can develop new skills in using spreadsheets for planning their finances. They can then use the centres' computers and other office facilities to work on their accounts and develop their business. The Western Australian Government has also funded telecentres in isolated parts of the State. In addition to the computer facilities, farm and town communities are able to use audio and video conferencing to attend meetings and do courses through local training and distance education.
Rural communities are now discovering additional uses for this technology as they adapt it to the needs they realise it can address. For example, women whose families have grown up are choosing to train in the use of office computers and in some cases are working as telecommuters or teleworkers. So, while the telecentres are making more farms and communities viable, they are also enriching the lives of those communities with new job opportunities and allowing them to be more active in the life of the nation.
The telecentres are well received in the communities that have them; the challenge is to extend them to all rural Australians.
Implementation
Difficult implementation questions will inevitably arise. For instance, what is the minimum size of school to which you provide a link, and how do you provide links to isolated facilities? Imaginative and non-standard delivery mechanisms using a variety of technologies and networks will be needed.
But we are not starting from scratch. Local, State and Territory and Commonwealth governments, business and community groups all have communications networks. These networks, and the people who use them, are a valuable resource on which we can build. It will be important to link these networks and coordinate the involvement of the variety of stakeholders, so that critical questions such as the timing of infrastructure roll-out, development of appropriate applications, the provision of user interface equipment, training of trainers, and integration into existing programs and community needs can be sensibly managed.
Funding community access to services will be a key implementation challenge. As mentioned the Group believes that cost of connection should be equally borne by the State and Territory and Commonwealth governments. There will, however, be other costs such as the user interface equipment (such as computers, modems or set top units), provision of content, cost of carriage (local and distance charges) and training. The Group believes that where possible the beneficiaries of the links, be they government programs, business or individuals, should make a contribution to the cost of providing the services.
As general principles, the Expert Group considers that:
- Commercial users should pay on a cost-recovery fee-for-service basis.
- State and Territory and Commonwealth government departments should contribute to on-going costs associated with delivery of program services.
- Where possible, use should be made of private sponsorship.
Interface equipment is a vital element in providing access. This equipment will require ongoing upgrades and replacement and it will need to match the requirements of the user. State and Territory and Commonwealth programs should allow for equipment funding from existing program budgets, particularly since the equipment should improve the quality and variety of government services and reduce costs.
Government funding, private sponsorship and the user-pays principle could also apply to the provision of content for community access points. But a considerable amount of content is already available for the community. Governments, business, tertiary education centres and community broadcasters have produced content for their own needs that would be of value to a wide range of community groups if it were accessible.
Access and carriage charges for information services remain a significant potential constraint for community use of services. There are a number of options for funding the cost of carriage. Government agencies and the private sector could continue to expand the growing practice of providing toll-free access to information services. Government programs could subsidise the costs of access and carriage where government benefits from the service (for example, schools access to and use of the Internet should be funded as part of the education budget). Commercial users of community access points could pay on a cost-recovery basis.
Finally, public access points will be vital training mechanisms, but formal training mechanisms may also be needed for some key community trainers such as librarians and teachers. The Group considers that funding for new infrastructure and technology courses should be provided for formal courses through organisations such as TAFE, where people with special learning requirements or interests could go to learn and apply the new services. Training and information programs should also be funded for community organisations with specific language and cultural needs.
The Expert Group recommends that, as communications services evolve:
- Funding for extension of new infrastructure and technology to educational institutions (such as TAFEs) should include significant training and support components.
- Funds should be made available to community organisations for targeted training programs.
- Government funded support for training facilities and personnel should be made available at libraries and telecentres.
Regulation
In its interim report the Group stated that 'the benefits of a broadband network will be maximised if non-discriminatory access is available to all service providers'. Nothing has occurred since then to change the Group's view that open and equitable access arrangements, for both consumers and providers of services, will be a key issue in realising the benefits of the new communications services. However the Group agrees with the view of the Minister for Communications and the Arts in his statement of 24 November 1994 supporting open access, that the Government needs to 'strike the right balance between encouraging cable roll out and introducing broadband services in the long term'.
The Minister went on to say that 'open access is necessary to promote competition, diversity and the development of competition' and 'the Government will act to ensure that broadband services will comply with the provisions of the Telecommunications Act relating to interconnection and non-discriminatory access'.
The Group supports a regulatory framework that promotes choice, quality and affordability of content and services to the community. It wants to see a vibrant, competitive communications industry composed of successful content, service provider and communications infrastructure elements. Nevertheless the Group recognises that these elements will be predominantly private sector financed and consequently a commercial return on investment is fundamental to the provision of services.
The Group firmly believes that these objectives can be met by establishing a regulatory regime that promotes open and equitable access for users of services, service providers and broadband carriers.
Choice and delivery of services
Users of broadband services should be able to select information and services from a range of potential providers to ensure a rich diversity in cultural, social and economic views and opportunities. Providers of services have a crucial role to play in delivering content to consumers.
The two main issues for user choice and delivery of services are the price consumers are required to pay and the opportunity for content providers to reach consumers.
Excessive connection and carriage charges will limit user access and reduce the uptake of enhanced narrowband and broadband services by business and the community. If users, and the nation as a whole, are to realise the benefits of these services it is important that a range of pricing packages be developed to encourage greater use. Diversity and flexibility in pricing structures (similar to that in the mobile telephone market) will promote choice and widespread access for users.
Pricing will also be critical for service delivery. It is important that pricing be responsive to competition and thus be driven closer to the costs of provision (including a commercial rate of return) for both infrastructure and content. Non-commercial pricing arrangements could result in the undersupply or oversupply of content and infrastructure, possibly leading to a boom-bust cycle that could adversely affect the development of the communications industry.
Several submitters argued that separation of carriage and content for telecommunications carriers is critical to identifying cross-subsidies that might restrict the ability of service providers to compete on a fair and efficient basis. On the other hand, network operators themselves need commercial flexibility in developing and offering broadband services. Artificially separating 'carriage' from other aspects will hinder their ability to develop services and to recover their investment in infrastructure.
While accepting this, the Group considers there is a role for identification of cross-subsidies (or pricing transparency) to provide signals to new entrants and existing competitors of the potential for imbalance in service provision. It also alerts regulators concerned with anti-competitive behaviour.
The Group believes that an efficient service industry, and an internationally competitive communications industry, will require pricing arrangements that provide a commercial rate of return for both carriage and content operators. While noting that there is regulation dealing with anti-competitive behaviour, the Group supports pricing transparency as an important element in achieving equitable commercially based pricing arrangements.
Development of infrastructure
Pay television is a major factor in funding the roll-out of broadband infrastructure. Without commercial returns from pay television in the short term it is likely that the opportunity for access to broadband services would be delayed.
The Minister for Communications and the Arts' statement on access acknowledged that commercial factors were a major consideration in not applying the general interconnection and access principles of the Telecommunications Act until at least 1 July 1997. The Minister emphasised however that this exemption did not mean 'closed' or 'exclusive' access to pay television services.
The Trade Practices Act will be used to deal with anti-competitive conduct and at least one carrier has indicated that it will welcome complementary service providers on appropriate commercial terms and conditions. The Government has also indicated that it will encourage broadband carriers to make available some capacity on their networks for community access and education.
The Group considers that the period leading up to the introduction of interactive broadband services will be critical in the development of services. It is an important transitional period during which a commercial return for investment in cable will underpin the opportunity to access broadband services when they develop. As the Minister stated,
At first glance it may be appealing to simply require totally open access by extending the relevant sections of the Telecommunications Act to Pay TV. This would however deny the builders of the cable a share of the revenues from content provision, as well as carriage, and the end result could be to delay the rollout of cable in Australia.
The Group supports the Government's approach in seeking to balance the commercial requirements of infrastructure providers with the longer term objective of providing open access for broadband services. In particular the Group supports the Minister's encouragement to consortia involved in the provision of pay television to make available some capacity on their networks for community access and education. The Group considers it important that both the community and industry are closely involved in the development of these arrangements.
Broadband carriers
The structure for the broadband cable industry is already beginning to take shape. Several consortia have indicated an interest in rolling out broadband cable in selected urban areas. This has led to speculation that there may be unnecessary duplication of broadband cable in commercially attractive areas, and no broadband services in others.
Duplication can bring with it consumer benefits from greater competition as well as costs. In any event, duplication will only occur if infrastructure investors believe it will be profitable in the longer term. A second infrastructure investor in a particular area will need to carefully assess demand, cashflows and the pricing response of the existing carrier before investing. Potential revenues from narrowband services such as telephony will be a major short-term factor in determining profitability; nevertheless, it appears that new entrants will be reluctant to undertake large-scale duplication of infrastructure outside areas of high demand.
The incentive for unnecessary duplication of infrastructure will also depend on the degree of access that providers of services and potential infrastructure competitors have to existing broadband cable.
In the longer term, open access arrangements are likely to reduce any incentive for unnecessary duplication by ensuring that a new entrant's decision is based, as far as possible, on demand factors rather than an inability to gain access at a reasonable price to existing infrastructure. If access to broadband cable is available at a reasonable, commercially negotiated price, then there is likely to be an incentive to fully utilise the existing cable before building another. Of course, this price must represent a fair return on investment if access arrangements are not to act as a brake on infrastructure roll-out.
Open access for service providers to infrastructure will be important in overcoming content distribution problems by providing outlets for material. At a time when there are concerns about concentration of media ownership, open access will also be vital in allowing consumers access to the plurality and diversity of views to be expressed and communicated in our society.
Although open access arrangements and effective competition between service providers will be important in ensuring that the community receives the benefits of new communications services at affordable prices, consumer safeguards will also be needed to ensure that the rights of consumers are protected in the competitive environment.
The need for consumer safeguards will apply equally to narrowband and broadband communications services; safeguards will need to deal with matters such as the definition of the standard telephone service, funding of universal service obligations, consumer complaints procedures and carrier access powers. These matters must be comprehensively examined as part of the Telecommunications Review. Licensing for broadband carriers should be consistent with post 1997 licensing of telecommunications carriers.
The Expert Group recommends that, once interactive services develop, the communications regulatory regime should promote open and equitable access arrangements for users, service providers and broadband carriers (recognising the necessity of a period of transition from pay television to broadband services to ensure there is no delay in the roll-out of cable in Australia). This should be based on diverse and flexible pricing arrangements, pricing transparency in the provision of carriage and content, and commercially negotiated connection charges.
Ownership and control
Ownership and control of broadcasting services and newspapers are subject to considerable regulation in Australia. This has been a response to concerns about the concentration of influence in the media and about the promotion of national culture and the national interest. There has been recent speculation that the combination of convergence and globalisation will render the regulatory framework for these matters irrelevant. Cross-media rules may become less relevant as news and entertainment services are delivered in the same digital medium, incorporating text and audiovisual features. Foreign ownership may not have the same connotations when news and entertainment services are distributed globally.
It is difficult to anticipate the industry structures that will emerge in the communications age. While we look forward to abundant capacity and a multiplicity of providers of information and entertainment services, dominant players may still emerge. The foundations of existing ownership and control regulatons rest on the aims of achieving diversity of opinions and content so that the concerns and interests of Australian society are reflected. These objectives will be no less relevant in the future. To the extent that it is possible to suggest approaches in such a dynamic environment, the Group considers that open access arrangements, for service providers and ultimately for the general community, will provide an important check on the dominance of a few participants. As the new industries evolve, government should continue to monitor the efficacy of the regulatory regime in restricting the concentration of influence and in supporting national culture and debate.
Privacy
The communications environment of the future will be rich in stores of personal information and characterised by intricate patterns of networked interaction between users, government and commercial entities. The Group believes that privacy as we currently understand it will be problematic in such an environment. Participants in our consultative process expressed concern at the prospect of the privacy of network users being eroded. Small businesses emphasised the importance of security of networked information.
The interim report identified the proliferation of participants on the networks as a key feature of the future communications environment. The Group expressed concern about the lack of control of personal information that might develop as collection points multiply on the networks. The report also noted the fragmentation of regulation in the broadband environment.
Since the release of the interim report a number of initiatives have been announced by the Government in the area of privacy and telecommunications. Privacy will also be examined as part of the review of telecommunications policy after 1997. Concern about privacy in relation to telecommunications needs to be seen against the backdrop of more general concerns about the collection, storage and use of personal information. These tend to be heightened when juxtaposed against the capabilities of new communications services, but the implications are not confined to the telecommunications sector. For example, we expect commercial transactions in the broadband environment to draw in a range of participants from other industries (such as the retail and service sectors), with different cultures and practices for storing and using information.
An increasing number of non-telecommunications participants are involved in storing and using personal information generated on networks and it is no longer appropriate to concentrate on the telecommunications industry as a distinct sector for privacy matters.
Although there are a range of outstanding privacy issues, such as telemarketing and encryption, the principal task is to develop a framework for continuing management of these matters.
The Privacy Act provides a framework embodying the Information Privacy Principles, a comprehensive set of guidelines that have been endorsed internationally. In the Group's opinion this is the appropriate framework within which to manage future privacy concerns. These are matters that span industries, are national or international in scope and require expertise about privacy. For example, we believe that it will be necessary to investigate ways in which the privacy of Australian residents can be protected by service providers operating outside national boundaries.
The Group does, however, recognise the need for flexibility. Flexibility could be retained if network operators and providers of content and services were to develop codes of practice, as is the case in New Zealand, with some quality control being exercised by the Privacy Commissioner. Complaints could be handled through the industry initially, with the Privacy Commissioner as a point of review.
The co-regulatory approach allows industry participants to develop practices appropriate for the relationship they have with their customers, while meeting minimum standards. Current legislative obligations for carriers and service providers could be retained. The Privacy Act would need to be amended to allow for this new approach. Its coverage would need to be extended to new areas of the private sector and the range of procedures within it broadened to allow for the development of industry codes.
The Group believes the codes should, as a minimum,
- provide consumer advice on the effects on privacy of new technology and network upgrades;
- include an obligation to consult widely on privacy issues associated with new technology;
- provide that consumers will not have to pay extra for basic privacy;
- specify appropriate avenues of complaint and redress.
The Group also notes the options available for the protection of privacy through new technology. Encryption systems, in particular, have been suggested as possible solutions to the preservation of privacy. Although the availability of such options is helpful, they may entail additional expense, and they may work against the development of a culture of openness on the networks. Developing a culture of respect for personal information will be as important as technology in preserving privacy in the networked environment.
The perceptions of consumers about what are the key privacy issues should also be studied and taken into account in policy development and in the design of interface systems and customer premises equipment. Definitions of privacy will change in a new environment that may well be more intrusive, and where there are technologies that support greater control by consumers they should be developed to meet this need.
The Expert Group recommends that the privacy of users of advanced networks be protected by developing a self-regulatory scheme for network participants within the framework of the Privacy Act.
Copyright
The tone of recent discussion about the future of copyright in the digital, networked environment has varied markedly. Some commentators have expressed confidence that existing laws and commercial practices will adapt; others have speculated on the emergence of a new model to replace the existing system of rights held by creators and distributors of particular categories of copyright material.
The Group received submissions and representations that touched on these matters, but the complexity of the issues involved is such that they deserve separate, detailed consideration.
The Group endorses the key recommendation of the Copyright Convergence Group that a new right of transmission to the public be created. However, the Copyright Convergence Group also identified other matters needing further attention, noting such fundamental concepts as publication, copying and reproduction. Some of these matters are of particular importance to developers of new services, and to providers of existing services in new forms or through new channels of distribution.
The Commonwealth Government has been responsive to content creators' and distributors' concerns about the impact of new technologies. The Group welcomes the wide ranging review of the Copyright Act by the Copyright Law Review Committee, as announced in Creative Nation. Protection of copyright in the broadband environment will be one of the areas for review. We expect that the review, in conjunction with the Review of Australian Copyright Collecting Societies, will examine many of the outstanding matters identified by the Copyright Convergence Group.
In particular, several matters of concern remain for the multimedia industry, which relies to a large extent on existing copyright material. The copyright status of a multimedia work, taken as a whole, is unclear and it takes a long time to obtain copyright clearances for material used in multimedia products. This is particularly so when owners of copyright are difficult to trace.
Other matters not specifically identified by the Copyright Convergence Group but emphasised by parts of the multimedia industry were that the ownership of a multimedia work and the duration of copyright for a multimedia work are not clear.
In its Commerce in Content report on the multimedia industry, Cutler and Company noted that having a sophisticated copyright regime could be a key factor in attracting investment to the multimedia industry in Australia. The Group has emphasised the potential of this industry and is concerned lest copyright issues become a significant impediment to its development.
Although it recognises that part of the solution to the difficulties faced by the multimedia industry will evolve from negotiations in the marketplace, the Group considers it important that as much certainty as possible be provided as early as possible. The review of the Copyright Act should focus at an early stage on the copyright problems associated with the multimedia industry. The Group also considers that the vulnerability of carriers in this regard should be recognised, and that they should not be liable for merely carrying material that infringes copyright.
The more general problem of large-scale unauthorised copying and distribution of copyright material on future networks is not amenable to short-term solutions. Some technological solutions have been proposed but their efficacy and (in the case of proposals such as 'metering' of use) market acceptance has yet to be tested. The importance of a fair return for creative work must be emphasised in dealing with copyright issues.
The process of monitoring the impact of technology on the legal framework for intellectual property will be a continuing task. The Copyright Law Review Committee is the appropriate body to assume this role. The Group also recognises that this process has an international dimension and that solutions may need to be negotiated at the international level.
Legal liability
A number of legal issues need to be addressed if Australia, and the world, are to be prepared for the communications age. Liability for information transmitted over networks could be a considerable problem. Defamation actions for messages transmitted over networks could occur (and involve people in more than one country), and there could be doubts about who is the publisher of defamatory material. There could also be problems with liability for the accuracy of information transmitted over networks. Who would be responsible, for example, if medical or financial data were transmitted incorrectly (causing health problems or financial loss)? Issues associated with digital transactions, such as digital signatures, also require examination.
The Group notes that the Australian Law Reform Commission has been considering whether there is a need for a study of the legal implications of the new information technologies. The Group would strongly encourage such a study.
Censorship
In general, broadband services should comply with community standards expressed in current legislation and prevailing community tastes and concerns. However, defining and maintaining community standards for information and entertainment services will be difficult on future networks. The recent report of the Computer Bulletin Board Task Force highlighted enforcement difficulties with the combination of new telecommunications and computing technologies. Even in the narrowband environment, the report noted, a comprehensive regulatory system imposed by government would be prohibitively costly. The Task Force recommended industry guidelines, backed by a complaints mechanism.
In a sophisticated network environment, we expect complex channels to develop for the circulation of information and for interpersonal communication. Such developments will increase the cost of comprehensive regulation of the flow of information, as virtual gateways and outlets proliferate in response to greater interconnectivity. It will be difficult to restrict users' access to sites with contentious material, particularly when sites are outside Australia.
Nonetheless, the Group considers that commercial services on the networks of the future should have an obligation to restrict and prohibit offensive material. Many of the services on the new networks - for example video-on-demand, or computer games - will be governed by existing or proposed systems of classification. Where they are not, classification obligations should be imposed on commercial services to the extent necessary to inhibit the availability of offensive material equivalent to the 'refused classification' category for other types of material.
The Group notes that the legal framework for some networked services is awkward because on-demand and point-to-point services are not subject to the same regulatory regime as broadcasting services. Dial-up audio services are regulated by an industry code of practice.
Education campaigns focusing on community standards issues may be needed to make parents more aware of the implications of broadband networking. It will also be important to support parents in their choices. For example, the Broadcasting Services Act requires that subscription television broadcasting licensees ensure that access to some programs is restricted by disabling devices. Features such as personal identification numbers are used to do this. Many providers of Internet services offer the capacity to restrict access to particular sites, and network management products are being developed which allow users to restrict access to unsuitable programs. In the Group's opinion such facilities should be compulsory where appropriate.
Cooperation of providers of services and users will be needed to control offensive and illegal material in the virtual environment. For enforcement purposes, it will be important to set priorities to determine the matters of greatest concern. Carriers of broadband services should not be held responsible for breaches of classification regulations or guidelines by content providers.
These are all matters that warrant continued monitoring to determine the scale of the problem and the depth of concern within the community. This task could be undertaken by the Office of Film and Literature Classification.
The Expert Group recommends that existing classification systems be applied to equivalent material commercially available on the new networks.
The Expert Group recommends that network operators and service providers be obliged to offer facilities, such as personal identification numbers, through which parents can restrict access to particular types of material.