The Coalitions plan for real action on

Broadband and Telecommunications

EXECUTIVE SUMMARY
Australians need fast, reliable and affordable broadband services delivered over an affordable highspeed broadband network using the best mix of optical fibre, wireless, DSL and satellite technologies. The Coalitions plan will deliver a uniform national broadband network, under which 97 percent of premises are able to be served by high speed networks capable of delivering from 100 Mbps down to a minimum of 12 Mbps peak speed, using a combination of technologies including HFC, DSL and fixed wireless. This will help businesses to be more productive, reduce costs, reach more customers here and overseas and employ more Australians. It will help families with access to education, information and medical services. Labor is heading down the wrong track. Its government owned and government run broadband network will be a taxpayer funded white elephant when it is completed in eight years time. It does nothing to deliver lower prices. It just substitutes one monopoly for another. It gives no priority to those who do not get an adequate service today. Under Labors plan Australians will be waiting up to eight years before they see a change. The Coalition will cancel Labors reckless and expensive National Broadband Network. Instead of creating a new, inefficient Government run monopoly, the Coalition will create a vibrant, private sector-based broadband market, with Government involved to encourage competition and ensure services reach all Australians. The Coalitions Plan for Real Action on Broadband and Telecommunications will: 1. Establish a National Broadband Commission The Coalition will create a National Broadband Commission to design and manage a competitive selection process to select the private sector companies which will execute the various programmes comprising the Coalitions Plan for Real Action on Broadband and Telecommunications. 2. Prepare a National Broadband Database The Coalition will direct the National Broadband Commission to gather and make publicly available high quality information about the availability of broadband services on a premises by premises basis across Australia, through building and maintaining a detailed database (the National Broadband Database). 3. Establish a Fixed Broadband Optimisation Programme The Coalition will serve the priority areas quickly by identifying the areas where Australians are underserved particularly outer metropolitan areas and rural and remote areas and filling

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

those gaps as quickly as possible by committing $750 million of funding for a Fixed Broadband Optimisation grant programme to significantly increase the number of households which can receive a DSL service or high speed equivalent. 4. Commit up to $2 billion of Funding for New Fixed Wireless Broadband Networks The Coalition will commit up to $1 billion in grant funding for new fixed wireless networks in rural and remote Australia. We will commit up to an additional $1 billion in investment funding for new fixed wireless networks in metropolitan Australia, with an emphasis on outer metropolitan areas. Through these actions the Coalition will deliver uniform nationwide availability of high-speed broadband so that by 2016 Australia achieves a national broadband baseline with 97 percent of premises able to be served by high-speed networks, using a combination of technologies including DSL, fixed wireless and other technologies such as Hybrid Fibre-Coaxial (HFC). We will ensure that all such premises, wherever they are in Australia, are able to receive services at prices comparable to those for similar services in metropolitan areas. 5. Fund new satellite services for the remaining three percent of the population not covered by other technology The Coalition will provide grant funding of $700 million to support the provision of improved satellite delivered broadband services to the remaining three percent of the population who do not have access to other technologies. 6. Break the backhaul bottleneck by establishing a new national fibre optic network to deliver competitive backhaul The Coalition will ensure lasting competition and stimulate new private sector broadband networks by committing up to $2.75 billion in funding (with the expectation of leveraging at least $750 million in additional private sector funding) to create a nation-wide competitive fibre optic backbone by 2017. This will ensure two lanes of backhaul fibre each accessible by any telecommunications company to provide multi-technology broadband. 7. Implement Pricing and other regulation to support competition and Broadband The Coalition will legislate to allow the ACCC to set access pricing to support broadband competition. 8. Provide a way forward to a higher bandwidth, more fibre-intensive Australia The Coalition will establish a commercial and technical platform for much greater fibre penetration over coming years, particularly by stimulating demand for broadband services and in turn stimulating investment by the private sector (building on government contributions such as new and more competitively priced backhaul). 9. Conduct a major review of the Universal Service Obligation The Coalition supports the need for enhanced consumer protections within the existing Universal Service Obligation Framework and will enact intermediate improvements to the USO framework.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

In addition the Coalition would task the NBC with examining the proposal of the Glasson Review for a new and broader framework to be known as the Communications Service Standard (CSS) as the rollout of the new infrastructure and the grants that will be provided in this policy are delivered, together with communications infrastructure that is being built by the private sector. 10. Review greenfields estates The Coalition will conduct an urgent review of whether to mandate that all greenfields connections must be fibre, with a view to implementing any new arrangements from 1 January 2012 at the earliest. 11. Support consumers The Coalition will ensure that consumers have the tools and resources to make the right choices for them regarding their communication needs. 12. Maintain Do Not Call Register but oppose extending it to business phone numbers The Coalition remains opposed to extending the Do Not Call Register to business telephone numbers. 13. Target mobile phone coverage blackspots The Coalition will provide grant funding to address mobile coverage blackspots in urban and rural areas. We will provide $30 million to support the deployment of the telecommunications infrastructure necessary to ensure communities have adequate and reliable mobile phone coverage.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

HOW LABOR HAS FAILED

Labor has made major mistakes in broadband policy. Shortly after coming to government, Labor cancelled the Howard Governments contract with the OPEL consortium to deliver a broadband network in outer suburban and rural and remote Australia. Had this contract proceeded, hundreds of thousands of homes would now be receiving broadband services instead many now face a long wait before services are available under Labors NBN. The Labor Government sought to implement a policy of building a fibre-to-the-node (FTTN) network to 98 percent of the population. It failed because Labors FTTN plan was flawed from the start. A National Audit Office inquiry found that the proposal was never likely to succeed. The tender wasted $30 million, including $17 million of taxpayers funds. In April 2009 the Labor Government dumped its failed FTTN plan. To cover up its failure, Labor made a political decision to announce its poorly thought through plan for a fibre-to-the-premises (FTTP) network. That is Labors so-called National Broadband Network (NBN). Labors NBN is riddled with problems. The NBN will cost $43 billion if every assumption is met, if nothing goes wrong, if there are no delays, if there are no cost blow-outs in any of the eight years of the project build. The Implementation Study says taxpayers must put up a minimum $26 billion. As losses mount, taxpayers will bear more of a burden. Given the Rudd-Gillard Governments track record of poor execution, there is every reason to doubt that the NBN will be built on time and on budget. The NBN is enormously expensive because of the need to build fibre all the way to each home served, regardless of whether they will use the service or not.1 The NBN may never attract enough customers or revenue to cover its costs. Even if it does, the Implementation Study says it will only earn a very low rate of return between six and seven percent. NBN Co will be the dominant fixed line player and monopoly network operator. As regulator and owner, government will face a profound conflict of interest. NBNs management will inevitably push to be allowed to enter retail markets, competing with existing private sector players. Labor recently published draft legislation permitting this if the Minister authorises it. There will be a strong incentive to allow this, particularly as time goes by and pressure mounts to demonstrate a commercial return.

1.

Implementation Study p 19: there will be 12 million premises by 2018. Implementation Study p 17: 93 percent of premises will be connected to fibre.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

NBN is a hugely expensive bet on a particular technology (FTTP), but it is not a bet which should be made with taxpayers funds especially with the surging popularity of wireless broadband. For the three years to 2009, mobile broadband subscribers increased by an average of 157 percent per year.2 Twenty five percent of Australians are accessing the Internet either via mobile or fixed wireless networks.3 At the same time, the speeds capable of being delivered over wireless are increasing constantly. Telstra recently announced that the theoretical speeds available over its wireless network had increased from 21Mbs to 42Mbs, with an increase to 84Mbs only a year away.4

2. 3. 4.

Buddecom data provided by Parliamentary Library. Australian Bureau of Statistics, 8153.0 Internet Activity, Australia, June 2009. M Bingemann, Telstra doubles wireless speed, The Australian, 16 February 2010, 31.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

The Coalition will: 1. Establish a National Broadband Commission The Coalition will establish a National Broadband Commission (NBC) that will be charged with implementing the Coalitions Plan for Real Action on Broadband and Telecommunications. The NBC is expected to complete its task within ten years. We will review the NBC after ten years.5 By drawing on selected personnel and resources of the current NBN Co and telecommunications regulators such as ACMA and the ACCC, the NBC will be able to start immediately. It will take full advantage of the work done and expertise held by NBN Co. As the NBC will be a much smaller and more focussed agency, its management will be required to prepare a new business plan for approval by the Minister.6 The NBC will operate under a board appointed by the Minister. In view of the priority attached to broadband services for rural and remote Australia, the board of NBC will include people with experience and knowledge of rural telecommunications. The NBCs role will be to design and manage a competitive selection process to select the private sector companies which will execute the various programmes comprising the Coalitions Plan for Real Action on Broadband and Telecommunications. The NBC will contract with those companies and supervise their performance. The selection criteria to be used, in choosing the private sector companies to execute the programmes, will include: capacity to meet the governments policy objectives (including the experience and capabilities of the company), price, value for money and capacity to deliver services within acceptable time frames. The NBC priority will be to commence work on new networks and services in the areas of greatest need. The NBC will be required to achieve its objectives at the lowest possible net cost to the community. If it can spend less than the amount allocated, it will be required to do so.

5.

There would be a presumption in favour of NBC being wound up, unless the review finds that there remain outstanding serious issues concerning broadband that require NBCs continuing operation. When it is wound up, its monitoring and reporting functions will be transferred to another government agency such as ACMA. NBC will also have specific responsibility for managing the transition for the small number of customers who as at 1 August 2010 are receiving a service under the NBN trial in three locations in Tasmania. This will include conducting a tender for parties wishing to continue to operate the installed network in these three locations so that these customers can receive continued service.

6.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

The Coalition will require that all networks funded under the Plan for Real Action on Broadband and Telecommunications be open access networks. That is, the operator of the network must provide access to the network to any other telecommunications carrier or carriage service provider, to allow them to use the network to provide competing retail services. Access prices will be set under the telecommunications access regime administered by the ACCC. To assist in achieving the most rapid possible rollout of services, the Coalition will take a proactive approach to spectrum allocation to support its broadband initiatives. 2. Prepare a National Broadband Database To properly undertake its functions, the Coalition will direct the National Broadband Commission to gather and make publicly available high quality information about the availability of broadband services on a premises by premises basis across Australia, through building and maintaining a detailed database (the National Broadband Database). The National Broadband Database will be based on the geospatial modelling of premises conducted as part of the Labor Governments Implementation Study. This will be supplemented with detailed sampling fieldwork. The database will be made available for public feedback within six months of the Coalition taking office. The database will underpin all competitive selection processes conducted by the NBC. 3. Establish a Fixed Broadband Optimisation Programme The Coalition will fund up to $750 million for a Fixed Broadband Optimisation grant programme to significantly increase the number of households which can receive a DSL service or an effective wireline alternative (such as HFC). The most commonly used technology to deliver broadband is DSL. However, there are many homes which today cannot receive DSL services. The key reasons are that their telephone line has a pair gain system or is delivered via a RIM (remote integrated multiplexer) two technologies used extensively by Telstra in the past which unintendedly prevent DSL being delivered over the line. It is likely that at least one million homes are affected.7 Therefore one of the most rapid and cost-effective ways to increase broadband availability at reasonable speeds is to fund the removal of DSL blockers such as pair gain systems and RIMs. Funding will be available anywhere in Australia, as even in rural and remote areas there are homes which could be served by DSL today but are not.8

7.

Implementation Study p 190 notes that Telstra installed up to 1.2 million pair gain lines which make it impossible to receive DSL; that pair gain restricts many households to slow dial-up Internet, even in 2010 and estimates the cost of remediating all of these lines at $2 billion. Implementation Study p 282 notes that, even in the last seven percent, there are around 400,000 premises which have the capacity to receive broadband over DSL but cannot today because DSLAMs have not been installed in the exchanges serving those premises.

8.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

Where DSL is currently not available the emphasis will be on using the best available, most cost-effective technology to provide service to those areas. This will put those areas on a technology base which allows competition and innovation to drive continuing improvements in service over time. The design of the Fixed Broadband Optimisation programme will be based on the National Broadband Database. The Fixed Broadband Optimisation programme will carry out the following activities: installing DSLAMs in exchanges which do not have them; upgrading exchanges to ASDL2+ if they have earlier generation DSLAMs installed; remediating pair gain lines;9 redesigning networks to permit delivery of broadband services in areas currently served by RIMs; and providing broadband services to premises that cannot receive DSL today, using other technologies that should be more economic. 4. Commit up to $2 Billion of Funding for New Fixed Wireless Broadband Networks The Coalition will commit up to $2 billion to meet urgent broadband needs in outer metropolitan Australia and rural and remote Australia. The Coalition believes that our broadband policy objectives should be to fill the gaps as quickly and efficiently as possible and to establish the uniform availability of broadband at a reasonable speed and reasonable price. It is not our intention to replace private enterprise with a new government bureaucracy; rather, our focus is on correcting market failure. To execute the Coalitions plan, funding for new wireless broadband networks will be allocated in two components: Grant funding of $1 billion commencing within one year of the Coalition taking office, in fixed wireless broadband networks serving rural and remote Australia. Investment funding10 of $1 billion in new fixed wireless networks in metropolitan Australia with an emphasis on outer metropolitan areas (or alternative technologies if they prove superior under the competitive selection process and if the coverage, price and open access requirements are met).

9.

Removing DSL blockers will allow premises to receive DSL which cannot receive it today, at the full range of speeds at which DSL is delivered (which in turn depends on distance from the exchange). That is, this programme is about increasing the availability of DSL, but it does not involve a speed commitment. 10. Investment funding will generate a financial return to the Commonwealth. Consistent with the accounting treatment proposed by the Labor Government for its national broadband network, this funding will not form part of the Commonwealths Budget. The NBC will advise on the appropriate rate of return target for this investment, but indicatively we envisage a rate of around the long term bond rate plus one to two percent would be appropriate. The selection criteria will include those applicable to the grant funded programmes described elsewhere in this policy, along with additional criteria: the extent of investment committed by the private sector partner; capacity to meet the governments rate of return target; and capacity for the government to exit its investment and receive its required return within acceptable time frames.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

Especially in rural and remote Australia, fixed wireless broadband is particularly well suited to meeting these objectives. Fixed wireless networks can be rolled out more quickly than fixed networks; fixed wireless networks have a lower capital cost (reducing the scope of subsidy required and also increasing the probability of private sector entry); and fixed wireless networks perform well as an overlay to fixed networks to fill the gap, for example in areas which are too far from an exchange to receive DSL services. Wireless technology is now in a phase of spectacular development globally. There are many more users on wireless networks than on wireline networks internationally, and the numbers are especially large in the most rapidly growing economies of our region. The very large and growing installed base of customers served on wireless networks is one factor behind the enormous commercial potential of wireless. Another is the rapid take up of devices such as the Kindle and the iPad. This policy is intended to ensure that services are provided to Australians who do not today receive adequate fixed broadband service. Accordingly, the governments contract with wireless network providers will require that they provide a fixed service, and particularly that it is provided over customer premises equipment (CPE) suitable for a fixed service (such as a modem-like device suitable for use with a desktop computer). Providers may also wish to offer other products such as USB modems suitable for use with laptop computers, and even mobile wireless broadband products, but this will not be a requirement under their contract with government. In particular, it will be important to manage spectrum in a way that enables these new fixed wireless networks to complement the plans of the existing mobile operators to upgrade their networks to 4G using Long Term Evolution (LTE) standards that provide for peak network speeds of up to 100Mbps and higher. With backhaul as a major part of the Coalitions policy, private sector operators can begin operations in rural and remote Australia at the same time as new competitive backhaul services funded under this policy begin to come on stream, knowing that they will have access to fibre optic backbone (either immediately or within a reasonably foreseeable period) at prices that maximise their ability to provide affordable service from day one. Wireless broadband makes economic sense and places rural and regional Australia at the frontier of current technologies. To ensure prices to end users in rural and regional Australia are comparable to those for similar services in metropolitan areas, the operator(s) of these wireless broadband networks will be required to provide a service over the network at a price comparable to similar DSL services in metropolitan areas.11 The requirement will apply for the life of the contract (expected to be fifteen years).
11. Retail DSL prices typically start at about $30/month and rise to over $100/month - depending on various factors including download limits, speeds and so on. Wireless services will be sold at comparable prices to these, on the new wireless networks to be built under our policy. This will be achieved by requiring the wireless network operators to sell wholesale services at prices comparable to wholesale DSL services in metropolitan Australia. While wholesale DSL prices are not publicly disclosed, there is a thriving wholesale DSL market. We will task the NBC to monitor wholesale prices for DSL and for the new wire less networks, and to ensure compliance by the new wireless networks with this comparability requirement.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

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The NBC will determine the specific areas comprising metropolitan and rural and remote and will assess the suitability of proposals to serve these areas through the competitive selection process. The Coalition will seek to exit the investments as soon as possible. Unlike Labors approach to the NBN, the Coalition will not seek to exercise managerial control as a corollary of providing investment funding. The specific mechanism for the investment will be determined based upon advice from the NBC. The selected operators will be required to meet strict time requirements, so as to achieve the target of completing the rollout by 2016. 5. Fund new satellite services for the remaining three percent of the population not covered by other technology The Coalition will provide grant funding of $700 million to support the provision of satellite delivered broadband services to the remaining three percent of the population not covered by other technology. This funding will maintain the existing Australian Broadband Guarantee programme which funds broadband services over satellite. While under Labor current funding allocations are dropping, we have allocated additional funding to allow scope for the bandwidth delivered to end users (recently increased to 1024 Kbps) to be further increased.12 The balance of the funding is intended to be used for a structural change to the provision of satellite services to the last three percent of Australian premises, with effect from 2014-15. Specifically, with new Ka band satellites expected to be available shortly, offering significantly improved bandwidth and efficiency compared to todays satellite, our policy allows sufficient funding for a substantial new programme drawing on such new technology. Prior to 2014-15, the NBC will consider and make recommendations on how the additional funds are best used to deliver such a structural change. With funding of $450 million available from that point, the Coalition believes that this is likely to take the form of grant funding to a private sector operator or operators, chosen through a competitive selection process. Such a selection process will be designed to determine the best available speed and quality of service. We will require that the service provided to end users complies with price benchmarks, similar to the requirements presently applicable under the Australian Broadband Guarantee arrangements. We will not be prescriptive as to whether the operator will own a satellite or will lease transponders from an existing operator.
12. The current budget allocation is $38m/year, with the cost expected to reduce as the number of eligible premises (defined to be those unable to receive a metro-comparable broadband service) reduces.

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6. Break the backhaul bottleneck by establishing a new national fibre optic network to deliver competitive backhaul The Coalition will commit up to $2.75 billion in funding (with the expectation of leveraging at least $750 million in additional private sector funding) to establish a nation-wide competitive fibre optic backbone. This will break the backhaul bottleneck by ensuring there is affordable fibre backhaul in locations where there is currently only a monopoly provider of backhaul. In rural and regional Australia, the difficult economics of building networks over vast distances means that many consumers and businesses in these areas are underserved and receive patchy, inadequate or more expensive broadband services. A key bottleneck in rural and regional Australia is expensive monopoly backhaul the long haul connection from a country town back to a capital city, over the transmission or trunk network. Inquiry after inquiry (including in the Glasson Review and the Labor Governments NBN Implementation Study) has found that backhaul costs are a major barrier to broadband services in much of Australia. Both wireless and fixed networks need backhaul. This programme addresses that bottleneck. It is designed to complement the fixed wireless funding programmes of the Plan for Real Action on Broadband and Telecommunications and will greatly reduce backhaul costs and thus improve the economic viability of wireless networks, particularly in rural and remote Australia. The Coalitions nation-wide fibre optic backbone programme will provide access to backhaul at prices that encourage competitive broadband investment and ensure that the cost of providing backhaul on longer, thinner routes in regional Australia does not prevent the equitable delivery of broadband services to consumers and businesses at prices enjoyed in metropolitan areas. This programme will be managed by the NBC. Funding will not be provided on routes where competitive backhaul is already available. The NBC will contract with the private sector to construct and manage the network. Where the operator(s) can lease fibre from existing providers on terms that the operator has management control of the fibre capacity and can deliver the required pricing in the wholesale market, the operator(s) will do this in preference to building. Where this is not possible the NBC will provide funding to the operator(s) to build new fibre optic backhaul infrastructure. This programme will establish a nationwide, competitive fibre optic backbone. Where necessary this will involve new physical build - and the programme is funded sufficiently to allow a build which entirely duplicates the existing monopoly backhaul network. Where suitable terms can be obtained to lease a link from the existing monopoly provider, allowing that link to be included in the network operated and managed by a private sector operator/s under contract to the NBC, then that leased link will be included in place of a separate physical build.

THE COALITIONS PLAN FOR REAL ACTION ON BROADBAND AND TELECOMMUNICATIONS

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The Coalition will also offer direct fibre connections (access network connections) to as many schools and hospitals within the backhaul footprint as possible.13 The precise number to be connected will be determined through the competitive selection process.14 However, our default requirement will be that in every location where there is a point of interconnect, if there is a school at that location there will be a direct fibre connection to that school and if there is a hospital at that location there will be a direct fibre connection to the hospital. The Coalitions competitive, nation-wide fibre optic backbone will be built and operated by the private sector, with the recipients of direct funding for building fibre optic routes chosen through a competitive selection process. To be selected, companies will be required to provide substantial capital funding of their own, so as to leverage the public funding to the maximum extent. The Implementation Study estimates a build cost for such a network of $3.5 billion.15 The Coalition expects that its funding of $2.75 billion, together with funding leveraged from the private sector, will be sufficient to meet the build cost of the network. In addition, these operators will be required to offer long term contracts with concrete options to renew, so as to ensure the long term availability of lower pricing for the telecommunications companies which purchase backhaul capacity. Operators of fibre optic routes funded under this policy will be required to sell wholesale backhaul services to any telecommunications company which requires it. Unlike Labors vertically integrated NBN Co, the fibre backhaul network operators funded under the Coalitions Plan for Real Action on Broadband and Telecommunications will have a strong incentive to sell to other operators. In addition, the network operator(s) who receive funding under this programme will be required to give contractual commitments, to be enforced by the NBC, about their wholesale pricing. These commitments will set limits on the rate of return which will be received recognising the high fixed and low variable cost characteristics of fibre networks. These characteristics mean that once there is sufficient traffic to meet the target rate of return, it should be possible to offer reduced pricing to all users as traffic increases. Ensuring competitive, nation-wide access to fibre optic backbone will deliver many benefits: It will serve the fixed wireless networks to be built under the Plan for Real Action on Broadband and Telecommunications connecting the base stations at lower cost than today and helping the network operators deliver services to consumers and business at the lowest possible cost. It will stimulate competition from the existing fixed and mobile non-Telstra operators in rural and remote Australia, by providing them cheaper backhaul and letting them expand their broadband services more aggressively in rural and remote Australia. This will mean better services and lower prices in rural and remote Australia.
13. The Coalition envisages that retail operators will come forward to use these direct fibre connections to offer services to the schools and hospitals which are connected. 14. There are around 9,500 schools and 1300 hospitals in Australia. Around 50 percent of schools are already connected to fibre, as are many hospitals. Australian Bureau of Statistics: <http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/4221.0Main%20Features22009?opendocument&tabname=Sum mary&prodno=4221.0&issue=2009&num=&view=>; Australian Institute of Health and Welfare, Australian Hospital Statistics 2006-07, p xix, <thttp://www. aihw.gov.au/publications/index.cfm/title/10587>; Department of Education, Employment and Workplace Relations, Strategies For Realising The National Vision Of Connectivity For Australian Schools, October 2008, p 3 http://www.deewr.gov.au/Schooling/DigitalEducationRevolution/Documents/fcs_strategies.pdf 15. Implementation Study, p 323 & 331 says that a fibre backhaul network of 70,000 km, would cost $3.5 billion. The incremental cost of the backhaul connections to mobile base stations (estimated in the Implementation Study as requiring 3,500km of fibre) will be met out of either this funding component or the separate funding component of up to $1 billion for wireless networks in rural and regional areas. The NBC will provide advice on this issue. Implementation Study p 312 says that with 1,100 wireless towers, the network reaches the 97th percentile of premises.

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 It will be a platform for the rollout of new broadband networks in the future all around Australia, as private sector operators will be able to build these new networks knowing they can connect them to the new competitive, nation-wide fibre optic backbone. There are many exciting possibilities: local wireless access networks offering high speed broadband; developers building fibre access networks in new suburbs; and apartment buildings with VDSL over copper connected to fibre backhaul. There is an explosion in data volumes being carried over telecommunications networks, particularly as the volume of video traffic being carried over the internet jumps enormously. This factor means that the backhaul bottleneck is a more pressing problem with each passing month. If the benefits of broadband and the internet are to be enjoyed equitably amongst all Australians, including those in rural and remote Australia, we must act urgently to make competitively priced backhaul available across the nation. That is why the Coalition is setting aside sufficient funds to build a competitive national fibre optic backbone to break this bottleneck once and for all.

7. Implement Pricing and other Regulation to Support Competition and Broadband The Coalition will introduce legislation containing the reforms to Part XIB and XIC of the Trade Practices Act 1974 which are presently contained in the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, in substantially the same form as those reforms are presently drafted. The legislation may include additional reforms designed to further stimulate broadband network investment. These reforms will create much-need certainty for the industry and will avoid the delays that have characterised the operation of Parts XIB and XIC to date. The Coalition believes that by facilitating up front price setting and allowing a specific pricing regime to apply for a longer period of time, these reforms will help create an investment climate in which Telstra and others will be ready to contemplate major network investments. These reforms will be implemented in a manner that provides the industry with predictable, transparent, accountable and timely regulation, while avoiding unnecessary compliance burdens. The Coalition will seek urgent advice from the ACCC and from market participants about further pricing reforms which may allow even longer term price setting, consistent with approaches used in other industries such as gas and electricity and as, for example, was proposed in the G9 access undertaking lodged with the ACCC in 2007. There is a case for allowing the use of a price cap methodology for setting prices, where necessary over a long period of time, based on key inputs such as actual costs, depreciation profile and demand forecasts. The ACCC has expressed its broad support for such an approach, provided there is suitable regulatory audit and review of the key inputs.

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The Coalition supports timely and effective action to discourage and clamp down on anti-competitive behaviour. This includes giving the ACCC the power to issue binding rules of conduct. Given such a power does not apply to other industries it should be used as a last resort and accompanied by appropriate safeguards. 8. The Way Forward to a Higher Bandwidth, More Fibre-Intensive Australia The Coalition will pursue policies designed to stimulate the broadband market in Australia and to establish a commercial and technical platform for much greater fibre penetration over coming years. The key elements of that platform include: By ensuring the delivery of a uniform national broadband network, under which 97 percent of premises are able to be served by high speed networks capable of delivering from 100 Mbps down to a minimum of 12 Mbps, peak speed, using a combination of technologies including HFC, DSL and fixed wireless, with the remainder having access to satellite, we will stimulate the growth of the broadband market and of applications which rely on the ubiquitous availability of such a speed. Rural and regional Australia will, through our fixed wireless network, be connected to the most dynamic element in current telecommunications technology and in applications, with our fixed wireless network also offering natural complementarities to mobile uses. By breaking the backhaul bottleneck, we will encourage competitive entry by new players building access networks, both wireless and fixed. With affordable backhaul, many more players will now be able to enter the market. By ensuring direct fibre connections to many schools and hospitals, we will offer a powerful demonstration of what fibre can deliver, and allow its high speed services to be used in settings where they are of the most value in the short term. We are confident that these measures will drive Australia rapidly to an even higher bandwidth world. There are many possible ways that even higher bandwidth services will be delivered in Australia in years to come. These might include: Telstra and Optus delivering 100 Mbps services over their HFC networks in our major cities. Telstra, Optus and VHA delivering high bandwidth services over their 3G mobile networks and in due course over 4G networks. New wireless players such as Vivid Wireless delivering high bandwidth services. The PSTN being upgraded in key locations to fibre to the node (FTTN) or fibre to the premises (FTTP), as other incumbent carriers are doing internationally, using their shareholders funds rather than those of taxpayers. New developments being built with FTTN or FTTP networks.

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We cannot be sure which of these or other possibilities will eventuate; that will be up to the market. But we are highly confident that the initiatives of the Plan for Real Action on Broadband and Telecommunications will stimulate the private sector to deliver new broadband services over time, building on the specific initiatives in the plan. We believe the right way forward to high speed broadband is through the operation of the market, stimulated by the initiatives set out in this policy document. Governments role should be that of addressing instances where private investment fails to deliver, not to replace the private sector with public monopolies. To ensure it does address those failures, government should use taxpayers money wisely and in a carefully targeted way not put it recklessly at risk.

Other Telecommunications Policy Initiatives 9. Conduct a major review of the Universal Service Obligation The USO is a key safeguard for consumers ensuring that all Australians, including people in rural and remote Australia, have access to essential telephone services and payphones. The Coalition supports the need for enhanced consumer protections within the existing Universal Service Obligation Framework. For this reason the Coalition has made it clear that it supports further improvements and enhancements in the areas outlined in the current Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. The Coalition regards these as interim improvements to the USO framework. The Glasson Review recommended the replacement of the USO with a new and broader framework to be known as the Communications Service Standard (CSS). A Coalition Government would task the NBC to examine the proposal as the rollout of the new infrastructure and the grants that will be provided in this policy are delivered, together with communications infrastructure that is being built by the private sector. The review will be timed to ensure new arrangements can be in place by 30 June 2014 as recommended by the Glasson Review. 10. Review Greenfields Estates Labor has mismanaged its approach to the issue of whether new housing estates (greenfields estates) should be built with fibre connections or continue to be built with copper connections.

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Labor announced new requirements without adequately consulting with the property industry and set a rushed implementation date of 1 July 2010. It soon became clear that this date could not be achieved as so many complex issues remained unresolved, and the new arrangements were deferred for six months. The Coalition believes that new dwellings should have a fibre connection rather than a copper connection. The incremental cost of installing fibre rather than copper in new developments is relatively low and will decline over time. If new dwellings are connected to fibre, then over time the percentage of dwellings connected to fibre will increase. This in turn will create a critical mass of fibre connected dwellings, and products and applications designed to serve that market will increase. However, there are many complicated issues to resolve before this principle can be given effect in practice, including: Who bears the cost of installing fibre (particularly the incremental cost over a copper installation) and how can we minimise the impact on the cost of housing particularly for those seeking to buy their first home? Who bears the formal legal obligation is it the telecommunications company or the property developer or another party? To which kinds of developments (including minimum size) does the obligation apply? How does this obligation interact with the Universal Service Obligation? Given the emerging competition in the market to build fibre access networks in new developments (with some developments already including such networks as a selling point), how can this competition be encouraged? How are the technical standards for such fibre access networks in new developments determined? The Coalition will conduct an urgent review of these issues, ensuring that all stakeholders (from both within and outside of the telecommunications sector) are given an adequate opportunity to offer their views. To allow sufficient time to conduct the review, and to inform all stakeholders of the new arrangements, the Coalition will set 1 January 2012 as the earliest possible start date for any new arrangements which are determined following the review. 11. Support consumers The Coalition will ensure that consumers have the tools and resources to make the right choices for them regarding their communications needs. The Coalition believes Australian consumers should have more streamlined complaints handling processes and more consumer awareness initiatives developed and adopted in conjunction with industry.

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The Coalition strongly supports the work of the Telecommunications Industry Ombudsman (TIO). The TIO is a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia who have a complaint about their telephone or Internet service. The Coalition also supports the Australian Communications and Media Authoritys formal inquiry into customer service and complaints handling in the telecommunications industry following the on-going high volume of complaints to the industry ombudsman. The Coalition believes the timing is right for this inquiry, particularly with the increasing concern over bill shock predominantly from the use of smart phones. 12. Maintain Do Not Call Register but oppose extending it to business phone numbers The current Do Not Call Register (Do Not Call Register Act 2006) was introduced by the Howard Government in June 2006 to apply to home phones. In May 2007, when the act came into effect, one million Australians listed their private fixed line, mobile, voice-over IP or satellite number on the DNCR. Currently, there are over 4 million registered telephone numbers on the Do Not Call Register. In May 2010, the Coalition supported an extension of the register to fax numbers and phone numbers of emergency service operators, such as local SES branches. We also supported the extension of the registration period from three to five years. The Coalition remains opposed to the Labor Governments intention to extend the Do Not Call Register to business telephone numbers.

13. Target mobile phone coverage blackspots The Coalition will provide grant funding to address mobile coverage blackspots in urban and rural areas. We will provide $30 million to support the deployment of the telecommunications infrastructure necessary to ensure communities have adequate and reliable mobile phone coverage.

The Coalition will work with the telecommunications industry and communities to target those areas that have inadequate mobile coverage. Our grant funding will allow the progressive roll out of telecommunications infrastructure to ensure adequate and reliable mobile phone coverage across Australia.

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COSTINGS
Recurrent expenditure
2010-11 $ million Fixed Broadband Optimisation Programme New wireless networks rural and remote Competitive National Fibre Optic Backhaul Satellite to serve last 3 percent* Establish a National Broadband Commission** Target mobile phone blackspots Total 200 0 0 22 20 10 252 2011-12 $ million 350 200 0 68 20 20 658 2012-13 $ million 0 175 50 80 15 0 320 2013-14 $ million 0 175 100 80 15 0 370 2014-15 $ million 100 200 750 150 15 0 1215 2015-16 $ million 100 250 850 150 15 0 1365 2016-17 $ million 0 0 1000 150 15 0 1165 TOTAL $ million 750 1000 2750 700 115 30 5345

* Funding is additional to existing Budget allocation. ** National Broadband Database included within NBC expenses.

Capital expenditure
2010-11 $ million New wireless networks metro 0 2011-12 $ million 0 2012-13 $ million 0 2013-14 $ million 375 2014-15 $ million 375 2015-16 $ million 250 2016-17 $ million 0 TOTAL $ million 1000

Authorised and printed by Brian Loughnane for the Liberal Party of Australia, Cnr Blackall and Macquarie Streets, BARTON ACT 2600.

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