This article is by Bill Morrow, the chief executive of Vodafone Australia (pictured, right). It first appeared in the Australian Financial Review newspaper and is replicated here with permission.
opinion A fundamental part of being human is the desire to communicate, express emotions, and exchange ideas. Telecommunications companies like Vodafone help facilitate this universal need to connect.
Over the last 20 years, there has been a remarkable reshaping of telecommunications. We have moved from fixed-line telephones and analogue mobiles, through to next generation broadband, smartphones, tablets and the connected home. This telecommunications revolution has transformed our society and economy. And it is clear that there is more to come. Consumers want to take advantage of the online world and this will drive the modernisation of our economy. The increased demand for bandwidth will require greater innovation and investment from the telecommunications industry.
The Government’s commitment to the National Broadband Network (NBN) is a high-profile policy response to the exponential growth in demand for bandwidth and the need to transform our telecommunications market. With the NBN, Australia is well-placed to take the next step in developing an advanced and productive digital economy. However, to take full advantage of the opportunities of the NBN, policy makers need to remain focused on establishing the right competitive framework.
The policy and regulatory decisions we make in the next few years will be crucial for Australia’s long- term success.
It is important to recognise that, as well as improving fixed-line broadband, the NBN will play an important role in enhancing mobile performance. To continue to improve wireless networks we need to build smaller and smarter ‘cells’ and use fibre to carry the traffic to the wider world. Just like the tablets and smartphones of today, we expect virtually all future devices will connect wirelessly, to both fixed and wireless networks, offering consumers a seamless telecommunications experience. Because of this, the future of telecommunications will be the convergence of mobile technology with next generation fixed networks, where wireless and fibre services are fundamental and essential complements.
The NBN will not only upgrade our fixed and mobile broadband infrastructure, it will also transform the competitive landscape of Australian communications. For 15 years, Australian policy makers tolerated a market structure that allowed Telstra to establish itself as the most vertically integrated telco in the world. No other jurisdiction allowed a company to have Telstra’s level of market dominance in fixed, mobile, and cable network infrastructure and to own half of the largest pay TV company.
This anti-competitive playing field has undermined the incentive for the broader telecommunications market to invest, resulting in less choice for consumers and a lack of innovation. Outside the capital cities there is virtually no fixed-line competition and mobile competition in regional areas has been hamstrung by Telstra’s regional backhaul dominance.
The current Government has initiated essential reforms that will start to overcome these serious structural problems. The wholesale-only focus of NBN Co and the structural separation of Telstra are crucial building blocks for a sustainable competitive industry. These reforms were vital elements of Vodafone’s decision to begin trialling NBN services, but more needs to be done.
Policy makers are finally tackling the significant deficiencies in Australia’s telecommunications market structure. As reforms deliver improvements to the competitive landscape, Australian consumers will reap the reward.
However, challenges continue. The transition to the NBN and the move to next generation mobile infrastructure must be carefully managed over the next decade. While the NBN has dealt with the enduring problem of Telstra’s ownership of the ‘last mile’ copper network limiting the modernisation of infrastructure, there is still more work to be done to ensure existing structural problems do not become entrenched.
The changing nature of the telecommunications market does not require a change in policy frameworks, but it will require a change in regulatory focus. Traditionally, regulators have treated ‘fixed’ and ‘mobile’ as separate markets. Regulatory assessments have not acknowledged that Telstra’s dominance in fixed telephony has significant impacts on the mobile industry. In a converging world this siloed approach is no longer tenable.
We need an urgent reassessment of the regulatory approach to the telecommunications industry. Without careful attention, this disproportionate market dominance could continue after the migration to the NBN. For consumers to benefit from the opportunities of a converged telecommunications market, the Government must continue to take action to overcome key market failures and redress the serious imbalances in the Australian competitive landscape.
The telecommunications sector has been at the forefront of the digital economy revolution and has lit the path of the technological transformation of our society. In the right regulatory climate, the telecommunications sector will be a powerhouse of productivity in the Australian economy.
Morrow image credit: Vodafone
I have doubts that even closer regulation will benefit the telecommunication market.
The companies that seem to cry loudest for regulation are those that have network problems. Is this the fault of Telstra or can it largely be due to the lack of investment in additional infrastructure by these same companies?
I am not sure what the real problem is but would suggest that there was a lack of capacity to service the advent of smart phones and tablets. Rather than take quick action to remedy this the companies were selling as many of these new devices that demanded extra capacity as they were able and were reluctant to admit they had network problems. If they carry on operating in this manner I would suggest that Government regulation isn’t going to help them.
Advancing Vodafone’s Agenda.
Nice corporate propaganda, Mr Bill Morrow.
The whole thing reads like a high school assignment. I tuned out, and by the time the author got to the point, I didn’t care any longer.
It is important to recognise that, as well as improving fixed-line broadband, the NBN will play an important role in enhancing mobile performance.
We, at Vodafone, love taxpayer-funded backhaul to rectify our crappy mobile product.
This anti-competitive playing field has undermined the incentive for the broader telecommunications market to invest, resulting in less choice for consumers and a lack of innovation. Outside the capital cities there is virtually no fixed-line competition and mobile competition in regional areas has been hamstrung by Telstra’s regional backhaul dominance.
There is no incentive to invest in metropolitan areas because we can all gang-rape Telstra infrastructure at ACCC-sanctioned discount warehouse rates. Outside the capital cities, frankly, we couldn’t be arsed competing with Telstra because building backhaul infrastructure in regional areas is way too expensive and the returns are too low. So, we’ll just leave it to Telstra to shoulder the burden of servicing these isolated, unprofitable areas, but demonise them by calling it “regional market dominance” and “anti-competitive” as if there was something nefarious going on.
“The transition to the NBN and the move to next generation mobile infrastructure must be carefully managed over the next decade. While the NBN has dealt with the enduring problem of Telstra’s ownership of the ‘last mile’ copper network limiting the modernisation of infrastructure, there is still more work to be done to ensure existing structural problems do not become entrenched. Traditionally, regulators have treated ‘fixed’ and ‘mobile’ as separate markets. Regulatory assessments have not acknowledged that Telstra’s dominance in fixed telephony has significant impacts on the mobile industry. In a converging world this siloed approach is no longer tenable.”
Telstra’s track record of building and delivering world-class, super-competitive mobile networks has left Vodafone biting the dust. The government must intervene to help Vodafone gain a bigger share of the wireless market because we’re sure as hell unable to do it by ourselves by simply competing.
We need an urgent reassessment of the regulatory approach to the telecommunications industry. Without careful attention, this disproportionate market dominance could continue after the migration to the NBN. For consumers to benefit from the opportunities of a converged telecommunications market, the Government must continue to take action to overcome key market failures and redress the serious imbalances in the Australian competitive landscape.
Successful mobile operators which offer consumers a superior product end up with a “dominant market share”. “Market dominance” is evil. So was Charles Darwin. The government must intervene in the mobile market to fix Vodafone’s market share …l mean… correct the “market failure” and redress the serious imbalance in Vodafone’s market share …l mean… “competitive landscape”. Please, ACCC, help us compete.
Jimmy Cricket – seems you are a bit bitter. work for telstra perhaps?
Remember who paid for Telstra’s ‘superior infrastructure’ and the backhaul – Public Funds mate.
Tax payers paid for it.
So maybe stop the sooking that everyone picks on Telstra and stand on your own two feet.
Indeed…
I was just wondering if we’d all jumped in the hot tub time machine and ended up at now we are talking in 2005?
I think that Jimmy Cricket might have been taking the piss out of the article mate or am I laughing for the wrong reason.
I think Tosh is serious.
+1
“Jimmy Cricket – seems you are a bit bitter. work for telstra perhaps?”
err… I think if you worked for any large organisation, actually knew it inside out as a corporate slave, you’d grow to despise it (unless you’re top management pulling in big dollars). Short answer: no.
“Remember who paid for Telstra’s ‘superior infrastructure’ and the backhaul – Public Funds mate.
Tax payers paid for it.”
PMG funded Telecom’s infrastructure. Telecom was subsequently privatized in a process where millions of ordinary Aussie pensioners paid tens of billions to acquire Telstra infrastructure. You’re correct — Vodafone shareholders did not pay a cent.
“So maybe stop the sooking that everyone picks on Telstra and stand on your own two feet.”
l do. Never have worn prosthetics.
“Telecom was subsequently privatized in a process where millions of ordinary Aussie pensioners paid tens of billions to acquire Telstra infrastructure. You’re correct — Vodafone shareholders did not pay a cent.”
And they got it that low price because part of the deal was that they were to provide access to that network at a fair wholesale price. They were also required to keep the network in good repair. They didn’t, they laid off 80% of their maintenance crew. They then proceeded to charge more wholesale they they were charging retail. Any wonder other Telcos and ISPs complained?
And again… +1
Mmm, while I appreciate someone from industry mentioning the inherent ability of the NBN to massively improve mobile networking, this smacks of self-preservation.
What is the point
http://www.itwire.com/it-policy-news/govenrment-tech-policy/56013-if-elected-the-coalition-will-most-likely-sell-the-nbn#
The free market in telecommunications sadly let down the Aussie consumer over the last ten years.
I arrived here in 2005 and was shocked at the poor service and high prices.
Better telecommunications, especially faster and cheaper broadband should have been started well before the demise of the Howard regime.
As Abbot, Turnbull and others were major players during the Howard years, I shudder to think what they plan to do about telecoms infrastructure in the likelihood they’ll return to government in 2013.
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