CCIQ's Broadband Policy

Written on the 26th of July 2010 by Chamber of Commerce & Industry Queensland

> BROADBAND
>
> High-speed broadband promises to open up a world of opportunity for
> businesses and individuals alike. For business and industry, there is
> the prospect of better productivity, increased efficiency and cost
> savings; more flexible service delivery and employment practices; and
> an improved ability to take advantage of opportunities in intrastate,
> interstate and international markets. For individuals, there are a
> range of potential benefits, including better communications, a more
> diverse range of products and services and improved service delivery.
>
> For a state like Queensland, with its geographically dispersed
> population, high-speed broadband may also deliver some additional
> benefits. First and foremost, there is the potential for broadband
> technology to improve service delivery in the key areas of health and
> education. Broadband also provides a mechanism through which the
> State's residents and businesses can partially overcome the 'tyranny
> of distance'. As such, it is likely to play an important role in the
> future in encouraging the growth and development of Queensland's
> regions and their business communities.
>
> Advanced communications infrastructure is also increasingly becoming a
> core technology in the global business environment. The
> competitiveness of Australian businesses and their ability to access
> world markets will therefore be determined to a large extent by their
> ability to access internationally competitive communications
> infrastructure.
>
> According to figures compiled by the OECD, Australia is ranked
> sixteenth (out of all OECD countries) in respect of broadband
> penetration. It fairs better on other measures though, with DSL
> internet connections per one hundred inhabitants exceeding the OECD
> average. That said, Australia is below the OECD average for cable and
> fibre/LAN internet connections per one hundred inhabitants. Australia
> has however over the last five years increased the uptake of broadband
> subscribers from 0.9 subscribers per one hundred inhabitants to 19.2
> subscribers per one hundred inhabitants, which is above the OECD and
> European Union average of fifteen.
>
> At this stage, it is estimated that around ninety per cent of
> Australian households can access broadband at speeds higher than 256
> Kbps. While that may be the case, Australian average DSL download
> speeds are still slower than those of most other OECD countries.
> According to a recent report, Mexico and Australia have the slowest
> average rates of 1.2Mbps and 1.3Mbps respectively.
>
> While it is difficult to make international comparisons due to the
> differing characteristics of each country (for example, geography and
> population density), the standard of Australian broadband lags behind
> that of other developed countries with similar characteristics . For
> example, Canada has a higher rate of broadband subscribers per one
> hundred inhabitants and it has a significantly higher number of
> cable/fibre/LAN connections than Australia.
>
> Key Issues
>
> Given the potential benefits, it is important that Queensland
> businesses are able to capitalise on the opportunities presented by
> high-speed broadband technology. There are however some key barriers
> which currently inhibit or prevent the optimal use of broadband in
> some Queensland businesses.
>
> The three critical threshold issues for Queensland businesses are
> access, cost and functionality - businesses need to be able to access
> broadband at a reasonable cost and to use broadband applications which
> will create value for their business (for example, video conferencing
> and high speed data transfer).
>
> A significant proportion of Queensland businesses and residents can
> access broadband services through existing communications
> infrastructure. There are however still some businesses in
> metropolitan, regional, rural and remote areas of the State which want
> to access broadband, but are unable to do so due to a lack of
> infrastructure or technical constraints. This lack of access needs to
> be addressed in order to ensure that those businesses are not
> disadvantaged as a result.
>
> In attempting to address the access issue though it is important that
> governments do not force infrastructure providers to use a particular
> technology or technologies. This is because mandated technology limits
> the ability of those providers to adapt their infrastructure to suit
> local needs and circumstances, potentially leading to suboptimal
> outcomes for consumers or the unnecessary 'gold plating' of
> infrastructure.
>
> The mandatory approach also fails to recognise the realities of
> providing broadband technology in a country like Australia, with its
> low population density, diverse communities and varied geography.
> These characteristics mean that particular technologies may be
> suitable and cost effective for some locations, but not for others.
> Broadband infrastructure providers need to have the flexibility to
> tailor their infrastructure to meet local needs and circumstances in
> the most cost-effective manner.
>
> CCIQ considers that government strategies which address the issue of
> broadband accessibility should seek to secure State-wide access to a
> minimum level of broadband services rather than access to a particular
> broadband technology. The minimum service level should incorporate the
> services and features required by the average business user.
> Government policy responses should also provide incentives to
> encourage the provision of appropriate broadband technology in areas
> where it is commercially unfeasible to do so.
> These responses must however be technology neutral and should not
> impose an unreasonable financial burden on the State's taxpayers.
>
> Cost is another key threshold issue for Queensland business. Broadband
> services must be reasonably priced (and not subject to overly
> restrictive download quotas) otherwise they will not be an attractive
> value proposition for many of the State's businesses. It is that
> simple.
>
> This reality poses a significant challenge for providers of broadband
> infrastructure, as they need to set a price which will encourage
> consumers to purchase their product, but which will also allow them to
> recoup the significant investment involved. In some circumstances,
> particularly in rural and remote areas, providers may not be able to
> resolve this pricing tension. Governments may need to provide
> incentives and/or other assistance to ensure that broadband is an
> affordable option for businesses in these areas.
>
> The second part of the value proposition for business is functionality
> - the broadband services available must allow the use of applications
> which create value for business users, including for example, video
> conferencing and high speed data transfer. Without this requisite
> level of functionality, businesses will not be able to make optimal
> use of broadband technology and may thus be deterred from utilising
> broadband technology in their operations. As the functionality needs
> of business are ever changing, the State's broadband infrastructure
> must also be scaleable so that it is capable of evolving to meet the
> future functionality needs of the Queensland business community.
>
> Another important consideration is the regulatory framework governing
> the provision of broadband services and infrastructure. To ensure the
> best outcomes for consumers in terms of access, price and product
> offering, the regulatory framework must encourage both investment and
> competition. It must also provide regulatory certainty. Broadband
> infrastructure providers will not be willing to invest the significant
> amounts of capital required to build and maintain the relevant
> broadband infrastructure unless they have a stable regulatory
> environment and the ability to earn a reasonable rate of return on
> those investments. It is imperative however that the Government does
> not stifle competition in its efforts to encourage investment in
> broadband infrastructure, as a competitive environment offers the best
> outcomes for consumers in terms of price, product offering and product
> innovation.
>
> The regulatory framework must also adequately address the backhaul
> infrastructure which facilitates the aggregation and transmission of
> data from regions to larger central hubs. Given the nature of its
> role, this infrastructure has a significant influence on prices and
> connection speeds.
> It is therefore important that the regulatory framework encourages
> 'open access' to backhaul infrastructure, as this will promote
> competition amongst broadband providers.
>
> Government and the private sector need to work together to ensure that
> Queensland businesses can make the most of the opportunities offered
> by high speed broadband. Government has an important role to play in
> encouraging investment, ensuring that access is affordable and
> providing an appropriate regulatory framework. The private sector
> however should take the lead role in building and maintaining the
> necessary infrastructure, as it is generally more efficient and
> effective at undertaking these tasks than the government sector.
>
> There may be circumstances though in which it is commercially
> unfeasible for the private sector to provide certain infrastructure or
> services. In these situations, the government sector may need to offer
> incentives or assistance to encourage the provision of the relevant
> infrastructure of services.
> CCIQ
> does not however support the use of taxpayer funds to needlessly
> duplicate existing infrastructure. In our view, these funds should be
> directed towards the expansion of the existing network and the
> resolution of identified market failures.
>
> It is also evident that governments, broadband providers and other key
> stakeholders need to work together to actively educate the business
> community, particularly small businesses, about how broadband may
> benefit their business. At the moment, it appears that many businesses
> are simply not aware of the potential benefits, efficiencies and
> market opportunities that can be generated through the use of broadband technology.
>
> Policy Position
>
> Advanced communications technologies such as broadband are fast
> becoming the cornerstone of modern developed economies and a
> prerequisite to effective participation in the global business
> environment. The competitiveness of Queensland businesses and their
> ability to access markets around the world will consequently be
> determined to a large extent by their ability to access
> internationally competitive communications infrastructure.
>
> To grow and remain competitive, Queensland businesses therefore need
> access to high speed broadband at a reasonable cost. They also need to
> be able to utilise broadband applications which create value for their
> business and to capitalise on the potential efficiency gains which may
> be achieved through the optimal use of broadband technology.
>
> The government and private sectors need to work together to ensure
> that Queensland businesses can make the most of the opportunities
> created by high speed broadband. The government sector needs to
> encourage investment in the necessary infrastructure, to provide
> assistance where necessary to ensure that businesses across the State
> have access to reasonably-priced broadband and to adopt a regulatory
> framework that promotes competition and investment. The private sector
> also has a key role to play in building and maintaining the required
> infrastructure and providing broadband services.
>
> Recommendations
>
> CCIQ considers that the following principles should apply to the
> provision of broadband in Queensland.
>
> 1. All Queensland businesses that need broadband should be able to
> access it, regardless of their location. Where necessary, governments
> should provide incentives for the provision of broadband in
> commercially unfeasible locations.
>
> 2. Government strategies addressing the issue of broadband
> accessibility should focus on securing state-wide access to a minimum
> level of broadband services rather than access to a particular
> technology. The minimum level of service should reflect the features
> required by the average business broadband subscriber.
>
> 3. Government strategies addressing broadband accessibility must be
> technology neutral and cost effective.
>
> 4. Governments should not finance the needless duplication of existing
> broadband infrastructure and should instead focus their financial
> assistance on expanding the infrastructure network and addressing
> identified market failures.
>
> 5. Broadband needs to be reasonably priced and not subject to overly
> restrictive download quotas otherwise it will not be an attractive
> value proposition for Queensland businesses.
>
> 6. Queensland businesses should be able to use broadband applications
> which are of value to them including for example video conferencing
> and high speed data transfer. The State's broadband infrastructure
> should also be scaleable so that it is capable of evolving to meet the
> ever changing needs of Queensland business.
>
> 7. The regulatory framework governing broadband services and
> infrastructure must certain and encourage both investment and competition.
>
> 8. Government and the private sector should work together to
> facilitate access to reasonably priced broadband services for
> Queensland business.