Forget the 'Set' and 'Forget' - C Chapman Commsday Speech 30 Mar 2011

Forget the ‘Set and Forget’

Speech by Chris Chapman

Chairman, Australian Communications and Media

Authority

CommsDay Summit

Four Seasons Hotel, Sydney

Wednesday 30 March 2011

Graham, thank you for having me back again. After my marathon remarks last year, that may have been in doubt! And little wonder John Stanton thought at that moment that he had encountered a parallel world. Mercifully, for Summit participants this will be more succinct.

So what am I alluding to? – just on a year ago I spoke at this Summit and detailed a multi-faceted program under the banner of “Reconnecting the Customer”. The program laid out a road map for modernising the regulatory relationships within the telecommunications sector. This approach was principally intended to address the industry’s endemic poor customer care record and, frankly, its reputation.

We remain on that program and have seen some progress. Our public inquiry on customer service has focussed everyone’s attention on this problem. Through our series of public hearings around the country, issues and research papers, submissions and consultations, we now have a strong evidence base to inform our enabling strategies.

A read of our December progress report confirms the reality and depth of the customer care problem and shines some light on where we think the causes and possible solutions lie.

acma | 1 Similarly, we signalled to the industry some firm expectations around the consumer protection and mobile premium services code reviews -- and the requirement to ensure clear results, and not just better process.

On this score, I am pleased to observe that industry and consumer groups have sought to respond to those expectations. Looking ahead, then, I am hopeful we will arrive at an end position which genuinely resets the industry’s approach to these fundamental consumer issues.

This said, the sharp rise in TIO complaint levels in the last quarter of 2010 and, again as the Ombudsman updated us yesterday, for the first two months of calendar 2011 (“record levels” he said), punctured what appeared to be a long-awaited turnaround in ever-rising telco complaints.

This was a disappointing reminder that we have a long way to go to achieve a systemic fix on issues, a step change, which to date, the current co-regulatory approach has not delivered. Let me reiterate for industry participants – a year later and yet record levels are being recorded. Faith, hope and “she’ll be right mate – trust us” has only so much elasticity.

Notwithstanding, I wanted to acknowledge the efforts of both the industry and consumer representatives to improve the code regime and customer care more generally. And I want to single out John Stanton for his energies and professionalism and Teresa Corbin for her increasing willingness to deal pragmatically with the challenge of bridging to that view of the future that her organisation foresees.

However, I also want to clarify that the Authority of the ACMA will not be satisfied with a set of cosmetic changes, changes that do not deliver a material, sustained improvement in consumer betterment.

I know it isn’t a walk in the park, because, if the fix was simple, we would not have had to initiate our inquiry. But the telco industry sits at the bottom of the league table for customer care on virtually every measure. As things are shaping up, if we are going to get a material and sustained change in favour of consumers, then the landscape may well be one where we will need all players to accept targeted but robust interventions.

What is blindingly obvious is that the market has failed to deliver around the issue of customer care and protection. We can all argue why this might be so, but concrete remedial action, buttressed where necessary with unambiguous regulatory activity, is what seems may now be required. Shame the industry didn’t come together a year or so ago to deliver the sort of industry step change that David Thodey called for yesterday.

2 | acma 3

The prospect of unambiguous regulatory activity applies particularly to the industry’s track record on compliance, where the time for self-reporting and “tick-box” compliance measures might well have now passed.

Nor is it any longer acceptable to have significant parts of the industry perceive themselves to be effectively outside of the regulatory framework. As I understand it, the TCP code will make it clear that all participants in the sector will be bound; will need to own it. Psychologically, that’s progress.

The result of our work and our considerations will emerge shortly; around Easter – when we’ve reviewed the pre-consultation drafts of the TCP and MPS codes and issued a draft of our Public Inquiry report – from the ACMA perspective, all pieces of the same program.

We will be ever mindful of stakeholder views, but anyone who thinks the ACMA will be resiling from dealing with these endemic consumer issues does so at their own peril. All players need to stop taking customers for granted and meaningfully invest in them – capture them, own them and retain them with competitive products and services, fortified with their own brand equity and all that it connotes.

We saw firsthand what problems quickly emerged around mobile premium services when industry (and perhaps the regulator) took its eye off the ball. Today the rapid uptake of smart phones and applications is increasing complexity and, with it, the potential for user vulnerability. In shorthand, this was the second reason for the ‘Reconnecting the Customer’ initiative – to collectively move now to address an imminent and yet even more dynamic environment.

This means we must move with some urgency, or risk not learning from the lessons of the past. If this requires us to up the ante and use our full toolkit of codes, standards and determinations, then so be it. One way or another, the industry’s reputation with its customers has to be rebooted.

This is not a static proposition. Innovation is pressing everyone to adapt to new challenges and address attendant issues. Today for instance, we are releasing a paper on the vexed issue of Informed Consent, an important telco consumer issue we need to come to a landing on to help inform our assessment of some aspects of the TCP and MPS codes. Our research shows that consumers want telcos to ensure that full information is offered in an accessible manner and at the time of agreement. The telco industry must take heed of their views; we certainly are.

If there is a message I want to leave with this audience it is that the days of ‘set and forget’ are over. The media and communications sector is arguably the most dynamic of this generation. As a nation, we need to be nimble and responsive to the challenges of rapid change, if we are to successfully seize the immense opportunity

acma | 3 of the digital era. As players in that space, you principally bear that responsibility and as the regulator we have interpreted our mandate to “make media and communications work in the national interest” (ie. really work).

Enough on that for the moment – suffice it to say the ACMA is alive to the challenge….and nowhere is this truer than with radio frequency spectrum.

The same voracious use of mobile data services challenging the provider-consumer relationship is also fuelling strong demand for wireless spectrum.

The ACMA’s proposition is that by 2015 a further 150 MHz of spectrum will be required for mobile broadband services. This is over and above the spectrum expected to become available through clearing the analog television bands and relocating ENG services from the 2.5 GHz band.

Let me give you a little preview on a soon to be released ACMA paper titled Towards 2020: Future spectrum requirements for mobile broadband.

The paper provides the rationale for our assumptions. This includes demand drivers, international comparisons and benchmarking data.

It will also canvass the ACMA view that providing additional spectrum is not the only solution to increased demand - that industry too has its role to play.

Many of you will not be surprised by our call for greater spectrally-efficient networks and deployments. The need to embrace sharing, review compression ratios, and to examine the use of femtocells and other emerging technology is canvassed.

The paper also recognises that our figure of an additional 150 MHz may not be an Australian-wide requirement, but reflects particular peaks around population dense sites. Even if this figure is only an indication of peak population demand, it still presents an obvious challenge.

The ACMA is already exploring the next tranche of possible bands to fill this need. A second soon-to-be released ACMA paper will look at options to replan the 820-960 MHz band (known as the 900 MHz band) to improve its utility and make additional spectrum available in the medium term for mobile broadband services.

The paper will seek responses to expanding the band to include the 14MHz of spectrum not part of the initial 700 MHZ allocation and the necessary arrangements for the continuation, or indeed the evolution, of digital cellular services. We will ask for feedback on options for new or expanded services, as well as the underlying rules for the band.

4 | acma 5

This is but part of our relentless efforts to ensure Australia is at the forefront internationally of spectrum management and usage.

As we face the growing demand for spectrum, we also need to find ways of stepping back and looking at the big picture – at the changing patterns of use by commercial, consumer and government users. We need to do this because the lead times to re- shape spectrum bands to meet demand and otherwise satisfy essential technical considerations are relatively long, the decisions are becoming more contentious, and corporations’ forward plans and investment horizons more sensitive to financial model assumptions. Decisions to re-shape spectrum bands have far-reaching implications nationally and internationally.

A key driver of current demand is the large number of broadband wireless modems for laptops, but a range of other ubiquitous multimedia devices (including e-book readers, tablet devices, game consoles, mp3 players, cameras, remote healthcare monitoring devices) are also expected to place added demands on spectrum capacity.

Video telephony is another potentially heavy spectrum user. With big manufacturers like Apple starting to equip their most popular devices with dual cameras and associated video communication services, we may finally be seeing the arrival of the long heralded videophone. Apple, of course, is famous for kick-starting whole categories -- tablets and touch phones -- where others had not ventured or had tried and failed.

At the same time, there are a number of national projects focussed on building and extending national infrastructure. These include the National Broadband Network and initiatives associated with smart infrastructure.

There is also increased discussion within government agencies of the need for spectrum to meet the national mobile data requirements of police and other emergency services, whether on dedicated or existing commercial networks.

What these projects have in common is the unquenchable thirst for spectrum and underlines what is now for the ACMA a disposition of continuous review of spectrum usage and re - allocation.

We seek to do this in an open and public manner, as reflected in our rolling Five- year Spectrum Outlook. The most recent edition (published last month) covers 2011 to 2015 and I commend this document to anyone looking to understand our methodology and approach to this critical national task.

Highlights in this report include:

acma | 5 > The successful review of the 400MHz band, to reduce congestion and create an enduring framework for emergency services, particularly on the voice side. We are now well advanced implementing this plan; > The advance planning work to enable the re-framing of the 700MHz and 2.5 GHz bands to enable Australians to reap the full benefits of the growth in broadband and mobile devices;

 The release of some additional spectrum in rural and regional Australia in relation to the 3.6 GHz bands to enable carriers to extend regional network coverage;

> The on-going development of a radio quiet zone (RQZ) for deep space research activities in a remote area of Western Australia; and > The on-going review of existing regulatory and technical arrangements to support the introduction of emerging and new technologies, and other services (including spread spectrum technologies and cognitive radio).

At the same time, and within this spectrum re-shaping, we are nonetheless looking to enhance the ability of existing spectrum users to continue to deliver the valuable services to the community that they provide. For example, we are working to make sure suitable spectrum arrangements for electronic news gathering services exist into the future, we are nearing completion of our survey of microwave fixed services bands below 5 GHz with a view to enhancing existing arrangements in that space.

Other work includes a new licensing tool kit to provide greater flexibility and to accommodate spectrum sharing technologies, including the consideration of pricing options for sharing,

A very exciting project that fits within this body of work is the development of a set of power levels – Protection Factors for Ancillary Access -- that would be included in our class licences with a view to enabling the use of cognitive or whitespace transmitters in certain frequency bands in Australia. So we’re seeking to facilitate spectrum – sharing and innovation, without giving rise to any material increase in the noise floor.

I could go on and, while all this is part of our day job, I mention this work to give you a sense of the breadth and depth of our work in this critical and increasingly high profile area. For those wanting to actively participate or simply be better informed on spectrum matters, I make a shameless plug to come along to our RadComms 2011 Conference in Sydney on the 26th and 27th of May.

Australia was at the leading edge of spectrum reform in the 1990s. The groundwork that has been in place since that time has enabled the ACMA to continue to be recognised as a leading spectrum regulator. We make strong

6 | acma 7

claims to this mantle and continue to check current approaches internationally - to look for innovation – to look for the ‘best practice’-- and to do this efficiently and with an appropriate eye to harmonisation.

This renaissance in spectrum management is something I see as one of my most important goals to deliver. Other goals are the successful implementation of the digital dividend, the associated completion of the switch over to digital television, the embracing of digital convergence and its many manifestations, and finally – as I noted earlier – material, sustainable consumer betterment through next generation reforms in the telco consumer space.

Each is a big issue in its own right. Together, they raise the bar internally on our expectations to deliver.

So finally, and just to further underscore my determination to ensure the ACMA is agile and organisationally dextrous enough to meet any and all legislative imperatives and stakeholder expectations and our own, we created yesterday a new division of the Authority that will oversee the large number of broadcasting planning and coverage issues that digital switchover and re-planning is throwing up. My deputy Chairman, Richard Bean, will chair the 3 person division, which will also include Chris Cheah and Reg Coutts.

Thank you again.

acma | 7