Tough times: Australian telcos about to hit the wall


Mark Gregory
Contributor

Australian telecommunications companies are underperforming and if they thought that life couldn’t get any worse, then they are in for a short sharp shock.

It does not matter who wins the next election, the telcos need to brace themselves for what is coming, and the next government is unlikely to bail out those companies that are bloated, overcharging, and underperforming.

The telecommunications companies continue to be tone deaf to customer concerns and complaints, to the extent that customer anger and dismay has reached a point where the next government is likely to act.

In a speech at CommsDay Summit 2022 that covered industry returns and “the investment challenge driven by OTT [over-the-top] traffic demands,” Optus vice-president for regulatory and public affairs Andrew Sheridan said that “during the heart of the lockdowns, we asked all the streaming companies to reduce their bitrate so that we could manage the traffic.”

“What happened? Nobody noticed. Not one customer complaint.”

“So, the fact that OTTs are consuming at least 20 per cent more bandwidth on something that no one even notices means that it is likely wasteful and is undermining future value for the whole country by forcing investment to the wrong places to support the wrong things.”

Telecommunications

Australians have been buying 4K ultra high-definition televisions since 2017. Should Australians be provided with standard definition and low-quality high-definition content when they’re forking out thousands for televisions that should be delivering a quality experience?

Seriously? Mr Russell obviously doesn’t talk to the same people that I do.

Customers are not able to complain to the Telecommunications Industry Ombudsman (TIO) about the poor quality (woeful) content being delivered over the Australian telecommunications networks. In fact, the TIO has very limited powers to act on poor performance generally.

We need to remember that there are no minimum performance standards and therefore the Australian Competition and Consumer Commission (ACCC) and the TIO can’t impose penalties, even if they had the power to do so.

One of the more fascinating, and poignant things that you can do today as an Australian consumer is to look at the Foxtel sports channels guide. I use yourtv.com.au and it has become a habit to scroll down to look at Channel 508 Fox Sports UHD 1. Day after day, week after week, month after month, the guide states “More exciting UHD sport is on its way.”

I’m not sure what I’ll do when the guide shows that there is a 4K sporting event scheduled on Channel 508 Fox Sports UHD 1. Possibly watch this once in a lifetime show?

And as I’ve written several times, the government must take action to move broadcast television to DVB-T2, which is a technology that permits broadcast 4K UHD. Most of the millions of televisions bought by Australian consumers since 2017 support DVB-T2.

The Australian telecommunications industry has failed to grasp the anger and angst of customers that are fed up with the poor performance of the Australian telecommunications market overall, our 67th global broadband ranking and the flow-on effects such as the lack of high quality 4K content available in Australia.

Where is the competition? If the entire telecommunications industry fails to work to improve consumer outcomes, then surely it is time for the government to step in and do something to rectify what is an unacceptable situation?

And yes, this will mean that data usage will increase. It might also mean that Australians can enjoy the 4K UHD televisions that they’ve been buying in the millions.

Earlier this week, I wrote about the record number of submissions to the 2021 Regional Telecommunications Review (RTR). As a result of the submissions, the committee made 12 recommendations, also a record.

Does this reflect an industry that is meeting consumer expectations?

Recommendations 7 and 9 highlight the anger and angst in the bush, but equally apply to the complaints I hear regularly from urban consumers. The recommendations are included here, so that we can be reminded that the RTR committee clearly identified what consumers really think about the Australian telecommunications providers.

And, I should also include the ACCC failure in 2018 to declare domestic roaming in regional and remote areas as another cause of some of the problems that exist today.

Recommendation 7. Network Performance and Reliability. The Committee recommends that the government develops and enforces minimum wholesale and retail service, performance and reliability standards appropriate for each service type (fixed and landline, mobile, fixed wireless, satellites).

The committee further recommends that:

  • escalating penalties for failure to meet standards appropriate for each service type are introduced and enforced; and
  • wholesalers and retailers must make practical and useable information available to consumers about network performance in ‘real time’.

Recommendation 9. Mobile Services. The Committee recommends that the Government ensures measures are undertaken to increase the accuracy and transparency of mobile network quality and coverage information, including network congestion. This includes measures to collect and standardise mobile network coverage information and develop a tool to empower consumers to compare network performance and service availability.

The Committee further recommends that:

  • the Government provides funding to undertake an investigation and audit to collect and report mobile coverage performance across regional Australia, including congestion; and
  • the Government undertakes a feasibility study to consider the capability for mobile roaming to be deployed in emergency circumstances.

Over the next three years, the telecommunications industry should anticipate that Government will act to implement Recommendations 7 and 9.

Mr Sheridan has inadvertently identified two outcomes that the government must act on immediately.

  1. There is a need for triannual Australian Telecommunications Reviews
  2. The regulatory agencies and the TIO should be empowered to act on Recommendations 7 and 9

The failure of the current government to hold an industry forum where individuals, consumer and community groups can provide input on the state of Australian telecommunications has led to much of the chaos that exists today.

NBN Co’s broken business model is harming competition and is a key reason for the low Telco returns that Mr Sheridan rightly highlights exist today.

Speaking at the same forum, Vocus chief executive Kevin Russell made a plea for the post-election government to address NBN Co’s “mission creep”.

Mr Russell said, “a government monopoly pushing into contestable markets can only have a negative impact on private infrastructure investment.”

Most Australians would be happy if NBN Co could focus on rolling out fibre to the premises to 93 per cent of premises as soon as possible.

The next election government should take action to redirect NBN Co to focus on a full fibre access network, to reduce OPEX and to offer products to retail service providers at reasonable costs without a data usage charge – this is the much-maligned Connectivity Virtual Circuit (CVC) charge.

An industry forum is needed that provides individuals, consumer and community groups, retail service providers and other stakeholders with the opportunity to provide input on the NBN, its future over the next decade and how to address the disaster that the NBN is today – Australia’s largest infrastructure failure.

The Australian telecommunications industry is sleep walking towards a short sharp shock. Consumers are not happy, not just people living in regional and remote areas.

Mark Gregory is an Associate Professor in the School of Engineering at RMIT University

Do you know more? Contact James Riley via Email.

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