Keynote Speech to CommsDay Summit
Westin Hotel Sydney, 9 April 2018
Michelle Lim - Chairperson
Competitive Carriers Coalition/Commpete
Good morning MC, Minister, ladies and gentlemen. My name is Michelle Lim – Chair, of the Competitive Carriers Coalition.
I’ve been looking forward to speaking with you today – as this is my first major speech as its new Chairperson. I personally wish to thank Matt Healy, our ex-chairman. Matt is someone I have amazing respect for and who - no doubt to many of you - is a very familiar and welcome face at this conference.
To share some background, I was first nominated as a chair’man’ and whilst I graciously accepted – I do stand here this morning, proud to be first Chair’woman’ of the CCC.
Being an Asian-Australian as well – I am pleased that the CCC firmly believes in the principal that, in Australia, we CAN be challengers of the ‘status quo’ – and that ‘diversity’ can certainly bring benefits, and this goal is a trend that is being embraced globally.
But more on that theme, later…
On a much lighter note, I stand here – short, at 5-foot-tall – but confident in the knowledge that in Australia ‘the little guys’ - the small businesses which deliver over 1/3 of this nations production - both CAN and DO achieve “BIG things”.
But unfortunately, while we may laugh here now – on a much more serious note, the harsh reality is:
- Australia is 51st in the world for internet speeds, falling behind developing nations, the US, most of Western Europe & Japan
- Our biggest incumbent, the former monopoly Telstra, remains THE most profitable incumbent in the developed world
- We have some of the highest prices for phone services in the world
- We all know about the Royal Commission into the banks, yet we have four times as many complaints to the TIO than there are to the Financial Services Ombudsman
And let’s not forget;
- Australia was one of the last countries in the world to deploy genuine broadband…
To put things bluntly;
- The ACCC’s annual market review last month estimated Telstra’s fixed broadband market share at 50%.
- In 2013 - that is pre-NBN build – for the same report, Telstra’s fixed broadband market share was estimated at 50%.
- So, in 5 years– no change has been observed. Telstra still holds 50% market share.
For those of us who believe in real competition, this is a very worrying trend.
We are only 2 years from the end of the NBN rollout, and ‘time’ IS running out…
The bottom line is in a competition sense, we’ve spent all this time and money - not to mention the opportunity cost for this nation - yet have achieved precisely, in competition terms, nothing.
Year after year after year – NO change.
The objective of the NBN was not for the taxpayers to take away Telstra’s capital burden and leave it just as dominant. NOR was it for the big 3 (Telstra, Optus and TPG) to have their stock value decline due to NBN market erosion.
It wasn’t to have the 3 biggest incumbents hold 88% of the market.
Nor was it for the challenger sector representation, Vocus plus others, to slip from 18% to 12% last year.
And to mirror this, it wasn’t for mobile to have the challenger sector similarly represent only 11% as MVNO’s in market share.
Going back to 2007, the intention behind NBN’s inception was to strip out the core problem of Telstra’s massive market power by separating the network from the retail markets.
This would, finally remove the incentive for - and the ability of - the monopoly fixed network owner to discriminate between one retailer and another.
With this foresight in 2001, the ACCC hit the nail - on the head.
The basic logic was this – if you separated the capital-intensive, monopoly network build and operation business from retail - you could create for the first time a genuine level playing field.
Innovative, dynamic, aggressive new retail entrants could come in, pitching new, diverse and cheaper products and quickly erode the market share of the incumbents who were defending legacy monopolists’ margins.
The goal was to give Australians THE most dynamic, competitive market in the world from which to buy.
It was to motivate change, challenge the status quo and increase the diversity in offerings to the benefit of CONSUMERS, BUSINESSES and OUR ECONOMY.
Ladies and Gentlemen, the topic of my speech today is “Real Competition”.
The CCC is excited because today we are announcing a new chapter in the journey of our alliance. We are representing the challengers, the innovators, and the emerging players who are banding together to fight for that most important of principles – real competition.
I would to like to acknowledge the many CEOs, as well as both new and old members of the CCC, who are here with us today.
It is great to have so many diverse companies unite. Together we encompass a broad spectrum of the market – from carriers, wholesale enablers, software innovators, disruptors, retail MVNOs, as well as cloud security providers.
What is also extremely pleasing is the addition of members who specialise in ‘regional Australia’, an area that knows all too well the effect of not having real competition.
As many of you know, Rene Sugo usually speaks in this spot. Today he handed over to me to make the case – and I thank him for that.
So, what IS ‘real competition’?
A JP Morgan report from 2012 gives us a good benchmark for what we thought success would look like.
With an effective competition policy and a healthy advanced economy, challengers should move to occupy 30% of the market share. Some may call this the ‘innovation wedge’.
Real competition would reduce market concentration of homogenous supply.
A flourishing wholesale market would encourage challengers to enter with ease and thrive, with the flexibility to offer real product differentiation to consumers and businesses alike.
Based on the Akamai study, Japan, Canada and the US are all in the top 10 for the fastest broadband speeds in the world.
In these countries, the combined market share of the challengers (outside the three-largest incumbents) represents between 40 and 50% market share.
And the largest incumbent represents only 20-30% market share.
So where are we at today?
In Australia, the challengers (that is, those other than the 3 largest incumbents) represent only 12% of the NBN fixed-line market.
We can argue that consumers on the whole have choices confined to a market characterised by a homogenous supply of services. And consumers today do pay a 29% premium compared to OCED average for fixed-line naked broadband.
But let’s check - is this different for mobile…?
No, it’s not. In Australia today, challengers represent 10-11% market share of retail mobile subscriptions.
Australia MVNO’s do not enjoy equal and non-discriminatory terms.
So, what does mobile look like around the world?
In many economies, MVNOs represent between 18-38% share of retail subscriptions
For example, in Europe, the share is reported to be
- Netherlands at 38%
- Germany at 35%
- the United Kingdom at 18%
- and Spain at 16%.
In Japan, it’s around 28 per cent.
So, in other words, in many other comparable countries the market share for challengers sits at a much higher level.
Australia has one of THE thinnest wholesale MVNO markets in the world.
In Australia, MVNOs do not enjoy equal and non-discriminatory terms.
These terms can go as far as to dictate –
what you sell,
how you sell and
who you sell to.
Ladies and Gentlemen - the innovators, the challengers, the new entrants are being stifled and suppressed by a communications system which only perpetuates the power of the big incumbents.
According to the ABS, we have around 10 million households.
They currently aren’t the ones, with the choice to decide.
It is also not the small businesses, who have the choice to decide.
Yet it IS ‘those businesses’ that are THE most vulnerable to high prices, unreliable access, slow speeds, and uncertainty.
We believe small businesses need access to communication services that perform well against other developed nations.
These businesses make up almost half the private, non-financial sector workforce and are producers of one third of the nation’s production… They need to stay ahead.
Real competition would enable consumers and businesses to have better access, more choice, improved pricing, stronger performance and increased reliability.
Real competition would allow us to challenge the status quo, to introduce an expanding and diverse menu of products and services, and to let the innovation wedge - driven by the challenger sector, reach 30%.
Real competition would close the gap between us, and our neighbours.
Since being founded in 2004, the CCC has been fighting the fight for real competition
The CCC and its member companies have spearheaded many significant price and service innovations that have been enjoyed by consumers.
This has included: ADSL2+, Voice Over IP networks, Naked DSL & ULL unbundling, the first 3G mobile network and a raft of price innovations such as unlimited data plans, no lock-in contracts, flat national call pricing and all-you-can-eat bundles.
These have provided better value, more flexibility and increased choice for consumers and businesses alike.
These price innovations are now commonplace. It’s what consumers have come to expect.
Over the years, the CCC has also achieved many regulatory and policy outcomes such as:
- Slashing cost from 40c to 2c for regulated mobile termination
- DSLAM access into exchanges
- advocating for the ACCC’s Market Study and NBN CVC cost reductions,
- and even fighting through the courts to force Telstra to abide by competition rules.
This shows that the ‘little guys’ CAN and DO achieve, BIG things.
Our Coalition was formed to unite the challenger competitors and give us one voice – a consistent and credible voice.
We continue to work with regulators, with government, and with incumbents.
Real competition is the cornerstone of, ‘what drives us’. In 2018 - this has not changed.
Despite all the hurdles we face - we see our role as being ever more important.
With changes in the digital sector, the CCC has undergone an evolution. Not only to passively reflect the expansion of the comms spectrum, but also to actively expand the criteria of its membership catchment.
And that is why today, it is with great pleasure that I announce the relaunch of our association, under the new name:
COMMPETE – the New Alliance for Competition in Digital Communications.
Our alliance has evolved, and long-time members and new members have united together.
I am delighted to introduce to you some key members who are with us today:
Julian Ogrin, CEO of Amaysim,
Damian Kay, CEO of InABox ,
David Tudehope, CEO of Macquarie Telecom,
Rene Sugo, CEO of the MNF Group,
Nicholas Demos, MD of MyRepublic,
Joel Harris, MD of Tasmanet,
We also have Vocus and Southern Phones in our membership.
Our membership is diverse, with broad expertise, and companies at different stages in their business evolution, in different parts of the industry.
We cover carriers, wholesale enablers, software innovators, disruptors, MVNOs, as well as data centre and cloud security providers.
Between us we cater for a broad spectrum of the market from residential, small business, to wholesale, enterprise, and government.
We are particularly pleased to have regional players. As we all know, it is those that face some of the biggest hurdles through lack of choice.
We have come together to build a stronger alliance, as equals. We represent the challenger market, and our goal is to influence decisions to ensure real competition is at the centre of all thinking, where all design starts
- open and timely access
- a flourishing wholesale market
- the opportunity for new companies to enter and thrive; and
- for the challenger sector to grow the innovation wedge to 30% market share across BOTH mobile and fixed
This country needs an open and affordable, high quality, fixed line broadband network.
Commpete DOES want the NBN to be a success.
We missed the opportunity to get the original regulatory settings right for the NBN.
So, let’s not have history repeat itself.
For MVNO and 5G, let’s get the settings right – right from the very start.
Let’s have Australia ranked in the top 10 nations for fastest, reliable and affordable broadband.
By fighting for real competition through our alliance – Commpete – we CAN be the key that can unlock Australia’s potential.
We urge you to come join with us to:
Stand for diversity
Stand for innovation
Stand for real competition
And challenge the status quo
We want you to join so we are more diverse in representation of the digital communications markets – but we are also stronger together
Join us in the fight to bring the challenger sector to 30%
Get equal and open access
Get a better deal for consumers, businesses and the economy
And deliver competition – REAL COMPETITION.