The ‘invisible force’ needed to sell productivity makes for lousy politics
Building physical infrastructure, such as roads, rail or even a new bridge, is easy. It can be grasped and marketed by politicians with the offer of real-world upside for users.
Even the inevitable cost overruns are quickly forgiven when a new metro line is shuttling passengers from one end of the city to another.
But productivity? That’s about streamlining processes and cutting red tape – stuff you can’t see or touch. The benefits are real, but they’re very, very abstract. And here’s the thing: not everyone wins when productivity gets a boost.
It’s going to be a tough sell for Telstra chief executive Vicki Brady as she urges the Albanese government to take political heat on something as lifeless as spectrum. That’s the radio frequencies shared by telcos, broadcasters, satellite operators, emergency services and even some private networks for business.
Spectrum is finite and Brady has put the case for a reallocation of this invisible force during her National Press Club address in Canberra on Wednesday. Spectrum should be considered a “scarce natural resource” to be set aside for communications, particularly in regional Australia.
Brady has previously spoken about Telstra’s role in delivering connectivity in a digital age, painting her network as the hero that will make it happen.
And for this, spectrum is needed – lots of it – to support the rollout of Wi-Fi, cloud computing, and terrestrial and satellite mobile services.
The challenge is that much of the lower-level spectrum is used by television, beaming digital images into homes.
Telstra’s view is that this is not the smartest use of some of that spectrum any more, and television should move further down the dial.
The telco sector added $47bn in value to the economy last year. This figure will get higher as AI is started to be used at scale, driving a significant increase in network traffic.
As abstract as it sounds, others have gone through the exercise.
Telcos won out in the UK late last decade amid a furious debate. They wrestled the 700MHz band from the country’s broadcasters, which were bumped down to a lower frequency. The exercise wasn’t cost free. Broadcasters had to invest in new transmission equipment, including broadcast towers. For most households, it came down to the hassle of retuning their TV sets. Even with more broadcasting taking place via streaming services over broadband, Australian free-to-air broadcasters are unlikely to go down a notch without a bloody fight.
All up, the UK government spent about $1.2bn “clearing” the spectrum, helping broadcasters along the way. However, the government reaped almost double that by reselling the vacated slice of spectrum back to telco operators for 5G mobile and broadband services.
Critically, it was sold as an infrastructure project.
Brady says the time is right to be having the conversation framed in the productivity debate.
The demands on telco networks are getting even bigger. With newer tech like low-orbit satellites becoming a commercial reality and the data-hungry 6G mobile networks likely to be rolled out from early next decade, the window for spectrum reform is starting to close. Brady’s comments now suggest the thinking among telcos is that low-orbit satellites, while capable of providing basic audio and good broadband services, will play a significant role sooner than later when it comes to expanding networks.
“There is a lot changing,” Brady says. “I do think that gives us an opportunity to really step back, because spectrum is such a scarce natural resource. As a country, if we want to achieve our ambitions, how do we really allocate and use that to maximise benefits for Australian consumers and businesses?”
Alarm bells start ringing among Telstra’s rivals when the biggest telco player in the land starts talking about a better use of spectrum. Telstra has the most holdings and the highest market share.
Telstra’s multibillion-dollar spectrum portfolio was one of the biggest factors behind the competition regulator’s decision to block a regional tie-up between Telstra and TPG/Vodafone.
At the time, the ACCC also called out spectrum as a “scare resource and an essential input into the operation of mobile networks”. It said its scarcity “makes it a substantial barrier to entry or expansion”.
Brady insists the call is not to deregulate – with players such as ACMA still to have a role overseeing and carving up spectrum in auctions. Rather, it’s a case of reallocation for an entire industry.
The timing of Brady’s press club address was an important test for business in the wake of Jim Chalmers leading the charge for a productivity push. The Telstra CEO, who is a board member of the Business Council of Australia, says it is a big step forward that business and government are on the same page. But the next step was just as critical.
Beyond spectrum, Brady nominates streamlining the 500 pieces of separate legislation and regulation covering the telco sector. There’s also the challenge of rising regulation between different levels of government. This week, the BCA issued a challenge to the government to cut compliance costs by 25 per cent by 2030. Telstra, for its part, is obliged to print and distribute physical copies of the White Pages – an oddity in an age of instant search, and when there are more mobile devices than landlines.
“I’m really encouraged that we’re having the right conversation on productivity,” Brady says.
“There’s good consultation that’s happened and I’m now keen, like everyone else, to now move to action.”
Matos provides cover
ANZ chief executive Nuno Matos swinging the axe on 4500 jobs has given others perfect cover for their own cost-cutting sprees.
Cross-town rival National Australia Bank now has 410 jobs set to go, particularly in technology and enterprise operations. There will be some offshoring, and more than 100 roles are set to move to its tech hub in Vietnam.
News of the new round of NAB cuts came as CEO Andrew Irvine was in the Vietnam this week looking at the bank’s back office operations in Hanoi and Saigon.
Elsewhere, regional lender Bendigo Bank recently outlined plans to cut 100 jobs as part of the “first phase” of a productivity program. Bendigo chief Richard Fennell will outline his second big cost-cut program in November.
Back at ANZ, Matos this week said the job cuts were designed to reduce duplication across the bank as well as complexity. But the details, apart from the hefty $560m charge of the cost out program, remain thin.
As Barrenjoey bank analyst Jon Mott puts it: “Surely these staff and contractors added some value?”. Matos has a strategy day planned for October 13. Answers, hopefully, to follow.
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Here’s the thing about selling productivity: it’s all down to intangibles.