VODAFONE CEO: There's $25 billion worth of untapped digital business in regional areas

(Photo by Chris McGrath/Getty Images)

Recent research from PricewaterhouseCoopers shows there’s $49.2 billion over 10 years in untapped digital business in Australia, with 53% in areas outside Australia’s inner metropolitan areas.

Small businesses and the economy generally, will see significant benefits by embracing mobile and internet technologies to transform how they work.

The benefits are not limited to tech companies or those in the middle of CBD’s – they range from construction through to farming.

Embracing internet connectivity could see a small regional factory save time by using a cloud based accounting software such as Xero, or a tradie being able to do all his paperwork with a customer on his mobile. Australia’s vital farming industry has the most to gain, with mobile technology allowing producers to better to compete with foreign companies selling product into Australia. They could implement wireless irrigation controllers, mobile payment systems, mobile distributing systems, and keep better tabs on their competitive environment.

Farmers like Darrin Lee from Bligh Lee Farms in Western Australia are already embracing technology to help their business. Lee uses moisture probes which are accompanied by a tailored application for Darrin’s property that collect data on temperature, wind and relative humidity and transmits this information in real time to his mobile devices. This has saved him several hours of work each week of manual data entry which has allowed him to work in other areas.

Vodafone CEO Inaki Berroeta.

But not all farmers have adequate and affordable access to mobile internet technology. Vodafone Australia CEO Inaki Berroeta spoke yesterday at the Digital Transformation in Agriculture Breakfast at Parliament House, saying regional Australia needs better choice to mobile access in the 21st century.

“Agriculture is one of the areas where Machine to Machine (M2M) technology can make the biggest differences, but changes are needed to ensure farmers don’t miss out on the opportunity to take advantage of advances in technology,” Mr Berroeta said.

“M2M can enable farmers to work smarter and faster, such as remotely monitor and adjust soil moisture levels, or receive live updates from the paddock on their tablets.“

Speaking to Business Insider after the event, Berroeta said the most important change that needs to be made is a government reform into the universal services obligation (USO). This is the agreement that sees the government pay Telstra over $300 million each year to maintain payphones and a copper network in regional areas. Years ago this was crucial, but now Berroeta points out that the money is being spent on an outdated network where we are already investing in the NBN.

“USO today is nearly 300 million annually and is being used to maintain and sometimes increase the fixed voice network, but we are already using billions on the state of the art NBN,” he said.

“The Government spent $110 million on the blackspot program, if they used the USO [funding] we could have four blackspot programs rather than one and that is a lot more important.”

The federal blackspot program helps subsidies telcos, usually Telstra and recently Vodafone as well, to build towers in regional areas where the lower population might not present them with a profitable business case otherwise. However, in the past, funding from the USO has allowed Telstra to build more regional towers, giving it market power in many regional locations.

“The USO is a roadblock to effective competition in regional areas, which means customers are paying more than they should. In fact, the Centre for International Economics found the price premium paid by Australians for telecommunication services is $3.1 billion each year,” Mr Berroeta said.

“What we are saying is the USO needs reform, the government needs to spend money in areas private investment would not maybe get a return and if the government keeps investing this money, they need to do so in a way that it can be shared by the three players so we can offer these people choice.

“The issue is that the public money is going to Telstra without any obligation of sharing any infrastructure being built with public money. If it is being built with public money it needs to be open so we can’t force the dominance [of one network] in single areas.”

Australia’s second biggest telco Optus agrees, submitting a proposal to review the Universal Services Obligation (USO) in July last year.

“These arrangements require Telstra to maintain its legacy copper network at an annual cost of some $330 million, or a potential total cost of around $6.6 billion over the contract period,” the telco wrote.

“Whilst network infrastructure is increasingly being tailored to meet customer demands for data and IP (internet) traffic, the USO policy appears to be frozen in a 1980s analog paradigm.”

The Regional Telecommunications Review was commissioned by the Communications department last year, with the committee releasing their report in October, backing up both Mr Berroeta’s thoughts as well as those of Optus.

“After the regional telecommunications report, it’s basically been saying the same thing we have been saying. The government now needs to answer to that report and that report is clearly calling for a reform,” Berroeta said.

“There is only one entity that is against this reform but it is very hard to hold this position.”

The government’s response to the review is due at the end of this month.

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