December 1994 The Hon. Michael Lee MP Minister for Communications and the Arts Parliament House CANBERRA ACT 2600 Dear Minister On behalf of the Broadband Services Expert Group, I have pleasure in submitting to you the Group's final report, prepared in response to the Government's request of December 1993. This report follows on from our interim report published in July 1994 to recommend a strategy to enable the community, industry and government to position themselves to realise the potential of new networked communications services. The Group is convinced that Australia has the talents and resources to be a major player in the future communications society if it acts to take advantage of the present opportunities. The Group was encouraged by the positive contributions a great variety of Australians made to its work and to the development of a framework for new communications services. It urges the Government to work with all Australians to begin planning now for our communications future. Yours sincerely BRIAN JOHNS Chairman CONTENTS terms of reference ii preface iii summary and recommendations iv setting the scene iv the final report iv recommendations x 1 The communications society 1 introduction 3 the communications platform 3 the communications society: principles for implementation 7 looking to the future 9 2 Evolving networks and services 13 communications evolution 15 developing an interactive broadband services industry 21 3 A culture of innovation 31 the need to innovate 33 involving the community in change - pilot projects 39 4 Providing access 49 universal reach 51 regulation 62 5 Building industries and services 71 creative infrastructure: a cooperative endeavour 73 network infrastructure 73 services and applications 75 content creation 80 research and development 85 standards 86 export promotion 88 6 A strategy for development 89 an evolutionary approach 91 a national strategy for new communications networks 92 a leadership role for government 93 looking to the future 96 APPENDICES A The terms of reference and this report 100 B Broadband Services Expert Group - membership 105 C Summary of the interim report 106 D Submissions and responses to the interim report 111 E Sub-group on services and applications 114 F Broadband services - studies on potential demand 115 GLOSSARY 116 TERMS OF REFERENCE The inquiry will examine the technical, economic and commercial preconditions for the widespread delivery of broadband services to homes, businesses and schools in Australia, having regard to matters such as: 1. current and likely future broadband services and the customer demand for these services; 2. the relative costs/benefits of delivery by optic fibre compared to other means, drawing on local and overseas experience; 3. the extent to which broadband services may be delivered by technologies other than optical fibre or through a staged evolution of technologies; 4. the industry development and export opportunities including the potential for increased employment; 5. the degree to which industry will be able to take advantage of the opportunities presented; and 6. the potential benefits to and impact on the Australian community of the availability of new broadband services. The inquiry will also examine: 7. the research and development effort required; 8. the educational and training requirements for economic use of the proposed services options; 9. the funding mechanisms for investment in such services; and 10. the role of international standards. The inquiry will identify: 11. options for cooperation among relevant interest groups; and 12. an appropriate role for government within the context of existing telecommunications policy. PREFACE The Broadband Services Expert Group was established by the Commonwealth Government on 8 December 1993 with the task of examining the technical, economic and commercial preconditions for widespread delivery of broadband services to homes, businesses and schools in Australia. The Group's membership was Mr Brian Johns (Chair) Mr Duncan Black Dr Laurie Mackechnie Dr Dennis Cooper Mr Brendan McManus Mr Alf Forster Mr Gerry Moriarty Associate Professor Patricia Gillard Mr Ross Ramsay Mr Bruce Gyngell Dr Ian Reinecke Mr Allan Horsley Mr Trevor Wisemantel Brendan McManus became a member of the Group in August 1994 following the resignation of Dr Laurie Mackechnie. The Group thanks Dr Mackechnie for his contribution whilst he was a member. Much of what we have to say in this report results from the extensive public consultation program the Group undertook and the studies it commissioned. People with particular interests and expertise also attended five discussion sessions, covering the social impact of broadband services, universal service, the 'new creators', infrastructure funding, and funding of multimedia content. In conjunction with Telstra, the Group held a series of public seminars in every State and Territory during October 1994, to give consumers and small business a chance to have a say on the issues and opportunities that new technologies present for them. We thank the Consumer Telecommunications Network, the Small Enterprise Telecommunications Centre and Telstra for their help in organising these seminars; we thank the participants, too, for sharing their ideas. We also thank the many people and organisations who gave us submissions, assisted with the preparation of case studies, and responded to the interim report, published in July 1994. Their contributions have been invaluable, and they illustrate the wide degree of interest Australians have in their communications future. Appendix D contains a list of the people and organisations that made submissions and responded to the interim report. The Group commissioned consultants to examine potential demand for new communications services across a range of sectors_education, health, domestic and entertainment services, business, government and telecommuting. The consultants' reports will be published shortly; we commend them to readers interested in finding out more about what services may be available and the prospects for demand. The Group also participated in a study of multimedia prospects by Cutler and Company, which was commissioned by the Department of Industry, Science and Technology. The report of that study, Commerce in Content, was published in September 1994. The process of consultation and commissioning studies was in itself an important beneficial outcome of the Expert Group's work. We strongly commend to government the value of continued community consultation on these issues. Electronic access This report can be obtained electronically from the Department of Communications and the Arts' World Wide Web server at the following address: http://www.dca.gov.au or by anonymous FTP from: www.dca.gov.au (using your e-mail address for a password). Copies of this report can be obtained through the Department, telephone (06) 279 1258. Comments on the report can be e-mailed to: bseg@dca.gov.au SUMMARY AND RECOMMENDATIONS SETTING THE SCENE This is the final report of the Broadband Services Expert Group. Before we begin it is necessary to recap what the Group said in its interim report. The interim report of July 1994 expressed our excitement at the possibilities and challenges that lie ahead in Australia's communications future. We saw the key challenges as how to develop new interactive services; how to build the infrastructure to deliver the services; how to make access to the services equitable; and how to create our own content. We argued that broadband services have the potential to transform the way we live, work and play. Australia's communications system provides a good basis for future broadband networks. These are already being developed, with carriers announcing plans for broadband hybrid fibre-coaxial cable networks - but to take advantage of opportunities available in content creation, infrastructure development and services provision, we need to build a 'creative infrastructure', an environment that will help develop a critical mass for the industry. Government could stimulate these developments by becoming a leading-edge user of networks. We said that access for all Australians would be a challenge, because commercial funding may not be forthcoming for areas of lower population density. Access could be provided through institutions such as schools, libraries, medical facilities and community centres. We noted too that there will be a range of delivery methods, each with an advantage in particular conditions - satellite; hybrid optical fibre-coaxial cable; MDS (microwave); and asymmetric digital subscriber line (video delivery using existing telephone lines) - but that all-fibre systems are unlikely to be viable for residential services for another 10 years. Digital switching and other elements needed for integrated broadband networks may not be widely available for at least five years. The report said that evolution of broadband cable might be a staged process, from one-way analogue through digital and two-way systems to switched broadband services. The interim report also raised some unresolved questions and concerns about the impact of broadband services, including privacy, copyright and censorship. Networks should be designed to enhance individuals' control over uses of information about themselves and, unless there is a strong case to do otherwise, current community standards should apply to broadband networks. Our work since publication of the interim report has reinforced our earlier views, particularly our examination of a number of case studies which have demonstrated the potential benefits to the Australian community through the thoughtful planning and implementation of modern communications services.1 THE FINAL REPORT The communications society This report is about how Australia can take up the challenges posed in our earlier report and build new communications services for the future. Profound changes lie ahead, but meeting them is not just a matter of building infrastructure and technology. Rather, we need to build a platform that will underpin our future society - promote social interaction, enrich education, improve health services, enhance the delivery of government services, and improve competitiveness for businesses and the economy. We also need to manage change sensitively. As a society we have choices to make. If we ignore the opportunities we run the risk of being left behind as other countries introduce new services and make themselves more competitive: we will become consumers of other countries' content, culture and technologies rather than our own. Or we could adopt new technologies at any cost, regardless of possible wasted investments, the creation of a class of 'information poor' who won't be able to use the technologies, or threats to our privacy that may follow. This report puts forward a different approach, one based on developing a new, user-oriented strategy for communications. The emphasis will be on communication among people, with their access to networks and privacy protected. It is also a strategy based on an evolutionary approach to infrastructure, changing as services develop and the community needs them. Evolving networks and services The exact shape of future technologies is far from clear. What services will be sent down the 'pipes' - and be paid for by consumers - is even more unclear. Planning for change is vital, but in doing so we need to build on existing infrastructure and services and avoid locking ourselves into solutions that may prove inappropriate. All around the world countries seem to be facing a difficult choice: to wait and see which services are available before taking a technological plunge, or to make a bet on a particular technology now. To steer a course through this dilemma, the Group believes that Australia needs a managed evolutionary approach to the development of infrastructure and services. Many of the services people think of as forming part of the 'information superhighway' are already or will be available over the existing telecommunications network. Electronic mail and classified advertisements, booking services, retail and banking services, and access to databases around the world are some of these. Recognising this forces us to confront the question of the kind of network needed for our future communications services: narrowband - to support voice, e-mail and other low data rate services - or broadband - to support high data rate services such as video. Our answer to this question is 'both'. Thus this report is not just about 'broadband': it is about new interactive communications networks regardless of whether they fit a particular bandwidth definition. In many cases digital narrowband solutions will evolve to broadband ones. The spectacular growth of the Internet and commercial on-line services is evidence of strong demand for new communications services. We can build on that demand now to create an on-line services industry that will enable creators, large or small, to make interactive content for the new medium, building on the initiatives outlined in Creative Nation, the Government's cultural policy statement. An interactive multimedia industry can develop using narrowband platforms and CD-ROM that will enable participants (creators, users and service providers) to develop their skills. The next step should be to take advantage of the much greater capabilities offered by the Integrated Services Digital Network (ISDN)2 platform, for both business and home applications. This would certainly enhance the services available to people and the opportunities for creators and service providers, and it would provide the basis for building skills and experience for the future. More flexible tariffing options and increased availability of ISDN are needed for this (Telstra intends to make ISDN available right across its network as it digitises all its exchanges over the next five years). Although pay television is currently driving the cable roll-out in Australia, in the long run the success of broadband services will not be dependent on what happens to that industry. It can provide some of the impetus in the short term for infrastructure development, but interactive broadband services which will deliver beneficial education, health and business services will require the development of fibre and cable technology capable of supporting high-bandwidth two-way services. A culture of innovation Just introducing new communications technologies and services is not enough. To take full advantage of the technologies and services, industry and society will need to integrate them into their activities - a complete re-engineering of processes rather than just using new technology to perform current tasks. A real commitment to change will be necessary, in professional roles, organisational structures, and social and cultural attitudes. Perhaps the changes will be most intense in the business, health and education sectors. The education sector has a particular role to play: it can build on the talents and enthusiasm of young Australians, offering them a vast array of curriculum choices and enabling them to spread the benefits of new communications networks through the community. Pilot projects will be necessary if we are to prepare ourselves for change. Such projects can encourage cooperation between individuals, the community, network operators, schools and service providers. They will also help to familiarise participants with some of the new services and technologies and provide a testbed for developing new communications services and applications. This report highlights a number of areas in which we believe pilot schemes could play a major role. New communications services can make a great contribution to education in Australia. But more is involved than just providing connectivity and upgrading equipment: we need a national strategy for networking in education, to help integrate networked services into educational practices and structures. In the health sector, patients will have access to a wider range of high-quality services regardless of where they are. A patient at a regional hospital or outback clinic will be able to have a highly skilled specialist located in a capital city hospital participate in their diagnosis using communications services. Business will be able to operate more efficiently by sharing resources, reducing development and production times and increasing the productivity of skilled resources by reducing or eliminating travel and associated costs. A clear message from our work is that new communications services, for a relatively small incremental cost compared with what we spend on education, health or business systems overall, can produce dramatic improvements in the capability of these sectors. Providing access Access to the network for both users and service providers is fundamental. This access must be equitable if our society is to share the benefits of the emerging communications environment, but our geography means this will be no easy task. How can we provide for people living in rural and remote areas, or those with special needs, or poorer people, services equivalent to those available to people living in wealthy city areas? It would be easy to recommend - but very difficult for government and network operators to implement - that everyone be provided with access to communications networks as soon as possible. The cost of providing broadband capacity to all Australians has been estimated at between $25 and 40 billion: how does the community judge whether such a sum would be better spent on communications at the expense of, say, roads and hospitals? Questions such as these will not be easily resolved. Perhaps we shouldn't even expect them to be resolved now, in advance of better information about future services and how they will be delivered. We need to have a sustained debate about communications needs and how they should be met. It is the Group's view, however, that we must begin the process of giving people access now. Encouraging digital narrowband access, including ISDN, will bring a great range of useful services to many people, including those in rural areas and those with special needs. While this is not as dramatic as immediate optical-fibre cabling of the entire country, it can play a major part in spreading the benefits of the communications age, and should not be overlooked. We can help to spread access (and help people learn to use networks at the same time) by providing network connections to schools, libraries, hospitals and community centres - at first narrowband, and then broadband links as they become available. Developing new services on narrowband networks will help to build demand for broadband services. We should not assume that providing community access points will solve all problems, though. Training for new users will be important in spreading benefits: this report has some suggestions for implementing a training program. The other side of the access debate is about access for service providers - those people and companies wishing to deliver services over networks. In the interim report, we said access to the network should be open to content providers regardless of their size. Nothing since has persuaded us to change that view. This report discusses the pivotal role of open access arrangements following the period of transition from pay television to interactive broadband services. Privacy concerns loom large for many people. Can we rely on the goodwill of those who will collect information about us, about our buying habits, about what we like to watch or who we like to communicate with? We examine these issues and put forward the view that the privacy of users needs to be protected by codes of practice under the Privacy Act. Access to information on networks is affected by copyright laws. There must be a balance between the rights of intellectual property holders and facilitating access to material (on reasonable terms and conditions) for multimedia content creators. Part of the solution to the difficulties faced by the multimedia industry with copyright will evolve from negotiations in the market place, but there remain issues that need to be considered when developing a copyright regime for future communications networks. The Copyright Convergence Group has recommended creating a new right of transmission to the public. We support that recommendation, and the Government's decision to ask the Copyright Law Review Committee to conduct a wide-ranging review of the Copyright Act. The review should look at outstanding copyright issues associated with multimedia. There are also some practical questions about offensive material on new networks. In this report we note the difficulties associated with future censorship and suggest some broad principles to be followed. Network operators and service providers should be required to offer the capacity to restrict children's access to objectionable material. Building industries and services A positive approach to new communications networks is one thing; ensuring that industries are able to grasp the opportunities that accompany the building and use of these networks is another. In the interim report we introduced the notion of a 'creative infrastructure'. In this report we explore further the question of how we can develop it. The pace at which content, services and applications, and communications networks develop should be closely linked. We advocate a coordinated approach to fostering these three elements and encourage industries and companies to increase their share of world markets by cooperating in pre-competitive activities such as export promotion. We were impressed by the many innovative services and applications being developed in Australia. Examples are scattered throughout this report, including multimedia access to Film Australia's archives, the creation of virtual galleries and museums, delivery of educational and health services to people in various parts of the country, and business applications such as an electronic music ordering system for record stores. Australia can develop a competitive advantage in services and applications ... but only if we provide the right environment and encouragement to build expertise in applications while networks roll out. We need to have content to develop services, as well as to reinforce our cultural values. This was a central theme of the interim report - and it was endorsed by the Government in Creative Nation. We are encouraged by the Creative Nation initiatives such as the Australian Multimedia Enterprise, the Multimedia Forums and the Cooperative Multimedia Centres - and we would like to build on them. We can do this by encouraging firms to invest in projects supported by the Australian Multimedia Enterprise, and by using Multimedia Forums to help target government programs more effectively and to find ways of improving access to audiovisual material by the multimedia industry. Cooperative Multimedia Centres and industry need to work closely in devising curricula and in funding. Great opportunities exist for Australian manufacturing and construction to provide and install equipment for domestic networks and exports. Our industry has proven itself efficient, innovative, and among the best in the world in many areas. Australia's telecommunications equipment industry has become one of the fastest growing export industries in the manufacturing sector. The Government's industry development programs should be extended to all cable network operators, to provide a base for maximising those opportunities. Australia's R&D base in the industries of convergence needs further development if it is to be vibrant, well balanced, and create competitive advantage. Small and medium-sized enterprises particularly should be encouraged to increase their investment in R&D. We need to keep up with international standards; a forum to address networking standards might help us do this. In Creative Nation the Government said that the Australia Council would give high priority to content for the 'information superhighway'. It also recognised the need for an international marketing strategy. We strongly support this. In our view, however, we need an export strategy that brings together Australian expertise in communications networks, covering not only content but also hardware and services. A strategy for development We face a complex set of technical, social, economic and regulatory issues. Demand is uncertain, as are the precise nature of technological change and the social implications of new communications. Yet we cannot turn our backs on the new networks. So how do we move forward? Australia needs a strategy for dealing with the dilemma. A central element of that strategy should be a managed evolutionary approach, building on opportunities offered by existing services and infrastructure. The strategy must also be based on an environment in which the participants can be brought together in the public interest and policy developed in response to changing technologies and services. Coordination between all participants will be vital to ensuring that Australia is prepared for the future. The strategy must balance development of infrastructure with development of services. It needs to take advantage of the services and technologies available now, while at the same time building a platform for the future. The strategy would draw together several key elements: education and community access; industry development; and the role of government. The most important part of the strategy is leadership. We need leadership at the highest levels, within government and the community. The Group has noted, and strongly supports, the announcement by the Prime Minister that he will chair a broadband services council. This announcement accords well with the Group's belief that responsibility for the national strategy be supported at the highest level by an advisory council comprising visionary and informed people from industry and the community. We suggest that the council be called the National Information Services Council and be an advisory and consultative body that would bring together industry, carriers, service providers, consumers and researchers, under the chairmanship of the Prime Minister to pursue public objectives. Part of the reason for proposing such a body lies in our experience with the public consultation process we undertook. That process brought together people from across the country, from a very wide range of viewpoints and interests, and had them talking together, making connections and exchanging ideas. The need for this interaction will not go away just because we have produced our final report. As we said in our interim report, there should be wide consultation with the community in planning broadband services. But the Council would do more than promote consultation. It should also advise government and industry on future issues. And it would support the multimedia initiatives announced in Creative Nation by advising on how we as a nation should be proceeding with development of multimedia content. An element of the strategy must be to promote the role of government as a leading-edge user of communications services. This role, which would encourage the spread of services and help create a market for local companies was one of the main findings of the interim report. Since that report was published, governments around Australia have continued to develop networks and make them accessible. In this final report we argue that we need to take these initiatives further. Improved coordination of efforts, a 'whole-of-government' approach, and some further stimulus to agencies to improve service and reduce costs by adopting new communications methods are necessary to provide this focus. We support a Ministerial committee to coordinate policy in this area. The Group has seen ample evidence of the talents and enthusiasm among Australians to take advantage of the opportunities arising from new communications services. We consulted widely and participated in some fascinating debates. In this final report, we make recommendations on how to bring visions to reality. But this is only the beginning: the whole community must pick up the challenge if we are to reap the benefits. RECOMMENDATIONS A NATIONAL STRATEGY FOR NEW COMMUNICATIONS NETWORKS The Expert Group believes that new communications services will be fundamental to Australia's future. Communications industries themselves - whether producing equipment, content, or carrying services - are among the fastest growing industries, and are making a vital contribution to our exports. Even more importantly they are crucial to the competitiveness of virtually all other industries. Australia's future depends on its success as an information society. Because our business competitiveness will be so dependent on the use of new communications services, the Expert Group believes that, while the following recommendations are largely directed to government, business also must be encouraged to take up the challenges offered and to play its part in the development of an information society. Our success must be built on the talents and enthusiasm of Australians, particularly business and young people, and on widespread reach of new communications services. The Expert Group proposes that a National Strategy for New Communications Networks be implemented based on three key elements: education and community access; industry development; and the role of government. The strategy would be underpinned by a commitment to education and equity of access. The new communications technologies have the potential to improve the quality of learning in schools, and to make a major contribution to equity in educational opportunity across the country: Links to schools and other community centres The Expert Group recommends that, with the spread of broadband infrastructure, broadband links be provided to all schools, libraries, medical and community centres by the year 2001. The Cooperative Multimedia Centres should also be linked to this network. In the interim, the Group recommends that schools and libraries be connected to available narrowband digital links for access to information services such as the Internet. The Group recommends that connections be funded on a dollar-for-dollar basis by the State/Territory and Commonwealth Governments. National Strategy for Broadband Networking in Education The Expert Group recommends the development of a National Strategy for Broadband Networking in Education in anticipation of the extension of high capacity links to educational institutions by 2001. The Group recommends that Open Net be funded to administer a program of pilot projects on broadband services such as the sharing of visual resources through, for example, image libraries. Complementing the schools-based education elements, there needs to be an approach to training and use of services within the community: Training The Expert Group recommends that, as communications services evolve: Funding for extension of new infrastructure and technology to educational institutions (such as TAFEs) should include significant training and support components. Funds should be made available to community organisations for targeted training programs. Government funded support for training facilities and personnel should be made available at libraries and telecentres. Community applications fund The Expert Group recommends that the Department of Communications and the Arts administer a program to support innovative applications of communications services by the community sector. Initial funding of $10 million should be made available over three years. The Group proposes action to stimulate the development of Australian industries as the second leg of the strategy: Industry development plans The Expert Group recommends that the Government require all cable network operators involved in broadband service provision to implement industry development plans for the telecommunications supply industry. Extension of networks The Expert Group recommends that telecommunications carriers and broadband network operators be required to inform government annually of their strategies for upgrading their networks, including the expected level of digitisation of existing network services, and the expected extent of broadband network coverage. This requirement should be reviewed by the year 2000. Services and applications The Expert Group recommends that a priority element of a national strategy for new communications networks be acceleration of the development, demonstration and use of networked services and applications. Local content The Expert Group recommends that providers of broadband entertainment and information services be obliged to commit at least 10 per cent of their expenditure on content to new Australian content. The obligation should be reviewed by the year 2000. Business and government must play a role, both as major users of communications networks and by working together to develop an appropriate regulatory environment to support the introduction of new services. The Expert Group believes that the business sector is well placed to make use of new services, and must use its leverage within the Australian and international economies to lead the adoption of innovative and beneficial broadband services. The Government's role will be especially important in leading the development of services that have particular social benefits: Government use of networks The Expert Group recommends that the Commonwealth Government should establish a fund, to be allocated on a matching-funds basis, to projects for new networked information services put forward by agencies. Preference should be given to those projects with the greatest user benefits and widest applicability as a model for other government services. The Commonwealth should wherever possible participate in pilot projects such as those proposed by Telstra. Open access to networks The Expert Group recommends that, once interactive services develop, the communications regulatory regime should promote open and equitable access arrangements for users, service providers and broadband carriers (recognising the necessity of a period of transition from pay television to broadband services to ensure there is no delay in the roll-out of cable in Australia). This should be based on diverse and flexible pricing arrangements, pricing transparency in the provision of carriage and content, and commercially negotiated connection charges. Privacy The Expert Group recommends that the privacy of users of advanced networks be protected by developing a self-regulatory scheme for network participants within the framework of the Privacy Act. Conditional access systems The Expert Group recommends that existing classification systems be applied to equivalent material commercially available on the new networks. The Expert Group recommends that network operators and service providers be obliged to offer facilities, such as personal identification numbers, through which parents can restrict access to particular types of material. IMPLEMENTATION To support the National Strategy, the Group believes that some continuing mechanisms for providing advice and for consultation with the community on future information and communications issues will be needed. National Information Services Council The Expert Group recommends that, to provide leadership for the national strategy, the Government establish a National Information Services Council, chaired by the Prime Minister, and in his absence the Minister for Communications and the Arts, and including visionary and informed people drawn from industry, creators, carriers, users, consumers and researchers. Ministerial Committee on National Information Services The Expert Group recommends that the Government establish a Ministerial Committee on National Information Services, to be chaired by the Minister for Communications and the Arts, with membership including the Ministers for Finance, Industry, Science and Technology, Consumer Affairs, and Employment, Education and Training. The Committee would have responsibility for coordination of policy across the relevant sectors, including government use of networks. The involvement of the States is vital, so the Council of Australian Governments should be involved in the discussion of national information services issues. The Group believes that there may be a need for other bodies to support the Council on particular issues. It recommends that the Council should review existing arrangements as well as look at the issues of how best to assess community needs for new communications services and develop standards, and consider the need for a sub-group on standards: Broadband Standards Advisory Group A Broadband Standards Advisory Group, chaired by industry, to address networking standards issues and to advise on standards development and implementation. The Group also believes that there is a need for further research into the communications needs of consumers as services evolve in the future. The Group considers that a Commonwealth government research agency, such as the Bureau of Transport and Communications Economics, would be appropriately placed to conduct this research. Research into Consumer Needs The Group recommends that a Commonwealth government research agency, such as the Bureau of Transport and Communications Economics, should be funded to coordinate a program of social research to identify the needs of particular groups of telecommunications consumers that are not currently being met. Chapter 1 THE COMMUNICATIONS SOCIETY OVERVIEW New communications technologies and services in the coming decade will transform society. We must manage this change sensitively to ensure that it is consistent with our social, economic and cultural goals. We see communications networks as a platform supporting social interaction, education, health and government services, business relations, and our communications with the world. Many of the new services will be interactive - they will allow users to explore and communicate, and to create and distribute their own material. INTRODUCTION In the next decade, large-scale communications investments in Australia will pave the way for many business, government, information and entertainment services. These services could change forever the way business and government operate and how we communicate with our colleagues, families and friends. Over time, even the significance of international borders and the design of towns and cities will change. We are now entering the communications age. Massive quantities of information can be rapidly transmitted to any corner of the earth. And advances in communications and information technologies will continue to accelerate in the coming decade. These changes, in combination with a population able to take advantage of the opportunities they present, will be as transforming as the spread of literacy. In Australia, we have often rapidly assimilated new technologies into everyday life. Video cassette recorders are now in over 80 per cent of Australian homes, personal computers in about 30 per cent.3 In the space of a few years the mobile phone has become an essential business tool, a way for parents to keep in touch with their children and for users to be contacted any time, almost anywhere. Technological progress can be frightening, especially when it demands skills we don't have. We now know that if new technologies are to be widely accepted they must be easy to use and they must offer the kinds of services that people want. Services, rather than technologies, will determine the extent to which we embrace the new opportunities. It is up to us as a community to ensure that information and communications services are used to create the kind of society we want. Many issues will have to be confronted in the coming years: what type of video material should be accessible through computer bulletin boards? what about privacy and copyright? do you want data kept on what you've ordered through a home shopping service, or what movies you've watched? would you be comfortable with your medical data or bank records being transmitted over the network? Physical infrastructure questions will also be important in developing the type of communications network that we want. Creative Nation, the Government's recent cultural policy statement, emphasised the role of information and communications technologies in making cultural products accessible to all Australians. In creating and disseminating cultural materials we are weaving a fabric that unites us as a nation and advancing our economic well-being. Of course, our communications systems are far more than this. They are the means through which we establish a sense of community, maintain personal relationships, conduct our business, entertain ourselves and build links with the rest of the world. And access to information and the opportunity to participate fully as a member of society are fundamental to our democratic processes. THE COMMUNICATIONS PLATFORM The Group believes that, rather than seeing the communications network as a system that connects us to phones, televisions and computers, we should see it as a platform underpinning our society, supporting a diverse and interwoven range of social, business and community activity. The new communications networks will provide a platform for greatly improved communication and social interaction. Less-structured family lives and increasing geographic dispersion and travel are creating demands for more flexible forms of personal communication that transcend barriers of place and time. People are looking for ways to make better use of their time and to promote social contact. To facilitate this interaction between people, consumer viewpoints need to be taken seriously in the design of, and access to, the basic tools and systems. Systems need to be designed with interactive communication in mind. With such a platform, we need no longer feel constrained by the 'tyranny of distance' - virtual communities of interest are being created across the world. But the scope for improved communication between people will be just as great closer to home. The communications platform will support education services. In this regard, we agree with several submitters' views about the importance of the education sector. We are convinced of the central role that education will play in the communications society. Many new opportunities for learning will present themselves. Just as importantly, we agree that the education system itself must contribute to the development of a clever country by producing people who are comfortable with new communications tools. As John Paul College in Brisbane submitted, there is a 'need to use our national education system to produce a generation of young men and women who will emerge capable and anxious to use all modern technology (but, especially, broadband services) to maintain Australia's international competitiveness'.4 The communications platform will support improved health services and better delivery of government services. Improving health care delivery to rural and remote as well as metropolitan areas, the shortage of qualified and expert medical practitioners in some regions, and the export potential of new services will drive the demand for telemedicine. For government, the attraction of new communications services will lie in improving the way it does business and in enabling it to provide better services for people. The platform will also enhance business relations. This report discusses a number of new business applications and the profound effects they are having on business practices, organisational structures and office locations. Mobile access to central databases, document, data and graphics transfer capability, group calls and video conferences are some of the emerging services. Electronic commerce (electronic trade between business partners) will become increasingly important to the 'bottom line' of firms. Networks can provide the platform for these services - but to make the most use of them businesses must take a fundamental look at their operations to build network services into their processes. Taken together, these applications will influence our trade and industry competitiveness. Globalisation of markets is increasing the pressure to adopt information-efficient practices and leading to restructuring of many industries. A country left behind in communications runs the risk of falling behind in the global competitiveness race as well. Other countries recognise this. For example, The Canadian Information Highway discussion paper published by Industry Canada argues that 'if Canada does not match the efforts of its competitors in accelerating infrastructure development, opportunities for network, product and service development - and the resulting economic growth and new jobs - will be seized by firms in other countries'.5 Or, as our own Prime Minister said recently, 'We are fast approaching a moment in our history when how well we play the information game will determine how well we prosper.'6 Finally, the communications platform will bring with it new industries, and new opportunities for existing industries. Creative Nation highlighted the possibilities for interactive multimedia services. The Expert Group strongly believes that Australia has the potential to develop a vibrant multimedia industry. CD-ROM is an early manifestation of this. Interactive multimedia services developed for on-line delivery will become increasingly important. Not all this multimedia content will result in huge export earnings - some will be very small scale and even personal - but we do have the opportunity to take a significant share of the world's multimedia content production. The innovative design and development capabilities of the Australian workforce will allow existing industries, including equipment manufacturing, to take advantage of the many opportunities the communications platform will present. Many of these industries are rapidly approaching world best practice. In the interim report, the Group identified a number of key principles that it believed should underpin the development of broadband services in Australia: It must be based on our tradition of inclusiveness and avoid creating or adding to inequalities. Access to the network should be open to content providers regardless of size. Broadband services should reinforce our cultural identity. Broadband services should contribute to the economic and social well-being of the community. Private investment and competition should be promoted wherever appropriate. We need to promote involvement of Australian industry in developing leading-edge applications and content, in building and running broadband services networks, with carriers working in partnership with industry. Government should actively encourage the development of broadband services. We need a flexible regulatory framework which supports openness of access and keeps pace with change. Responses to the interim report and our public consultations strongly supported these principles. This report is about the 'how' of broadband services - how they might be introduced in Australia. Many implementation details are discussed but, rather than being a blueprint for the path to the communications age, this report should be seen as setting in motion a complex evolutionary process, providing a starting point and framework through which some common understanding of the issues is gained and agreement reached on a strategy for implementation. What sort of communications future do we want? In looking at how the communications platform might evolve, the Group found it useful to consider what sort of communications future we as a community want. The following possible approaches to the communications future are put somewhat starkly, but this will help to clarify many of the issues that emerge in discussions of how new technologies and services might develop. Unplanned development Development without an overall strategy could lead to under-investment in communications infrastructure and services, perhaps because governments fail to recognise the value of public infrastructure or because corporations are risk-averse or unwilling to finance what might be seen as a public good. As other countries introduce new technologies and services, Australians will have relatively fewer communications options and reduced access to information. Control of our media will continue to be relatively concentrated, and individuals will have limited opportunities to create and distribute their own material. Health and education budgets will continue to grow because of the failure to adopt new service delivery opportunities, and services in rural and remote areas will be limited. Access to government services and information will be difficult and costly. Our businesses will be uncompetitive and our quality of life will suffer. We will become a nation of consumers of other countries' content, culture and technologies. A technology-driven approach In contrast, we could seek to implement new technologies at any cost. If this were the case, investment would be driven by the availability of technologies rather than the needs of consumers or demand for services. Many existing services would be replaced by electronic services, resulting in reduced social and community interaction. Those without computer skills or who cannot afford consumer equipment would become isolated by their lack of access to information and services. Classes of information 'haves' and 'have-nots' would emerge. Privacy would be eroded by lack of controls on the storage and use of personal data and the use of new technologies to monitor citizens. Electronic junk mail would flood the networks. Computer billboards containing pornography and graphic violence would be easily accessible. A user-based approach We believe that neither of the approaches just described represents an outcome the community would want. Instead, we pose an approach based on developing a new, user-based strategy for communications. Under such an approach, investment decisions are made after consultation with consumers and community groups. Technologies and services will support our social, economic and cultural goals. In contrast to the current pattern of one-way mass media information distribution, there will be an emphasis on creation and communication by and between individuals and communities. Services will enhance social, business and family interaction. Training in computer skills will be widely available to the community. Mechanisms will exist to ensure that sectors of the community are not denied access to basic services and information by excessive service charges or network tariffs or lack of access to consumer equipment. Both electronic and personal services will be available. The design of systems and equipment will reflect ways people are willing to provide electronic access to their homes and businesses. People will have control over the kind of content that is accessible, and when and how it enters their personal space. THE COMMUNICATIONS SOCIETY: PRINCIPLES FOR IMPLEMENTATION The Group believes that we need to follow a number of implementation principles if we are to reap the benefits of the communications society: A managed evolutionary approach to infrastructure development and the concurrent development of content and services will deliver results that best meet Australia's economic, social and cultural objectives. Investment in communications infrastructure should be driven by demand for services and content rather than the availability of technology. Government should encourage private sector use of broadband applications and adopt a leading-edge role to demonstrate the benefits of broadband services. The potential impacts of broadband services require a high level of consultation between government, industry, consumers, service providers and network operators in planning the development of infrastructure and services. Services and technologies should be 'user-friendly' and facilitate social interaction and community participation in the creation of content. Interactive (as opposed to one-way) services are essential if we are to reap the benefits of broadband services. Evolution of the existing telecommunications network should recognise that the basic communications service will in the future include a range of enhanced digital services. Local industry should be encouraged to take advantage of the opportunities presented by development of the network and services. The evolution of an information infrastructure for all Australians Australia has a proud history of equitable access across a range of services. Almost all Australians have reasonable access to water and electricity, health and education services. And telephone, postal and broadcasting services have been provided on a uniform-price basis to cities, towns and much of the country. Underlying this has been the Australian sense of social equity. Many services have been provided to remote areas by cross-subsidies within government programs. This does not mean that the services are uneconomic. The return to the service may be in the form of benefits that cannot be captured by the service provider. Primary industries, for example, may not have been able to make such a substantial contribution to Australia's economy without governments providing access to basic services. Recently, however, there has been much debate about the future provision of basic services, including: what should be considered a basic communications service, and will this in time encompass a range of services not currently available? how can Government best achieve its social objectives in a deregulated environment? will economic efficiency considerations result in a reduced level of services to 'non-economic' areas and the creation of significantly different levels of service? Although it is not yet clear that the telephone service will one day be replaced as the basic form of communication, the availability of a collection of information services may at some stage demand that every home has access to a high-capacity two-way data service. Restricted access to interactive health and education services, for example, might severely disadvantage some sections of the population. During the next decade, the existing telecommunications network and the broadband cable networks currently being established in major metropolitan areas will evolve to offer a range of interactive information and enhanced communications services. The combination of opportunities created by this range of services - the capacity to communicate with one another, to educate ourselves and gain access to government and cultural information, and to participate as members of 'virtual' communities - will determine how significant communication networks will be for people in the future. We have the opportunity to build a platform that enables us all to be creators and distributors, to control what information reaches us, and to contribute to community debate unimpeded by editorial control. Services can cater to the needs of the disadvantaged and disabled, young and old, and community and minority groups. New communications networks will offer access to a collection of services that may be fundamental to full participation in future society. Any discrimination in access to these services, be it based on affordability, geography or whatever, may threaten Australia's egalitarian and democratic foundations. Managed deregulation of telecommunications has delivered benefits to all sections of the community. But the prospect of rapid change in the communications sector raises the possibility of significant inequalities in access to services. A managed evolutionary approach to development of Australia's information infrastructure will maximise investment efficiency and minimise the prospect of uneven distribution of benefits. A diversity of technologies The next decade will see the introduction or expanded use of a number of technologies: satellite, microwave, asymmetric digital subscriber line (ADSL - video transmission over existing telephone lines), assorted mobile services, digital broadcasting systems, as well as optical fibre and coaxial cable, individually or in hybrid forms. Different technologies will be chosen for different areas, depending on the terrain, the population density, the coverage required, and the type of service being delivered. This diversity and the continuing rapid development of the technologies make it almost impossible to be prescriptive about which technology should be used in any particular circumstance. But they do give grounds for hope that at some time in the future most services could be economically delivered to most areas, whether through cable, a local wireless transmitter, or a domestic or international satellite. Timing and costs are dependent on unpredictable rates of technology refinement: the economics of service provision can change dramatically with each new development. The existing telephone network, too, is being continuously upgraded. Over half the network already has digital capability. In the next five years, such capacity will be installed throughout Australia, providing almost universal access to enhanced digital services. Existing telephone connections already enable databases to be explored, low-resolution video services to be transmitted, interactive information services to be navigated, and bank transactions to be performed. Upgrades to digital networks will enable this to be done better. This capability to send and receive information from anywhere in the world means that in many ways the communications age is already upon us. Pay television will soon be available through cable, satellite and microwave networks now being established. At some stage, the cable and telephony networks are expected to merge, allowing the two-way transmission of video and other high-data-rate services. The cost of providing broadband capability to all Australians has been estimated at between $25 and 40 billion.7 The Group believes it is not feasible to consider expenditure of this size in the near future for two main reasons: The technologies needed for such a network are not fully developed. Further detailed analysis and evidence of the potential benefits of broadband networks is necessary before the expenditure can be justified. The Group does consider, however, that many of the benefits of broadband services can be realised in the near term if provision of services to the community is accelerated through connections to schools, hospitals, libraries and community centres. These connections will enable students to gain access to worldwide reference material, hospitals to send medical data to specialists for immediate analysis, and the public to gain access to a range of on-line government and information services. The evolutionary path: a multi-faceted approach The Group proposes that the managed evolution of the communications infrastructure in Australia be based around three concurrent and continuing processes: commercial investment in communications infrastructure, encouraged, where appropriate, by competition in the telecommunications and broadcasting sectors. The range of services available will be expanded, local content encouraged, and a broadband services industry established in a climate that supports the continued development of projects such as those already emerging: the Telstra, Optus and other proposed broadband networks; satellite and microwave services, ADSL, and digital broadcasting systems. Consideration should, however, be given to establishing mechanisms to ensure equitable access to a range of services; upgrading existing networks, with attention to network and service availability and affordability; government provision of enhanced communications links to schools, hospitals, libraries and community centres, to ensure widespread access to new services, and the availability of training to ensure that people are able to use the services. LOOKING TO THE FUTURE In the interim report, we said that we were adopting a 10 year time frame. Within this time, we expect a vibrant interactive services industry to have been established in Australia. We cannot confidently say that every home, school and business will have a broadband connection by this time, but we do expect that the many elements of a broadband services industry - creation of content, packaging of services, consumer equipment, training and education of consumers - will have seen sufficient progress to position Australia among the world leaders in creating and using new communications services. If so, Australia will be well prepared for the twenty-first century. In the years ahead, and as the matters raised in this report are reviewed, several issues will need further consideration: the evolving role of communications services in achieving broad social and cultural policy objectives, including access, basic service and social equity issues; how to generate savings through efficiencies in government service provision, especially in the health and education sectors, and improved service quality; whether the commercial sector will provide an appropriate level of investment and what government can do to encourage investment; business efficiency, international competitiveness and capacity to export will increasingly depend on access to quality communications services; the building of an open-access 'public space', connecting government agencies, the business sector, cultural institutions, community groups and individuals. The coming decade will see continued growth in trading of information products and services. Globalisation of markets will result in fundamental restructuring of many industries and the creation of global company networks through which tasks and projects are allocated around the world. Some industries will support isolated pockets of expertise; others will need an extensive local infrastructure to develop the critical mass necessary to establish a self-sustaining national industry. The 'convergence' phenomenon brings together the telecommunications, broadcasting and computing sectors, but it will affect a far greater range of industries. Integrating the disparate cultures of these industries will present considerable challenges: we are familiar now with announcements of mergers, joint ventures and new consortia designed to bring together the range of skills, program material and control of delivery channels necessary to secure a dominant role in the multimedia environment. For Australia, we believe that some industry development issues may warrant special attention. One is content creation and distribution, which enables cultural values to be expressed and a national identity to be reinforced. In many creative fields, Australia has world-renowned artists producing works portraying uniquely Australian values. We need to foster an environment in which all Australians can explore our museums, libraries and art galleries, gain access to archival footage, watch Australian programs, and create and distribute their own material reflecting contemporary Australian life. We already have established industries in many creative fields. In others, such as multimedia products, we are very much in the early stages. We need to nurture the skills to build a viable industry. But we also need to develop the links between the elements of the broadband service delivery chain so that we can convert our skills into services available to all Australians, and for export, by electronic means. The remainder of this report presents the Group's ideas on how it sees Australia managing the transition towards the communications society. It looks at the evolution of the physical infrastructure, the ways we can ensure that we all benefit, and what might be done so that our own cultural life is reflected in the services we use. The Group sees the communications infrastructure not as a collection of wires and satellite dishes and computers, but as a platform to support a vibrant and equitable cultural and social life, efficient businesses, and communication with each other and the rest of the world. Rather than imposing itself on us, the communications platform offers us the opportunity to create the sort of society we want to live in. The One Stop Statistics Shop The aphorism 'you can do anything with statistics' may be a cliche, but it may become the slogan for a new electronic service from the Australian Bureau of Statistics (ABS). It's not surprising, in the information age, to find the ABS in the vanguard as an information provider. Now its Information Warehouse is making ABS data, and that of other government agencies, available in an accessible and highly useable electronic form. At its heart is a 'data catalogue' which provides details of topics, populations, geographical areas, classifications and keywords. It also drives powerful tools which can be used to access the specific information required and present it in a form desired by the user. The system will be available on existing communications networks, however it will move to higher bandwidth links as the volumes of data, speed of computer equipment and demand increase. The potential for the system covers not just other government agencies, it also represents benefits for students and business. For example, a potential shop owner searching for a location for a specialty store could access demographic data to determine population density, incomes and other retail outlets. The resulting information could be invaluable in ascertaining the likelihood of their business being a success. The ABS Information Warehouse is an example of computer technology being harnessed to add value to the service provided by the Bureau. It has also shown potential to win export income with the recent award of a contract with the Asia Pacific Economic Co-operation (APEC) Secretariat. In partnership with a Singaporean firm it will install a version of the Information Warehouse into APEC's communications network. Other opportunities, involving public and private organisations, are being explored. Chapter 2 EVOLVING NETWORKS AND SERVICES OVERVIEW Technology capabilities and costs are changing rapidly. Optical fibre costs continue to fall, new wireless services are being developed, computer memories are expanding, and digital processing techniques continue to reduce the data requirements of many services. It is difficult to predict the nature of the technology environment we will find ourselves in beyond the next few years. In the Group's view, however, there is a clear path towards development of our communications industry - both infrastructure and services - starting with the existing telecommunications infrastructure, progressing to a digital services platform, and finally moving to interactive broadband networks. Existing standard telephone connections to homes, with a computer and modem, can support a range of interactive information and communications services, including e-mail, classified ads, theatre and airline reservations, bookings and payments. Cooperation between content creators, service providers, network operators and computer companies could rapidly and cheaply establish a significant on-line services industry, using existing telephone lines, in preparation for the migration of video and interactive multimedia services to the broadband network. Within five years all telephone exchanges in Australia will have been upgraded to support enhanced digital services such as ISDN. ISDN uses existing telephone lines and is relatively cheap to introduce, but offers a higher data rate than standard telephone lines. Services can be transmitted more rapidly and limited video services are possible. Businesses can transfer files and graphics, hold video conferences, work together from separate offices on drawings and designs, and use voice, fax and data services simultaneously. In around five years' time, with a developed digital communications infrastructure, an established interactive services industry, and five further years of technological progress as a guide, we will be well placed to implement an interactive broadband network and realise its potential. COMMUNICATIONS EVOLUTION The interim report identified three technology developments contributing to the emerging potential of communications and information systems: advances in computer processing capacity; the rapid development of digital video compression capabilities; and the large bandwidth of optical fibre. But just how the technologies will evolve is still far from clear. There are many possible paths forward, many possibilities as to what sort of infrastructure we will have in the future, and many factors to consider in selecting technologies. We cannot look at the technical issues in isolation. Consumers are a critical element in the evolutionary process. They will determine which services thrive, which services enhance our lifestyles and afford us greater opportunities. We might have a fair idea of what the technologies will look like, but it is the services they support and the content they carry that will ultimately determine the technologies' futures. The penetration and affordability of consumer equipment, a population with the necessary skills and training to use the services, a consumer base willing to adopt new means of interaction, and prices competitive with those of existing or alternative ways of doing things will also be influential in a technology's success. There is a great demand for 'information' services. We all spend much of our lives producing or consuming information - through conversation or watching television or reading a newspaper. But exchanging information is really about communicating, and this is the essence of the changes ahead. At the heart of the transition towards the communication age will be replacement of the existing broadcasting model of distributive (one-way) information services by a system in which consumers create and have access to information, and exercise choice and control in their communications. In the communications society, people will be able to send or receive large amounts of information - video, audio, text, graphics or data - anywhere, any time. The next decade will see some quite remarkable applications of these capabilities. We can expect future networks to: support broadband, or high-data-rate services, such as high-quality video; allow people to create and distribute their own material; support, and interconnect, both fixed and mobile systems through a combination of cable, satellite and local wireless services; enable multiple parties to be connected to a broadband or narrowband service, rather than the one-to-one nature of the existing telephone service; support interactive and switched (addressable) two-way transmission, as the telephone network does now; be global networks. We have perhaps become accustomed to technological progress and can accept such networks as quite plausible, yet they assume developments that are still many years away. Technologies are still being developed, like global satellite systems, mobile broadband services, international standards for video transmission and broadband switching services - but we need to plan now for their future availability. Among a host of other planning requirements, we need global standards, interconnection between the various technologies, and platforms that support multiple services. The starting point Almost every house in Australia now has a telephone connection. We receive radio and television services, and in some places satellite services. A rapidly increasing part of our population has mobile phones, around 30 per cent of homes have personal computers, and a vast majority have video cassette recorders. Most metropolitan centres also have access to ISDN, which supports enhanced digital services over telephone lines. Australia has one of the world's highest per capita levels of optic fibre, with some 1.5 million kilometres installed, reaching to within 700 metres of about 50 per cent of homes. Against this, there is a very low household use of modems, which enable computers to send and receive data over telephone lines, and the on-line services industry in Australia is very small. Digital satellite and terrestrial microwave pay television transmissions are expected to commence soon, and the first cable pay television services will be available in limited areas of Sydney, Melbourne and south-east Queensland. The existing network: a wealth of interactive services Many submitters have told us that the existing telecommunications network in Australia is already capable of supporting a large range of interactive services. With a computer and modem and a standard telephone connection the general public can gain access to a large number of information and communications services, including creating and sending computer files, transaction and booking services, and searching databases within the local community, nationally, and even internationally. Many such services are already available through the Internet and other on-line networks. However, the on-line or dial-up services industry is still relatively undeveloped in Australia. Few local organisations make services available electronically and, with only a few per cent of houses having a modem, the immediate potential market is fairly limited. However, the number of home computers in Australia suggests significant potential for market growth. In Chapter 1 we said that interactivity will become essential to reaping the benefits of new communications services. Broadband cable networks currently being developed will not offer full interactivity for several years. For this reason, early development of a local on-line services industry based on existing telecommunications networks should be a priority in the communications and information sector. We believe that such an industry can be established at relatively little cost. Many services could be offered over the existing network, and the scope for creativity by consumers and service providers will ensure a diverse range of services in the near future. On-line interactive services will have a significant commercial place. For instance, retail price lists will enable consumers, using intelligent 'searching agents', to quickly locate the cheapest products, and restaurant choices will be easier with on-line menus. Snappy photos The days of photo libraries full of bulging folders of transparencies are definitely numbered. A new software package from Telstra called the Visual Service Broker is set to turn access to images into a computer-oriented communication service. The Visual Services Broker will allow users to browse through any number of quality multimedia databases, selecting images to a scrapbook which can then be requested for electronic transfer as digitised photo-quality images. These can then be incorporated into popular desktop publishing packages, running in Macintosh or Windows environments (with appropriate negotiation of usage fees), and then printed. The new software is also capable of vending other media electronically, such as text, video and sound. The system is currently being trialed with the State Library of New South Wales, which has an extensive repository of digital images. Plans are also under way for an advertising and printed catalogue distributor, Shomega, to utilise the new software for the benefit of its customers. Initially this will involve an on-line catalogue publishing service for major clients. Shomega will establish digitised product image libraries that clients will be able to access, downloading images for use in catalogue production, then electronically returning the desktop published catalogue to Shomega for production and distribution. The process will reduce the possibility of errors in production, say where incorrect images are used, resulting in the need to reprint catalogues. But the major benefit will be the speed and ease of access to materials for production of publications. These examples are forerunners of new applications in media, travel, government, advertising and general publishing, which have the potential to earn export income either from the provision of information content services or exports of technology as a turn-key system. Almost wherever search and information costs exist, interactive services are capable of quickly and cheaply improving outcomes. We already know a narrowband platform will support . e-mail . banking and transaction services . classified advertisements . Yellow Pages . restaurant and theatre bookings . transport timetables and reservations . government services . worldwide discussion groups . retail services . fast food orders The interim report discussed the 'critical mass' necessary for a self-sustaining industry. Many of the costs of establishing an industry are borne by the early entrants. A coordinated approach by the major players is needed to get things moving. Once the industry is established, the low marginal cost of adding services should rapidly attract new service providers. The growth of Internet use in Australia suggests a strong demand for on-line services. We now need to work from this demand to create an on-line services industry. Such an industry will provide clear economic benefits through the adoption of electronic services; significant employment opportunities in the service provider sector; training and skills development opportunities for employees in the multimedia content industry. The next step: enhanced digital services Once the elements of an interactive services industry are in place and a consumer base established, competition between service providers is likely to bring about rapid service innovation and quality improvements. One impediment to the quality of some services will be the characteristics of the existing telephone network. Although many services can be transmitted over existing lines, the data rate constraints of these lines limit the speed of transmission. There is, however, already a range of enhanced digital services available in most cities. The ISDN platform still uses existing telephone lines, but it supports a higher data rate than the standard telephone connection. This means that it can be implemented quite cheaply, by installing processing equipment at customer premises. The higher data rate is also sufficient for slow-scan or low-resolution video such as interactive home shopping services, video games between remote players, and videophones. Within three years Telstra expects all metropolitan telephone exchanges to have been upgraded to support narrowband digital services, and within five years all rural exchanges will be capable of supporting these services. The developing Optus access and switching network is fully digital. The flexibility and benefits of digital services are beginning to be more widely recognised by businesses. Services such as file transfer and video conferencing allow for efficient communication with regional offices and major clients. Voice, fax and data services can be used simultaneously. The Group believes that the capacity to support digital services must be translated into widespread availability and adoption of these services. This could be achieved by carriers ensuring that all exchanges offer this facility as soon as practicable. Encouraging an on-line services industry Rather than just offering marginal operating efficiency and productivity gains to business and industry, exploitation of new communication and information services will be essential to future business competitiveness and survival. In the last decade computers have become indispensable tools for information management; in the next decade linking those computers into global networks will be just as critical. The current communications environment in Australia - universal coverage of the telecommunications network, the significant and growing use of personal computers, and Australia's educated population, with a demonstrated willingness to adopt new technologies and services - presents very favourable circumstances for the immediate development of an on-line services industry. To develop this industry content creators, service providers, network operators, equipment manufacturers and software companies will need to cooperate. We believe that forming an on-line services industry is an essential step towards developing an interactive broadband services industry. It will also provide new communication and content creation and distribution opportunities to the wider community. As ISDN services become widely accessible throughout Australia in the coming years, it will be important to move from standard telephone connections towards ISDN's higher data capacity to increase the range and quality of available services. The Group believes that current ISDN pricing does not encourage widespread adoption of these services and that availability of flexible tariffing options would stimulate demand for enhanced digital services, as has happened in the mobile and long-distance sectors. Ultimately, the migration towards interactive broadband services over the existing network will be constrained by the data capacity of the copper wire pairs used in standard telephone connections. These copper pairs can support the higher data rates of ISDN and additional equipment at each end of the line may enable them to carry some video services through such techniques as ADSL. But the existing network is unlikely to be able to support two-way broadband services at least until these copper pairs are replaced by coaxial copper or fibre-optic cable. DEVELOPING AN INTERACTIVE BROADBAND SERVICES INDUSTRY The Group expects a vibrant interactive services industry to develop in Australia in the next five or so years. Within this time, ISDN should be widely available, widely used, and possibly considered a 'basic' communications service. This industry can be established at minimal cost, and will deliver significant economic benefits. A community trained in and comfortable with the use of interactive services will demand new and innovative services. The current rate of technological progress suggests that within five years, the state of development and costs of various technologies will be very different. In some areas, progress seems to be fairly steady - computing, for example, has simple 'rules' for advances in memory costs and processing speed. In other areas progress has been more rapid than expected, and in yet others it has been slower. In these circumstances, and given the relatively undeveloped state of the interactive content creation industry, it is difficult to make firm predictions about the best technology for a future broadband services infrastructure. The technologies In the interim report we surveyed the technologies that might one day deliver broadband services. We said that optical fibre is capable of supporting far higher data rates than other technologies and is especially superior in the delivery of high bandwidth two-way services. We also said that it was currently more expensive than cable alternatives such as hybrid fibre-coaxial cable (that is, optical fibre cable from the local exchange to a central point in each local community and coaxial copper cable for the connection to each residence). Information at your finger tips Imagine having access to much of the information contained in the National Library of Australia, and over 2000 libraries in Australia and New Zealand, from a computer in your home or office. That possibility is about to become a reality as the National Library works on developing a major information service. Called the National Document and Information Service, by late 1996 the collections of all the participating libraries will be both more accessible and more widely used by all sections of the community - rural or remote communities, students, researchers, teachers, lawyers, journalists, consultants and others. Powerful access tools will make for quick, easy and high quality searches for information. Initially the service will not have a high broadband content. However, the system's underlying architecture has excellent capabilities for broadband service delivery. The architecture is the same as that under development for delivery of digital video services to households. The service will be available through the Internet, which will mean access will be possible from personal computers in offices, places of study and homes. As a result, National Document Information Service is expected to become a major information resource for Australians and New Zealanders. The initial capital cost (estimated at $10 million) will be met in part by government loans, ultimately paid for on a cost recovery basis. The service will go along way towards overcoming the tyranny of distance - for all users across the region, the library will end up being as far away as the nearest phone. We noted too that wireless services such as cellular microwave might one day support high-bandwidth personal services such as video-on-demand, and might even support two-way broadband services. The cable networks currently being implemented, based on hybrid optical fibre-coaxial cable, will provide the only broadband links to residences over the next few years that are likely to become capable of interactivity, and it is quite possible that they will become the two-way broadband networks of the future. We therefore believe that coverage of the cable networks should be extended over time, such that the range of services delivered by these networks is made more widely available and a substantial base for a future interactive broadband network is in place in preparation for the broadband communications era. We emphasise, however, that at some stage in the future a more economic means of delivering interactive broadband services might emerge from a rapidly advancing technological environment. Decisions on technologies are most appropriately made by network operators on the basis of their commercial judgments. But network operators are just one of many industry players. Industry planning - by service providers, equipment manufacturers, content creators and consumers - will be facilitated by a greater awareness of likely infrastructure developments. The Expert Group recommends that telecommunications carriers and broadband network operators be required to inform government annually of their strategies for upgrading their networks, including the expected level of digitisation of existing network services, and the expected extent of broadband network coverage. This requirement should be reviewed by the year 2000. Digital satellite transmissions have begun in the United States and will soon be used in Australia for the delivery of pay television. Increasing satellite transponder powers and more efficient transmissions mean that the size of the dishes required to receive the signals is rapidly decreasing. In the coming years hundreds of new satellites will be launched worldwide, many with footprints covering much of the Asia-Pacific region. Constellations of low-earth-orbit satellites could also offer a variety of global mobile satellite communications and information services. Australis and other microwave licensees will soon commence analogue microwave transmissions in capital cities and major regional centres. Digital terrestrial television systems expected to be introduced towards the end of this decade will expand the number of channels available from the current six to about twenty. Narrowband digital mobile services are already available, and in the next few years a range of enhancements and mobile data services will be offered as the mobile network coverage is extended, as it is integrated into the public switched telephone network, and as the intelligence of the network is exploited. However, for a range of reasons it may not be possible to provide enhanced communications services to all Australians - cable services cannot be economically provided to low population density areas; satellite footprints might not cover all of Australia; and the coverage of terrestrial transmissions such as microwave services is restricted by the local terrain. Of the range of wireless services, only cellular microwave appears likely to support two-way or fully interactive broadband services in the foreseeable future. Cellular microwave systems use low-powered transmitters located perhaps in each local community. They operate at a much higher frequency (around 30 gigahertz) than conventional microwave. The large amount of spectrum available in this frequency range makes it plausible that each household in a cell could have a dedicated channel over which, say, video-on-demand services could be transmitted. Each household might also be able to transmit its own video or data services back to the local receiver/transmitter, and through it link into the public switched telephone network for two-way broadband services. Although optical fibre remains the best way of supporting high-bandwidth two-way services, the cost of opto-electronic converters currently constrains the use of optical fibre to deliver services to the home. It is not yet evident that home users need the data capacities made possible by optical fibre. It might be argued, however, that the history of communications suggests that available bandwidth, memory and processing power are invariably fully utilised. We expect the next five years to provide clearer evidence of the likely level of community demand for information and communications services. Armed with this knowledge, and a clearer picture of trends in the costs and capabilities of emerging technologies, we will then be well placed to determine an appropriate next step in the development of a broadband communications infrastructure in Australia. Current developments in cable During the next few years distributive broadband cable networks will be installed in major metropolitan areas of Australia. These networks will be based on hybrid fibre-coax technology. The network being constructed by Telstra will initially be separate and operate independently of its existing telephone network; it is likely that a new network such as that proposed by Optus would have one cable per household carrying both subscription television services and telephone traffic. The digital technology for these systems is still relatively undeveloped. They are expected to begin with analogue video services, limiting the number of channels to around sixty. This system operates in much the same way as existing broadcast services: all the channels are transmitted down every cable, but conditional access systems determine who can switch into which channel. The system is relatively simple because services do not need to be 'switched' at the local exchange to be sent to each customer. The transition to digital transmission will increase the number of channels available. The timing of the transition will depend on demand for the services, and future technology developments affecting the cost of digital video servers and consumer equipment. Costing new communications networks A recent study by the Communications Futures Project in the Bureau of Transport and Communications Economics estimated the cost of providing communications links to homes by a range of delivery technologies. The study assumes a 10 to 15 year time frame for the roll-out of each delivery platform. The estimated costs for each technology are based on universal take-up of the services where the technology is available. The study assumed that electronic and opto-electronic component costs will decrease substantially over time. Other costs, such as cable laying, may not fall significantly. The average cost per home in inner urban areas of each delivery platform, excluding program costs, for distributive video services is estimated to be $1260 for a hybrid fibre-coaxial cable service $1500 for an ADSL service $1000 for a satellite service $500 for a microwave (MDS) service. The study also found that providing an analogue distributive service to every home in Australia by hybrid fibre-coax would cost around $25 billion - this could be upgraded to a digital interactive service for an additional $5.4 billion, and further upgraded to a limited communicative service for an additional $11 billion - thus the total cost of a limited communicative hybrid fibre-coax service by 2005 would be over $40 billion. Almost 60 per cent of this amount is for rural and remote areas, which represent about 30 per cent of households. a distributive ADSL service could be provided to one million outer urban households by 1999 for about $1.7 billion. This assumes that ADSL units are produced in large volumes, with consequent rapid decreases in costs. While the cost of a fibre-coax network is directly related to household density, ADSL costs are largely independent of market area characteristics. No additional cabling is required; most of the cost is in consumer equipment. ADSL requires digital set-top units, whereas a hybrid fibre-coax system can initially use cheaper analogue units. an estimated 85 per cent of households could receive digital satellite services by 1997 for a cost of $7.4 billion. Most of this cost is in satellite dishes and set-top units. Up to 15 per cent of the population may not receive useable satellite signals. about 4 million households (up to 80 per cent of urban and provincial areas and 20 per cent of rural areas) could be provided with an MDS service for a cost of around $2.1 billion. MDS is likely to be economic only in population centres of over 5000. Within these centres, coverage will be restricted to line-of-sight transmission. Note The findings and qualifications of the estimates are detailed in the Bureau's publication Costing New Residential Communications Networks - work in progress paper No. 5, BTCE, Canberra, September 1994. Although 60 channels may sound sufficient, hundreds of channels could be used to offer a 'near-video-on-demand' system. Latest release movies will be shown on several channels at staggered starting times, so that no matter when you want to watch the movie you will only have to wait a short time for it to start. A two-hour movie starting at 15-minute intervals would use up eight channels of the service. In a multi-channel environment many 'niche' services might also be available. The next significant step will be the transition to digital interactive or video-on-demand services. The hundreds of channels effectively become just one - any program you want to watch, any time - with the 'video controls' of pause, fast forward and rewind. There will be limitations, of course. Only those programs digitised and stored in video servers connected to the network will be available. And currently the cost and time involved in converting old program material to digital is considerable. However high-quality real-time compression is becoming available and its cost is expected to fall considerably over time. Although decreasing rapidly, the cost of memory space is also likely to affect what is accessible. The network architecture of such a system is complex. It is no longer a broadcast system. Each time a program is ordered, the video server will locate the program in its memory banks, and send it through the switched network of exchanges to the household requesting it. If there are few video servers and programs need to be transmitted between cities, heavy demands will be placed on the communications network. One movie transmitted at normal speed is likely to require the same capacity as about 100 telephone calls. The costs of digital video servers, of broadband switching and of transmission will have to fall substantially if a video-on-demand service is to be widely available within the next decade. The cost of computer memory and transmission is falling; broadband switches are still being developed. Substantial restructuring of tariffs will also be needed if a video-on-demand service is to compete with video rentals. Once an interactive digital network is in place it will be possible to combine the separate broadband and telephone services of the Telstra network on a single cable. Bandwidth or data rate limitations of copper wire pairs used for telephone services will be overcome. Most exchanges in the telephone network will by then have been upgraded to allow the telephone network to support enhanced digital communications services, but the replacement of copper pairs with broadband cables will enable much higher data rates to be supported. The final step in developing an interactive broadband network, the capacity to send high speed data both from and to each 'telephone' connection, requires cable technology that can support high-bandwidth two-way services. Optical fibre offers this capability, but the coaxial cable technology currently being used in the broadband networks has limited return path capability. The evolution of broadband switching will herald the introduction of interactive business, government, health and education services and provide the means for substantial benefits to be realised by our nation. Making the big state smaller Australia's largest State, Western Australia, covers one-third of the continent and, not surprisingly, communications have always played a major role in its development. Now ready access to talk-back television by satellite is reducing the distance between its far-flung communities, if not physically then in helping them to interact more closely. WESTLINK is a Western Australian Government network that enables many agencies to deliver services to rural and remote communities. The eventual aim is to link all the towns in the State. Currently, satellite receivers have been placed in 80 towns, with the next 20 in planning. Access is provided through 'host institutions' such as schools, hospitals, TAFEs, telecentres and business enterprise centres. However, access is not restricted to those organisations. Although the main use is for educational and training programs by tertiary institutions and TAFEs, the network is available to all levels of government, the private sector and community groups. The health community is another major user, and because WESTLINK uses the same technology as the ABC and commercial television, 3000 isolated communities can also access it. Testing of the service left no doubt that it would be a success - when the pilot project concluded, there was widespread concern that the service was being withdrawn. In the event, the Western Australian Government continues to subsidise WESTLINK's operations. The reasons for its success are the involvement of end users, focus on services rather than technology, use of a commonly available infrastructure, and the 'soft' financial entry for program originators. More than anything else, however, the success is due to the system's ability to deliver services to remote areas cost effectively, which also contributes to a reduction of the drain of people from the country to the city. The main drawbacks so far have been the very high cost of satellite time and the possible proliferation of formats when compressed digital video services become available. Chapter 3 A CULTURE OF INNOVATION OVERVIEW A culture of innovation is essential if Australia is to remain internationally competitive in the coming decades. Making best use of communications and information technologies and services means re-engineering existing processes rather than the piecemeal automation of current functions. The opportunities presented by new communications services will result in fundamental restructuring in many industries, and the creation of global markets in which individual tasks are rapidly and cheaply passed to international centres of expertise. Many long-established traditions and practices will be challenged: professional roles, organisational and industry structures, hierarchical supervisory practices, social and cultural mores. This chapter considers possibilities in the business, health and education sectors. The Group believes that pilot projects are needed to encourage cooperation between the user community, network operators and service providers and content creators. Such projects will also help to familiarise participants with some of the new services and provide a testbed to encourage the development and application of innovative communications services. THE NEED TO INNOVATE Competitive advantages are at best fleeting. Innovative applications of new technologies rapidly make existing processes obsolete. Whether Australia catches the 'next wave' is up to Australians. If we are to remain internationally competitive, we must be willing to make the changes that will keep us at the forefront of new information and communications services. In Chapter 2 we emphasised the evolutionary nature of the changes ahead. In developing our infrastructure we must take account of the skills of consumers, the creation of content and applications, and the demand for services. But in other senses the changes will be dramatic - we are unlikely to see a period of sustained stability in the near future. The key message of this chapter is that over time the new communications services and the growth of global information networks will result in a fundamental restructuring of industry and business, and of the delivery of education, health and government services. Rather than incremental improvements in efficiency or the piecemeal automation of clerical functions, these changes imply a complete re-examination of information flows, internally and with clients, and of organisational and industry structures. Trade in information services is growing rapidly, and even such industries as construction are extremely information intensive. We can no longer think in terms of imports and exports or of physical distances creating local, regional and national markets. We have to think in terms of one, global market. There are many barriers - institutional, organisational, legal, social and cultural - to the immediate adoption of new practices. In Chapter 1 we said that technologies should not be imposed on the community. But we do believe that only if the barriers to adoption of new technologies and services are lowered will Australians have the opportunity to compete on an equal footing with other countries. In its submission the Department of Foreign Affairs and Trade noted the importance of global networks to 'the opening of international markets for Australian information and communication exports, and the development of an internationally competitive and outward-looking economy'. Australia is giving strong support to multilateral efforts to liberalise the telecommunications and information technology and service sectors in a number of forums. The Uruguay Round of negotiations on the General Agreement on Trade in Services provides a substantial basis for future liberalisation of the telecommunications sector. This will be given further impetus through consideration of the United States' Global Information Infrastructure initiative in coming Group of 7 meetings on telecommunications. Australia is also working through the Asia-Pacific Economic Cooperation forum to promote trade liberalisation and, through the APEC Telecommunications Working Group, to expand trade in telecommunications goods and services and encourage the adoption of compatible telecommunications technology in the region. This chapter considers some of the possibilities created by new communications services and global networks in the business, health and education sectors. Although the examples used may be quite specific, we stress that an innovative culture must be adopted in all sectors of the economy if we are to maintain our international competitiveness and the quality of life we now enjoy. Business The terms 'electronic commerce' and 'process re-engineering' relate to the management of information within and between firms and the resulting organisational and production efficiencies. A simple example of this is the use of bar codes on retail goods. Scanning a bar code at the point of sale might automatically update store inventory and revenue records and, through automated network communications links, trigger ordering, shipping and production activities all the way back to the warehouse. In many industries the availability of portable computers, mobile links to computer networks, and services such as video conferencing are changing the function of central offices. Staff can spend more time with clients or 'on the road', still having full access to data files, still able to hold meetings with colleagues and have calls redirected and, via broadband links, able to collaborate on work of almost any nature. Significant savings can thus be achieved in accommodation costs - a small number of desks with computer sockets can be sufficient for a central office. The nature of corporations is changing too. A loose consortium of companies connected by high-capacity data links - the 'virtual corporation' - enables expertise to be drawn in as required. Documents, files or graphics can be readily transmitted to the best-qualified staff, or to offices with light workloads. A single company representative in each country might be sufficient to capture or maintain a share of the market. Manufacturing, architectural and engineering design and graphics can be worked on simultaneously by staff in different cities; software can be sent anywhere in seconds. Only those companies that exploit these opportunities will be competitive in the future. Office accommodation costs, under-utilised staff, and a lack of specific expertise could undermine a company's efficiency in increasingly tough markets. Businesses will most readily adopt new communications services that can be demonstrated to provide commercial returns. Governments can play a role in accelerating the uptake of services by acting as a leading edge user to demonstrate the viability of those services and by making firms aware of their benefits through programs such as AusIndustry in the Department of Industry, Science and Technology. A consultancy commissioned by the Group noted that major projects in the building and construction sector have always involved collaboration.8 Early mainframe computers centralised this activity, but local area networks are leading to distributed computing and linking of data systems between organisations. Networked computer aided design applications allow an on-site project manager to view and revise design drawings with an off-site architect; site views, product images and animated simulations can also be incorporated. If process re-engineering is to eliminate inefficiencies, duplication and sources of error, processes must first be redesigned: just imposing information technologies on existing processes can exacerbate current inefficiencies. Increased flexibility and efficiency are being achieved through concurrent engineering techniques - parallel rather than sequential design and manufacturing processes. Product designs are usually modified before manufacture to reduce production costs and improve reliability. Network applications such as interactive graphics and computer aided design, multi-party video conferencing and high-speed file transfer allow design and manufacturing teams to work together from the start of a design, with significant savings. In Chapter 1 we noted that trends towards increased travel and less structured family life are creating demands for more flexible forms of communication. Parallelling this, the availability of a range of new information services and the cost of travelling are encouraging people to work from home or distributed company offices. As economic activity becomes more information intensive, it makes sense to transfer information rather than people and goods. Mobile communications technologies and services such as video conferencing are now making this possible. Building bridges for CAD The architectural consultants are in Melbourne, the marble experts are in Milan, the acoustic engineers are in Sydney, the engineering company is based in Japan, and the client is in one of the fast developing nations of Asia. This is a typical recipe for many major architectural, engineering, construction or manufacturing projects - highly specialised skills dispersed far and wide, sometimes around the globe. Bringing these skills together has usually meant time-consuming and disruptive jet-setting, the novelty of which wears off after just a few 12 or 24-hour flights. One reason that the experts from the disciplines mentioned can't conduct most of their business over the phone is the constant need to refer to their designs. It isn't enough to have paper copies in front of all parties because the danger of misunderstanding exactly what is being indicated may prove disastrous. And while much of the design is computer aided (CAD), transferring the design using phone lines, couriers or post is too slow. Given Australia's geographical position, it's not surprising to find Telstra's Melbourne Research Laboratories and CSIRO's Division of Building, Construction and Engineering at the forefront of a new approach to inter-city and international consultancy. It's called CAD Conferencing, and it incorporates live video with the capacity for high-speed transfer of CAD drawings so that a designer can call a remote office and display images on a video screen for discussion with the client. The package can be used by large international organisations right through to small consultancies, removing the need to bring them to a single physical location. In the early stages, it means that designers can meet frequently with clients, using CAD Conferencing, to interpret their needs and respond quickly with design concepts. It can eliminate the need for short overseas visits by allowing the team to conduct interactive design sessions. The designers benefit, and so do the clients. Concerns over the environmental impact of mass transport and the inefficiency of daily commuting and its impact on family and social life also suggest that traditional central business district company offices will gradually diminish in size. Telecommuting from home is currently limited by the capacity of existing telephone connections to support high-data-rate functions such as video conferencing and graphics and file transfer, and by consumer equipment costs. There are also many occupations where close contact with colleagues or physical access to office equipment and services is necessary. But in other areas the potential productivity gains will challenge traditional hierarchical and supervisory structures. Telecommuting awards, workers' compensation, and in some cases liability issues still need to be resolved before working from home becomes widespread. Small regional or distributed offices offer many similar benefits to home-based telecommuting but also maintain contact between company staff, and may make more efficient use of infrastructure and hardware. Health The health sector depends on the quality of its information and the speed with which it is transmitted. Detailed, accurate and timely information is essential for patient records, for diagnosis and for administration. Efficient information management and distribution will increasingly provide the key to the delivery of high-quality, cost-effective health services. New communications services can dramatically improve health care quality and reduce costs. But if the potential benefits are to be realised a coordinated national approach is required to implement process and culture changes across the health sector. The Group commissioned a consultant to report on the use of broadband services in the health sector. The report stated that: Broadband services will play a major role in the process of establishing an integrated health sector information system. As well, broadband will provide an opportunity for the delivery and implementation of improved diagnostic techniques such as teleradiology, improved access to medical knowledge through on-line services, and, perhaps most importantly, improved communications between different health care professionals. However, the health care industry has a long history of rigid institutions which are necessary in this politically sensitive area. Concerns about privacy, professional demarcation, and, most importantly the delivery of quality health care will strongly influence the diffusion of broadband applications in this sector. The consultant's report helped the Group to identify a number of areas in which some form of process or culture change may be necessary. A fundamental starting point to electronic processing and transfer of information in medical facilities is the digitisation of medical data. This is a huge task and will require a reallocation of resources within major institutions. Staff training is another important area. For some time larger medical institutions have been providing equipment and training for staff in computer-based applications. But greater resources and increased specialisation will probably be needed in the future. There may also be a pressing need for more training and resources for smaller scale operations such as general practices, pharmacies and rural medical institutions. A number of State, Territory and Commonwealth health departments and agencies are moving to electronic information systems. There does not, however, appear to be a coordinated approach to the operation and development of these systems and networks, despite the similar database requirements of the various health information systems, the mobility of the client base, and common dispensing and billing procedures. Considerable efficiencies may be possible if the various networks are linked in an integrated national health communications network. Privacy is an overriding concern in the electronic transfer of health records. Concern centres on access to patient records and it appears that the risk of disclosure has retarded the development and use of communications networks and services. The integrity of databases is also a major limiting factor. The medical profession is increasingly being subjected to legal challenge, and undoubtedly the prospect of inaccurate information being placed on a database is another potential area for litigation. The Group recognises that these are important considerations in the development of health communications networks. If we do not confront and resolve them, however, we may be accepting a lower standard of health care than we need to. There may be advantages in a national approach to resolving these issues, using advice of experts in the health field. Accordingly, the Group suggests that the Australian Health Ministers Advisory Council consider establishing a taskforce of State, Territory and Commonwealth officials to identify major impediments and possible solutions to the development of a national communications network in the health sector. Education Broadband networks and services can make a great contribution to education. The authors of a study of demand in the education sector commissioned by the Group concluded that 'education has in place some proven applications poised to utilise significant broadband capacity as soon as this becomes available at affordable prices'. Potential demand for the following was identified: remote delivery of classes; flexible access to multimedia course material and audiovisual educational material; on-line information discovery; collaboration in virtual 'shared spaces'; network-based course administration procedures. Some broadband services with limited interactivity are already available to students by satellite, particularly in New South Wales and Victoria and in the distance education sector in Western Australia and Queensland. In the school sector, access to on-line services is widely available in some States, but in others availability depends on the initiative of individual institutions. The Group considers that a national approach to the introduction of sophisticated network services in education is essential. The widespread introduction of such services in educational institutions will, however, challenge and extend both students and teachers. Providing infrastructure and equipment is in many ways the easiest part of the task. The challenges go beyond technology to the fundamentals of teaching and learning. They will involve major cultural changes. The Group agrees with the Open Learning Technology Corporation that developing an educational framework appropriate to broadband services will be the principal challenge. It is important that a cross-sectoral strategy be devised and implemented to ensure that the extension of broadband services in education is not seen as purely a matter of extending connectivity. We must explore the potential contribution of new features and services such as interactivity, multimedia applications, and networked information discovery to optimising educational outcomes for each sector. We need to assess the possibilities they offer for self-directed learning on one hand and collaborative learning on the other. The Group agrees with the Corporation that teaching and learning styles and roles that emerge from the introduction of new services should be articulated: they will probably be very different from current practice. The Group expects an increase in the use of networked information resources based outside the educational sites that use them. The Open Training and Education Network submitted that as more on-line and computer-based interactive content becomes available, teachers will no longer be merely custodians of knowledge, but facilitators, assisting students to conduct research and providing access to outside specialists. The Network also noted a new role for teachers in developing networked content and services. The availability of training, information and support for teachers will be a key factor in determining whether the new services will be used to their full potential. Teachers will need to be proficient in the use of the basic technologies, aware of the possibilities of the services, and able to impart enthusiasm about them to students. They will also need to be comfortable with new styles of teaching. Initial teacher training and continuing professional development of teachers should take these matters into account. Students, too, will need to develop new approaches to learning. Initially, familiarity with the technologies and methods of gaining access to networked resources will need to be encouraged. Longer term, we expect to see an emphasis on higher level analytical skills at earlier stages in education, as locating information becomes a less demanding task. Educational curricula will need to describe and integrate the skills and competencies associated with the new services and applications. The skills and competencies will also need to be integrated into the assessment procedures in the final years of school, to be accepted as a legitimate part of the educational experience. An integrated approach to the funding of equipment, and access to and use of telecommunications and information services will have to be developed. If broadband capacity is to be used by educators, educational content appropriate to local requirements will have to be available. The Group welcomes the announcement in Creative Nation that Cooperative Multimedia Centres will be created to help the education sector produce multimedia titles and accelerate the uptake of multimedia within the education and training sectors. Extensive liaison between these centres and the different sectors of education will be necessary to ensure they are responsive to the needs of users, and the potential for integration with other relevant networked sectors, such as libraries and museums, should be explored. Obviously, close cooperation between State, Territory and Commonwealth governments will be necessary to implement a national strategy for broadband networking. A national education network, with flexible delivery of national or even international education programs and resources, will challenge existing administrative boundaries. There will be questions about the funding and administration of resources, such as specialist teachers or library services, that are used on a nationwide basis. Quality control, security, consistency of technical standards and basic common practices, and research and development will also need to be dealt with at the national level. Both the Open Learning Technology Corporation and the Open Training and Education Network have urged that codes of ethics for users and service providers be developed to cover concerns about the material that would be available to students over the networks. Some educationalists are sceptical about the potential of new technology, taken in isolation. The promise of earlier technological innovations, such as computer-assisted learning, has yet to be fully realised. But we are confident that, properly integrated into the learning process and properly supported, broadband services will benefit education. The Expert Group recommends the development of a National Strategy for Broadband Networking in Education in anticipation of the extension of high capacity links to educational institutions by 2001. INVOLVING THE COMMUNITY IN CHANGE - PILOT PROJECTS There is much uncertainty about the types of services consumers will demand, the advantages and practicalities of the various technologies, and the willingness of users to consider new ways of doing things. The Group considers that there would be great advantages in a program of pilot projects to prepare the community for processes of change and for businesses to develop experience in meeting consumer needs. Governments should work with the carriers to implement pilot projects as soon as possible. This may require governments to provide financial incentives and to support pilot projects by, for example, making government information and services available. Before implementing any pilot project, it would be necessary to determine the source and type of content and services that the trial will make available. The success of such projects depends on providing services that are appropriate to the community, and which are designed with the skill level of the intended users in mind. The pilots should be evaluated after completion to help prepare guidelines for a possible extension of the program. The results of the evaluation should be disseminated widely to stimulate and focus innovation in the development of a broadband services industry in Australia. The Group sees pilot projects as an ideal means of learning more about such issues, and preparing Australian people and companies to be leaders in developing and using new technologies and services. There are many new services waiting to be tested, many users wanting to try new ways of disseminating information, and many new technologies still being developed. The Group believes there would be benefits in trials in a number of complementary areas: broadband services to homes; narrowband on-line services connecting a community; community applications; innovative education applications; access to cultural collections; health services. Broadband services to homes The Group believes that the real benefits of broadband cable trials will come from the possibilities for consumer interactivity with the services, and the involvement of the community and local industry in creating content. Many elements of broadband delivery technologies are still being developed, and a broadband cable trial would provide network operators with valuable experience in customer billing and management and conditional access systems. Telstra has announced that it intends to run an ADSL trial in 1995 and an interactive cable television trial in 1996. These trials could provide a valuable opportunity for network operators, service providers and local content creators to establish links with consumers and test reactions to their services. The trials should offer service diversity and customer interactivity with the services. Telstra's cable services trial in Centennial Park, Sydney has already provided a small-scale opportunity for community groups, libraries, educational institutions, film and video makers and local residents to collaborate in the operation of a community cable service. The trial has enabled a variety of interests to participate in a new technology venture and receive training in all aspects of the project. The services have also provided an outlet for program material - arts, experimental and youth - that might not otherwise be distributed. Narrowband on-line services connecting a community Narrowband links between all members of a community would allow a range of new possibilities to be explored in areas such as e-mail, group discussion sessions, and access to information databases such as classified ads, Yellow Pages, and government services information. The success of such a trial would depend on local community groups, schools and businesses developing interactive on-line applications that encouraged the exploration of new business processes, social interactions, and communications between students and their schools, for example. Services supporting people working from home, such as file transfer capability, could also be provided. Computer companies could use such a trial to test reactions to new customer interfaces and develop user-friendly services. Appropriate training should be made available to ensure that sections of the community are not excluded. Community communications Uptake of new communications services will be constrained initially by a lack of awareness of the benefits services can provide and a shortage of specific-purpose applications. A 'kick start' is needed to overcome these problems. The Group proposes the establishment of a program to fund stand-alone community applications using advanced communications services. The program would encourage the resources and creativity of the community and content creators to develop innovative projects that build awareness of what new communications services can offer, link potential users of services with potential creators, and provide communications services to the community. Today's school of the future The students have notebook computers, the school has an optical fibre network, the library has information on hard disk and CD-ROM, and students are taught how to think, not what to think. It sounds like a school of the future but in fact it is John Paul College in Brisbane. As part of a philosophy to teach students to respond to the challenges of a changing environment throughout their lives, information technology has been embraced as fully as possible. The college is using communications and information technology to access and sort the most relevant information available. Students from Year 5 to Year 9 (1000 in all) have notebook computers; this will be extended from Year 4 to Year 12 by 1998. The library can be accessed electronically by students at the school or from their homes and it has subscriptions to the Internet and educational on-line services. Scanners, digital cameras and printers are also available. The information technology strategy was developed and implemented by the school, with input from all stakeholders - staff, students and parents. A two-year campaign laid the groundwork for the introduction of information technology - making clear its objectives and the responsibilities of the participants. In the case of the parents, this involves a substantial investment. The costs of hardware, training and staff are ongoing, at about $1.7 million a year. The notebooks account for half of this, with parents contributing $65 a month for three years, so their children can have access to them. As for the staff, the orthodox roles of both teacher and student have changed; for example, information is no longer the sole province of the teacher. A professional development program acknowledges the levels of expertise already in existence, provides staff with appropriate computer curriculum skills and challenges staff to further explore the application of technology to enhance learning. As part of their industrial agreement all staff have a personal strategy for professional development which they pursue outside school hours. The school is keen to network the expertise it has developed and help other schools in implementing information technology. It has also identified ar