Australian audit office criticises mobile blackspot program 'weaknesses'

An audit completed by the Australian National Audit Office (ANAO) has criticised several aspects of the federal government's mobile blackspots program, saying the Department of Communications had erred in its selection criteria and ability to evaluate impact and cost effectiveness.

The audit -- The Award of Funding under the Mobile Black Spot Programme [PDF] -- was undertaken in order to assess the Department of Communications' effectiveness in assessing and selecting base stations for funding under the first round of the program.

While ANAO said the government department was successful in establishing "the key elements that would be expected to form part of a competitive, merit-based grants program, and, in the main, implemented these elements", it added that the program's administration had various "weaknesses".

Specifically, ANAO said the department's selection criteria allowed for the expansion and improvement of existing coverage, rather than providing coverage to areas with no mobile access; did not have methodologies for assessing the technical and financial aspects of proposals, especially in regards to applicant costings; and said the department does not have a sufficient capacity to assess the impact and cost effectiveness of the program, because there was no evaluation framework formed beforehand.

"The department's assessment of applicant costings for proposed base stations lacked sufficient rigour," the report says.

"There was scope for the department to have better prepared for the assessment of coverage claims and applicant costs."

As a result of the criteria used by the Department of Communications -- including the cost contributions being offered by telecommunications carriers themselves -- proposals by Optus to take part in the program were also rejected, ANAO revealed.

"The basis on which the merit list of base stations was developed was appropriately supported by documentation, with funding decisions made in accordance with the recommendations arising from the assessment process. All eligible proposed base stations were ranked in order of the assigned assessment score (from highest to lowest) and the equitable distribution principles were applied in accordance with the requirements outlined in the published programme guidelines," the report says.

"As a result, the proposals of one applicant (Optus) were not recommended for funding. The electoral distribution of selected base stations was primarily driven by the area that operators chose to locate their proposals and the level of co-contributions that had been committed."

ANAO concluded that the extent to which competition has improved in regional areas as a result of the program is yet to be determined.

As a result of its report, ANAO made three recommendations, all of which the Department of Communications agreed to: Establishing minimum scores for assessment criteria of locations; implementing a detailed assessment methodology for choosing locations; and applying a framework for performance measurement.

The opposition slammed the government over ANAO's report, calling it "damning" and pointing out that over 80 percent of the new mobile phone tower locations are within Coalition electorates.

"Clearly, the number one criterion for site selection was politics, not community need," Shadow Communications Minister Michelle Rowland and Shadow Regional Communications Minister Stephen Jones argued in a joint media release.

"Perhaps the most damning finding is that the Abbott-Turnbull government has been caught funding sites that would have been built by the mobile phone companies anyway; 25 percent of new mobile phone towers funded in round one provided no new or extended coverage."

ANAO's report also said that the approach in promoting the blackspot program across electorates was inconsistent, which "may have had an impact on the distribution of nominations across electorates".

Rowland and Jones added that the government had also "ignored" natural disaster-prone areas in its selection of blackspot areas.

"The deputy prime minister favoured his own seat of New England, which received more than 28 mobile base stations," the ministers said.

"Labor's policy on mobile black spots is to place a far greater emphasis on a fair distribution of funds across a fairer spread of electorates. We will make sure that areas affected by natural disasters are given strong consideration, especially where human safety is at stake."

The first round of mobile blackspot funding was opened in December 2014, with Telstra and Vodafone Australia securing AU$185 million in government funding to build or upgrade 499 mobile towers across Australia.

In total, Telstra will build out 429 cell towers while Vodafone builds out 70, with the full rollout to be completed within three years. Telstra was also commissioned to install the small cells in order to provide small towns with 4G services where Telstra infrastructure is already available.

The government then announced the second round of the program in early December last year, providing a further AU$60 million to those participating.

At the end of May, the Coalition pledged to spend an additional AU$60 million to fund a third round of the mobile blackspot program to build or upgrade a further 900 mobile towers.

Telstra last month announced having activated 60 mobile base stations under round one of the program, saying it will reach 100 blackspots by the end of 2016.

In June, Telstra and the Australian government also announced the 135 regional and remote locations that will receive 4G mobile connectivity thanks to the small cells being deployed under the program.