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SELECT COMMITTEE ON THE NATIONAL BROADBAND NETWORK
Implications of the proposed National Broadband Network
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SELECT COMMITTEE ON THE NATIONAL BROADBAND NETWORK
Implications of the proposed National Broadband Network
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SELECT COMMITTEE ON THE NATIONAL BROADBAND NETWORK
(Senate-Friday, 4 June 2010)
ERGAS, Professor Henry
HARRISON, Dr Mark Douglas
CHAIR (Senator Ian Macdonald)
COUTTS, Professor Reginald Paul
KERIN, Professor Paul
PEARSON, Mr Mark
RIORDAN, Mr Sean
STANTON, Mr John Leslie
WAGG, Dr Michael
SHERIDAN, Mr Andrew
- ERGAS, Professor Henry
Content WindowSELECT COMMITTEE ON THE NATIONAL BROADBAND NETWORK
Implications of the proposed National Broadband Network
CHAIR —We will resume. Senator Lundy is here, so we have a quorum. Mr Stanton, as this is the first time that you have been before a committee, I just want to make you aware that these are proceedings of the parliament and, therefore, parliamentary privilege applies. If there is anything that you would rather say in private, you need only ask the committee and we will consider it and possibly hold some evidence in camera. Also, it is an offence against the Senate rules for anyone to prejudice or impact upon you in any way for any evidence that you might have given to a Senate committee.
With those few rules and regulations, welcome; thank you very much for coming to give evidence. This is the Select Committee on the National Broadband Network. Already we have had a great number of hearings and issued a number of reports. We are directing this hearing, more or less, at the implementation study, but we are keen to hear your views on that and anything else that you think might be relevant. Would you like to make an opening statement and perhaps also tell us who and what you are and what the Communications Alliance is all about?
Mr Stanton —Thank you very much. I will start by thanking the committee for the opportunity to be here today. My name is John Stanton. I am the Chief Executive Officer of the Communications Alliance, which is the peak telecommunications industry body in Australia. Our membership is drawn from a wide cross-section of the industry. We have more than 50 telecommunications carriers as members; NBN Co., by the way, is also part of our member base. We have other service providers, vendors, equipment suppliers, consultants and individuals who together make up the organisation. Our mission is not only to provide a unified voice for the industry but also to promote the growth of the industry and the protection of consumer interests by fostering, through self-governance, the highest standards of business ethics and behaviour.
We have been very active on the NBN front. We have been leading industry activity and, in a sense, acting as a conduit for the industry into NBN Co. We have established seven working groups, which include more than 150 individuals from across the industry, providing input to NBN Co. on things such as wholesale services, end user premises, end user migration, technical issues, network architecture, fibre and greenfields, and other topics. It has been a substantial body of work and it is still going on today. Our focus as an industry body is to ensure that, if the NBN is built, it can work effectively as part of an end-to-end service. We have not delved into politics or debated the public policy issues or even the business case; rather, we have been focused on trying to ensure that there are practical solutions in place so that, when the network lights up, it can do so seamlessly and customers can gain maximum benefit from it.
One important new area of our work relating squarely to the implementation study is an initiative that I launched very recently to create a dialogue and education process for consumers of NBN based services. It is designed to ensure that consumers have the essential information that they will need to manage their overall communications experience in an NBN environment; in other words, it is to ensure that they know how to connect to the NBN, what their service options are, how to minimise the costs to themselves, what the options are in terms of things like in-house cabling and in-premises equipment, how to deal with multiple service providers and how to manage faults et cetera. That has been done because we see the NBN as a game-changing event and, if we do not have a consumer base that has the information that it needs, the potential for confusion and inefficiency is enormous. I am really pleased to say that all of the stakeholders that I have approached to join me in this work have come on board. We have the consumer bodies ATUG and ACCAN; the Internet Society; the ACMA; the ACCC; the Department of Broadband, Communications and the Digital Economy; and also industry representatives who will join the work. For the reasons that I have outlined, we feel that this is a vital task and we have highlighted it in our response to the implementation study.
In responding to the study, many of our responses have been supportive of the work and the recommendations therein. I guess, almost inevitably, I would like to focus on a couple of those that we do not agree with. One of those is the somewhat famous recommendation 68—
Senator FISHER —Do you mean ‘infamous’?
Mr Stanton —I will stick with my construction, if I may, but thank you.
Senator FISHER —Well done!
Mr Stanton —In particular, it is the proposed discretion to allow the minister to make exceptions to allow NBN Co. to sell to entities other than carriers or service providers. I must preface my remarks by saying that we certainly appreciated the recent statement by the minister in which he said that he would take on board industry feedback before finalising the legislation.
To put this in context, I guess that it is worth noting that the NBN itself will change very little in Australia. What it does is create a platform on which change can occur, and that change will occur through the investments, the efforts and the innovation of carriers and service providers. Those players may find it more difficult to make those investments in a climate where the minister does have the ability at any time to change the market topography by letting NBN Co. ‘go retail’, as it has popularly been put. To foster the most vigorous competition in the market with the resulting benefits to customers, the industry participants need certainty, and we feel that recommendation 68 and clause 9.2 of the legislation remove some of that certainty.
I did read the Hansard transcript of the hearings that you held in Sydney recently and a relevant point jumped out of that transcript at me. It was in the evidence that you received from ATUG, in which, I think, the UK experience was held out as a bit of a shining example of why it is a good idea to let government departments turn themselves into mini-carriers and provide services to the bureaucracy. I was intrigued by that. I used to live in the UK and have some experience in dealing with UK government departments. So I went to do a little investigation, I guess, of the UK experience and, I must say, I found a somewhat different story. I talked to people in the UK who are directly involved in the process and the provision of services to government departments. It turns out that the procurement of wholesale services by government departments in the UK has been so piecemeal, so inefficient and so hopeless that the UK government is quietly dismantling that process and is in the process of setting up a new central government agency to take over that role; the working name for this is the PSN, or ‘public service network’. I do not believe that too much has been announced about this as yet, but I would be happy to provide further information to the committee as it becomes available. But, to me, it was certainly instructive as to whether it was necessarily a good idea to let government departments move into that role. It is worth noting also that—
Senator LUNDY —I am sorry; what did you just say?
Mr Stanton —I thought it was instructive as to whether it is a good idea to necessarily let government departments become carriers in their own right.
Senator FISHER —I think you heard correctly, Senator Lundy.
CHAIR —Keep going, Mr Stanton. We will have questions when you have finished.
Mr Stanton —There is just one more recommendation of concern, if I may, and that is recommendation 15, which seeks to require that the topology that is deployed in the new development should be home run rather than shared.
CHAIR —Should be what?
Mr Stanton —Home run as opposed to shared. We disagree with this recommendation for a range of reasons, including green related issues, cost and complexity. I would be happy to elaborate on those, if the committee desires.
CHAIR —Firstly, are Telstra and Optus a couple of your members?
Mr Stanton —Indeed.
CHAIR —You are funded by a levy, in one form or another, of all of your members.
Mr Stanton —That is right.
CHAIR —Just on the central PSN—I raised this earlier—someone who made a submission to us mentioned the Intra Government Communications Network in Australia, whose acronym is ICON. Are you aware of ICON?
Mr Stanton —I am aware of it, yes. I am not intimately familiar with it, but I know what it does.
CHAIR —Would that be similar to the proposition in the UK that either was or is going to be?
Mr Stanton —I do not believe that it necessarily is, in the sense that ICON, as I understand it, is a dark fibre network connecting government departments and is used for a range of different applications, some of them data related and some PABX related, whereas, I am told, the agency that is being set up in the UK is to manage the overall telecom-services-buying requirements of government departments.
CHAIR —So, in the UK, it is a sort of wholesaler and retailer to government, is it?
Mr Stanton —As it was described to me, it would be an agency that would buy on behalf of all departments. So it is really a procurement agency to ensure that the departments are buying telecom services at the right price and in a way that is consistent.
CHAIR —From retailers?
Mr Stanton —From RSPs of the likes of BT or Openreach.
CHAIR —So they own the dark fibre or layer 1; is that right?
Mr Stanton —I think it varies from department to department in terms of whether they have any infrastructure themselves; I think the Foreign and Commonwealth Office, for example, does have some assets of its own. But this agency, as described to me, would be designed to procure services from RSPs for the departments.
Senator LUDLAM —You are a kind of United Nations of the telco sector, I guess. You have folk who are quite often taking contrary positions in the public domain, but you manage to hold it together. Do all your members sign off on a process of consent before you put in a submission, such as the one that you have put in to the implementation study? How do you manage that?
Mr Stanton —No. We throw it open for comment from the membership, and silence is assent.
Senator LUDLAM —I want to pick up on one point that you make in response to recommendation 78; it talks about a pre-privatisation review to make sure that the market is going to function post privatisation. I think your comment is that the requirement would ‘ideally be included in the establishing legislation to ensure it is binding on future governments’. Can we just tease out what you mean by that and whether it is fair to say that, in that case, the sector is of one mind that we need some kind of binding restraint on government from selling the network down, at least until that assessment has been done?
Mr Stanton —In fact, in terms of our response to the committee, we made no comment on that recommendation.
Senator LUDLAM —That is interesting. What about in your submission to the department on the implementation study?
Mr Stanton —We simply said, ‘Communications Alliance has no comment to make on this recommendation at this time.’
Senator LUDLAM —That is very interesting. I am reading off the screen here. I might go to another question. I certainly do not want to quote you out of context or misquote you if that is not there. As far as you are concerned, am I misquoting you? Is that not the view of the Communications Alliance?
Mr Stanton —We did not seek to make a full response on that issue. Because of the diversity of our membership, there are often issues on which we choose not to comment, either because there is not a consensus or we do not feel that it is part of our mission.
Senator LUDLAM —Yes; I was a bit surprised to see that there. I am going to chase that down, and I will offer you an apology if I find that I am quoting you completely out of turn.
Mr Stanton —Not at all.
Senator LUDLAM —Just to pick up, then, on the issue of the NBN Co. being able to provide services to those other than carriers and service providers, my understanding of the intent of the government’s proposition that we have seen in the draft bills is that they are offering a level-2 bit stream to big organisations like government departments, rather than taking up full-blown retail services. Is that how you read it?
Mr Stanton —That would be my understanding, yes.
Senator LUDLAM —But do you still see that as a dangerous extension of the NBN Co.’s proposed mandate or role?
Mr Stanton —One of the considerations is practical, because nobody will be given an end-to-end service by NBN Co. Think about what an entity like a department would need to do if it were buying wholesale services from NBN Co. to turn that into, effectively, a retail service. It is a pretty sophisticated process. Firstly, they would need to have an agreement with someone for an upstream connection to the internet. They would need to have in place agreements with one or more third-party providers of backhaul. They would need a broadband access gateway. They would need equipment in the POIs across the country. They would need aggregation equipment, a network management system and racks in data centres—a fairly sophisticated infrastructure of their own. I guess the question is whether that makes sense at the end of the day. Our objection really was more to the uncertainty that the discretion provides than to whether those entities are able to buy at the wholesale level.
Senator LUDLAM —That it would be case by case, on the basis of the ministerial mood of the day.
Mr Stanton —Yes—simply the fact that it does remove some of the certainty as to what is your addressable market as a service provider.
Senator LUDLAM —Given the diversity and the range of members that you have, you are generally supportive of the existence of the NBN and of the Commonwealth taking a position of this sort, although there are some debates around the edges. Is that a fair characterisation?
Mr Stanton —We have certainly put a lot of effort into helping to make it a successful entity. We see it as a game-changing event and a technology that will have benefits for the country. We have not chosen to try to opine on whether it is the best possible solution or whether there are or are not other solutions. We are really dealing with the government decision as it stands.
Senator LUDLAM —That is fair enough. I will just play devil’s advocate for a moment. We have had commentators and a couple of economists in here this morning making some quite strong claims about the unreliability of the government’s numbers in the implementation study and that it will not be a profit-making business and will actually run at a loss. One commentator has even suggested that it is going to need to be bailed out by the taxpayer. The devil’s advocate part is that your industry stands to gain a lot from the Commonwealth making this investment in backhaul and taking glass all the way up to the house. Are you arguing here from a point of view of pure self-interest, or have you actually gone through and forensically analysed the government’s numbers?
Mr Stanton —No, we have not taken a position on the business case. We have looked at the numbers, and I think probably the best comment I can make is that we agree with the implementation study authors when they say that there are a great many risks and a great many challenges to be dealt with and managed during the course of this build.
Senator LUDLAM —Communications Alliance Ltd—we are talking about the right thing, aren’t we?
Mr Stanton —Yes.
Senator LUDLAM —I have just had somebody take a quick look at your whole submission rather than just cherry picking a little piece of it. I have been informed that, in fact, in your submission on the idea of binding future governments to that pre-privatisation review that was recommended by the consultants, you have said both things. Let me get it in front of me; I was actually reliably quoting from your submission. You also have said cautiously that you do not want to take a strong position on it but that, in fact:
This requirement would ideally be included in the establishing legislation to ensure that it is binding on future governments.
I am quoting you directly from your submission—not the one to this committee but the one to the implementation study. I think it is probably worth putting that on the record.
Mr Stanton —I will certainly go back and look at that. There may be some commentary there that the position submitted by us was that we did not want to make a response to that recommendation.
Senator LUDLAM —It is at page 55. I might come back to that later, but I will yield to some other questions, if you like.
Senator FISHER —Perhaps I can follow on from Senator Ludlam. Mr Stanton, I am not really reassured, I suppose. I will put it this way: your members have a vested interest in ‘something, anything’ activity in this sector, so why would you not support ‘something, anything’ as opposed to something that is actually good?
Mr Stanton —I am not entirely sure that I understand the question.
Senator FISHER —I admit that it was a bit obtuse. You said earlier that you had chosen not to opine on whether the NBN is best or not; I think that is pretty important. Isn’t it the main question, or are you, I guess, subjugating that question to your members’ vested interests in something going ahead—it does not really matter whether it is the best or not?
Mr Stanton —If our membership had significant misgivings about whether the technical solution being proposed here was workable or not, we would certainly reflect that. But, in terms of the high-level architecture and the information that we are starting to get now about what the network will look like from a physical and interconnection point of view, we are reasonably confident that it is fit for purpose. We are continuing technical work with NBN Co. on a range of issues, but we have been comfortable in working to try to make this network the best it can be.
Senator FISHER —So are you saying that, if it were to be delivered and Australia were to get to the NBN end point, it would work?
Mr Stanton —If Australia were to get to the NBN end point, it would work?
Senator FISHER —You are saying that technically it will work. On what basis are you able to say—and maybe you are not able to say—that the result will even be achieved? It is like: if we get to utopia, that would be great, but are we going to get to utopia? Give me some confidence that your members believe that there is a pathway for that.
Mr Stanton —My members will not be responsible for the build, by and large, although a couple of our members are involved in the rollout in Tasmania, so some of our members will have some involvement in that. But, by and large, it is not the RSPs who will build this network, so we cannot project whether it will be completed on time or within budget and we cannot predict how many lessons learned along the way will have impacts on the actual detail of the rollout. So far, from what we have seen in terms of the fibre element of the design, it is a workable design. We have not yet seen the responses to the satellite tender—I think enough of our membership knows enough about Ka-band satellite technology to know that it ought to be feasible to create a service, but we need to see what comes back from the respondents to that tender—nor have we seen, of course, the detail of the wireless component, which will be the subject of further activity down the track.
Senator FISHER —Who are your members?
Mr Stanton —We have, I think, 53 telecommunications carriers. They include the big ones like Telstra, Optus and AAPT—
Senator FISHER —Yes, you said that earlier.
Mr Stanton —and a lot of the tier-2 and tier-3 players. We have a lot of the larger vendors of the likes of Ericsson and Alcatel-Lucent, for example; we have ISPs; we have consultants; and we have individuals.
Senator FISHER —And I guess you have collective groups as well. Are other alliances members of yours?
Mr Stanton —Not specifically. We have members that include organisations like the CSIRO.
Senator FISHER —So other collective organisations within the telecommunications sector are not members of yours?
CHAIR —You have mentioned ATUG.
Senator FISHER —Exactly.
Mr Stanton —Yes, we work closely with people like ATUG and ISOC and now ACCAN.
Senator FISHER —And are they members of yours?
Mr Stanton —ACCAN is not a member, no.
Senator FISHER —Right, but ATUG is. I am just trying to evaluate, therefore, the extent to which you are representing carriers and service providers per se as well as having inputs from others out of your 53 groups.
Mr Stanton —We are predominantly an industry association.
Senator FISHER —You are, but, in general parlance, industry associations are members of yours as well. I would characterise ATUG as an industry association, in general terms.
Mr Stanton —It is a users group.
Senator FISHER —Yes, and it is a member of yours as well, as opposed to, as I say, carriers and service providers.
Mr Stanton —I am aiming to clarify: ATUG was a member our board some years ago and it is not a member of our board now. I am not certain that it is still even a member, actually. Perhaps I may take that on notice.
Senator FISHER —Certainly. I guess the point is that your organisation is open to membership from organisations of that nature.
Mr Stanton —Yes.
Senator FISHER —Do you have a memorandum of association?
Mr Stanton —We have a constitution.
Senator FISHER —You must have eligibility rules or something.
Mr Stanton —Yes.
Senator FISHER —Can you perhaps provide us with a copy of the relevant clause?
Mr Stanton —Certainly.
Senator FISHER —I am sorry; that would be on the public record, anyway, wouldn’t it, if we went and had a look?
Mr Stanton —Yes; but I am happy to provide it to you.
Senator FISHER —Thank you. I do not want to intrude inappropriately. Chair, that is all for now.
CHAIR —At the start of your evidence, you said that one of your roles was to make information available. What part did you play, for example, at hearings a month or so ago? Neither NBN nor the retailers could tell me at that stage what they were offering to Tasmania, because nobody knew the pricings. Then—I think in the last couple of weeks—there have been pricings. Also, at estimates, NBN Co. said that, for the first six or nine months or something, they were not charging the retail service providers anything for their network, except for a $300 connection fee. Are you engaged in making that new information available to Tasmania—bearing in mind that, by making it available, you will be supporting some of your members and impacting upon the business of others?
Mr Stanton —At this stage, we are not involved in disseminating any information to consumers in Tasmania. The initiative that I have just launched, which will meet for the first time next week, will put together an overall dialogue and information plan as well as a channel strategy as to how that is to be disseminated. So it is not impossible that in the future that type of activity would come out of that initiative, but so far it has not.
CHAIR —But you are there talking up—perhaps that has challenged me if it is not being delivered—the NBN but, in so doing, some of your members will miss out. For example, I understand that in Tasmania there are only three retail service providers, which means that there are 51 that are not part of the ‘deal’. Is that correct and, if it is, how do you cope with that?
Mr Stanton —We have not had to cope with it as yet, because we have not provided any information in Tasmania. In terms of the rollout and the early-stage deployment sites on the mainland, the group that I have pulled together will have to decide how best to get the relevant information to those people. Part of what we will be doing is creating a consistent messaging platform, recognising that most or a lot of this information will come from the RSPs themselves as they look for new customers or try to draw customers across.
CHAIR —But then what information are you disseminating? Surely the two questions that the public at large—not the aficionados—would have to ask are, firstly, ‘What will I get out of this that I do not already get?’ and, secondly, ‘What will it cost me?’ Then, having got those two things, you make an assessment: ‘Well, for that cost, am I prepared to pay, or will I stay where I am?’ So what information can you deliver to me as a member of the public that would help me in making some decisions on what I should do?
Mr Stanton —There may well be many other questions you will want to ask. For example, you might want to understand what your options are in terms of cabling within your house, whether your network termination unit is going to be outside or inside of the house, how you manage the fact that you have one or more different service providers providing different services to your house, whether you can continue to use the equipment that you have today or whether you need new equipment, or what you will do if there is a fault. There is a whole raft of questions.
CHAIR —Do you have the answers to all of those questions?
Mr Stanton —We are compiling the answers to all of those questions, yes.
CHAIR —Will you disseminate them? Is there a booklet or a website? Bearing in mind that I am told in the implementation study commentary that 22 per cent of Australians do not have websites and 28 per cent do not have computers—or the other way around—perhaps a website is not always the best way to disseminate information.
Mr Stanton —We will examine all the available channels. Websites are certainly one of them, as is below-the-line literature, such as brochures, and involvement in community forums that the government will be running around the country. There will be ways to inject this information into the messaging of all the RSPs who will be trawling the landscape looking for customers. We may use blogs, Twitter, Facebook and other forms of social media.
CHAIR —It is going to be interesting watching you ride the barbed-wire fence, I would think—and good luck to you. But are you in a position now to answer me this fairly basic question? Suppose that I were a user, a consumer, in a capital city area—which I am not—and currently living close enough to an exchange to have a you-beaut ADSL2 provision for my emails and the little bit that I do on the worldwide web, with all that working beautifully for me because I am probably getting pretty good speed at the moment. Do you have information that would say, ‘Yes, but if you had fibre to your home you would get a better service at a price better, worse, richer or poorer than you are currently paying for your ADSL2’?
Senator FISHER —Or that would encourage you to take it up, basically.
Mr Stanton —It would be difficult for us to try to get into the game of providing real-time price information to customers in an attempt to influence their decision, because that is a variable that will continue to change. We would be able to describe the characteristics and capabilities of the network but, again, it will depend on the particular service mix that retail service providers are offering; they will all have their own kind of sizzle, if you like, with their own set of service and product characteristics.
CHAIR —I am sure that you will tell me straight away if you cannot answer any of my questions but, being more specific, I have been trying to understand why you would pay what I believe would be a bigger fee to RSPs using the NBN, if the NBN were charging commercial values, as opposed to my existing service over ADSL2. I have used some figures—and, for the record, I should say that I, perhaps foolishly, mentioned Primus Telecom and obviously got some of the figures wrong. I have apologised to Primus Telecom for that and there is a letter to that effect in the committee’s records; I just put that on the record again. I appreciate that every RSP will have a different package to put to me, but my concern is that surely it is going to cost me more to be connected through a wholesale set-up that has cost $43 billion than to be connected with a set-up that was paid for years ago and for which a return on capital is not needed.
Mr Stanton —There are a few variables there. I cannot make the assumption that you necessarily are going to pay more for an NBN service. The implementation study speaks of a philosophy of providing similar price points to those that exist in the market today.
Senator FISHER —Can you assume at least that?
Mr Stanton —If you look at the sorts of wholesale price points that are being talked about in the implementation study, you will see that they are not wildly different from the wholesale price points that exist today.
CHAIR —But that is my point. To get the fibre to your home, you have to pay your share of the $43 billion. So any commercial reality would suggest that the existing RSPs are making super profits—
Senator FISHER —A motza.
CHAIR —on which very shortly they will be subject to a tax, I am sure—
Senator FISHER —Yes, of course.
CHAIR —and that the NBN simply cannot be commercial. It may operate, but this was all announced, with great gusto, on the basis of it being a commercial stand-alone operation by this government corporation.
Mr Stanton —In a previous life I ran a listed telco in Australia, which was reselling wholesale services from the major carriers, and I can at least offer the advice that it is extremely difficult to make a motza doing that; the margins in that part of the game are reasonably tight. The question as to whether consumers necessarily need to pay more for an NBN based service because of the investment that has been made in that network is not one that I can answer; it goes to the business case and the decision that NBN Co. makes about pricing.
CHAIR —From your obviously very intimate involvement in the whole industry, are you aware whether the NBN Tasmanian proposal not to charge, as I understand, for the use of its equipment, apart from a one-off connection fee, is going to be the deal on mainland Australia when it eventually launches; and, if so, with that sort of income return, how can NBN even pay its interest, let alone make a profit?
Mr Stanton —I am afraid that I have not been advised by NBN Co. whether they will replicate that offer for the early stage deployments on the mainland.
CHAIR —Who is next? We are sharing the questioning around very fairly.
Senator LUDLAM —I have had a go already, but I would not mind clarifying a point; I am not even sure that this is a question. I might have muddied the waters a little bit before with my comments about what was in your submission, and that might have been because I was just misreading the way that you have formatted your document. For the recommendation around the purposes of safeguarding competition outcomes in the event of the privatisation by NBN Co., you have some quite useful feedback in your implementation considerations but, when it comes to a formal response, you have said that you have no comment to make. What is the status of ‘implementation considerations’—because, to me they read as fairly sensible commentary or, in a way, a response? I just wonder what distinction you draw.
Mr Stanton —The officer who was putting the response together, I think, for some of the recommendations made some points for discussion or observations, but the issue of whether to take a position or not was decided recommendation by recommendation. Probably to at least a third of the recommendations we chose not to respond.
Senator LUDLAM —I was not trying to put you on the spot there, but I take it then that that is not the position of the Communications Alliance but your offering advice to the government on how to handle that recommendation.
Mr Stanton —I guess that it is a point of view without it being a position of the organisation.
Senator LUDLAM —I will treat it as such. Thank you for clarifying that. I have no further questions.
CHAIR —Your study of the implementation study has obviously been an intense one.
Mr Stanton —We have certainly worked through it in a fair bit of detail in order to provide a response, or not, on each recommendation.
CHAIR —A lot of assumptions are made in the implementation study, such as those regarding take-up rates, access and the costings that NBN might be able to charge. There has been some commentary that the implementation study talks about, I think, 50 per cent, 70 per cent and 90 per cent take-up rates over various years as opposed to what some commentators say is the Dutch and American experience, which is that it is only 40 per cent. There are other assumptions that NBN would be able to increase its fees by at least two per cent—I think it was said somewhere—over many years. Do you have any comment on those two and other assumptions made by the implementation study in delivering its report?
Mr Stanton —We have relatively little to offer on that front. Certainly I did look at the take-up rates in the international examples provided, and the projected range within the implementation study did not jar us in particular; it sounds like a possible scenario. There is a question in my mind as to whether that will be a particularly linear experience. One of our members made what I think is an excellent observation recently when he talked about the fact that the NBN Co., being a network whose parameters are well known and stable, will be a much more fertile ground for the development of applications than the existing series of networks in Australia. He made the analogy that it will be a bit like the iPhone. People are buying iPhones not because they are good phones on which to make telephone calls but because of the wonder of the applications. The fact of the NBN Co. being a stable environment like that will foster application development. But he said that will probably take six years. So for a number of years you will see not much movement and then suddenly, at the applications level, it will explode and people will be much more inclined to take up services. So you may see some differing rates of growth over a 10-year profile, for example.
CHAIR —Mind you, you make a good point with the iPhone. That, of course, is a wireless technology, which will not be interested at all in the NBN’s offerings. But, again, I should not ask you to comment on that. Thank you very much for coming along and helping us. It has been good to see you.