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Monday, 15 November 2010
Page: 2259

Mr SYMON (6:12 PM) —I speak in support of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. This bill will enhance competition in the Australian telecommunications industry and strengthen consumer safeguards. The Australian telecommunications market is characterised by a very strong and highly integrated incumbent, Telstra. That is no accident. That has happened over many years. Prior to it being Telstra, it was Telecom. Prior to that, it was the PMG. It was a monopoly service. In many ways, a lot of that has stayed. If you have a look at a suburban street or a suburban office block or shop and see how the phone cable actually gets into the business or the home, there is only one way and there is only one cable. It will come down the street either on poles or underneath the footpath, maybe in a conduit, through a few pits, maybe from a local exchange; but it all comes back to one point, and that point is Telstra.

Competition is hard when you cannot use the infrastructure. We have seen it over many years when phone companies have sprung up and tried to do things. Optus did do some things. They installed their HFC and they were able to do some local phone hook-ups. It is still not easy for competitors to break into that market. When we talk about competition in telecommunications, we really need to have a good look at the way that Australia has done it, because it has not worked. We have some of the most expensive communications in the world. There is no need for it to be so expensive. What we are talking about with this bill will start to change that so that we are up there with the world—and not only in terms of cost but also in terms of speed and availability of access.

Telstra owns the only copper network, connecting almost every house; it owns the largest HFC cable and mobile networks; and it owns a 50 per cent stake in Foxtel, which is Australia’s largest subscription television provider. The Australian telecommunications market is unique in its structure and the Australian Competition and Consumer Commission has a role of investigating the state of the market. In its recent reports into the telecommunication industry of 2007 and 2008, the ACCC noted:

The competitive markets anticipated in 1997 do not appear to be emerging. The major downstream services continue to exhibit high levels of concentration, regulatory mechanisms are still heavily relied upon for promoting and maintaining competitive outcomes and the levels of consumer complaints about the industry reached new heights in 2007-08.

The report continued, noting ‘the industry continues to have an extremely high level of disputation and litigation’. In 2007-08, the ACCC was notified of 28 new access disputes and had 18 of its arbitral determinations subject to judicial review by the Federal Court. The ACCC report continued:

… the level of disputation and litigation in the telecommunications sector far outstrips that in any other regulated sector and is contributing to some frustration of competitive outcomes.

Separate to the official reports, the Chairman of the ACCC, Graeme Samuel, has made his views on the separation of Telstra well known. In a recent statement he said:

We have been debating this issue for years and years and years. The ACCC, the National Competition Council and many experts in the area have said the only way to infuse true competition into Australian telecommunications is to remove that vertically integrated structure existing with Telstra, and to structurally separate.

It is obvious from the ACCC reports that Australia’s telecommunications market is not functioning as well as it could.

Telstra’s level of horizontal integration across the different delivery platforms—HFC, copper, cable and mobile—is in contrast to many countries, where there are restrictions on incumbents owning both cable and traditional fixed-line telephone networks. Telstra’s horizontal integration has significantly contributed to Telstra’s ongoing dominance in the Australian telecommunications market. Since 1997 Telstra has continued to hold a significant share of the telecommunications market and has been able to block new entrants and competitors from gaining traction in the market.

And what has been the impact of this type of market here in Australia? As I mentioned before, it means higher prices for consumers. It means less choice. In many cases, it means lower speeds. Australia currently has the 5th most expensive broadband charges amongst OECD countries. It is estimated that Telstra enjoys profit margins of about 60 per cent on fixed line services—that is according to analysts at JP Morgan. And Australians face the world’s highest prices for sending a text message. You would not think so with the amount of text messaging that goes on now. But competition in this area is still not what it should be.

This bill is about breaking open the telecommunications market and enabling real competition to deliver lower prices and better services for all Australians. This bill will force Telstra to voluntarily separate its businesses by denying the company its ability to bid for valuable future spectrum if it does not undertake that separation. It is envisaged that Telstra will negotiate a transfer of its fixed line assets to the new National Broadband Network. On 20 June this year Telstra and the NBN Co. announced that they had entered into a financial heads of agreement to move its fixed-line asset to the new National Broadband Network. The agreement will deliver structural separation by providing for the progressive migration of customer services from Telstra’s copper and pay TV cable networks to the new wholesale only network to be built and operated by the NBN Co. Such an approach will ultimately lead to a national outcome where there is a wholesale only network not controlled by any retail company. This is critical to fostering greater competition in the telecommunications market. Again, it is about choice. This company, NBN Co., will on-sell its capacity to all competitors in the market. This type of competition is currently not possible as the holder of the majority of the fixed line assets, Telstra, is a profit-making competitor to the companies to whom it is selling capacity.

The way things are going at the moment is just not working. The government’s key objective is to promote an open, competitive telecommunications market to provide Australian consumers with access to innovative and affordable services. This legislation will amend the Competition and Consumer Act 2010 to clarify the role of the ACCC in determining the price that competitors will pay to access the NBN. Under the proposed changes to the Competition and Consumer Act 2010, the ACCC will set price and non-price terms of access for declared services in an access determination to apply to all parties. The bill will also remove the right to seek merits reviews of the ACCC’s regulatory decisions. The removal of this right to review is due to an excessive amount of disputes and litigation, which has had the effect of delaying and suppressing competition in the telecommunications market.

In addition to seeking the separation of Telstra’s business and generating a changed market for telecommunications, this bill will enhance and strengthen Australia’s consumer protection legislation. The bill strengthens existing legislative requirements to better protect consumers, address falling service quality and ensure continued access to basic voice services in the lead-up to the NBN. There are measures to improve the effectiveness of the regulating body, the Australian Communications and Media Authority, through enhanced regulatory powers. And this bill amends the Consumer Protection Act to include new requirements for the customer service guarantee. That covers the universal service provider and ensures that they supply on request standard telephone services with characteristics and to performance standards determined by the minister. It is intended that performance standards will include maximum periods of time for new connections and fault rectification and reliability standards.

We, as members of this place, all hear stories about our constituents having to wait extended periods of time to have faults fixed, to get new services installed or, even worse, to request a broadband connection to a suburban house and find out that, for whatever reason, they are not allowed to have broadband even though their neighbours may well have it.

The universal service obligation will include the provision of payphone services. There will also be public consultation and notification of proposals to remove payphones. That is another ongoing problem that many members of this place have spent a lot of time dealing with. Payphones are a simple issue and one that many people regard as a community asset anyway—even if it is at the local railway station. It is always in use but, in recent years, has always been under threat of removal because a profit motive is put behind it.

Mr Ciobo interjecting—

Mr SYMON —Those on the other side may actually not know how to use a payphone, but many of us on this side have spent years and years having to use such devices and having to catch the train to and from work.

ACMA will have new powers to direct the universal service provider not to remove payphones. Under this bill, new requirements will be imposed on service providers to ensure that statutory performance benchmarks are met. If they are not, the service provider will be subject to civil penalties. These enhanced penalties and the broad powers that this bill grants ACMA to issue infringement notices or on-the-spot fines for breaches of the civil penalty provisions will help ACMA effectively enforce this consumer safeguard.

This bill is about delivering for Australia an important reform in the telecommunications industry. Telecommunications, as we know, are central to an innovative and modern economy. Communications such as high-speed broadband can generate economic growth and create jobs. The current market, as we know, is dominated by Telstra, which has consistently protected its market share at the expense of new entrants.

This reform is supported by the Chairman of the ACCC and many informed experts. Reforming markets can make a substantial difference to quality and pricing. You only need to look at the changes in the airline industry with the dismantling of the previous oligopoly, the substantial drop in pricing and the rise in use of airline travel. The benefits that flowed to regional tourism as a result of that move are huge. The same can happen in telecommunications—especially for those on the other side who do not like to use payphones. This bill will enhance competitive outcomes in the Australian telecommunications industry and strengthen consumer safeguards. I commend the bill to the House.

Debate interrupted.