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Monday, 4 July 2011
Page: 7364


Mr TEHAN (Wannon) (17:33): I rise this evening to talk about the Telecom­munications Legislation Amendment (Fibre Deployment) Bill, which once again demon­strates this government's ability to take an area of policy, an area of the economy, which is functioning and working well and to potentially turn it into a mess. The greenfields sector for the provision of fibre-optic services was an area which was working relatively well, and now we have a government which, unfortunately, is legisl­ating to make a mess of this area and, it would seem, to entrench monopolistic practice, which I do not think it can be argued is in anyone's interests.

We have had already a dissenting report from coalition members of the Joint Committee on the National Broadband Network, which examined the bill. Coalition members have called for three amendments for three main reasons, three very valid reasons. Firstly, the regime established by the bill is unnecessarily slow and bureau­cratic for property developers, so rather than speeding things up and creating less red tape this bill is going to have the potential to do the opposite. How we can come into this place and argue that we want to see optic fibre rolled out more slowly in greenfields sites and for there to be greater bureaucracy in the way it is rolled out beggars belief, but that seems to be what the government is proposing here.

The second reason that coalition members believe that the bill needs to be amended is that, as presently drafted, it represents a missed opportunity to take advantage of the existence of the competitive greenfields operators to impose effective competitive and cost discipline on NBN Co. It is especially worth highlighting the phrase 'to impose effective competitive and cost discipline on NBN Co.' I think we would all argue that we need to see that when it comes to NBN Co., because if we do not we are going to see the creation of one of the greatest white elephants this country has ever seen. In an area in particular where the market seemed to be working quite well, we now look like we are going to have a bill which will impose more uncompetitiveness and less cost discipline on the behemoth which this government is setting up in this area, NBN Co. The third reason that the coalition members believe the bill should be amended is that the regime established by the bill is damaging to competition in the market for the provision of new fibre infrastructure. So, rather than driving further competition into the sector, it is actually going to do the opposite. They are the three key reasons the coalition has problems with the Telecom­munications Legislation Amendment (Fibre Deployment) Bill. I will explain in a little more detail what these problems are and then raise another issue which is directly relevant—the rolling out of broadband to greenfield sites where we will not be able to provide optic fibre. That was being done under the Australian Broadband Guarantee program, which was meant to run for an additional 12 months. Sadly, the govern­ment, although it said on its website that it was to run for another year, has pulled the pin on it. We now have to rely on NBN Co. using satellite to provide services in this area. That has caused sovereign risk damage to those wireless providers that were operating under the Australian Broadband Guarantee—something which we have seen occur all too often with this government. It also means that consumers in areas where we will not see fibre to the premise are going to suffer because they are going to get delayed and inadequate services provided by satellite. I will touch on that in a bit more detail as well.

The NBN estimates that 1.9 million greenfield households will have to be connected to the NBN by 2020 and 250,000 households will have to be connected by June 2013. You would hope that what we get is less red tape and more competition to make sure that this occurs. The NBN has allocated more than $100 million to connect greenfield households. Once again, we do not see any detailed costings or analysis on how the NBN will allocate its money. It is just that we have a figure of more than $100 million to connect greenfield households within the first year of operation. In the first five months of 2011, NBN Co. received more than 1,480 applications from greenfield developers, representing approximately 133,000 premises to be connected across Australia. So there is demand for these premises to be connected. The problem is that the marginal cost of installing fibre in new housing developments is low compared to the benefits. The government's policy paper on greenfields estimated that the cost of rolling out a fibre-to-the-premise conn­ection is approximately $2,500, which is about $1,500 greater than the cost per premise of a broadband capable copper based connection. However, the increased cost will not always be paid upfront by homeowners. Traditionally, it has been split by developers and telecommunication providers who recoup costs through offering superior services.

Although we on this side support regulation that would ensure fibre to the premise is used in greenfield estates, there are several concerns. Changes to the market structure will ensue from the role of NBN Co. as a provider of last resort. However, NBN Co. has agreed to absorb the cost of rolling out fibre in greenfield sites—costing up to $3,000—which puts them at a competitive advantage to competitors who must come to an arrangement with devel­opers. Again, we have an area of competition where, by setting these rules, we ensure that NBN Co. has the advantage as the behemoth. As the white elephant that it has the potential to become, it will sadly be able to gouge and make sure that where there is competition it will be lessened.

There is also huge worry—and this is why the design of the bill does seem fraught and lacking—that the lack of consultation with industry will result in an eleventh hour decision that the NBN establishes technical standards that will be too onerous for small providers to meet. In a market where we need to encourage smaller providers, this government is sadly going to create a sit­uation where NBN Co., through onerous regulation, will be able to dominate the market. Part of the rationale that the gov­ernment gave for the NBN is that it would end the dominance of the vertically integrated Telstra. According to the ACMA Communications report 2009-10, Telstra boasts 82 per cent of the fixed line telephone market and 65 per cent of the DSL, which accounts for 82 per cent of fixed line internet connections.

The opening up of Telstra exchanges have to an extent diminished Telstra's dominance. The number of unbundled services offered by competing ISPs increased by 23 per cent between June 2009 and June 2010. Telstra's share of the market was reduced from 70 per cent to 65 per cent. However, the greenfield market is incredibly competitive. Of the 909,000 cable and fibre connections in Australia, more than 400,000 have been connected by small operators under the greenfield fibre operators of Australia. The government's own policy document on greenfield estates states:

The installation of FTTP is taking place in a competitive context, with developers typically contracting out the provision of infrastructure and services in developments.

Why then are we again looking to concen­trate commercial power in this market when the government's own documents say that we are seeing good competition here?

Once again we are seeing a government that seems to want to re-regulate, to create a large player to replace Telstra and, sadly, to impact on the small providers.

On that matter, I want to spend some time looking at what is happening with the Australian broadband guarantee, because we are going to see the same thing happen there as well. We have small competitors operating and providing services through wireless, yet the government is bringing forward the end of the Australian broadband guarantee program by 12 months, creating serious sovereign risk to these wireless providers in country areas. They have now decided that that will be replaced by NBN Co., who have now said that they are going to use satellite. It seems that they are not in a position to roll out the satellite services at the speed with which the wireless providers were under the Australian broadband guar­antee.

There is also no guarantee that an equivalence of service in terms of speed will be provided. It is commonly acknowledged, especially in country areas, that wireless is a far superior technology to satellite and is far more economical from an installation and maintenance perspective. So I would strong­ly urge the government to look again at this issue and urge against using satellite to infill or provide a quick fix for wireless areas whilst the NBN wireless network is built. We should see a continuation of the Australian broadband guarantee program, at least for another 12 months, until NBN Co. and the government can get their act together and we can see wireless once again being provided to those regional and rural areas which will otherwise suffer while this 12-month or potentially two- to three-year gap in satellite provision is filled by NBN Co.

This bill needs a serious examination. It needs to go to the Joint Committee on the National Broadband Network, which can look into all elements of it. Sadly, like many other pieces of policy we have seen from this government, in the end it is going to create more red tape rather than less, especially for smaller operators. It seems it is going to drive less competition into this sector rather than more, and this will occur in an area where competition, in the government's own words, has been working extremely well. It is also a shame that what we are going to see, through red tape and costs, is probably that NBN Co. will in the end be the major provider of services in this area and, sadly, will push competition out of this sector. That will be damaging to telecommunications providers and the industry. I call on the government to really think seriously about going back to the drawing board with this piece of legislation, going back to industry, making sure that they consult properly with industry and making sure that we get a piece of legislation which will actually lessen red tape and continue to see strong competition in an area where it already exists.