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Thursday, 19 September 2002
Page: 4586


Senator LUNDY (7:07 PM) —I think it is fair to say that we all need to get ready for 12 months of bread and circuses from the government and Telstra. They are attached at the hip, and they are as one in their absolute focus on privatisation at the expense of the real issues both of them should be facing. The Estens inquiry will provide the forum for this exercise.

If they were looking beyond next year, Telstra would be thinking about modernising their network. If the government were looking beyond the next year and beyond privatisation, they would be thinking about how it could create the type of competitive marketplace needed to ensure that Australians have broadband communications infrastructure fit for the new century, at prices they can afford. But Telstra's corporate leadership is committed to minimising costs and maximising short-term profits. Building a network for the future has never been a priority for a company locked in a mutual agenda of privatisation with the coalition. What Telstra mean by `creating shareholder value' is squeezing every last dollar out of their existing copper local loop while spending as little as they possibly can to satisfy the public clamour for a modern, effective network. Building national broadband infrastructure does not factor into this equation.

Telstra will use its vast capital reserves to try to buy approval for privatisation from rural and regional customers by throwing money at shallow initiatives and non-essential features on an ageing network. This bread and circuses approach will not future-proof the network—far from it. Evidence shows that Telstra's main broadband product, ADSL, has severe limitations. By Telstra's own admission, up to one million consumers on Telstra's copper local loop are blocked from accessing broadband services because of the company's decision to use so-called pair gain technologies as a cheap alternative to giving consumers the second lines they order and pay for. Add to this the standard limitations of ADSL, which include a maximum radius of about six kilometres—it might be four kilometres or it might be eight, depending on the state of the copper—and a percentage limit of customers in an exchange area, in a given bundle of copper wires. Clearly, ADSL was never designed as some sort of ubiquitous broadband technology or indeed as an effective bridging technology from narrowband to broadband. Rather, it was a stopgap measure.

These limitations primarily affect people in outer metropolitan, regional and rural Australia, but customers in metropolitan cities are not immune. Looking at these limitations from a geographical perspective is very informative. For consumers who are more than about six kilometres from an exchange, there is no alternative broadband service available through the copper network. The only hope is connectivity via satellite. This is expensive, and, unless the consumer is eligible for the extended call zone subsidy, it is not an affordable broadband service. This combination of inadequate technology and subsidies means Australia is a nation of telecommunications doughnuts. People in the doughnuts—that is, outside Telstra's ADSL reach but inside the government's satellite subsidy zone—are in the `affordable broadband free' zone. These doughnuts are one of the most significant policy challenges in telecommunications. Unless a solution can be found to deliver affordable broadband to people in this zone, there will never be ubiquitous broadband internet connectivity in Australia. Services will never ever be `up to scratch'.

The solution lies in building broadband local loops that can somehow extend into those long roads and into the doughnut areas. However, experience to date has shown it is extremely difficult to build a new broadband network unless it is somehow associated with the infrastructure of existing utilities. In other words, it is made possible by the utilities' economics—economics which historically only governments have had the patience to cope with. A number of broadband infrastructure providers are rolling out such networks. But, in order to prevent the need for an interconnection policy for these new broadband networks in the future, there is a real public interest test that should be applied. They should be open networks—that is, they should be networks that carry the retail services of any provider willing to lease the bandwidth necessary to deliver them. Supporting an open network approach for new communications infrastructure is a smart approach that would show we have learnt from past policy mistakes.

Senate adjourned at 7.12 p.m.