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Tuesday, 10 August 2004
Page: 26020


Senator CHERRY (4:14 PM) —I rise to speak on the report on competition in broadband services by the Senate Environment, Communications, Information Technology and the Arts References Committee. This is a very important report because it concerns a fundamental part of Australia's telecommunications infrastructure: the roll-out of broadband technology across Australia. The picture which emerges from this report is that of a work in progress, and inevitably it will be. I am sure we will hear the same complaint that I heard from the government last week, that the report is already out of date. Because of the rapid changes in terms of the roll-out and the changing nature of this market, I think the government, in defending the status quo, is failing to recognise that governments do have a role in trying to influence where policy goes, where access is, the pricing of that access and where the infrastructure is invested in.

The fundamental recommendation of this committee is that we need to have a substantial investment in the roll-out of a new fibre optic cable network across Australia. It is a recommendation similar to the one we made last week in respect of the customer access network and it is one which is equally important, if not in fact more important, for the broadband network. If we are going to have a proper roll-out of real broadband—not pretend broadband and not halfway broadband, which is what the ADSL technology is, but real broadband—then we need to ensure that we have a proper fibre optic cable network to the home that can actually deliver that. That should be a long-term objective of Australia. Other countries have done it. Korea has done it and Japan has done it, so why can't Australia? In Korea and Japan there are certainly much faster upload and download speeds at costs much cheaper than anything that has been achieved in Australia. Yes, I accept there are population density issues involved, but Canada have done it and they have population density issues similar to Australia's, so why can't we do it? This is the sort of question which the committee has been trying to grapple with and the government has failed to address.

I noticed that even the government senators' report noted that the most recent figure suggests that Telstra has 750,000 broadband customers—five times as many broadband customers as its nearest rival. Telstra has a 68 eight per cent market share in broadband and it is able to use its market dominance in other parts of the telecommunications market to actually ensure it develops a dominant position in the broadband area. This has been a matter which has been reported on regularly by the Australian Competition and Consumer Commission and by and large the government has ignored every single recommendation of its competition watchdog. I was listening to Senator Tchen's comments suggesting that the ACCC were really adopting a conflict of interest or a theoretical approach. No, the ACCC were adopting a view that they have been trying to regulate telecommunications since 1997 and they have come to the conclusion that there are fundamental structural impediments to competition in telecommunications and that those structural impediments are that Telstra, as the most vertically and horizontally integrated telco in the world, is simply beyond the regulator's ability to effectively regulate.

That is also dealt with fundamentally in the recommendations of this committee report. It calls on the government to actually look at and do the extra work on the issues raised by the ACCC. I saw comments by the Minister for Communications, Information Technology and the Arts, Senator Coonan—and I am pleased she is in the chamber for this debate—in the media this morning suggesting that the ACCC needed to do work on the costs and benefits of the structural separation of Telstra. It is not the ACCC's role to do that; it is the government's job to do that. It is the Productivity Commission's job to do that. It is time that the government did what the National Competition Council told this committee it should do: have a proper assessment under competition policy principles of the benefits, one way or the other, of the structural separation of Telstra. It is time that review occurred so that we do look at the costs and benefits and it is time that an appropriate body—presumably the Productivity Commission or some other body—did that work. This committee has called on the government to initiate that process. It has called on the government to initiate a review of the ownership of both Foxtel and the HFC cable network and also to look at the broader issues in encouraging competition in this very important area. It has also called on the government to look at the issue of peering, which is a fundamental concern for many smaller ISPs on the basis that they are unable to compete adequately with Telstra, given current peering arrangements. We have also called for changes in the backhaul operation and the costing of the backhaul cables—a very important issue that adds costs and reduces competition in the roll-out of broadband across Australia.

Over the last six months we have seen very significant changes in the pricing of broadband in Australia and a regulatory response from the ACCC. The concern of many in the industry is that the approaches which are being adopted at this stage are about ensuring Telstra's continuing market dominance in the broadband market as it emerges and as it grows. This is something which should worry Australia over the longer term because the roll-out of broadband is the absolute backbone of the information economy. If we do not have a roll-out of broadband to business and consumers on fair terms and with reasonable access, then we are going to deny large chunks of our country access to the information economy. In particular, this committee heard evidence from many country towns and many communities which have been denied access, even to ADSL, on the basis that there were not enough people prepared to sign up to the demand register. We heard evidence that the demand register's numbers have changed from 15 to 20, up to 150 and 200 and down to other figures at different times, depending on Telstra's arguments at the time. This has to be improved. The roll-out of broadband to all communities in Australia, particularly regional communities, should be a national priority—and the national broadband strategy, which we talk about in this report, is not going to get there. It is not going to deliver it because it is too small, it is too lacking in imagination and it is simply failing to address the fundamental core issue of investment in the infrastructure and the competition issues that underpin access to that infrastructure. This is what this report is about. It is an important contribution to the debate, and I do commend it to the Senate.

I also wish to thank the committee secretariat for their assistance in putting together this report, which we have done in a fairly short period of time. I wish to thank the many people who gave submissions to the committee, in particular the councils of Ballarat and the Gold Coast, who hosted the committee. They gave us an extraordinary insight into what regional communities can do in terms of the application and development of broadband. We also note that in both areas there were impediments to taking that further, and we certainly need to look at some of the planning and geospatial mapping issues in terms of allowing Telstra's competitors to know where the infrastructure is that they can hook into. I wish to thank the committee members, particularly Senator Tchen and Senator Lundy, for their work on this committee report, which is a very important report. I also thank Telstra and the government authorities who appeared in front of the committee and gave us excellent access to the materials which were available to them. Broadband is a moving feast. It is a changing area of policy, one on which I believe the government needs to provide more leadership rather than be a spectator. This committee report, heartily endorsed by the Democrats, is very much about showing how a government could provide leadership to ensure that the backbone of the information economy stretches out to as many Australians as economically feasible. I seek leave to continue my remarks later.

Leave granted; debate adjourned.