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Rollout of the National Broadband Network
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Joint Committee on the National Broadband Network
(Joint-Friday, 17 June 2011)
ACTING CHAIR (Mrs D'Ath)
Senator IAN MACDONALD
Senator IAN MACDONALD
Senator IAN MACDONALD
Senator IAN MACDONALD
Senator IAN MACDONALD
Senator IAN MACDONALD
- Senator CAMERON
Content WindowJoint Committee on the National Broadband Network
Rollout of the National Broadband Network
LEE, Mr Peter, General Manager, Strategy, Wholesale and Regulatory Affairs, TransACT
SLAVICH, Mr Ivan, Chief Executive Officer, TransACT
ACTING CHAIR: I now welcome the representatives of TransACT. Although the committee does not require you to give evidence under oath, I advise you that these hearings are formal proceedings of the parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. Mr Slavich, would you like to make an opening statement to the committee?
Mr Slavich : Absolutely. Thank you, Chair. I would like first to thank the chair and the committee for the opportunity for TransACT to speak today with regard to the inquiry into the Telecommunications Legislation Amendment (Fibre Deployment) Bill 2011and answer any questions that you may have.
TransACT should need no introduction to the joint committee. We have had significant involvement with the development of policy and consulting throughout the process with the department, with the minister and with relevant stakeholders, including related policy and legislation. I thought I would just give a little bit of background just in case you are not fully aware of who TransACT are. We have been around for over 10 years and we have operated and built advanced fibre-optic based networks for that period of time. We have a mixture of fibre based networks which pass the approximately 200,000 Australian premises in the areas of the ACT, Queanbeyan, Geelong, Ballarat and Mildura. More recently, in the last five years, we have been quite active in deploying fibre to the premise as the latest form of technology, particularly to greenfield sites. We now have 16½ thousand premises that are now under contract for us to deploy fibre to the premise to, most notably in the northern suburbs of the ACT and the big growth corridor in the Molonglo Valley. As we speak we have 4,500 premises passed and 2,100 premises that are now actively deployed with fibre to the premise. To those premises we are deploying voice, data, IPTV and free-to-air television via an RF overlay signal. What that means is that houses do not need to put TV antennas on their roofs. We also have an open-access network, so we provide layer 3 open access to approximately 11 ISPs on our network.
We absolutely agree with the government's policy and with this bill in the sense of building fibre optic cable in greenfield sites. We think it would be counterproductive not to do that. We liken putting copper into new estates with putting clay pipes into houses many, many years ago. That is why we have embarked on deploying fibre to the premise in greenfield estates since 2006.
However, TransACT believes that there are a number of provisions in this specific piece of legislation that if amended appropriately would improve the desired outcome for all stakeholders. The main amendments we would like to see put into legislation is amending the developers' contribution from the fibre-ready pit and pipe requirement to a capped financial contribution methodology or price threshold that was proposed in the original draft legislation of the 2010 fibre deployment bill. Secondly, where timing precludes a Communications Alliance industry wide endorsed code or a standard applying in the bill, that as a default measure the fibre-ready conditions should be those specified by a licensed and accredited carrier, not conditions as determined by the minister. Thirdly, TransACT believes that an appropriate percentage of the USO—that is, the universal service obligation subsidy—should still be made available to the private sector based on contestability and the universal service arrangement should they assume similar responsibilities to that of a primary universal service provider, such as NBN Co. or a USO co. We understand that the bill addresses the requirements to ensure fibre-ready facilities and optical fibre lines are installed in new developments. The impact of this bill, together with the government's overarching NBN policy and supporting legislation and initiatives, significantly affects the competitive landscape for future fixed line infrastructure competition in Australia. In this context TransACT believes that the committee needs to consider not only the potential impacts of specific provisions within the fibre deployment build but the greater impact on how this piece of legislation, together with the government's overall NBN policy framework, looks to enshrine the NBN Co. as a monopoly provider of fixed line services in Australia, potentially displacing the private sector from the market altogether.
Mr TURNBULL: You were here when I was describing the amendment that we were considering. I will not repeat it, because you heard it. Could you give us your reaction to that?
Mr Slavich : Essentially, we believe that having a situation where the developer puts pit and pipe into the development creates a situation where we have a tripartite type arrangement. You have the developer putting in pit and pipe and you have a fibre operator coming in subsequent to that. What we typically provide to developments is a turnkey solution. We deploy the fibre and the pit and pipe altogether to the developer. We believe that having a situation where it is pit and pipe only is not necessarily the best outcome overall.
Mr TURNBULL: The amendment I flagged earlier would probably fit in with your approach, because the developer could hire you or somebody else to do pit and pipe and fibre at the same time and then choose to operate that with you or OptiComm as an independent network or, alternatively, under the amendment I am canvassing, in effect put that back to the NBN?
Mr Slavich : Yes, that is right. We would support that type of amendment to the legislation.
Mr TURNBULL: The point you are making is that there is merit in it. Rather than having the developer doing the pit and pipe and waiting for the NBN to show up, just be able to get it all done at once by a suitably qualified person?
Mr Slavich : That is right, particularly during this transitional period. The requirement is for NBN Co. to be the supplier of last resort, not necessarily the supplier of first resort. We obviously want to continue to operate in this space. All the new greenfield developments in the ACT have been deployed using fibre-to-the-premise with TransACT, so we would like to continue to do that, and obviously we would have to comply with the requirements of the access act as well. We gave a fair bit of evidence and views in terms of that legislation as well. Obviously we would have to comply with the requirements under that act as well, but we would support that amendment.
Mr HUSIC: Not in contradiction of what you were saying but more for clarification: you could have the pit and pipe installed by someone with, for example, boring equipment who does all that work, and someone else comes later to backhaul the cable through, or, as in your case, you have the capability to do both at once.
Mr Slavich : Yes. We think it is much more efficient to do both at the same time, rather than putting in pit and pipe and later on having fibre coming through. If you put in pit and pipe and then wait for someone to come along later to put in fibre, you may be confronted with the situation where it is not ready when the homeowner wants to have the fibre deployed. With our model, that does not happen. We are always ready to deploy fibre to the premise when the homeowner wishes to move in.
Mr TURNBULL: We heard from OptiComm about the relative cost of their pit and pipe versus the NBN version. Can you tell us a little bit about what your pit and pipe approach costs versus what you understand NBN is requiring?
Mr Slavich : Certainly a lot of numbers are on the record by other suppliers. Typically, TransACT does not disclose that information because that is commercial in confidence, and we all compete with each other when it comes to deploying these new developments so it is not something that I would like to have in the Hansard. However, I think what I can quote is what others have stated and they are ballpark type numbers. The ballpark type numbers indicate that pit and pipe is somewhere in the order of $500 to $1,000 a premise and a turnkey solution is anywhere up to $3,500 a premise depending on who deploys it and what the specification is. That is one of the reasons why we would like to see an amendment to the legislation whereby the technical standard is not set by the minister, because a concern that we have is that it may be a specification that is too costly. We absolutely, positively deploy a fibre network to the premise and with our deployment we offer 10, 30 and 100 megabits per second to the home. We offer a multicast closed loop IPTV service to the home and an RF overlay and a UPS back-up. Our specification absolutely delivers what is required to the premise. What we are concerned about is if a 'gold-plated type of specification' is put in place as that will then increase the cost unnecessarily.
Mr TURNBULL: So your major concern though is not as a constructor. You do construct these networks but your major concern—like OptiComm's—is with the way this impacts on you as an operator of networks, and you do operate a very large broadband network at the moment. That is right, isn't it?
Mr Slavich : Absolutely. What we ask for is a level playing field so that we can compete on like terms. As it is, it will be difficult for us, as a smaller operator and from an economies of scale perspective, to compete with NBN Co. Obviously, they are awarding multimillion dollar contracts. From an economies of scale perspective, we need to compete with that. But, as the OptiComm witnesses indicated, we think we are very flexible, we believe we are very innovative and very customer service orientated—and our developers are delighted with the services that we do provide to them. So we believe that we can provide a value proposition to developers and to homeowners, but what we ask for is a level playing field and that we do not get dictated to in terms of that specification. Obviously, the specification does need to meet standards.
Mr TURNBULL: Who do you think should set the specification?
Mr Slavich : We believe anyone that has a carriers licence and is suitably accredited should be suitably qualified to set that specification, although we are a member of the Communications Alliance and I note that you mentioned ACMA before. I guess what we want to avoid is having an overengineered specification.
Mr Lee : I was talking about the Communications Alliance specification, and we are also a member of the Communications Alliance working group on early stage deployments and looking at that specification. We would like to see that it is an industry specification, not necessarily an NBN Co. specification. But what the bill does at the moment is this. Given that there are no Communications Alliance industry endorsed specifications, the bill defaults to the minister having the powers to set those specifications for the fibre-ready and also the optical fibre line requirement. We do not agree necessarily that that should be the case. In our submission we talk about this and we put forward a recommendation as to an amendment. Basically, we say that as an alternative it should be a licensed carrier specification. So if Mr Developer wants to go to NBN Co. for his solution he would be expected to comply with NBN Co. specifications for pit and pipe and optical fibre lines. If he goes to TransACT for his solution, you would expect that he would comply with TransACT specifications. This is as a default in lieu of not having a Communications Alliance specification.
Mr HUSIC: So you would have your own standards that you would expect subbies would follow if they work on your network.
Mr Lee : Yes. But our standards also comply with current industry standards in relation to the types of conduits, the pits, the markings.
Mr HUSIC: The subbies do not work to their own standards; they work to yours?
Mr Slavich : In a development?
Mr HUSIC: Yes.
Mr Slavich : Yes, that is correct.
Senator IAN MACDONALD: Your preference would be a Comms Alliance ability to set the standard?
Mr Lee : Correct.
Senator IAN MACDONALD: Do you have any idea why the government did not pick that up in drafting the legislation? Have they given you any reason? You are a major player in the area; they may have confided in you as to why they did not do that?
Mr Lee : My understanding is that it is because, currently, there is not a Comms Alliance specification for pit and pipe. In lacking that, currently, the bill defaults to the minister being able to have the discretion to set those standards. What we are afraid of is that the minister will set the NBN Co. standards as the minimum spec, which will then make it an anticompetitive and inflexible playing field for other private sector providers.
Senator IAN MACDONALD: Do I get this right that, although you have your own standard, you pass it across Comms Alliance before you implement it so that others in your industry know that they could connect in if the need arose. They think it is not a bad idea?
Mr Slavich : We certainly communicate that as part of that process.
Senator IAN MACDONALD: They approve your standards?
Mr Slavich : We work with developers and we are a licensed carrier. As a prudent licensed carrier, we need to set a standard that deploys the correct services to the end customer. The last thing we want to do is deploy a service that does not set the requirements that we would like. Our delivery is a GPON—gigabit passive optical network—standard that is utilising Alcatel-Lucent kit and Corning fibre. In fact, the standard that we put in is actually above what NBN Co. will provide in terms of RF overlay. So we provide an RF overlay to the premises.
Senator IAN MACDONALD: Accepting that there is a thought around that you should not be your own judge, sort of thing, and looking at it going, as a last resort, to NBN—which is the minister, the NBN, which is what you are worried about—is there a way in which you could facilitate a third party, that is, the Comms Alliance to be—
Mr Slavich : We would be satisfied with working with other carriers in this space through the Comms Alliance to set that standard.
Senator IAN MACDONALD: Is it able to be done legislatively?
Mr Lee : It could be. If there were a Comms Alliance standard that was already set and agreed to by industry, certainly the legislation could refer to that standard, or an ACMA or Comms Alliance code, whatever. Currently, that standard does not exist.
Senator IAN MACDONALD: To do that, Comms Alliance would have to set a standard?
Mr Lee : Correct.
Senator IAN MACDONALD: It is not sufficient to say, 'We'll use our standard, provided an independent third party like Comms Alliance says that it's not bad'?
Mr Slavich : As pointed out earlier, NBN Co. is part of that Comms Alliance as well.
Mr Lee : NBN Co. is also in that working group.
Senator IAN MACDONALD: I am not sure whether you have answered my question. Do you know why the government did not go along with that? Have they shared that with you?
Mr Lee : As I said, I think it is because currently there is not an agreed standard that has been set by the Comms Alliance, which is why the government has not specified a specific Comms Alliance standard.
Senator IAN MACDONALD: Would it be hard to get Comms Alliance—
Mr Lee : My understanding is that it is being worked on at the moment and, as Phil Smith from OptiComm said in his previous statement, he is the chair of that working group and that working group is currently working very hard to come to a point where that standard is actually set. On that working group there are representatives from NBN Co., Telstra, TransACT, even representatives from the department, and they are working hard to come to that standard.
Senator IAN MACDONALD: It is the default bit that you are worried about, leaving it to the minister—
Mr Lee : Correct. And then the minister then—
Senator IAN MACDONALD: I do not want you to comment on this, but leaving anything to this minister would be of concern to me, not to you perhaps—
Senator FISHER: Now, Senator! I did not mean to pull you up specifically at that point, but I am mindful of the time. I want to check whether you have many more questions. No. Three more members want to ask questions.
Senator CAMERON: Why do you not have an industry standard?
Mr Slavich : That is a good question. I guess the reason that is the case is that it has been a very competitive environment, and there is no question that the fibre to the premise that has been deployed thus far has been absolutely adequate to meet consumers' needs. So my answer to that would be that it is probably more because of the competitive environment. TransACT, Opticomm, Comverge, Pivit, Openetworks—all these companies—have competed with each other in these developments, and it is more of a function of the NBN Co. coming into existence, whereby the industry now recognises that there is that need to set that standard and is working hard to develop that standard.
Senator CAMERON: So there is competition based on lowering standards, is there?
Mr Slavich : I would not say that it is on the basis of lowering standards; it is probably more a case of intellectual property with each of the carriers in terms of how they deploy that service, and it was a case of, 'How much of that intellectual property do you want to share with your competitors?'
Senator CAMERON: But intellectual property is intellectual property; base standards for industry are a different thing, aren't they?
Mr Slavich : There is no question that as a licensed and accredited carrier we have to satisfy a standard in deploying our fibre-to-the-premise, and we provide a very good standard for our deployments. So there is no question at all that we are not looking to lower standards whatsoever; it is more a case of sharing that IP with competitors.
Senator CAMERON: So all your competitors set their own standards; NBN is now saying that they want a standard. Isn't the minister basically saying, 'Why don't you just get your act together and set a standard?
Mr Slavich : We are in the process of doing that, but, the way the legislation is drafted at present, it states that the minister will set the standard.
Senator CAMERON: Is that not because you have vacated the field and you cannot get it up because of intellectual property, you cannot get it up because of competition and you cannot get it up because you do not trust each other? What else can the minister do?
Senator Fisher interjecting—
Senator CAMERON: Just ignore that rabble over there; I would like you to answer my question.
Mr Slavich : As I said, the industry is working on establishing that standard through the Communications Alliance. Is there a timeframe on when that standard will be available, Peter?
Mr Lee : I am not aware of the timeframe, but I know that it is imminent.
Senator CAMERON: But is it not it about the minister having a reserve power?
Mr Slavich : It would be good if the legislation had a timeframe by which industry could establish that standard. So perhaps that is a way of addressing that—you give us a timeframe to establish that standard, and, if we do not establish that standard within that timeframe, the minister then has a reserve power.
Mr Lee : We currently do meet standards in the industry as they are today, but we also innovate. We—
Senator CAMERON: But what are the standards in the industry today?
Mr Lee : There are standards—Comms Alliance standards—in the industry today.
Senator CAMERON: But they are all different standards.
Mr Lee : There are standards for pit and pipe type deployments in the industry today. I will give you a practical example of our ability to innovate. If, in deploying a network in a new estate, we want to put in a 50 millimetre conduit because we believe that that is all that is required, then we should not be dictated to deploy a 100 millimetre conduit as a minimum requirement because that is an NBN Co. standard. We should be able to innovate—as Opticomm indicated, we might put five pits in a certain area within our design and not six pits. So that is about innovation, about being competitive in the market, about deploying a network that still meets standards, but—
Senator CAMERON: It sounds and more like cost cutting than innovation—you put in 50 millimetre pipe instead of 200 millimetre pipe. What is so innovative about that?
Mr Lee : But why put in 100 millimetre pipe when you do not need 100 millimetres?
Senator CAMERON: But it is not innovation, is it?
Mr Lee : It is innovation in the way that you design your networks.
Senator CAMERON: I have never heard innovation being described in that way.
Mr Slavich : I guess it is as I was saying before in the sense that we do not want—and this is the point that Peter is trying to make—to see overengineering beyond what is required. When TransACT goes into a development, we design the deployment for that development; there is no point putting in an overengineered solution if that development does not require that.
Senator CAMERON: But do you agree that if there is a National Broadband Network there should be some standardisation in that network?
Mr Slavich : I cannot speak for NBN Co. but I am sure NBN Co. would want a standard for what it is doing the same way in which we set a standard for what we do.
Senator CAMERON: That is fine. Thanks.
Mr HARTSUYKER: You mentioned a turnkey figure of 1,500 to 3,000. What is the difference represented, UPS and RF overlay, how do you get from 1,500 to 3,000?
Mr Slavich : There is obviously a number that we provide to developers and there is that competitive framework at the moment. Obviously, like any service provision, one of the value propositions is that you provide for a lower cost. Essentially, what tends to happen now is that the developer will incorporate that cost in the cost of the building, the block that gets sold or a house and land package that gets deployed. The top end of the spectrum would represent more of an over engineered, gold plated, no other choice than price.
Mr HARTSUYKER: What is the overengineering and gold plating?
Mr Slavich : I think it is also dependent on competition. Competition will drive prices down because if you know that someone else is also bidding for the work you are obviously going to be as keen as possible to provide the lowest cost that will win you the business. It is putting pit and pipe on both sides of the street, having lots of conduit under roads, having extra pits, having more fibre than what is required—those types of over engineering could get the price up to that higher number.
Mr HUSIC: Is it your view that overengineering exists now with what has been proposed in terms of the rollout?
Mr Slavich : What exists now is primarily private companies deploying into greenfield sites and private companies are efficient with what they do in deploying, so I do not think that what has been deployed thus far for fibre to the premise has been overengineered, no.
Mr HUSIC: I am trying to grapple with two points that you have made. One is that you want to be able, if I understand this correctly—and by all means correct me if I have misunderstood what you said earlier—if TransACT were involved in a greenfield site in the rollout of the network, to set your own standard. But if you have subcontracting firms that you engage in development sites to roll out TransACT's network you would expect them to follow your standards.
Mr Slavich : Absolutely.
Mr HUSIC: Do you not see the contradiction of position where in the absence of a Comms Alliance mandated standard you are asking NBN Co. to do something that you are not prepared to do?
Mr Slavich : There is not a contradiction there. What we are saying is that in the current environment a licensed and accredited carrier sets the standard which is appropriate. Moving forward, TransACT would be prepared to abide by an industry standard that is set by the industry. What we would be concerned about is a standard that is handed down unilaterally by the minister or NBN Co. We would be happy in the future if OptiComm, TransACT, NBN Co., Telstra, Optus, all of the carriers, established a standard which was appropriate and which was satisfactory to ACMA, for example. Then we would be prepared to abide by that standard. We would not want a unilateral overengineered standard to apply.
Mr HUSIC: But Comms Alliance, which is made up of a range of different companies in this space including NBN Co., can talk with each other about the development of a standard and has not done so yet. So what should happen if the industry is unable to reach broadly unanimous agreement about standards? How should a standard be developed if your other concern then is that the minister becomes involved in some way to set some standards to create a degree of uniformity in the rollout?
Mr Slavich : There is a draft standard that has been established by those carriers as part of that Communications Alliance. My suggestion there would be that you have a time frame for that standard to be established by the industry and, failing that standard being established, perhaps have the minister with the reserve right to come in and set the standard.
Mr HUSIC: Do you accept there is a degree of risk that you would be anticipating government would wear, in the instance where Comms Alliance, for example, was unable to, within its own internal fora, reach agreement on a standard, being without standards under the scenario you just outlined?
Mr Slavich : I would not say that we were without standards. We are a licensed and accredited carrier. So absolutely our standard has to be adequate, otherwise we run the risk of losing our licence. If TransACT started rolling out dodgy fibre-to-the-premise deployments that did not meet the requirements, we would be running the risk of losing our licence. So there are standards.
Mr HUSIC: Also, if, in that scenario, it were found that there were a higher incidence of, say, faults that led to service standards not being met in terms of delivery of service, that would be an issue as well. Right?
Mr Slavich : Absolutely. If it were a situation where there were lots of faults and problems with what we were deploying, as I said, we would run the risk of losing our carriers licence.
Mr HUSIC: That is the other issue that exists here. I hear clearly what you are saying, which is that you do not want the minister to be able to bring in a standard, but, at the same time, too, the industry has not yet reached a landing on what that standard would be. But, if it did, who is ultimately responsible if that standard is observed and it did lead to a higher incidence of fault and non-performance? What happens then?
Mr Slavich : I think in that scenario it would be ACMA that would come into the picture.
Mr Lee : There is currently a draft standard, which was set by the Comms Alliance. Maybe the question should be asked of NBN Co. as to whether they are happy to comply with that particular standard as a minimum standard as it stands today and maybe that can be referenced in the legislation.
ACTING CHAIR: I know Senator Fisher would like to ask a question, but I just want to follow up from that. You talked about the unilateral power of the minister to impose these standards. My reading of the bill and my understanding of the department's submissions to this committee is that the bill does not impose NBN Co. specifications on the industry and that in fact the provisions in the bill give the minister a reserve power. When it talks about NBN Co. specifications, it is talking about those specifications being provided to the Communications Alliance for endorsement for general use. How is that not really consistent with what you are saying? There is a reserve power, so that if no-one steps up to fill the void the minister is able to ensure that there are specifications out there. NBN Co. would be taking their specifications to the Communications Alliance. My understanding of all the evidence I have heard today is that that is what companies want and that they would be seeking endorsement for it to be used generally.
Mr Lee : Currently NBN Co. have taken their guidelines—they are not really specifications; they are NBN Co. guidelines, which they released in April this year—to the Comms Alliance working group. The issue currently is that members of the Comms Alliance do not all necessarily agree that those standards should be industry minimum standards. So that is the current issue. What we are saying is that without a Comms Alliance standard, we propose an amendment to this bill that the guidelines should be those of an existing licensed carrier— whether that be NBN Co.—therefore Mr Developer goes to NBN Co., and he would have to comply with NBN Co's guidelines for installation of pit and pipe, fibre-ready infrastructure. If he went to TransACT, he would have to comply with TransACT's guidelines, given that both those guidelines or both those companies still meet certain current standards in the industry, Comms Alliance standards, that are there today.
ACTING CHAIR: Do you not accept that, where the government is making such a major investment in infrastructure in this country, it should be able to at least expect that an industry standard would be put out there in relation to infrastructure and it not just be left to each company to say, 'We can't agree, so we should be able to basically do our own thing'?
Mr Slavich : I do not think it is a case of doing your own thing. We do have to meet standards. As I indicated before, we would lose our carrier licence if we did not meet those standards. My understanding of the concept and the position of the government is that NBN Co. is to be a supplier of last resort, not the supplier of first resort, into these greenfield estates. TransACT's intention is to continue to deploy in these greenfield sites to a standard that is established. We are an accredited licence carrier so we do have standards. We have participated in this Comms Alliance standard and we would be prepared to shift and say we would abide by a Communications Alliance standard. But there is that standard that is established. In terms of that investment, NBN Co. should be going into estates only where private companies have not been able to deliver the service to the end customer.
Senator FISHER: If the government regime allowed TransACT to be chosen as an alternative provider to NBN Co. as that developer's preferred supplier, what then do you think should be the expectations by the developer, and anyone else, of TransACT in the context of the minister saying yesterday that, for developments of 100 or more, NBN Co. does the work and the developer must reach an agreement with NBN Co. that transfers ownership of the infrastructure to NBN Co.? If you were to stand in the shoes of NBN Co., which is what I understand you want TransACT to be able to do—although on your own terms and conditions in terms of the product, if I can put it that way—what should be the expectation of TransACT if ownership of the pit and pipe were transferred?
Mr Slavich : Our position on this—and we understand with that minister's clarification—is that sites under 100 will continue to be supplied by Telstra using copper and that, for sites over 100, it is not that NBN Co. will be the supplier; it is our understanding that NBN Co. will be the supplier of last resort. I guess one of the issues for all the private companies is that everyone seems to think that NBN Co. will be the supplier of first resort into these greenfield estates.
Senator FISHER: Indeed, at every resort.
Mr Slavich : What private companies would like to see is that that we supply greenfield estates and, if we do not get it right, then NBN Co. comes in as a supplier of last resort. If for whatever reason—the development is in the middle of nowhere and there are problems with backhaul to that site, or it is too far for us—from an economics perspective we cannot make it work then NBN Co. should be the supplier of last resort. But it seems that what is happening now is that developers are saying, 'Okay, NBN Co. is going to do this; all we need to do is put in the pit and pipe and they will do the rest,' whereas we have provided a turnkey solution to the developer. We do not require developers to put in the pit and pipe; we do it. We put in the pit and pipe, we put in the fibre and we provide them with a price per dwelling—which I have not disclosed because of commercial-in-confidence reasons—and we provide that turnkey solution. Only in the situation where we or the private industry has failed to do that should the NBN Co. then come in.
Senator FISHER: If you get the opportunity to do that, I would have thought the clear inference of what you have outlined would be that TransACT would expect to maintain the pit and pipe as well as what is going through it.
Mr Slavich : Absolutely. That is exactly it. We have 16,500 premises under contract, of which 4,500 have passed. We have pit and pipe there but that is pit and pipe we have put in; we own it. We put that in place, and we have put in the fibre, the optical network termination units and so forth, and the GPON—the gigabit passive optical network equipment. We supplied that as a turnkey solution. Developers take that cost into account when they sell their blocks.
Senator FISHER: So you are already shouldering that burden. Surely, then, you would have some concerns about the fact that this bill does not touch that issue. Now, the government does not intend it to, yet yesterday the minister spouted forth that ownership of pits and pipes must be transferred back to NBN Co., without saying anything about who should bear the responsibility of maintenance thereafter. Do you have concerns about a competitive playing field? Because there seems to be a presumption that NBN Co. will look after things thereafter, yet there does not seem to be any intention to give them legislative compulsion to do that—which you already do today.
Mr Slavich : One of the amendments that we have asked for goes back to the original draft legislation and is 'whereby a financial contribution methodology or price threshold is provided per development', rather than the requirement to put in pit and pipe. That avoids that whole issue of pit and pipe, and maintenance and transfer. At the moment, we provide that turnkey solution, whereas by having this pit and pipe concept you have again introduced a third party, so the developer needs to go to a third party to put in the pit and pipe and then the fibre operator comes in.
Senator FISHER: Why do you call it a 'turnkey solution'?
Mr Lee : It is a total end-to-end solution.
Senator FISHER: Silly me! Of course.
Mr Slavich : And it is one of those things that developers really value as a proposition because they do not need to worry about the pit and pipe. We do that per our standard—and, as I said, we would be happy to comply with a Comms Alliance standard.
CHAIR: Thank you for attending today to assist the committee with its review of the fibre deployment bill. I do not think we put any questions on notice to our witnesses, which is great. So thank you very much for your time.