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Joint Committee on the National Broadband Network - 16/05/2011

EDGE, Mr John, First Assistant Secretary, Government Business, Special Claims and Land Policy, Department of Finance and Deregulation

HARRIS, Mr Peter, Secretary, Department of Broadband, Communications and the Digital Economy

MASON, Mr Philip, Assistant Secretary, National Broadband Network Implementation Division, Department of Broadband, Communications and the Digital Economy

CHAIR: Welcome. 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. Before we proceed to questions on the rollout, I would like to remind everyone that we will deal with issues surrounding greenfields developments and the fibre deployment bill in the introduction. I will ask people to hold off on questions until we get to the issues.

Mr Harris, would you like to make an opening statement to the committee? Senator Macdonald, did you want to wait?

Senator IAN MACDONALD: Yes. I thought we were starting just to get through those formalities, which I think is appropriate. Rather than have Mr Harris repeat his statement, we should at least get a few more people at the table.

CHAIR: We have a quorum, but if that is a request of a committee member we will wait. If you could round up your crew, that would be appreciated.

Senator IAN MACDONALD: I think most of them are just about here.

Senator FISHER: It is a bit like herding feral cats.

Senator IAN MACDONALD: We have the senators here, so that is all we really need!

Mr Harris : I am sure the members of the House of Representatives will be bored rigid by my brief opening statement, whereas the senators have far greater tolerance; they are used to this! I will be very brief because of the amount of time that has already been taken up this morning with Mike Quigley's evidence. Then I might hand over to Mr Mason, who will want to talk about the bills this committee has had put in front of it.

Members of the committee are aware the department handles many things other than the NBN, so I was going to talk about that, but in the interest of time I am not. I am also not even going to mention that the budget had rather a lot of money in it for the NBN; I am just going to skip straight over that. The particular issues that I remind everybody that the department has primary responsibility for are quite important. We do the development of legislation and regulation that addresses the major policy issues in telecommunications; thus, the Competition and Consumer Safeguards Act, the National Broadband Network Companies Act and the National Broadband Network Access Act. Plus, as Mr Quigley mentioned in his evidence, the $2 billion element of the agreements with Telstra relating to the universal service obligations and the creation of USO code belongs to us. We do support and advice to the minister and the board of NBN Co.

I will skip over all the wondrous achievements of the last 12 months. I am sure the committee will endorse all of them. I will note, however, for the committee's benefit, the Regional Backbone Blackspots Program belongs to us and has come up quite a few times. I think individual members would probably have some questions on that. Not only is the program moving very rapidly to a conclusion in the course of this year, there have been some significant benefits already achieved through that and some partial answers. For Senator Macdonald's benefit, I think we can provide those on towns that are adjacent to or on that network. We have a document for the committee that it had asked for previously on international submarine cable linkages. We will provide it to the secretariat, and that can be circulated. I am not sure it will be subject to questioning today.

Finally, as I have noted, the committee has allocated time for discussion on the fibre deployment bill, and my colleague Mr Mason is here to provide brief comments on that and to answer questions in relation to it. I will cease at this point, and we can move onto Mr Mason's introductory remarks.

Mr Mason : I think it would be useful to make some brief comments about how this fibre deployment bill differs from an earlier version of the bill which was introduced into the parliament in March 2010. That bill lapsed when the parliament was dissolved last year. There are a number of important differences between this bill and last year's. The most important difference stems from the decision announced in June 2010 that NBN Co. would be the fibre provider of last resort in new developments. As a result, this bill focuses more on ensuring fibre-ready passive infrastructure—that is, pit and pipe—is installed in new developments to pave the way for the roll-out of fibre.

As before, the bill provides that where passive infrastructure is installed it must be fibre-ready. As a further safeguard, however, this bill also provides for a monetary penalty if the corporation sells or leases a property in a real estate development in the fibre footprint without fibre-ready passive infrastructure being installed. Given this approach, there are new mechanisms to exclude premises that may not be in the fibre footprint—notably, a utility test, the ability for NBN Co. to give a statement and the ability for the minister to give exemptions. There is still scope for the minister to make an instrument to require the installation of fibre in new developments as opposed to passive infrastructure, but this now plays a reserve role. The previous bill allowed for the creation of an access regime for non-carrier pit and pipe via regulation. In this bill that access regime has been set out in legislation.

In general the bill is less reliant on subordinate legislation. Obligations are generally set out in a statute rather than having to be activated by subordinate legislation, as in the previous bill. As a result, this bill also has provision for specific exemptions—for example, where construction of passive infrastructure is already contracted or already underway at the commencement of the bill. The bill also expands the powers of the Australian Communications and Media Authority so it can make standards for in-premises cabling and customer equipment for use with the NBN or other superfast broadband networks. It also creates a power for the minister to direct the ACMA to make such standards as required. Those are my introductory comments on the bill. I am happy to answer questions on it. Thank you.

CHAIR: Thank you. We might deal with the bill first. Is there anyone who has some specific questions now? The other option is that we wait to hear from the greenfield fibre operators and Telstra and then, if the department is comfortable, we will put questions on notice to the department. I would hope the department are okay with that.

Mr Harris : Of course it is entirely in the committee's remit to manage it in that way. As you know, we have an awful lot of questions on notice and so, particularly as you have got a quick reporting deadline here, it may be better if I could just ask for any questions even of what I call a generic nature—as in: 'What do you mean by this bill?—would hopefully reduce some of the time for witnesses.

CHAIR: I am easy either way.

Senator FISHER: Chair, I do have sympathy with Mr Harris's view.

CHAIR: So do you have any specific questions now?

Senator FISHER: Not at this stage. Also, to the extent to which this hearing is supposed to be an inquiry into the fibre deployment bill, I have got some concerns that we are able to do that job adequately and diligently and to give fair regard to the witnesses in that respect.

CHAIR: Sure. So do you have a question?

Senator FISHER: Not at this stage, Chair.

CHAIR: Okay. Member for Bradfield.

Mr FLETCHER: What is the department's view about the impact of the arrangements on the speed with which access network is being built in new developments at the moment?

Mr Harris : At the moment there is continuing activity of a contracted kind, as you will be aware, from the past in terms of continuing to roll out telco services across Australia. But increasingly, as developers finalise their developments and put in their submissions for new telecommunications facilities, there will be a growing queue of development applications. Both Telstra and NBN Co. are aware of this and are currently managing with developers to prioritise, if you like, developments that are ready to go, because the way the development industry works there is a history, for example, we have encountered in this process of applications that are five years old. Developers have not progressed them, in other words; they have lodged them, but they have not actually progressed them. So there is an exchange going on now to keep the rollout in new developments going on, but there is a developing set of applications which will have to be prioritised, and Telstra and NBN Co. are doing that, as we speak right now, on a continuing basis.

Mr FLETCHER: This arrangement effectively creates a bottleneck, doesn't it, in that all developers for developments above a certain size have to go to NBN?

Mr Harris : No, I do not think it creates a bottleneck of that kind. It is primarily about the obligations of developers in the future to supply passive infrastructure for the purposes of a rollout. That is what this bill is primarily trying to do. I do acknowledge your point, but I do not think it is the bill. I think it is the fact that applications are going to have to be lodged and decisions are going to be made as to what kind of infrastructure is going to be placed in the passive infrastructure, the pit and pipe, that we are trying to put in place right now.

Mr Mason : The only thing I would add is that the policy is that developers can use what fibre provider they want. NBN Co.'s role is there as a fibre provider of last resort.

Mr Harris : The important thing here is that this is like saying: 'There is a transition to a new style of network and we want the development industry to be very conscious of what will be their obligations under this.' Their quid pro quo for that is: 'Yes, and you should be very conscious of your obligations, which is: when we ask for it, give us the appropriate cabling and put it in place.' So that is the Telstra-NBN discussion at the moment, and the bill is trying to say: 'Here is the future infrastructure, the passive infrastructure rollout approach of the government.'

Mr FLETCHER: Mr Mason, when you say that the bill provides for the developer to choose any network builder that they wish, once the network is built what is then required to happen?

Mr Mason : I actually said that the policy provides for a developer to use any provider of first choice. The legislation, as the secretary pointed out, fundamentally relates to the provision of fibre-ready infrastructure—that is, the pit and pipe and so forth. Assuming the fibre network is constructed, it is up to the service provider to provide the services on it for RSPs to come to that network and use that to provide services.

Mr FLETCHER: I will ask the question another way. Is the policy scheme that NBN Co. will operate the network in new developments?

Mr Mason : As I said, developers can choose to use whatever provider they want to provide the infrastructure, but if they choose NBN Co. then NBN Co. would operate the network.

Mr FLETCHER: Are they free to choose any other party that has the skills and competence to both build a network and operate it?

Mr Mason : Yes, this legislation does not deal with those arrangements.

Mr Harris : In fact the legislation that does deal with those things is the NBN access bill which went through at the end of the last things. That is the bill that says there is wholesale open access if you are going to go down this path, as long as you meet the technical standards. There will be technical standards put in place by ACMA as well for the stability of the fibre network. I am not a technologist so I cannot explain those but there will be some developed by appropriate technologists. As long as you meet the competition requirements for wholesale open access you will be able to put another network in. For the purpose of these developments you can plug that into the NBN is part of the rollout.

Mr FLETCHER: It is correct, is it not, that if there were operators who previously had a business model of building fibre networks in new developments and then providing retail broadband services over those networks, under the overall legislative scheme that business model is now not available?

Mr Harris : No.

Mr Mason : Under the access bill that was passed by parliament, if those providers were supplying a superfast network—and we accept that a fibre network in a new development is a superfast network—they would have to operate on a wholesale only basis.

Mr Harris : But the question is ultimately one of price from that point on. The question is: can they do it? A developer will still be able to go to a third party and say that NBN Co., as Mr Mason has made clear, will operate in a major developments at least as a provider of last resort. The burden that I think you are referring to and which has been complained about by individual developers is that they do not necessarily want to operate to the standard of the NBN because that has not been their commercial approach. That is the interface that causes contention.

Mr FLETCHER: I want to specifically understand the logic behind introducing a policy which now effectively precludes what I understand to have been a nascent and emerging business model in which operators would enter into a contract with a developer to build a fibre network within the development and would then offer services to residents in that development over that network.

Mr Harris : There will be two factors, and let us assume that we are talking about a development of significance here because it will help the debate but I can go back a tiny scope too if you want me to. The first is that ultimately the government is creating not only a national network but also a national network with uniform national pricing which inherently involves a cross-subsidy and therefore a concern about cherry picking. Ultimately, if somebody wanted to run a series of big developments in wealthy parts of the country the take-up might be exceptionally high and data use might be extremely high, then, as you know from a commercial perspective, that undermines the possibility of cross-subsidising from those areas to support those in the bush—to be crude about it. That is a factor, and then there is the Balkanisation of the network concerned; that is, if you do not run a technical standard that makes interoperability easy you have created the little Balkanised states of fibre or different technologies that have been referred to earlier today—HFC or whatever. The idea is, effectively, to say that we have to have a legislative structure that is consistent with the concept behind the NBN, and the concept behind the NBN, as the committee has heard me say previously, is both that there is a national network of nationally uniform wholesale pricing and that it is consistent with structural separation—a voluntary undertaking from Telstra to structurally separate from its network.

The pieces of legislation that you have seen coming through in the last 12 months from the department have been designed to be consistent with that overall vision of the kind of national network we are talking about. We attempted to accommodate the parties which were upset about this, and if I understand rightly you will probably be talking to some of them today, firstly by running a tender process under which they could bid to be effectively the subcontractors to NBN for the purposes of this. Their business models were definitely varied under that, but they would still be viable, and that process has resulted in the announcement from NBN Co. that it is going to go with Fujitsu on a scale basis. I guess that when you asked Mr Quigley for his comments on that this morning that is probably where you will be going to. I am not in a position to answer questions on this regard about Fujitsu, but there was a process where we attempted to accommodate the needs of the multiple parties who had been in this area—the smaller players. It was, effectively, that this is a contracting arrangement—

Mr FLETCHER: Is it a fair statement of the policy you are implementing that in the government's view the prohibition of a business model that a number of operators had been following is just a regrettable consequence of its policy objectives?

Mr Harris : No, I do not think that is right. As I said, we attempted to accommodate them firstly through—

Mr FLETCHER: But you would agree that the business model which a number of these companies that had been pursuing this is no longer open to them?

Mr Harris : In the second sense of an NBN today it is no longer, but it is clearly going to have to change as a result of the NBN.

Mr FLETCHER: It is correct, is it not, that they are not able to sell retail services?

Mr Mason : With due respect, I think you are oversimplifying the market model that those kinds of providers were actually operating. Many of them are operating on a wholesale-only basis, and at a very low level in the stack. There are some operators who also have retail businesses, but that is not the uniform model. So to say that the model under which they were operating in the past is no longer available to them is—

Mr FLETCHER: Is it right or is it not that there is a business model that was available previously which is now not permitted?

Mr Harris : No, the individuals had the ability to tender to NBN Co. for this purpose.

Mr FLETCHER: No, it is right is it not, that it was previously open to operators in this situation to deliver retail services within a development and that is now not permitted under the law?

Mr Harris : No, retailers are quite open to contractors—NBN, not their customers.

Mr FLETCHER: No, I am talking about people who build a network and then deliver a retail service over it. That used to be permitted under the law and that is now not permitted.

Mr Harris : Let us be clear, because I know I do not agree with your statement. If you want me to go clearly on the record: I do not agree with it. We are talking wholesale here. That is what NBN does.

Mr FLETCHER: Again, let me put my question to you. I am not talking wholesale, I am asking you the question: is it the case that it was previously open to companies that wish to pursue this as a business model—to build a fibre network in a new development and to then sell retail services on that network to residents of that development—and that that business model is now not permitted under the law?

CHAIR: To clarify that: wholesale plus retail as a business model?

Mr FLETCHER: What they do with wholesale is a matter for them. I am asking—

CHAIR: But that is building the platform and then selling retail off the back of it?

Mr FLETCHER: Constructing the network is one thing, but then delivering a retail service to people who live or work in that development: that is the question

CHAIR: As a self-contained exercise?

Mr FLETCHER: Yes.

Mr Harris : Still in terms of your question: no, I do not think that is correct. But Mr Mason and I have just conferred over what we think you are aiming at, and vertical integration is no longer a possibility. You say 'retail' but you are talking about wholesale and retail. In retailing you can be a retailer—let us live with that right now—

Mr FLETCHER: I am talking about a player who owns a network then delivers retail services. I accept the point that Mr Mason makes that it is a question of fact as to what business models those companies have actually been pursuing, and we can ask them that when they actually appear before us. I want to get it clear—

Mr Harris : The only thing the law is preventing is a question of being unwilling to be wholesale open access. That is what the law has dealt with but it is not this bill. It was in previous legislation, now an act of the parliament.

Mr FLETCHER: It is part of a regulatory system.

Mr Harris : It is part of a structure, I agree. I am not trying to evade your point. I agree it is part of a structure.

Mr FLETCHER: I will close on this question. I just want to be clear. It is correct, is it not, that it would previously have been open to companies who chose to pursue this is a business model to build out a fibre network in a new development and then sell retail services over that network to residents of that development and that business model is now not permitted under the law?

Mr Harris : Under the access act.

Mr FLETCHER: Is that correct?

Mr Harris : From a wholesale point of view, yes.

Mr Mason : The amendments made to the Telecommunications Act through the access act that was passed by parliament last month put in a new part 8, which says if they operate a superfast broadband network, which is fibre network, basically they will need to be a wholesale-only company.

Mr FLETCHER: They cannot operate a retail service.

Mr Mason : They have to operate that part of the network on a wholesale-only basis. It does not preclude them having a retail business at arm's length, though.

CHAIR: How do you define arm's length?

Mr Mason : A separate company.

CHAIR: Does it include the seven per cent area as well, the satellite and wireless coverage—the Julia Creek issue that is now becoming so famous in this committee?

Mr Mason : Those rules only apply to a fixed line network.

CHAIR: What is emerging is that NBN Co. may very well be entering into separate arrangements with some communities to potentially upgrade their services. The question of where a private provider may sit in that arrangement then becomes—

Mr Harris : It would have to be wholesale open access, consistent with the provisions of the access bill if you were to be an alternative fibre provider extending into the seven per cent. The law is the same.

Mr SYMON: My question is on the cost of passive fibre-ready infrastructure. I have gone through the explanatory memorandum. It is put at $800, about, compared to $13 if it is done with no passive infrastructure. What do you get for the $800? A new housing estate would have underground power, underground water, underground gas and underground telephone connections. In that case, what extra is required in that $800 figure for the underground fibre-optic connection? Is it allowing for a separate service to be run or is that going to be shared with an existing copper service?

Mr Mason : The $800 figure that we have used in the explanatory memorandum is very similar to the estimated cost of putting in an underground phone connection. You are right: there are not that many differences between ordinary pit-and-pipe as put in today and what needs to be done to be fibre ready. There are some differences, for example, in the pit sizes, the conduit sizes and the angles of the conduits so that the fibre can travel is through it smoothly. What that costing involves is trenching for the conduit, the conduit itself, the pits, the reinstatement and the provision of the lead-in from the street to the property. Basically, it is the building of the pit-and-pipe infrastructure, the digging, the installation of the hardware and then the filling-in of the trench. It is what you would expect in most developments.

Mr SYMON: That is also taking into account the cost of running it down the streets and connecting back to a central point and then averaging that cost across each household?

Mr Mason : Yes, it is an average. It is basically the cost of the pit-and-pipe infrastructure within the development. Typically, you would have a kind of hub site or a central point in the development, so it is the pit-and-pipe from there.

Mr TURNBULL: The greenfield companies ask the question why NBN Co. is not simply a provider of last resort and why they are not able, with the same degree of government support, to continue in their business in rolling out fibre infrastructure in those greenfield developments, as long as it does comply with the relevant standards.

Mr Harris : That is currently the case.

Mr TURNBULL: They are complaining that it is not. They have seen that in practical terms they are not going to be able to do it.

Mr Harris : As with the question put to Mr Fletcher, it sort of requires me to accept a position. I am not questioning that the NBN is going to change their ability to sell their businesses. I am saying what the law currently says is that you must be wholesale open access and you must eventually meet a technical standard established by ACMA so that interoperability is not an issue. That is because that is the government's aim. The government's aim is wholesale open access, and obviously interoperability is common sense.

Mr TURNBULL: Again, why would a developer choose to use one of the greenfield companies rather than wait for NBN to do the work for him or her?

Mr Harris : I think simple practicality might be a very good reason for doing this, as long as the developer is conscious of the standard, if you want to get your development done super swiftly. It is true of today with Telstra that there is a queue. If you want to get that done and you want to sell fibre then certainly in Victoria, where I have been working for the last 10 years, there are developers who have done that and who have sold housing developments on the basis of fibre complete estates and the attraction of superfast broadband and all of that sort of thing. They have contracted parties to do that. The important issue here for us, from the government's perspective, is that they are saying, 'You can do it; it is just going to have to be done differently. You are going to have to be wholesale open access.' Some parties are saying, 'That is not the way I run my business.' I think that is the point Mr Fletcher was trying to make. We are not disagreeing. That will be different. But we are not, as it were, rubbing them out.

More importantly, what we were trying to do with the tender process was give them an ability to be a subcontractor to NBN because that, again, seems to be an entirely practical option. It has not worked the way that we the government would have preferred in the tender. Because the tender is run by NBN Co., I am not going to go into the details of why that might be, but they ended up with Fujitsu as the primary provider, which is what they have just announced.

Mr TURNBULL: Let me put to you what I anticipate the greenfield fibre operators group will be saying. They have said to the committee that the NBN Co. should be directed by this bill to focus only on new development areas where commercial development does not have a choice of available and experienced commercial operators ready, willing and able to provide fibre to the premises connections. Developers should have the choice of either NBN Co. or a private provider of FTTP networks for voice, internet and data services to the standards required by the NBN but without the pain of self-funding the build cost above the cost of pits, pipes, trenching and any additional services. How would you respond to that?

Mr Harris : Maybe I misheard, but it seems to me that in the latter statement they are effectively saying, 'Pay us to do this.'

Mr TURNBULL: Yes. They are competing with a free service. So what they are saying is, 'Why don't we get the same degree of subsidy so that we are not put out of business by this great big new government monopoly? Why can't we continue in our business and keep our employees on the payroll as long as we are delivering the fibre infrastructure that meets your requirements? Why can't we continue doing that?'

Mr Harris : I think the answer is reasonably clear. The government's investment is to create a national network and that is why it has set up NBN Co.

Mr TURNBULL: But if what they build is compatible with the national network—

Mr Harris : That is what the law requires them to do. That is all it currently—

Mr TURNBULL: But, at the moment, if I am a developer and I have the NBN Co. saying, 'I'll build this. You provide the pits and pipes and I will provide the cabling and electronics for free,' and then I have a greenfield operator saying, 'I can do just as good a job as NBN, but you are going to have to pay me for it,' the greenfield operator is not competitive, is he?

Mr Harris : You are right. In the circumstances, the government is paying for a national network and that is its plan.

Mr TURNBULL: Is there any reason why the government cannot make available the same level of funding to these operators to provide the same infrastructure so they are not put out of business.

Mr Harris : It is like everything that goes into a budget process. There are plenty of things the government can pay businesses to do if it chooses to do so.

Mr TURNBULL: But this is not going to cost anything additional. They have got to pay someone to do it. Either the NBN is going to have to be paid to do it or a greenfield operator will be paid to do it. It seems that you have got government subsidised business that is putting private businesses out of business.

Mr FLETCHER: Could I make some comments?

Mr TURNBULL: Please.

Mr FLETCHER: I understand the issues you are raising. They are issues that we have grappled with. One of the problems that we found in looking at small providers providing solutions in greenfields was their scale. There was a consistent issue in relation to providing backhaul. I think it is generally accepted that the cost of providing fibre within the new development itself is fairly consistent, and most of the data the providers provide to us seems about equivalent in terms of price; however, they were in very poor circumstances in relation to providing backhaul to those states. They are relatively small undertakings. The government's policy as Mr Harris has indicated is to provide a national broadband network, including any new developments. It was not seen that those small fibre providers could always help achieve that objective and that NBN Co. was better placed to do that. That is why the emphasis has been placed on NBN Co. as being the fibre provider of last resort nationally in new developments.

Mr TURNBULL: Can I just interrupt you there: you say the fibre provider of last resort, and new developments would really be the fibre provider of first and last resort because it is offering a fibre build that is free, whereas the private sector has got to charge for it.

Mr Mason : The phrase 'fibre provider of last resort' is used because a developer can choose to use whoever it wants. Some of the small providers in light of the Fujitsu announcement have said, for example, they are interested in competing in terms of time of delivery, value-adds and things like that. I think it has recognised that the scope to compete is harder now. However, it is not as if NBN Co. is providing the infrastructure for free. I think the actual difference between the providers is the size and scale of their operation. NBN Co. obviously, is the national operation of far greater scale and scope and it has greater opportunity to recover its costs over time. I would not agree that NBN Co. is providing fibre for free in new developments.

Mr TURNBULL: From the developer's point of view, he or she will have to pay the private sector fibre company a sum of money to cable the premises and the development, whereas, with the NBN, there will be no construction cost to the developer from the NBN.

Mr Mason : That is the way the small fibre operators choose to run their businesses. I accept that that is because of the nature of the operation, but it is the way they recover the costs of providing the infrastructure.

Mr Harris : The likely point ultimately is the one I have been making: there is scope for developers who want to get developments done quickly to continue to use these providers.

Mr TURNBULL: Mr Harris, wouldn't it be equally cost-effective and in terms of efficiency—we have a gigantic housing shortage in Australia, we have got a housing affordability problem, constraints on supply; as you know, from your previous departmental roles, it is one of the big economic problems we face—to get these developments completed, out and sold and occupied. Wouldn't it make sense and wouldn't it be from a cost point of view neutral to the government if a developer could say, 'I have my private sector cable company here. They're prepared to cable my estate in accordance with the ACMA standards. He's prepared to do it right now. NBN's got me on a six-month wait. Let him get on with it, and he can build the NBN.'?

Mr Harris : This is where we were: I keep referring to the request we put to NBN to run this subcontracting role. That is, frankly, from my perspective, what I expected to see the greenfield operators put in, and we spoke to them about this opportunity.

Mr TURNBULL: Where did this run off the rails then?

Mr Harris : Not being the manager of the tender process, I cannot tell you. That was done by NBN. As Mr Mason has said, we did anticipate this and they did their best to tell us about it. It is not as if we were sitting there learning it at the last minute. The operators did come in and tell us about this. We saw this as being the best way to marry them with the national rollout objective, anyway. Also, with the time frame, particularly, there is this queuing issue, which has been there through Telstra and is still there. We now own a good chunk of it and we are going to own all of it in the future. We saw that as being the right way of getting this delivered. That did not work. Perhaps I should not make a comment—

Mr TURNBULL: When you say it did not work, do you mean that the tender process with NBN did not work?

Mr Harris : I think you should ask the operators about how they ran that tender process.

Mr TURNBULL: We will. They will be here this afternoon.

Senator CAMERON: I want to get back to some of the bigger issues that we are facing. There has quite clearly been a market failure in telecommunications in the supply of broadband in this country, hasn't there?

Mr Harris : In the international data we see comparisons that strongly suggest that that is the case.

Senator CAMERON: Has part of that market failure been in the vertical integration of Telstra and the dominance of Telstra?

Mr Harris : Yes.

Senator CAMERON: There has been an argument put forward that the government should buy from Telstra the copper for the last few hundred metres to the home. Given that you are advising government on some of these issues, I have seen a figure of between $15 billion and $20 billion to buy that copper from Telstra. Is that a figure you have seen or would agree with?

Mr Harris : I have heard of the figure and when I heard of it I searched for its source. I think it is what you would call market speculation. It is not rejected by anybody in the market and when you ask people this—and I do not just mean Telstra—everybody says that it sounds about right. But I do not have any more credible commentary on it than that. I think the most important thing with the copper, as Mr Quigley pointed out, is that it is the government that chooses as a shareholder to say to NBN, 'We want the fibre to the premises network.'

But, more importantly, how did we get here? The government started out with fibre to the node and ran a tender process for that purpose. For whatever reason the Telstra proposition to that failed and the independent panel that assessed the bids said there was no value for money. And probably the most important aspect to me when I came in and looked at this is that the ACCC said that this investment in fibre to the node was unlikely to necessarily deliver the kind of benefit that the government perceived of it and that a substantial part of it would effectively be wasted, in terms of competition outcome. So the government is there, again, with an attempt to do fibre to the node that was previously unsuccessful and it is required to either do nothing or move up to fibre to the premises. It chose to move up to fibre to the premises and charged Mr Quigley with the responsibility for delivering that.

Senator CAMERON: The fibre-to-the-premises approach allows Telstra to migrate its customers from the existing network and onto the NBN, and that provides for a level playing field of competition at the retail level, doesn't it?

Mr Harris : That is the idea. Moreover, because of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Act that was passed at the end of last year, Telstra has the choice of functional separation or structural separation, and that is the preferred model from Telstra's perspective, as I understand it. I do not want to claim to be speaking on behalf of them, but we have been negotiating it for a hell of a long time, the preferred model for delivering that competition policy outcome is structural separation and migration of the customers.

Senator CAMERON: A fibre-to-the-node operation would effectively move exchanges closer to the home. I have seen some estimates of 50,000 cabinets being built across the country. Is that correct?

Mr Harris : I have heard that order of magnitude as well. I think there was assessment work. It was done prior to my time. If the committee is interested, I can probably dig out the numbers, but it was certainly assessed at the time for what fibre to the node would mean. 'Additional street furniture', as I think it was called, was one of the factors that were raised at the time.

Senator CAMERON: Mr Fletcher this morning raised the issue of overhead cables in heritage areas. To do fibre to the node, you would have very large cabinets in heritage areas, wouldn't you?

Mr Harris : For fibre to the node, you would have to have some kind of street furniture, yes. I guess that is right.

Senator CAMERON: And these street cabinets are powered, noisy and less energy-efficient—correct?

Mr Harris : That is correct.

Senator CAMERON: Malcolm, are you—

Senator FISHER: They were your policy for 12 months, Senator.

Senator CAMERON: I thought Tony had sent him another email to tell him what to do again, you see.

Senator FISHER: Who is sending you yours?

Senator CAMERON: It is not Tony Abbott, let me tell you. Does fibre to the node support multiple services in premises?

Mr Harris : No.

Senator CAMERON: Part of the argument is that there should be more competition. Therefore, does fibre to the dwelling create more competition?

Mr Harris : I think Mr Quigley has pointed out that he has a number of ports that are potentially available in his network termination unit for individual services, so the answer is yes: in the structure that NBN Co. is rolling out, there is more capacity for that than there would be in a fibre-to-the-node network.

Senator CAMERON: So, in summary, there is anywhere between $15 billion and $20 billion to buy the copper network; it is less efficient in terms of being able to get competition into the household; and there is more visual pollution. That is basically what we have looked at here in this questioning.

Mr Harris : There are ups and downs with every network, and they are certainly things that fibre to the node has as characteristics in those orders of magnitude. I guess yes.

Senator CAMERON: Thanks.

Mr TURNBULL: I will ask a follow-up on that—just one quick question. Mr Harris, you have been very agreeable in your discussion with Senator Cameron and agreed with all of the leading questions he put to you.

Senator CAMERON: You're the QC that never does a leading question!

Mr TURNBULL: You seem to share his view that fibre to the node is an inferior technology. If that is the case, why is that by far the more common way of delivering broadband around the world? In particular, why is it that the South Koreans, who on most views would be the most advanced country in terms of broadband deployment, use fibre to the node or fibre to the basement but certainly do not use fibre to the home—or very rarely use it?

Mr Harris : Can I answer the Korean question first, since it has been asked in that order.

Mr TURNBULL: Please.

Mr Harris : Then can we go back to the other question, because it is equally important and I do not want to lose sight of it. In fact, I will summarise it. The answer to your start-out question is that it is not structural separation. Fibre to the node is not structural separation; let us be clear on that.

Mr TURNBULL: But they do have structural separation in Korea.

Mr Harris : No.

Mr TURNBULL: They have a lot of competition there.

Mr Harris : It would not be structural separation in our terms. You could argue for that. Let me do it in the right order. In a commercial sense, why do people favour fibre to the node? Because it is commercially cheap. Yet, as the ACCC advised the government—and I was not here at the time, but I went back and did the due diligence—if you are going to invest in a fibre-to-the-node network, just be aware of this: if you were to want a competitive wholesale network, most of that investment would be wasted, because it will commercially advantage one party. So I am answering your question. You asked me why everyone favours it. The answer is that they are mainly investing on their own behalf; they are investing in their own networks and they would like to do it cheaply, because you make more money that way. That is why you do it. So it is common around the world. What are we doing? We are doing a big government investment in a national network. I have been happy to publicly call it unique. There are 70 governments around the world, as I understand it from the UN broadband commission, that are investing some billions of dollars in fibre networks of different kinds, but we are right out there. The Economist Intelligence Unit said this, and everybody says it. We are right out there. We are building a national network. But that is the government's plan. So fibre to the node is—

Mr TURNBULL: So we are right and 69 other governments are wrong?

Mr Harris : I would say 69 other governments are investing billions and we are investing more billions. That would probably suit your agenda and everybody else's agenda if I said that because I think it is the only thing that is absolutely common ground: we are just spending a lot more on this. We are doing it for structural separation reasons—that is what we are doing. We are pursuing competition objectives—

Mr FLETCHER: Can I follow up on—

Mr Harris : Before you do can I go to the second half of Mr Turnbull's—

Mr FLETCHER: I also have a question on the Korean thing. Have you finished Mr Harris?

Mr Harris : On the Korean issue, we had the Korea-Australia-New Zealand Broadband Summit in Hobart a few weeks ago. I asked the Korean communications commissioner about these issues.

Mr TURNBULL: Who was that?

Mr Harris : I asked the CEO of the Korean Communications Commission. He is a senior representative in creating the plans by which the Koreans are doing these investments. The important issue to him is fibre to the basement. As I think Mr Quigley said to you, fibre to the basement is an acceptable way to do MDUs if it can be made to work sufficiently for your objectives and so I think there is reasonably common ground there. Korea has a Fibre-To-The-Home Council and is clearly running, in their advice to us, fibre-to-the-home network planning. They are doing fibre to the home. They are just sequencing it as we have done, fibre to the basement, as you have said, we have done some fibre to the node and we are keeping on going and now doing fibre to the home. It has not stopped. Their program continues and their objective is fibre to the home.

CHAIR: Is it correct that fibre to the basement is considered in the statement of expectations as fibre to the premises?

Mr Harris : It is now more an NBN issue than it will be a policy issue for us but I can assist you at least with this: in circumstances where multidwelling units bodies corporate do not enable the NBN to connect, the NBN will still seek to connect fibre to the basement to provide the best service they can to that building and in that sense it is included in the plan. Otherwise the government's plan is fibre to the premises including the apartment. In other words we would do fibre to the basement if a body corporate would not let us get in to the home.

CHAIR: So the concept of DSLAM that has come up in previous discussions in this committee is not part of the statement of expectations?

Mr Harris : It is not the intention of the government, no. But if NBN Co. has no other mechanism by which it can offer its service, our intention is that it goes as far as it can in offering its services. There will be a lot of effort put in by NBN to try to sell this to the bodies corporate and this is one of the reasons that we are in Brunswick because it has a lot of unit developments. The idea is to try to work out the best techniques for getting in touch with bodies corporate and giving them some encouragement. Nevertheless, the way I understand it is that it may end up in the basement if it cannot be taken to the apartment.

Senator XENOPHON: On a different topic, very quickly, Mr Harris, did you hear the questions I asked Mr Quigley in relation to the issue of the connectivity virtual circuit and the concerns expressed by Simon Hackett from Internode?

Mr Harris : Yes, I think I did.

Senator XENOPHON: Basically there is a concern that, despite the prohibition of volume discounting, the larger players could still dominate the market and not have as competitive a playing field by virtue of the CBC. Simon Hackett says it would make it impossible for providers with fewer than 250,000 customers to supply a national service because the fees are based on a minimum transmission volume that greatly favours larger providers.

Mr Harris : I have heard it said. I must say that the discussions we have had to any effect is that that might actually be a commentary on a likely mechanism that some retailers will attempt to use to maintain their margins. It is more a margins issue than it is a volume issue.

Senator XENOPHON: Where are we at with that though? The ACCC needs to sign off on that, don't they?

Mr Harris : That is right.

Senator XENOPHON: Given the time constraints, could you take on notice where we are at with that?

Mr Harris : Yes, we can. I am pretty sure you will see because the access undertaking and the Telstra undertaking as well—the structural separation undertaking—have to be in. Telstra's has to be in by 30 June. The SAU I would hope from NBN Co. would go in roughly the same time frame. So you will see it pretty soon because—

Senator XENOPHON: If you could comment on that. These were supported in a Financial Review article headed 'Telco bullies to prosper with NBN' on 16 April. If you could comment on notice on those issues raised.

Mr Harris : Sure.

Senator XENOPHON: Just out of left field—and my esteemed colleague Senator Heffernan alerted me to this—I have a question about battery backup. At the moment if there is a power blackout, you do not need a battery backup, but you will with fibre. Has that been factored into the budget?

Mr Harris : Yes, it is funded.

Senator XENOPHON: But who is paying for it? Is it a separate line item?

Mr Harris : It is part of the NBN.

Senator XENOPHON: What is the ballpark figure for that battery backup?

Mr Harris : I do have a ballpark figure in my head. I am wondering whether I should take the Fifth though. I should. I am old, my mind is feeble and I might get the number wrong. We do have an estimate and we can provide it to the committee in writing.

Senator XENOPHON: But it will be up to consumers to have their own battery backup after the first lot?

Mr Harris : We think our retailers will include in the service replacement of batteries as they reach the end of their life. The NBN is planning an alarm system, which will effectively enable them to tell a retailer: 'Your customer's battery is about to run down. Go and replace it.' We think that will be part of the product suite.

Senator XENOPHON: So they will be able to tell which individual batteries are going flat?

Mr Harris : Yes, we will have monitors. That is one of the great things about fibre to the home—you can have any service you like running down it. That will be relatively costless. It will be added in.

Mr FLETCHER: I just want to make sure that I was not mishearing you. You are not putting to us that fibre to the home is necessary to achieve structural separation.

Mr Harris : I know that I said fibre to the node was not structural separation. That is what I said.

Mr FLETCHER: You would agree that structural separation relates to the access network being under different ownership than the retail business and that is independent of technology?

Mr Harris : Of course. You may not have heard me, Mr Fletcher, but I went through the sequence of how the government arrived at this and I was saying that the advice from the ACCC to the government was: 'A lot of your investment will be wasted here if you intend this to support the competitively neutral market circumstances of structural separation.'

Mr FLETCHER: But you agree that there could be quite readily a structurally separated market under which—

Mr Harris : Yes, you could sell off your copper network to a third party and—

Mr FLETCHER: You could have a fibre-to-the-node access network in a structurally separated model?

Mr Harris : You could.

Mr FLETCHER: I want to come back to the greenfield sites from moment. Did the department or the government consider an alternative model under which any operator with requisite skills that met the necessary technical standards would be free to build a fibre network in a new development? Why did you discard such an approach?

Mr Mason : I think there might be another part to the question. The model we have now enables any fibre provider to offer its services to provide fibre in new developments. I think, as we discussed, the issue is what price they can charge. If the question is: 'Did the government consider such a model with direct funding of all providers of subsidies?', that option obviously was apparent to us and has been considered.

Mr FLETCHER: You considered it, but you did not proceed with it?

Mr Mason : That is correct.

Mr FLETCHER: And why was that?

Mr Mason : Because the government is making an investment in the National Broadband Network and that is the means by which it is delivering fibre nationally.

Mr FLETCHER: Let me put the question another way. There is no reason, is there, why the objective of having a fibre network owned and operated at the wholesale level by different companies that provide the retail services could not be achieved in a world where in some places the fibre network is owned by NBN Co. and in other places, such as new developments, it is owned by non-NBN Co. players?

Mr Mason : Technically, that is correct. The original model that was put forward by the government was one in which there were multiple providers, of which NBN Co. could have been one, and developers would fund the installation of that infrastructure. So yes, that model is a valid model. It does have problems in implementation. I talked about some of those. Some went to the scale of the providers, some went to backhaul and some go to nationally consistent outcomes. There is so much you can achieve with technical standards and so forth. I think you will be aware that many of the small providers are concerned about having standards that are too inflexible, and that would impact on outcomes. There are also issues about policy outcomes as well. Mr Harris mentioned uniform national pricing before and how you would achieve that in a multi-provider environment. So those are a range of factors which went into the role of NBN Co. being the fibre provider of last resort.

CHAIR: I have a couple of questions. These are broader questions based on the conversation this morning with Mr Quigley. There was a conversation around the seven per cent under satellite and wireless. Some evidence was given that a process is about to be established to assist communities that may want to upgrade at some point in the future. Do you have any input into that at all and, if so, is there anything you can report to the committee?

Mr Mason : I can give you the context as I understand it, although there may have been some recent developments in NBN Co. that I am not aware of. The way NBN Co. operates is that it identifies a potential addition that the government is planning to date—decisions about the implementation study, the points of interconnect, the statement of expectations. It will develop a plan in-house, write a paper and consult with relevant parties on the paper and then will send that to the government and see whether we are interested in the endorsement of it. My understanding is NBN Co. have done some work already on this idea, but I have not seen a paper as such from them. My understanding is they have been working on one. I think the idea has been provoked by some councils who have approached NBN directly and said, 'If we are not on the fibre network, we would like to put some support towards getting ourselves onto the fibre network.'

CHAIR: The evidence this morning suggested that the issue of technology change outside of the statement of expectations, particularly for those seven per cent, had not necessarily been considered alongside that process. Do you have any comment on that evidence given this morning at all?

Mr Mason : No. Technology issues are much more a matter for NBN Co. than for me, certainly. I do not know whether our other officers here want to comment on it. We have a technical advisory unit in the department but they are not here today, and I am not sure anyway whether this isn't really much more a matter for NBN to determine. We have had a parliamentary debate where this was extensively argued about in the Senate. The question is ultimately: is there a technology that is ready to put in place today? From the NBN perspective, certainly they are trying to put in place the latest technology, but it has to be commercially available technology. So they are going down that path. Nevertheless, they have made some undertakings which I think were the subject of discussion in the House of Representatives when that bill came back for confirmation when the House was recalled at the end of the last sittings. Commitments were effectively made by the government to continuously look for updated technologies. I think Senator Macdonald might have raised this from the inverse perspective earlier with Mr Quigley. The government's statement of expectations can vary and will be capable of varying in the light of improved availability. In the corporate plan where you see the $24 figures across the 12/1 for all technologies and you see blanks in the columns below that for the faster speeds, that is because the fibre can deliver it and the planning is for the wireless and the satellite to do the common 12/1 entry standard and for the same price nationally. Clearly, when technology is available the government's intention, as I understand it, is to try and introduce improved offerings. But that will be a question, ultimately, of whether that technology is deliverable and in such a state that you could roll it out nationally, because people will be entirely dependent upon it for their broadband services.

CHAIR: You may have answered my final question along that line. I would have to check the Hansard, but I thought that Mr Quigley indicated this morning that in his view the statement of expectations is not necessarily a document set in sandstone; it is a document that is fluid; it is a working paper, if you like.

Mr Harris : I could get Mr Edge on the record here, but the statement of expectations is an updateable document. Do you want to leave it at that?

Mr Edge : It is an updateable document and it will change.

CHAIR: Depending on a whole range of circumstances.

Mr Harris : Over time, as that becomes available, the statement of expectations will be updated. I should say for the benefit of the committee that the statement of expectations is treated very seriously by both us and NBN Co. There are deep arguments over the meaning of individual words to ensure that there is no doubt at all.

CHAIR: The final question is on an administrative issue. The committee has called for the Productivity Commission to turn up. There have been some issues in regards to whether they will turn up or not. I just want to be very clear that the department and the government, as far as you are aware, have informed all the relevant bodies that have been mentioned in the letter between the Prime Minister and Senator Xenophon in the establishment of this committee. If not, would you be willing to assist?

Mr Harris : Perhaps I will take it that way. I will agree to assist rather than put on the record that I am absolutely sure that everybody who needs to be informed has been, because I guess you can always find someone who will say that they were not told. So why don't I do it in the reverse order; why don't I take on the obligation of trying to make sure that everybody who I can possibly think of who needs to be is aware of the possible need to come in front of the committee? I will inform them that the committee is a very important institution and the government expects to see advise provided to it.

Mr TURNBULL: Who was the gentlemen from the KCC?

Mr Harris : Let me find out who it was.

Mr TURNBULL: I met with a gentleman from the KCC on 7 March in Seoul and in said to us that in Korea it is fibre to the basement and in almost all cases the lines in the apartment buildings are the property of the owners corporation, so the individual apartment owners can choose who they connect to. They encourage facilities based competition, so typically there will be at least one fibre provider to the basement, a cable HFC provider, who will resell his bandwidth to a telco. Sometimes there will be copper DSL as well. They emphasised that in their experience service level competition—which is what we are proposing here—had not worked and that it is important to get facilities based competition as well. That is from my notes of that meeting. I leave that for your information and for the information of the committee. In terms of GPON, the architecture, would you agree that a fibre-to-the-home network using GPON architecture is in fact a shared network?

Mr Harris : Mr Turnbull, just before you go on, in terms of everybody's notes, we asked the Korean Communications Council what their planning was. I do not think that at any point in my answer previously I said that they were not doing fibre to the basement. I talked about their intentions to do fibre to the home—and they are rolling that out. We followed this up and requested advice from the Australian Embassy in Seoul and the advice to us indicates that a majority of the new buildings in Korea have fibre to the premises as the service and that older buildings have the fibre to the node. That is reasonably consistent with what you have been saying, but the Korean intention is to keep going with fibre to the home.

Mr TURNBULL: Again—I have the advantage over you of having been there—the biggest new urban developments in Korea are the huge new cities being built in the Inchon area. There are three huge cities there. The new residential developments are gigantic and have a very futuristic design. I inspected one of them with Cisco, our hosts, and the cabling in the new residential buildings is in fact cat 5 cable. That is a brand-new development. They had not even completed selling it. So maybe there is a factual thing there.

Mr Harris : I suspect it is not a factual thing; I suspect it is a difference of emphasis, because I do not think the post in Seoul would have given us bad advice.

Mr TURNBULL: Do you think I was misled by Cisco, or I don't know the difference between fibre and cat 5?

Mr Harris : No. I think you can go to a location and see a story and apply it nationally, and it may not necessarily be the case.

Mr TURNBULL: Let me get back to this critical thing about FTTN. You agree that fibre to the home where you are using GPON architecture does involve a shared network; isn't that correct? In other words, the actual maximum speed available to any single customer is dependent on the total utilisation of the GPON segment. That is the CV circuit that has been so contentious. Do you agree with that?

Mr Harris : I do not think I am going to comment on that, no, because I am not a technologist and I am not appearing here in that capacity. Perhaps Mr Mason would like to come in?

Mr Mason : I would like to hear the full question.

Mr TURNBULL: Do you agree with the point I have just made, Mr Mason?

Mr Mason : I am not a technologist either, and I think it is a question better directed at NBN Co., but I would have thought: to the extent that the CV circuit involves backhaul, then backhaul is generally shared.

Mr TURNBULL: Correct. You would agree with me, wouldn't you, that xDSL—meaning any ADSL, VDSL or whatever—networks have an underlying point-to-point architecture; that is to say, there is one line to the customer's premises, that twisted copper pair, or it might be two copper pairs bundled together. In other words, there is a one-to-one contention in that service.

Mr Mason : From the exchange.

Mr TURNBULL: From the exchange or the node.

Mr Mason : Yes, or the node.

Mr TURNBULL: You would agree with that, wouldn't you?

Mr Mason : Yes—

Mr TURNBULL: With that architecture, it is not a shared network.

Mr Mason : But the analogy is the backhaul from where the node is, which would be shared. When you are talking about a CV circuit, you are talking about the backhaul from the splitter cabinet, I guess, or the hub.

Mr Harris : In other words, Mr Mason's earlier answer to you agreed with you on the basis of backhaul but not on the basis of what I think you are now going to, which is the street immediately outside the house.

Mr TURNBULL: No, the way a GPON segment works is that you have 32 users sharing a common amount of bandwidth, so there is potentially contention.

Mr Harris : And instantly upgradable.

Mr TURNBULL: No doubt—

Mr Harris : Unlike the copper.

Mr TURNBULL: Let me just make this final point, though. You have now conceded that fibre to the basement, which is basically what they do in Korea, is within your vision for the NBN. So you are happy—you are not going to insist—

Mr Harris : No, 'happy' would be utterly inconsistent with what I said, Mr Turnbull. I said 'when NBN Co. cannot get access to a multidwelling unit'. On NBN's current planning it will do its best to get itself plugged in as far as it possibly can and, in those circumstances, will go to the basement, because an owners corporation, as you know, can be very—well, they may not get their act together.

Mr TURNBULL: It might be physically difficult, too.

Mr Harris : There might be any number of reasons, but what I was trying to do there was say to you that it is not ruled out, because you could equally say to me: 'How stupid that is. How are you going to get past the owners corporation?' So I was trying to deal with that issue. The owners corporation will eventually decide whether someone can or cannot come onto the premises and convert every apartment. As to our intention, I think I have pretty clearly said on the record, but if I did not let me say it very clearly now: our intention is to try and get to every apartment. But owners corporations will ultimately be able to decide that matter.

Senator CAMERON: I have two quick questions. Mr Turnbull wants the government to buy the copper network. Can you provide—you can take this on notice—any details of the maintenance costs of the Telstra copper network, if that is available, and also the reliability of the Telstra copper network?

On the issue that Mr Fletcher has been raising—the question of vertical integration and competition—it seems to me that the argument that has been put forward is one for cherry picking. Could you advise us of the implications for the cost of providing the NBN to rural and regional areas if cherry picking was allowed?

Mr Harris : We can attempt to do that. It would be an interesting calculation but we could attempt to do it.

Senator IAN MACDONALD: I have just informed myself. Until the last couple of questions, I thought we were only dealing with the bill but I now realise that the department was talking about a broader range of things.

CHAIR: The department is available on an ongoing basis; there is no time sensitivity.

Senator IAN MACDONALD: Today?

CHAIR: No, you have a copy of the agenda. They can take questions on notice and they have made it very clear—

Mr Harris : I would prefer if I did not take 100 questions on notice.

CHAIR: Yes, but you are willing to come back.

Senator IAN MACDONALD: Okay, I am just giving you notice that in estimates I want to ask about the financing, which I started asking about with Mr Quigley. So please come prepared for that.

Mr Harris : Yes, I have taken notes from your earlier comments. Since you asked about the Julia Creek issue and things like that earlier, I think we are providing the committee with the list of the 100 towns that you asked for previously. They are on the network. I have gone back and clarified this because the question did come up in the private hearings. I think there is little doubt that as the fibre servicing areas are determined by NBN Co., a town that is on a big backhaul network is going to be—all other things being equal—in a much better place to be part of the fibre servicing areas than a town that is not. While Mr Quigley could not give you an assurance about this issue either, the bottom line is that I went back and asked what was likely to happen under the circumstances. The answer is that you are better advantaged by being on the big backhaul network than otherwise.

Senator IAN MACDONALD: All Mr Quigley said was that he would do the cost exercise on the incremental costs.

Senator FISHER: Mr Harris, can you advise the committee whether the Prime Minister and/or the government wrote to the Productivity Commission and the ACCC to inform them that if this committee requested that they appear they would do so, as she promised in her letter to Senator Xenophon on 23 November last year?

Mr Harris : We will.

CHAIR: Thank you for assisting the committee today. You have been asked to provide additional information on the fibre deployment bill and the secretariat would really appreciate that by 23 May so that we can progress any reporting on that. On all other issues we would really appreciate it by 30 May, if that is okay, because as you know we have a reporting deadline of August. If the committee has any further questions they will be sending them through in writing. We will try to limit this in light of your obvious workload.

Pr oceedings suspended from 13:33 to 14:14