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Monday, 15 November 2010
Page: 2265


Mr STEPHEN JONES (6:38 PM) —The primary aims of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 are, firstly, to tackle long-overdue industry reform by providing a legislative framework for Telstra to voluntarily structurally separate by migrating its customers to the National Broadband Network, as agreed in the financial heads of agreement between Telstra and NBN Co.; secondly, to strengthen the telecommunications-specific access regime to provide more certain and quicker outcomes for telecommunications companies; thirdly, to streamline the anticompetitive conduct regime by removing procedural impediments that in the past have restricted the effective operation of the telecommunications-specific competition regime in this country; and, finally, to significantly strengthen consumer safeguards.

The bill deals with the issue of structural separation by setting out a legislative framework for Telstra to voluntarily structurally separate by migrating its customers to the NBN. The bill will finally deliver what is long overdue for Australia’s telecommunications industry—that is, competition. That is because the fundamental structural impediments to competition that have existed in this country since the transition of Telstra from a fully government owned telecommunications company to a fully privatised company are dealt with once and for all in this bill.

The bill recognises that, despite nearly two decades of deregulation in the telecommunications industry, which has delivered some benefits in the rollout of infrastructure, mainly in mobile and radio based technology, competition in infrastructure has not occurred in the fixed line network. The market, quite simply, has failed to deliver real competition in the provision of this infrastructure. There is a very simple reason for this: it is massively expensive and the returns on investment are very low outside the major capital cities and the significant trunk routes down the east coast of Australia.

There is no doubt that Telstra has rolled out broadband services in the past decade in a highly selective manner, focusing primarily on the profitable urban markets and neglecting the rest of Australia. Who could blame it? There was very little incentive to do otherwise. Telstra continued to cut back its capital investment in the fixed line network and, as a result, investment in the Telstra Customer Access Network stagnated. The result was that Telstra’s degraded network was wholly unsuited to the provision of anything but the most basic broadband services. The near-monopoly of Telstra in the fixed line market meant that the company had no incentive to invest in upgrading its network to provide services until it was forced to do so. This meant that Australians were held back from access to decent broadband services for too long.

The structural separation measures in this bill are understandably welcomed by Telstra’s competitors—and indeed by Telstra itself since the financial heads of agreement between Telstra and the Australian government were signed in June this year. And the really big winners from this legislation will be the Australian consumers, who will finally be on their way to getting cheaper and faster broadband services.

The NBN will be Australia’s first truly national wholesale-only network. No retail company will be able to control the network in its own interests. This is important for consumers and the prices they will pay because the discipline of genuine competition and competitive pressures in the market drive lower prices, innovation and greater choice of different services and price points.

The lack of competition has held Australia back from moving into a broadband future. It is no wonder that the structural separation of Telstra has been described as a ‘landmark change’ by Australia’s second and third largest telcos, Optus and iiNet. Until the advent of the Gillard government’s policy to create a National Broadband Network, competition in the fixed line network was, in effect, stymied. It was frustrating for government, frustrating for Telstra’s competitors and frustrating for consumers. It was even frustrating for Telstra as the company struggled under the heavy hand of government regulation that vainly attempted to provide competition in the fixed line retail telephone services in the face of these structural issues. And it was not their fault that they did not succeed in this regard. They were battling real structural issues.

It is disappointing that the member for Wentworth is still clinging to the idea that these structural issues can be dealt with through a functional separation of Telstra, with both the wholesale and retail networks still owned by the one company, Telstra. Let me assure him—as he enters the chamber—and members opposite that this approach has been tried and has failed. He needs just to ask former ministers for communications Senator Alston and Senator Coonan. It was clear to all that the coalition government was hopelessly compromised as it tried to both maximise the sale price as part of Telstra’s privatisation and at the same time deal with the difficult competition issues raised by such a large incumbent company that was both vertically and horizontally integrated.

So instead of clinging to the failed policy positions of the past decade, the shadow minister would be better to get on board with the NBN and to stop throwing up spurious diversions to detract from the progression of this important project. This legislative framework will provide some measure of certainty for Telstra going forward into the NBN era. That is good news for all. Given all of this, you would think that those opposite would welcome the government’s plan for a national broadband network and the opportunity for Australians to move forward into a digital economy without any impediments such as those that I have just described.

I turn now to the regulatory reforms in the bill. The government has considered the important regulatory measures that will be necessary during the transition to the NBN to ensure that the consumer service regime is maintained. The government has rightly taken this opportunity to examine the current regulatory framework as a result of representations, mainly from Telstra’s competitors, that the current regime is inadequate. Changes to part XIC of the Competition and Consumer Act 2010 mean that the ACCC will have an enhanced and streamlined role, allowing it to set price and non-price terms for access to declared services in access determinations to apply to all parties. This will put Telstra and its competitors on a level playing field for the first time.

There is no doubt that this regulatory review was much needed. The extremely high number of telecommunications access disputes that have been notified since the commencement of the regime in 1997 point to a failing system. Telstra’s highly litigious approach might have been good for its lawyers, but it was not good for other telecommunications companies struggling to compete in such an uncertain and frustrating regulatory environment.

Another important measure in this regard is that this bill will remove the right to seek merits review of ACCC regulatory decisions. This approach is being pursued because Telstra has continually used every regulatory and legal avenue available to frustrate regulatory outcomes and cause uncertainty for its competitors. By providing the ACCC with the power to issue binding rules of conduct, the ACCC will be able to take action immediately to address problems relating to the supply of declared services. The telecommunications industry will at last have a greater degree of certainty in relation to regulatory outcomes and this certainty will encourage investment.

I turn now to the consumer protection measures contained within the bill. The big winners from this bill will be consumers. That is because the measures in this bill are focused on retaining and strengthening existing regulation to better protect consumers’ access to, and the reliability of, basic telephone services and to address concerns with the removal of payphones.

The measures in this bill reflect the government’s decision to retain the existing universal service obligation on Telstra for voice telephony and payphones in the lead-up to the NBN and the new universal service obligation company, and to require improvements to service quality by introducing new minimum performance benchmarks in meeting the customer service guarantee. The new universal service arrangements will make explicit, for consumers and for Telstra, the services—both voice telephony and payphone—Telstra must supply in fulfilment of the universal service obligation. This provision is incredibly important for consumers in regional Australia, including those in my electorate of Throsby where we still rely on the important services provided by payphones. It is incredibly important to ensure that people of low socioeconomic background have access to those payphone services.

So Telstra must supply the services, which include reliability standards and repair requirements, specified in the new universal service arrangements to fulfil its universal service obligation—this is instead of leaving these decisions to the sole discretion of Telstra. This measure will address the concerns raised in the report of the Regional Telecommunications Independent Review Committee—that the universal service obligation arrangements are both vague and difficult to enforce.

In conclusion, the measures in this bill are a landmark for the Australian telecommunications industry. After nearly 20 years of reform to this sector, this Gillard Labor government is finally getting the measures right to ensure that we have genuine competition within the industry, not only in mobile telecommunications services—critical services for households and for industry—but in fixed-line services and in fast, reliable, affordable, high-speed broadband services. The bill also provides enhanced consumer protections. Given this, it is hard to comprehend why the opposition cannot bring themselves to support it. They are out of touch with their own electorates—this is particularly so for those members opposite who represent regional electorates—and with the national interest on this. I commend the bill to the House.