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Wednesday, 24 August 2011
Page: 5428


Senator BIRMINGHAM (South Australia) (18:41): Grudgingly, the minister found a way to at least sort of answer the question. He said that NBN Co. would provide and lay the fibre, but would recover the costs on a national basis over a longer time horizon. Private providers providing the services would not be able to do that; they would have to recover their costs by charging the developer, which of course would be put into the costs of the land that is sold.

Senator Conroy: What's the cost? Come on!

Senator BIRMINGHAM: Minister, you said the very nice words that you could not talk about the business models of—

Senator Conroy: I'm not talking about business model, I'm saying: what is the actual cost of opening up pits and pipes? Come on, you've got to know that—you're an expert on this.

Senator BIRMINGHAM: Minister, you are not going to catch me on that, because, while you have tried to proclaim me as an expert on things, I made the point very clearly before that I do not propose or pretend that we are experts on everything. I can, if you want. I can quote some of the evidence received by the Joint Standing Committee on the National Broadband Network about the costs of developing these things, of installing the fibre and so on, if you want. We can go through the submission of Greenfield Fibre Operators of Australia, which stated that:

NBN Co Agreements with Developers, who have already applied for 133,000 new lot connections in Greenfield developments since 1 January 2011, evidences that the cost of each connection is currently averaging over $3000 per lot (excluding any back haul construction costs).

Current prices for GFOA networks that equal or exceed the current functional performance of NBN Co networks are up to $1500 per lot (excluding any back haul construction costs). FTA TV and Pay TV may add $300 per lot.

That was from the submission made by GFOA to the committee's inquiry into this legislation. If you want to talk about costs, TransACT said, according to the committee's dissenting report, that:

… the approximate cost depending on choice of provider and specification used, of installation of a fibre network per premise is up to $3500. TransACT stated:

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.

They are fairly valid points, but none of them get away from the reality of what you have just said and made quite clear to the chamber in this debate—that is, that the first of two models that will be available to developers is that they can use a private provider to have fibre laid. Of course, that private provider, as a private business provider, is going to have to recoup its costs somehow. The only place it can recoup them under your model is to charge the developer, which costs the developer more. Or, the provider can let NBN Co. do it and recoup the costs 'on a national basis', to use your words, over a longer time horizon, charging the developer nothing.

Senator Conroy: What did Telstra charge the developer?

Senator BIRMINGHAM: Minister, I cannot believe that you, of all people, who love to come in here and give these lectures to everybody else, want to try to draw this comparison between Telstra laying a copper wire and developers getting a private business provider to lay fibre. I cannot believe you want to draw that comparison. This is a changed dynamic. This is a different approach that you are pushing through, and that is your right. But you are now talking about a situation whereby it is not Telstra laying copper against a private provider laying fibre. It is not Telstra offering copper for free against a private provider offering fibre at a cost. It is NBN Co. offering fibre for free against a private provider offering fibre at a cost. It is the same product, but one person—your govern¬≠ment owned monopoly—is offering it for free. This is a fairly emphatic difference. You cannot keep drawing this comparison, making this argument that it is the same as with Telstra, because we are looking at a different situation here.

We are looking at businesses that have evolved over a period of time, businesses that have filled a space in the market that was not being filled. By changing the ground rules, as you are doing, you are going to transparently disadvantage those businesses. Your notion of provider of last resort is very clearly a flawed notion. You are very clearly setting up a situation whereby NBN Co. becomes the default provider. It will become the default provider because it will be hundreds if not thousands of dollars cheaper to use it. Per premise, developers will save hundreds or thousands of dollars to go with NBN Co. instead.

For most developers operating in a market where margins are tight, particularly right now, there is not a lot out there at present—not a lot of money to be made on residential or other property developments. Every dollar they can get counts. Every dollar on the margin is important. They are going to take the cheapest option. I cannot believe that you will not recognise and accept that. You see this concern of the opposition's as illegitimate and reject out of hand this sensible amendment of the opposition's that seeks to simply preserve the right, the role and the capacity of these private providers to keep doing the business they are currently doing: laying fibre in greenfields develop¬≠ments and ensuring that in those greenfields developments there is competitive tension, as Senator Xenophon acknowledged, between the potential providers of fibre to those developments. It baffles me that you reject that.

But I am pleased that at least you have acknowledged, even if you will not put it in these words, that there will be a very distinct cost differential. People can go with the private provider and pay, or they can go with NBN Co. and not have to pay. That is the situation that will confront developers. In the overwhelming majority of cases one would expect that anybody who is given what is a fairly rational economic choice—do you pay for something or do you get it for free?—will go with 'get it for free' on almost any day of the week.

That is what will happen. You cannot continue to mount this argument that what is happening with these fibre providers is somehow comparable to where we are at with Telstra and copper. I am not aware that anybody is out there providing competition in the marketplace over who is laying copper in the ground. I am aware that there are plenty of businesses providing competition over who is laying fibre in the ground, and I am aware that those businesses fear this legislation and fear what it will do to their future.