Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE
04/03/2011
National Broadband Network Companies Bill 2011; Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011

CHAIR —Welcome, and thank you for coming along to assist us today. I note that you have not made a submission, which is fine. Do you have a brief opening statement that you would like to make before we go to questions?

Mr Strong —The belief of the council, after great debate, is that we need an NBN, something across the nation, for small business. It is something that people and a lot of small businesses have become excited about. They want it. They know in some cases it will mean high speed, but in a lot of cases when we are talking to small business they say that it means they can rely upon it. A lot of the problems out in regional areas and even in some city areas, without a doubt, is a lack of reliability from the current service. Tasmania, in particular, is a state that said they really need it; they are desperate for it. That is basically our view on it.

When it comes to the technicalities, probably the reason we did not put in a submission—besides the lack of time and resources—is the fact that our submission would basically be around the need for individuals out there who want speed and reliability.

Senator TROETH —I am sure you have discussed this many times during your council processes, Mr Strong. What is the view of your smallest businesses on the price they will have to pay for access to the NBN and on the way it will affect their ongoing business activities?

Mr Strong —The correct answer is that a lot of them do not know. This is one of the interesting things I have noted as I go around and talk to people. They say: ‘I want speed and I want reliability. I don’t want it to be expensive and I don’t want it to be difficult. I don’t want a lot of red tape but I want it.’ A lot of them just do not know beyond that, unless they are a specialist IT company, in which case they all want it. There is no doubt there: all the IT people want it.

When it comes to the shoe shop, when it comes to any of those sorts of people—the franchises out in the country towns and, as I said, even in some of the cities—they do not know a lot beyond the fact that they know they want it. It is really interesting to hear them. They are not experts on these things, and they know they are not, but they are experts on access to the marketplace. They know that the world is changing quickly with the internet. As we know, it is impacting enormously on retail. The innovative people, in particular, want to use it. The ones who do not understand and still know that they need it say: ‘I’m not sure. It’s awfully expensive.’ They certainly say that, but they also say: ‘If we’re going to keep up I’m going to have to access it. I’m going to need it.’ They are coming across as people. There are some who do not want it, by the way. When you question them as to why they say: ‘I don’t need it. I’m in the city and it’s fast enough now. I don’t care about someone in regional Australia. I just don’t want to do it.’

There are 2.4 million small businesses. They are diverse, but I think I can say with confidence that the great bulk of them want this for competitive reasons as much as anything.

Senator TROETH —You mentioned some of your country businesses. As you and I know, country businesses often make up the fabric of a small town. You would probably divide those again into ones that recognise the potential and others who know nothing about it. Could you describe some of their attitudes?

Mr Strong —There are some in retail in country towns who are quite afraid of what is happening in retail, but there are also manufacturers and other small businesses out there who are quite concerned about what is happening. They are unsure. They do not have the knowledge, and why would they? They are just little shops. But they say, ‘We do need to do something.’ The comparison I have heard several times is with the highway. They say, ‘We’ve got a national highway which we can send goods around Australia on; we want that access through the internet.’ A lot of them are not on the internet, I might add.

Senator TROETH —They are?

Mr Strong —They are not, because they have had no need. As you know, the book industry is going through huge change, caused in the main by the internet as well as other things, and a bookshop in a country town is probably a bit safer—depending on the quality of that shop, of course—than bookshops elsewhere. So they have not had to embrace it as quickly as they would have thought. But now they are being hit hard by online sales and they are asking: ‘How do I get online? Will I—and should I? Will I be able to compete online?’ But they always say, ‘If I’m going to, I want it to be reliable and I want it to be fast and I want to have access to my marketplace, wherever that is, and the marketplace to have access back to me.’

The other group of people that are really fascinating are the women on farms. I have seen a few of them use the internet quite well to sell products. Some of them, I cannot remember who they are, are selling jam—the classic product we make fun of people for—and they are making money out of selling jam online.

CHAIR —Not if it’s good jam!

Senator WORTLEY —Not if it’s strawberry.

Mr Strong —Strawberry mainly, but also other types of jam. They are saying they need this, and that is a classic view from anybody in remote regional areas as well. But from the entrepreneurial point of view—forgetting about health and all the other issues which are being debated elsewhere—if there are innovative people out there who compete online they need to have that highway so that they can do it.

Senator TROETH —Yes. I am also associated with a group called Australian Women in Agriculture and they have used the internet to set up quite a sophisticated professional network, which means they need not leave their homes. I take your point. In terms of the lack of certainty, do you find that the access to information so far about the NBN has been satisfactory from your public’s point of view?

Mr Strong —I would say not, given what they do not know—when you get down to any fine detail they are lost on it. They know they want it for the reliability et cetera. Beyond that, I would say not. I have had some conversations myself where I have discovered more about new satellites—I did not even know about that until the other week—and a whole range of other things. So I think there needs to be a lot more information. The nature of small business makes it very hard to communicate with them, we know that, and that is because people try and do it the wrong way. I think we need to target the ones who will use it the most, which is retailers and manufacturers in particular, to make sure that they can use it. The Australian Women in Agriculture group is, of course, one you would target. Plenty of those women do business type activities so they would be a group you would go to and pass that information on. As I say, small business by its nature is too busy to be reading everything.

One comment I should make is about something I know from talking to people in the cities. Some of them are saying, ‘I don’t care,’ and some are saying, ‘I really want it.’ They are seeing that it is high speed for them, but when we put to them that it is high speed for customers in areas that do not have high speed, they stop and think about it and they say that that is a new market they had not thought of. So they may have a product—like with Australian Women in Agriculture, for instance—that they can get out to people that, in their minds, they could not before because those people did not have access to high speed.

One other thing I can say in relation to the NBN—and I hope this does not go outside the terms of reference—is that one of the issues we have got in the real world is the lack of true competition in the way cities are designed around the needs of the big landlords. We all know that. Lots of little businesses die, they lose their houses and people do not seem to care—but that is another issue. We are hoping that national broadband means we can have a level playing field out there. I had a meeting with the Productivity Commission this morning to discuss the fact that we need to make sure that happens. You cannot have the level playing field without it. That gives everybody the same access to the marketplace that we do not have in the real world because of urban planning.

Senator TROETH —Are you confident that that will happen under the proposed NBN?

Mr Strong —I was confident a year ago and I am not now, because I have watched big business—and they are the enemy. They will capture search engines, and they have started doing it already. That is the other side of this. If we are going to do this we have got to make sure that it is a level playing field otherwise those women on farms and the people in country towns who are really innovative and have got the energy will not have the chance—the same is now. We have got to have that protection. It is not even protection; we have got to have the level playing field through the NBN. Again, we would not have it without the NBN, so we have got to have that go hand in hand with it.

Senator WORTLEY —Mr Strong, do you think that the NBN, for your regional members in particular, could not only be a lifeline but actually help them reach out further to new customers?

Mr Strong —It certainly will. Those that have access to high speed already are selling overseas. I have been to Indigenous communities where they are using the internet to sell overseas—they need to go elsewhere to actually make the speed work. There are innovative people in every community in Australia who, with that access, will surprise us all.

Senator WORTLEY —Indigenous communities are one area of it. With the small businesses, what other areas in small business would use the NBN?

Mr Strong —To say retailers is very broad. It is retailers, but within that there would be people that could not use it at the moment, for example, books, because the competitors on the internet are really quite difficult to deal with. That would be one that I could not see happening too quickly.

Manufacturing would be an example. I know one young man is manufacturing and selling golf clubs online and doing quite a good job of it. Sporting goods are apparently going that way. Rather than saying which ones they are, it is a matter of the entrepreneurs out there who will discover it and this is a way for them feeling more confident in doing that. A lot of the younger people, in particular, are very internet savvy, as we know.

The other thing I could point out is social networking. Younger people are using that a lot better than the older people. As you may be aware, I own a shop here in town—a bookshop, poor thing! One of my younger staff—

Senator WORTLEY —Hence your interest in books.

Mr Strong —That is why I keep mentioning it, I suppose. I am pleased to take it on board. The other people who are being hit hardest are the people with sporting goods, and the music industry in particular, who keep getting hit by these things. This is evolutionary change; this is not something that has been forced upon us by government or big business, which is a nice change.

Social networking gives the opportunity for people to use it in an innovative way. In my particular case one of my young people is very good at it and doing stuff that I never would have thought of in a million years, which is really helping to reinvent the shop around different things. And that is the access to it. When the internet slows down it is really very frustrating. She has instantaneous communications with the 800 friends the shop now has around an event that is happening at that particular time, and people will come in. When it stops sending, the next day you will get people complaining and saying that they did not know about the event.

Senator WORTLEY —That sounds very interesting. Can you tell us a bit more about that particular one? You are saying that she sends out—

Mr Strong —Yes. For example, we had an event in the shop last night around a launch of a literature journal from the Australian National University. Some of my staff—and I hate calling them staff, because we work together—were there saying, ‘This is a great event, and so-and-so just said such and such,’ and click, send, and immediately someone will reply and say, ‘I didn’t know so-and-so was there. I’ll come around. What time are you open till?’ You tell them and it is fascinating to watch. I would not have done that. It took Amy to do that for me.

Senator WORTLEY —You spoke earlier about something to do with Indigenous communities and that once the NBN is up and running it will provide access. What was the business relationship with that particular one?

Mr Strong —It was an artist. This is an entrepreneur who can paint and is selling his own artwork online. He is keeping it very much to himself—classic entrepreneurial behaviour. He does not want anyone else involved; he did does not want to share his secrets, which is what entrepreneurs do. He has been using the internet to do that and is selling a lot of his works to Germany, and he mentioned to the United States in particular. With him doing that, other younger people will do other things and not just paintings. Who knows what they are going to do? That is the beauty of what we have here. It gives people with imagination and drive the opportunity to think of something that none of us would have thought of.

Senator WORTLEY —And the NBN would support and assist in that?

Mr Strong —That is right. Without the NBN it becomes too clumsy and costly. They may develop and put a lot of time and effort into something that cannot work because people cannot access that information or that product from the marketplace.

Senator FISHER —When you say that small business will benefit from the NBN and that they want the NBN, what is small business prepared to pay for access to the NBN?

Mr Strong —That is a good question. In my experience, what they are prepared to pay is what everybody is else paying. Presently, if you go onto the internet you know you pay for the setup costs. That is happening now—it might be $10,000 or $2,000 depending on what you want and what products you have. When it comes to access they pay what everybody else pays. I would think that what they would want to pay is what everybody else is paying. Again, small businesses are just people—they are not businesses in the sense that a lot of people imagine. They are individuals and they will think, ‘Why am I paying more in my business than I am paying at home?’

The issue comes down to what it costs—not what it costs for small business. If it costs more for small business than for the person at home, that makes no sense. It has to be the same as for other people. In the end, is a person willing to spend that money to go onto the internet to get the return that they want? If it is too expensive and they cannot see the return in their business plan they will not do it. If it is the right price they will do it. They will talk amongst each other. Certainly in country towns they will ask each other how much they are paying, who is their provider and whether it is worth it. The people who have embraced it already will be consulted a lot about the return for effort.  The business associations will certainly have models out there of what you should expect to pay before you start making a loss or before you should stop and think about some other mechanism. In the end, it is like a lease—if you want to do it you have got to pay for it.

Senator FISHER —What is ‘the same as everybody else?’

Mr Strong —In a country town, we do not want to have a different price for business than for a family.

Senator FISHER —What if the people in the country town are paying a whole lot more than people in another regional centre?

Mr Strong —If I know those people they will be questioning that and coming down here and challenging it. They should not pay a whole lot more—it is that simple. When a physical highway is built it does not cost you more to drive on that highway when you go from wherever it is to wherever it is. It should be the same with the NBN.

Senator FISHER —So in saying that your members want the NBN, what reassurance, if any, have you got from the government or anywhere else that they will not be paying a whole lot more?

Mr Strong —No reassurance at the moment. This is all new territory. We probably could not put the submission in because we could not put in a coherent submission except for one page saying, ‘We want it.’

Senator FISHER —You cannot say a whole lot about what you do not know a whole lot about.

Mr Strong —That is right. At the moment we do need a lot more information so we can influence it. A classic small business reason is that we do not have resources. In many ways, we would like to have some resources allocated to us in the form of a seconded person who knows this sort of thing who we could brief—it might be for three months or longer—and say, ‘This is what we want.’ They could then brief us and say, ‘Have you thought about these things?’ Then we could work together to come up with a coherent response from the small business sector. But we need that expertise. We do not have it and obviously small business can never afford much when it comes to places like COSBOA and other organisations. That would be quite a good outcome if we could get that resource. I do not think it is an unfair request. If we are going to inform discussion and policy in a proper way to make it work for everybody, we need the information and the resources to do that.

Senator FISHER —Have you got any views on the prospect of the wholesale price meaning a prohibitive cost for your members to access broadband?

Mr Strong —I do not have the information to make comments on that. We have discussed this among the council, and some of them are more knowledgeable than others, but we sit there and say, ‘We need some expert advice on this to make informed comment.’ Otherwise it is just yes or no, with no real depth to it. At the moment we do know we want it for all those very good reasons. One of the fears that has been expressed by several council members is whether business—because you have the word ‘business’ in your name—will be charged more than a family. In small business you are both. That is one of the fears they have expressed—to make sure that we get charged the same as everybody else. At the moment it would be nice to know more. As I say, I did not put the submission in because it would not have been much.

CHAIR —You have raised a whole range of issues which has been, I think, quite helpful for this inquiry. But we are looking at the legislation to get NBN up and running. You have raised a number of issues that are extraneous to the legislation but which are practical issues that the government and this committee need to understand in terms of any recommendations it makes.

I have just had a quick look at your website, and I notice that you have a debate between the HR Nicholls Society Inc. and the Fabians as your headline.

Mr Strong —That is right.

CHAIR —I just wonder what help you would need to get that off your headline and to get the benefits and an educational process on NBN on the headline of your website? I think that in the longer term these theoretical debates about industrial relations are a bit diminished against this argument about the benefits for small business of the NBN.

Mr Strong —The reason we have done that is that small business has been invisible for a long time. A lot of what we are doing is to get it up there and to say, ‘We are just people; let’s stop treating us like we’re small versions of BHP’. The Fabians and HR Nicholls were a headline grabber; it was the other night and it was—

Senator TROETH —You could always try, ‘We have some questions about NBN,’ and publicly ask for some information.

Mr Strong —That is right, and there is only me and COSBOA so we will chase that through. Interestingly, both sides were discussing projects for business. They said that most of the big projects are about ports and things that are for big business. Small business benefits from that by being contractors and what have you around that, but the NBN is actually for everybody.

Senator TROETH —Yes.

Mr Strong —That is one of the interesting things about it that we like. I take your point, and to get that up on the COSBOA site would not take much, but where we want to get that up is on the sites of the business associations where their members are the ones that will benefit the most: the Australian Retailers Association, some manufacturing groups and those sorts of people are the ones that we need to get to.

We are the lobby group at the peak level to do other things, and that is the sort of information where we come back to people like you and say, ‘Target the ones who will use it.’ For example, Australian Women in Agriculture is great—is it on their website?

Senator TROETH —Yes.

Mr Strong —There you go; whereas from our point of view, we put that up there but people go to our site to find out our attitude towards certain things.

CHAIR —But maybe some engagement between COSBOA and the department in relation to information may assist? Would that—

Mr Strong —It is like when I talked about the resourcing before; again, that is one thing we have identified. In the past—a long time ago—the government did that with certain groups. They said, ‘Of course we can’t have the knowledge on that and other matters, so we will give you someone for three months or six months,’—with a brief and a whole range of things. In that way, they really do inform our opinion and they motivate us. They energise our member organisations; they visit them, they give them information and they tell them where they are wrong and where they are right, and that does create momentum.

Senator TROETH —I am sure your members would appreciate more information, but at the same time—and I am sure you would be equally advised of the problems for your organisation as you would not—you would not want to be seen as a government propaganda machine? If Senator Cameron is suggesting the benefits of the NBN, my suggestion would be, ‘We need more information,’ or questions that need to be asked or whatever, or—

Senator FISHER —The benefits at what cost?

Senator TROETH —Yes.

Mr Strong —We do need more information, without at doubt, and I agree with you. What we have discovered in the past is that these things happen and we get promised a lot of things, but in the end big business benefits from it and we do not get the benefits that we want. There are other reasons as well, but that is our fear and that is where—

Senator TROETH —Yes.

CHAIR —Are you aware that NBN itself has a website where information can be accessed about NBN?

Mr Strong —I am, and I have been there and had a look at it.

CHAIR —Do you have a link on your site to that NBN site?

Mr Strong —No, and I have got to say that that website has only just been done in the last two weeks because we have changed over. Now we have got access we can start doing links and pushing the things that we see as important, and NBN certainly is.

CHAIR —The department also has a range of answers to questions on NBN, so there are two big resources there. I thought the answer to Senator Fisher’s question was, ‘Well, nobody really knows what is going on,’ but it really takes two to tango, doesn’t it?

Mr Strong —It does, but let me also say that small business are people and they do not look at everything. They have millions of things—lots of mail coming in. They are just-in-time people and they will be looking at the NBN when they have to. You cannot change them and we do not want to change them. Everybody wants small business to be looking at their particular thing and they do not have the time for it. That is why I say the best way to do it is to target the particular associations whose members are going to have more of an interest and then to resource it, go out there and talk with them in a language that those people understand and set up some case studies. Small business understands case studies more than anything. There is an issue there around how to communicate.

CHAIR —On this, Senator Fisher put to you that people will be paying a whole lot more. You do understand that the NBN company is a wholesaler and will not set retail prices?

Mr Strong —Yes.

CHAIR —It is actually for the retailer to decide prices in a certain area; that is a reasonable proposition, isn’t it?

Mr Strong —It is. You go to country areas and we have issues around a lack of competition. I am not sure whether with the NBN there will be a lack of competition. That is what we need to discover as we go along. We would love to be involved in the process so that we can stop and say: ‘It’s not working for us.’ At the moment we cannot because of resources.

CHAIR —You made the comment about the road: everybody should have access to the road. Isn’t that the equivalent of what has happened with this legislation? That is that there is a common wholesale price across the country. It does not matter if you are a small businessperson in Wee Waa, the wholesale price in that area will be the same and then retail competition should drive down the price.

Mr Strong —Thank you, Senator, because at the board meetings in that discussion they have said they like that.

CHAIR —They like it.

Mr Strong —They like it. They have always said, ‘As far as we understand,’ because beyond that we have no faith in big business and we know that we get treated like we are big business by a lot of government policies. So beyond that they are not sure. Yes, it makes sense, it is a good theory, it is good practice but what will happen in the end once people get hold of it and what will big business do? We would like to be involved as we go along.

CHAIR —We had the discussion about the benefits for small business, but benefits for small business cannot be seen in isolation. Is it correct to say that, if a big business is benefiting and can then contract work out to a small business or use small business services because of that access to better broadband, that will have a benefit for the small business group as well?

Mr Strong —It can. A medium business is probably the better example because medium businesses do not have a big history of destroying small business per se and there are some good big businesses out there. We know that. But the big ones who control the nation—which is the four big banks, the two big supermarket chains and the big landlords—are the ones that would use it to destroy businesses. They would use it to make sure businesses just stayed alive long enough so that they could milk them for money. That is our experience in the real world and that is the fear on the internet. As we have gone along on the debate about the NBN that fear has grown among all the council members. They think it looks great, it looks like a level playing field but, unless we stop them, they will use it to destroy people.

CHAIR —That may be a submission for another inquiry.

Mr Strong —It will be. It is all connected, as you said.

CHAIR —Coming back to this linkage, what is your definition of ‘small business’ in terms of numbers?

Mr Strong —We look at it as ‘employs fewer than 20’.

CHAIR —There are a lot of pretty powerful businesses with 20 employees using high technology around the country, isn’t there?

Mr Strong —There are and they are going very well. The definition of small business is always a great debate. We all know what it is: employ fewer than 20, but your turnover is less than $20 million or something. It is an interesting debate. We know what a small business is: it is a company run by a person.

CHAIR —I used to live in Muswellbrook in the Hunter Valley. There are some big regional areas north of Muswellbrook that are isolated from a lot of the business activity—areas like Tamworth, Armidale, Narrabri, areas in which small business would be predominant. It seems to me that the wholesale price being equal across the country would give them a benefit, wouldn’t it?

Mr Strong —It will. I lived in Inverell for a while. If you go in there and say, ‘It is the same for me as elsewhere,’ then it is like the highway—we all have the same cost of driving on the highway. That is fine. We will live with it and move on. To me it is within the terms of reference in that everything impacts on small business, and it impacts badly if it is not managed well.

CHAIR —All in all, you think the NBN legislation would be good for small business?

Mr Strong —It will be. If I could mention standard business reporting—internet based government reporting or the red-tape area. When that is finally in place, it will be a wonderful thing, but out in the bush you are going to need high speed to use it. Even in the cities, as red tape gets more complicated, you will need high speed as well.

Senator WORTLEY —I would like to follow up some of the questions from Senator Cameron. While we were talking I just flicked over to the website. From what you were saying—and obviously you have many members—would it not be useful for your website to have a link to the NBN Co. website? That website has a lot of questions and answers, facts and information. Access to those questions with answers via a link would, I am sure, save you a lot of time having to explain things to your members.

Mr Strong —You are right and we will put a link there. One of the things that we will do is put in links to particular explanations and say, ‘This is a good explanation.’ There are 2.4 million out there and they vote however they want—nobody tells them. In order to be fair we link to opinions from other parties as well. Then they can make informed decisions. But you are quite right; we have to get that information to them. Some of them out there are adamant they do not want it. Small businesses are not a coherent group where everyone has the same opinion. They are very varied. In this case, the great majority—but some of them do not want it at all, do not worry about that.

CHAIR —Mr Strong, the wholesale price that is published in the NBN business plan starts off at $24 a month. Are you aware of that? That is the wholesale price. There are other websites where you can find this information. Do you think it would be helpful if someone from the department sat down with COSBOA and said, ‘Look, here is how to manoeuvre your way through all the information’? You could then get it up on your website so that it is more effective. That might prevent you getting hit by some fear campaign that says, ‘Everything is too expensive and you are going to be disadvantaged and you will not get equal access.’

Mr Strong —What you say is true. Some of our people might ask themselves, ‘Is it a fear campaign or is it true?’ So we have to get the information up there. I am converting that $24 and I am thinking: ‘What will that cost me? Is it going to cost me $100 a month to access it? Will it cost me $300?’

Senator FISHER —Given that $24 is a starting price.

Mr Strong —Yes, that is right and I was just trying to work that through.

Senator FISHER —Good luck.

Mr Strong —That is where I would like to have someone come and work that through with someone from the industry and say, ‘Right, here is the $24, here are all the costs that you are going to have added on there and these are the likely prices that would come out of it.’ I am quite happy to have someone come and challenge that, as well, because we are very used to people telling us stuff that is not true. It happens all the time: ‘It is all right; everything will be fine,’ and then it is not. It happens—well, I cannot think of times when it does not happen, to be honest. The problem is that big business cannot be trusted and government still treats small business the same as big in most cases. So that is what we need.

Proceedings suspended from 12.24 pm to 1.31 pm