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Standing Committee on Infrastructure and Communications
19/04/2011
Role and potential of the National Broadband Network

CHAIR —Welcome. Although the committee does not require you to give evidence under oath, the hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. We do not have a written submission from you, but would you like to make some opening comments on the terms of reference?

Mr Moffat —I would. Thank you for the opportunity. In essence I am here to represent the small fish. Around the country there are several hundred small service providers who provide a range of products that are key to local economies. As I move forward I will talk more specifically about my business.

I have some questions regarding NBN and how NBN Co. and the government propose to give consideration to small and local service providers that, for many reasons, would not want to go to a level tier position through the big fish—Telstra, Optus, et cetera. In considering that, has the committee or NBN Co. perhaps considered opening a partition in the wholesale channel to allow small service providers like ours to get direct access rather than going through that third party? That is my main consideration. That is on the basis that as local businesses—and I reiterate there are several hundred local service providers with multiples of that in terms of employees—we provide some important services to local businesses.

It is not just the ISP services or telephony services. It may be technical services. It may be IT services. There is certainly an element of we do not know what we do not know. By that I mean there are innovators and entrepreneurs out there who are most likely on the cusp of inventing the new Facebook, the new Napster, or whatever else is going to be used through the services of the NBN Co. My fear is that through the wholesale pricing proposal that I have seen for NBN Co. that is going to preclude a lot of those small players from having direct access, and therefore they will be at the beck and call of the level 1 providers and their chest-beating in terms of wholesale to retail pricing. I would like to ask that initial question: what consideration has been given to the small players? Would you take on board a suggestion to partition the wholesale channel to allow us to get direct access?

CHAIR —We are not decision makers so we cannot give you answers to those. We are here to hear your concerns. For the record, so that we can consider it, you are a regionally based business. Do you have a peak body working on these issues? As the rollout happens, have you looked at what opportunities you actually want to take up as a business that you are concerned you may be precluded from? Can you give us a picture of that?

Mr Moffat —It is a good question. There is not a peak body that small ISPs such as us report to. I will take some figures from the wholesale pricing which suggests—and I will stand corrected if I have this wrong—that there are two levels of entry. One is a forecast of up to 250,000 customers nationally and a second forecast of up to 20,000 customers nationally. I have canvassed about 60 small ISPs in regional locations around the country and not one of them had more than 2,000 customers. As previous speakers have mentioned, there are all sorts of technology that will be available. Videoconferencing seems to be huge. Certainly that is something we are looking at, and other voice services and remote monitoring of crops and that sort of thing that will be enabled through this. In order to make those offerings competitive to the market and economical for primary producers, for example, to take up, I think it is important that we have that direct access rather than having to pay a third part a premium.

CHAIR —Do I understand from what you are saying that you do not have a peak body? Do you know whether those messages are going through to ministerial level? This is one way, to talk to us as a committee, but do you know whether it is being raised at the national level?

Mr Moffat —As far as I am aware, if you think about companies like Westnet, iiNet and Internode, they all started from zero customers and worked up. Even some of those bigger players are at risk of having to go through a third party, such as Telstra, to enable them to continue their business. I am fairly certain that some of those guys have made their feelings known to the appropriate persons. But in terms of smaller ISPs just like mine, there is not a peak body and there is not an avenue that we are aware of collectively, other than coming to talk to the committee today.

Mrs PRENTICE —At the moment, what sort of share of your business is wireless and satellite? Would that be most of it?

Mr Moffat —No. We concentrate mostly on internet to the home and internet to business through the telephone line. When wireless becomes available, other than wholesaling it off to Optus or Telstra, we would certainly like to produce our own service, with I guess other innovative add-ons, for want of a better term. But, again, the competitiveness of what we are going to be able to offer is under question if you have to buy it off a third party that will not necessarily play the game and offers predatory pricing.

Mrs PRENTICE —Are you identifying products that you think you can offer uniquely to households, small businesses and home businesses?

Mr Moffat —Absolutely. We are looking at a lot of different ideas. We have engaged the services of a couple of people to help us think through some of those ideas. A lot of it revolves around the use of video. It might be, for example, a podiatrist who has an office here and an office in Mount Isa and would rather do remote consultations rather than travel from week to week. E-health has been a huge discussion point around NBN, but there are a lot of small health operators that are thinking: how can I benefit from NBN Co. as well as all the big guys? I guess that is where we see ourselves as providing a service to the smaller operators.

Mrs PRENTICE —There is an opportunity for you to educate some of the small business and home business communities and promote your products at the same time?

Mr Moffat —Absolutely.

Mrs PRENTICE —I think you said before that there are 6,500 small businesses?

Mr Moffat —Yes.

Mrs PRENTICE —What are we looking at in home business or is that just a growing market?

Mr Moffat —I think that is inclusive. That was a figure thrown at us in a recent discussion.

Mrs PRENTICE —What sorts of products do you offer now?

Mr Moffat —All the voice and mobile services. Again, they are all wholesaled from other carriers and I cannot see that any of that would change for mobile services once NBN comes in. With the advent of new applications on smart phones, if wireless is available through NBN Co., then Skype will be a tool that people can use on a roaming basis so that may have an effect on GSM and 3G mobile services as we know it.

Mrs PRENTICE —You have identified obviously the videoconference and the education sector as benefiting. Are there other key sectors that you see as key clients going forward?

Mr Moffat —I think locally agriculture would be a terrific opportunity for remote crop monitoring, and cattle or livestock monitoring. As the speaker from the council previously identified, there are opportunities for CCTV, particularly in the pub and nightclub strip, for safe zones and even within the home for remote security monitoring. There are all sorts of opportunities and you are really only bound by your imagination as to where you can put a camera in and display it to the world or to the appropriate person.

Mrs PRENTICE —Are you saying that you want a genuine wholesale platform?

Mr Moffat —Absolutely.

Mrs PRENTICE —Can I encourage you to put in a formal submission on why that needs to happen.

CHAIR —For your information, there is actually another joint committee of the parliament looking at the infrastructure build and business case. It is probably worth while also submitting to them. But from our perspective in terms of supporting regional businesses, there is some good evidence there for us to consider.

Mrs PRENTICE —We could pass it on.

Mr Moffat —For the record, there is probably an opportunity for the decision makers to open up a separate partition to allow all of the small service providers to go in together to make up the numbers—

CHAIR —A consortium type of arrangement?

Mr Moffat —Yes. We are certainly not looking for a handout. We would expect to have to pay for the access and expect to pay the appropriate set-up fees on a pro rata basis. I think if someone were to canvass other small ISPs around the country they would all agree. As a small ISP, the flow of information to us has been negligible. There has been virtually nothing. I have had to go out and source the information. Given that we are in a first rollout area, the only direct contact I have had with NBN Co. is when I have chased them.

CHAIR —You raise a really interesting point that has been raised with us in a conversation we have been having in terms of providing information back about who should actually be responsible for that. Because to some extent NBN Co. is like the RTA; they roll through and build a road, but they do not go around and educate people about what you could use the road for, how to build your business on the road. Whether they are the most appropriate place to do that or whether you would see another model that government should look at that would actually do what you are talking about as the physical rollout happened? Do you have a view on that?

Mr Moffat —Given the importance of the NBN I would have thought that the government or NBN Co. would have engaged somebody to go out to all of the small service providers and the large ones and provide them with good-quality information.

CHAIR —Maybe the relevant government departments, small business and regional development, or something like that could look at that?

Mr Moffat —Yes. I know that locally we have got the Small Business Centre. But I suspect that they are suffering from the same problem that we are—a lack of simple and easy to understand information. There seems to be a requirement in writing the documents that have been sent to me to make them as hard to understand as possible. As a simple local provider, I would like to just see a simple document that is easy to understand: ‘You pay this much and you will get this.’

Mr SYMON —It sounds like you feel like you are shut out of the NBN rollout at the moment because of that lack of information.

Mr Moffat —I probably would not say that I feel like I am shut out. I think that the small ISP area in general has just been a little bit overlooked.

Mr SYMON —Are you able to offer a product over the NBN at the moment?

Mr Moffat —We could certainly go to videoconferencing and anything to do with video pretty much straightaway.

Mr SYMON —As an ISP?

Mr Moffat —Yes.

Mr SYMON —But you are currently not doing that because there is not the information there?

Mr Moffat —I do not know anything about NBN locally other than it is going to be working out of Aitkenvale. I do not know how to get access to it. I do not know what my—

Mr SYMON —There is not the information there?

Mr Moffat —Yes.

Mr SYMON —I think it was in Launceston we spoke to people. There were also trial sites around Launceston, in Scottsdale and Smithton, from memory. There were local ISPs involved with that, but they were small in number.

Mr Moffat —I actually spoke to a company called Launtel, based out of Launceston, and it shares the same frustrations that I do.

Mr SYMON —As to the current situation, in terms of your access to infrastructures already in place and what you can do to then sell those services as an ISP, do you feel like you are on a level playing field with the big providers?

Mr Moffat —No, not at all. I guess we have made our feelings public many times that some of the larger telcos certainly undertake some predatory pricing practices from time to time. There was a Hansard from a committee at which I spoke five or six years ago looking into something very similar, and I guess I vented my frustrations back then. We understand entering the telco market that that is the case. Unless we have got a few billion dollars to build our own network, we are going to have to buy off a third party. My feelings as we move forward on a government-owned product is that ISPs like ours should be allowed that direct access so that we can compete on the same level playing field as the other providers regardless of size.

Mr SYMON —Instead of the current situation where the wholesaler may well be a retailer as well?

Mr Moffat —That is correct, yes.

CHAIR —Clearly, regional development is a major focus for us. I am going to pick your brain in a different area, if you do not mind. You would have contact with a lot of local businesses as well. Can you give us an idea of how prepared you think local small and medium businesses are? As Ms Prentice mentioned, we are very interested in home based businesses, which we suspect is a burgeoning sector, but nobody is gathering data or information on it so it is hard to know. I would be interested in your observation of it as someone who has a service across small business sectors.

Mr Moffat —I just do not think they are. I think there is generally a lack of awareness through small business. I have attended a couple of forums where the question is continually asked: what will the NBN mean to me? What can I do that I cannot do now? With the advent of a reliable internet service things like remote employees through a host of voice services become a reality. It certainly takes the geography away from running a business. But getting the information to the masses is lost. We are happy to undertake some of that. I think there are some initiatives that regional development organisations or government bodies could undertake as well.

CHAIR —We spoke to the chemist in Tasmania that is being used as a case study who said that he is really looking at bundling, putting not only his internet but also voice over internet, and the savings for him potentially in telephone connection are quite significant. He had been reluctant to move to it, because old voice over internet had been less than great and he was quite surprised at how good the quality was over fibre. He wanted to use it for was staff training in particular; that it was a huge problem for him if there was a training update course on particular issues for chemist assistants, and to send somebody away. It may only be a half-day session, but they are away for two days and so forth. The other area that I think you have touched on is actually buying in expertise. If you want a very specialised sort of advice or consultancy, being able to do that in a real way through video conferencing—are they things that are being looked at in the trial sites? Are there examples that you might want to give us where something good has happened so that we could look at how we would replicate that?

Mr Moffat —Again, it is a great question. Only about six weeks ago we implemented a host of voice service through our businesses. That has allowed us some tremendous flexibility. We have an accountant and a bookkeeper who have young children. They can work from home on the days when their kids are sick and still be in touch with the business. Personally I do a lot of travelling. I take my phone off my desk and plug it into an internet connection wherever I am going—an extension of the office. It is those flexibilities that a lot of businesses are really not tuned into at the moment.

In terms of bringing in specialist services, for example, if I need some legal counsel and we need to share some documents, at the moment the quality of the current internet is not that great unless you pay a lot of money for a dedicated 2 meg-2 meg link. To be able to do a video call with my legal counsel and show them the documents and share them in real-time without having to pay for them to travel to me or vice-versa is massive. The same can be said for every other professional service, I guess.

CHAIR —Perhaps if they are the sorts of areas you think might be good perhaps for government or whoever, for us to facilitate someone else to actually develop those case studies, what do you think is the best way to engage with those small businesses about those stories that what they—

Mr Moffat —I guess it would be sensible to go to the first rollout areas. It would be just to get some local businesses together and have a think-tank. Again, we do not know what we do not know, but somebody might throw something on the table that initially may seem a little bit lame, but it can develop into something quite spectacular. You could probably develop a framework out of that into something you could roll out as a bullet point document to small businesses locally.

CHAIR —You would follow up as the trial sites happen with the local business communities having, as you say, a roundtable: how could we have done this better? How can we maximise engagement?

Mr Moffat —In answering that question, what does the NBN mean to me and my small business? You have touched on home businesses on a couple of occasions. Unless you sit down and think about it with a group of other like-minded people, you are not going to get the best out of it. At the moment a small home business person might just be thinking, ‘I am going to get quicker internet. Okay. So, I will be able to watch a few more movies on YouTube, but what else am I going to be able to do with it?’ If they are not in an IT related field they are not necessarily going to understand all the implications for them. I think there is a responsibility certainly on our business to be able to go to those home businesses and say, ‘Have you considered doing this? Did you know you could do this?’ And all of a sudden, for example, cloud services, you do not need to spend $10,000 on a server anymore; you can post it all in the cloud and it will cost you $100 a month. What is cloud? We need to be prepared to be able to answer all of those questions.

CHAIR —Certainly we had evidence in Ballarat from a gentleman there who had established an ISP in that area but now within other fields. He said to us, ‘You need to talk to people about what the outcomes are that they want. Do not talk about the engine driving that outcome, because you lose them.’ Am I hearing from you that you would agree?

Mr Moffat —That is absolutely correct.

CHAIR —And that part of the dilemma is our conversation so far has been around all the technical construction issues, which is not something that people engage easily with.

Mr Moffat —Yes.

CHAIR —I think that is a really a useful insight from a regional business providing those services and in contact with their local small businesses. That is great information.

Mrs PRENTICE —Do put in a submission about the platform for the wholesaler. You can send it to our secretariat and we will pass it on to the other committee and copy you in on where it has gone.

CHAIR —Thank you for your attendance here today. If you have been asked to provide additional information just forward it to the secretary. You will be sent a copy of the transcript of your evidence, to which you can make corrections of grammar and fact. Once again, that was very useful information so thank you very much for participating today.

 [10.46 am]