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We had to wait for the ACCC: Conroy -

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We had to wait for the ACCC: Conroy

Broadcast: 24/11/2010

Reporter: Tony Jones

Communications Minister Stephen Conroy tells Lateline it was necessary to wait for the ACCC to give
a recommendation on the NBN business plan before releasing it.


TONY JONES, PRESENTER: Just a short time ago I spoke to the Communications Minister Stephen Conroy.
He was in our Canberra studio.

Stephen Conroy, thanks for joining us.


TONY JONES: Why didn't you get the debate and the vote that you expected to have in the Senate

STEPHEN CONROY: Look, the Senate has a lot of quite arcane procedures and we're very keen to
progress this debate. This is a bill that has been in Parliament on the table for a year, 12
months, and yet the Opposition - and they proved it again today - were prepared to talk this out,
use every procedure of the Senate they could to frustrate the opportunity to bring this to a vote.
There are lots of arcane procedures ...

TONY JONES: But was it bad management on behalf of the - your senate managers, because it appears
there weren't enough Labor senators when the quorum was called? I mean, surely you must have known
that was coming up?

STEPHEN CONROY: No, look, I don't accept that at all, Tony. There's a number of arcane Senate
procedures and we're in a situation where we'll be able to commence the debate again tomorrow.

But the point that needs to be made here is that the Abbott Coalition continues to try and wreck
the NBN. They will not even allow this to come to a vote. Twelve months this legislation has sat on
the notice paper. We've tried to bring it on a number of occasions. They've blocked our ability to
debate it and yet again they're trying to frustrate Australians getting access to cheap and
affordable broadband.

TONY JONES: Alright. Well you're definitely going to get a vote tomorrow. Have you got the numbers,
because tonight, for example, we've learnt that Steven Fielding - Senator Fielding has come on
board. He's going to vote for the NBN. I mean, that must be a surprise to start with, that you got
his vote in your hand before the vote is even taken?

STEPHEN CONROY: Look, Steve Fielding is somebody who has a steep background in the
telecommunications sector. He's actually worked in this sector. So I think Steve ultimately
believes that this is a project, an infrastructure project that is transformational. And so, while
you say we must be surprised, Steve has a background and an understanding of the issues and it's no
surprise that Steve believes that this is the best thing for Australia.

TONY JONES: So you've got the numbers tomorrow, have you, when the vote is eventually taken?

STEPHEN CONROY: Well, there were a number of votes this afternoon, key procedural votes and Steve
Fielding voted with us to give us a majority on the floor of the Senate.

TONY JONES: So you've got the numbers, you're convinced now?

STEPHEN CONROY: Oh, look, I thought that was a very good sign. Steve hadn't spoken in the debate
yet. Again, one of the issues here is the Opposition chose to frustrate, filibuster and ensure that
we couldn't get back to this debate. So, Steve will speak for himself tomorrow, but it was a very
encouraging sign to see Steve supporting the position on the floor tonight.

TONY JONES: Let's talk about the politics of this. Why didn't you just agree at the outset to
release this Readers' Digest version of the NBN business case and avoid all of the self-inflicted
problems that happened over the past week?

STEPHEN CONROY: Well we've been in a position where we've argued consistently that this is a matter
that the Cabinet has to consider. There is incredibly sensitive commercial negotiations that will
be compromised if we actually just did what the Liberal Party keep demanding, which is reveal all
of the business plan. We've made this point.

There are decisions that are awaiting the Cabinet which are not able to be taken till after the
ACCC gives us a key recommendation on November 30th. This is all key information that we're not in
a position to release a document that hasn't been considered ...

TONY JONES: But you must have known last week that it was possible to release this 40-page, as I
say Readers' Digest version of the business case. I mean, why didn't you just say, "We'll do that"?

STEPHEN CONROY: We've been happy in the end to ensure that there's more information out there,
we've provided private briefings, confidential briefings to other senators and other Lower House
members so that they understood all of the processes, understood some of the key information in the
business plan and we've been happy to facilitate the debate, facilitate the support for this bill
by providing this information today. And now we're in a position where we're trying to bring this
on for a vote, trying to bring this on for a debate and the Opposition continue with their standard
tactic of trying to oppose and wreck.

TONY JONES: But who dreamt up the idea that minority MPs and senator would have to sign a
seven-year confidentiality agreement to just get a briefing on this? This was like a comedy of
errors. I mean, it started as seven years, it went down to three years, eventually it went down to
two weeks. I mean, who was running this?

STEPHEN CONROY: I think there was some very eager officials in one of the departments that were
very keen to ensure we had maximum confidentiality and once - and this was all happening over the
weekend - once we were able to see what was being put forward, we agreed with the proposition that
they were a little over-eager in terms of the time that they were seeking when the majority of this
information would be available within a few weeks' time in December, as Julia Gillard made clear
over a week ago: That we would be releasing as much as was not commercially sensitive and we've
said this consistently: we would release this document, but the Cabinet has to consider it. But
we've always said that we would release as much information as we could.

TONY JONES: I guess I'm talking about the - we'll talk about the actual business case in a moment,
but I'm talking about how the politics have been managed over the past weeks. And it doesn't give a
lot of confidence when for example you came out and said the bill that's being voted on doesn't
include any mention of the NBN. Well evidently that's not true.

STEPHEN CONROY: No, look, the situation there was that the bill was amended about two or three
weeks ago. Up until that point in time, there was not a single mention of the National Broadband
Network. The amendments were put in and they talked about the deal between Telstra and the NBN, and
they facilitated that deal. But there is nothing to do with the operations of the National
Broadband Network in this bill.

This has been one of the great furphies. They've been opposing this bill for 12 months, and the
Australian public recognises that Tony Abbott is simply continuing to oppose and try and wreck.
They've had 10 different excuses over 12 months as to why they've opposed this bill.

Up until two or three weeks ago, the business plan had never been mentioned by them as a reason to
oppose this bill. All of a sudden it was a new reason; we must have this. Well, the business plan's
been coming for 12 months and yet it wasn't a reason to oppose the bill over the last 11 and a half

TONY JONES: Alright. Let's talk about what you have released: this cut-down version of the business
plan. Malcolm Turnbull says what you've released today is curiously inadequate and he says it
doesn't include any financial statements, no profit and loss statement, no cash flow statements, no
balance sheets.

First of all, are all those things in the longer version which has been censored?

STEPHEN CONROY: Absolutely. As we said, we're in a position where a range of key decisions need to
be taken. They can't be taken until after the ACCC gives us a recommendation on November 30th, and
so, this information is all there and subject to decisions that have been made - and Mike Quigley's
been very clear about this when he's wrote to myself and we publicised that letter over the
weekend, he's been quite clear: there are important decisions that could make changes to the
assumptions in the business case.

It is not unreasonable, Tony, for us to want to actually get all the information.

TONY JONES: Have the minority senators, the one who got the briefings, have they been told this
fundamental financial information? Have they taken that information with them when they've gone to
vote on this, or do they still not know?

STEPHEN CONROY: Look, there was a range of key financial information made available to the senators
in the confidential briefing and they understood that the briefing was on the basis of they could
consider the information, but they couldn't publicise the information, because some of the
information that they were given would allow you to work backwards to unpack key financial
considerations, key financial considerations around the Telstra deal. And that's information that
we're not in a position that we can put into public domain.

TONY JONES: OK. But some information about the Telstra deal has come out in the cut-down version.
The Government will pay $13.8 billion to Telstra for its infrastructure. And we now can see that's
forecast to reduce the NBN's capital expenditure bill on paper at least by $1.7 billion. Is that
the only financial benefit from the Telstra deal?

STEPHEN CONROY: Absolutely not, and I think Malcolm Turnbull, who spent all day trying to convince
journalists to add together an operating expense with a capital expense.

But there is revenue that comes to us from the Telstra deal, and so what's happened is the amount
of homes that we'll be connecting because of the Telstra deal increases - and that's why that
number is what it is. But there's revenue coming to us from this deal as well, and that's why we're
in a position that it clearly demonstrates that the Telstra deal is overwhelmingly positive, not
just for the National Broadband Network company, but for Telstra as well.

TONY JONES: Are you saying it's more than the 1.7 or vastly more than the $1.7 billion that's
stated here?

STEPHEN CONROY: Oh, look, I'm not going to speculate on what's in that document yet, Tony. That's a
good try. But clearly, clearly, what some of the information that's now in the public domain
demonstrates is it's a very positive deal for both the NBN Co. and Telstra shareholders.

TONY JONES: OK. A few more details have become clear. One is that the NBN's basic entry level
product for - I guess for ordinary households will offer downloading speeds of 12 megabits per
second. Well that's not very good, is it? I mean, 12 megabits per second: you can get that already.

STEPHEN CONROY: This is the basic product. This is the basic product that we're offering to people
at a very competitive price. And the key to remember, Tony, ...

TONY JONES: What's the price?

STEPHEN CONROY: The key - well, again, those prices will be available very soon and I'd love to
give you a scoop on Lateline, but you'll just have to be a little bit more patient.

But the key here is that when you buy 12 meg on a piece of fibre from National Broadband Network,
that's what you will get. It's not like buying ADSL that is 24 meg headline speeds, but in actual
fact most Australians get somewhere between six and eight meg or 10 if you're lucky.

This is: you get what you pay for. And there are a range of options onwards from there that will be
part of the pricing product structure.

TONY JONES: Yes, and you'll have to pay more the faster the speed is, obviously, by the way the
thing is set up. One of the other details is the NBN Co. anticipates it'll be able to reduce the
prices for its other products, but not for the basic service. Why's that?

STEPHEN CONROY: Well what the NBN business case has assumed is, unlike Malcolm Turnbull trying to
again run a scare campaign - even after Mike Quigley said it's not true that prices will go up.

The business case for the NBN assumes a flat nominal price, but that means they're falling in real
terms. Just to pick a number: $10 today is not the same as $10 in the future.

So if you hold that price, that nominal price fixed, the real price has gone down. So, the NBN
business case is based on falling, real and nominal prices across all the other product range, and
on this one falling real prices. But no suggestion, as Malcolm Turnbull is trying to pretend, of
increasing prices.

TONY JONES: Unless you're one of the ordinary households that has the basic service, which frankly
many people can get now ADSL-2, in which case you've got no prospect of your service becoming
cheaper, whereas the people who are spending more money on higher speeds possibly do.

STEPHEN CONROY: No, well, as I said, that's not right, Tony. Falling real prices is falling real
prices and that's what's built into the National Broadband Network's model.

TONY JONES: Yes. OK. So - but it is true, according to the statement, that the people on the basic
service will not be able to get any cost benefit when these economic factors come into play?

STEPHEN CONROY: Well, the pricing structure, as you've said, Tony, is that the nominal price is
held flat and that that means that the prices fall in real terms.


STEPHEN CONROY: That's absolutely right.

TONY JONES: Let's just go to one other thing you're going to be dealing with. We've only got a
couple of minutes left. But will you be taking to Cabinet tomorrow proposed changes to the
anti-siphoning laws on sports broadcasting?

STEPHEN CONROY: Well, look, I don't speculate on when Cabinet does or doesn't meet. I know there's
been a lot of speculation in the media about that. I'm not in a position to confirm when Cabinet
does or doesn't meet. What I've said publicly ...

TONY JONES: When Cabinet next meets, which is presumably - we believe is tomorrow morning.

STEPHEN CONROY: What I will say is that my anticipation at this stage is that we'll be tabling a
regulation some stage tomorrow.

TONY JONES: Will you allow free-to-air networks to put sporting networks onto their digital
channels which they currently can't?

STEPHEN CONROY: Look, that's certainly one of the proposals that I've talked about, I've speculated
about, I believe it would be good public policy, but ultimately Cabinet has to make a final
decision on that, but I would certainly think that would be a good public policy outcome, to allow
sport to be able to be shown on the multichannels.

Now, there's obviously a couple of issues there, for instance, not everybody yet has access -
though we're seeing a fantastic take-up around the country, partly due to the fact that we've got
an advertising campaign explaining about the switchover, partly due to the fact that - and this has
been done in co-operation with the Government - new channels are being rolled out across Australia
at the moment, not just the multichannels.

It may come as a surprise to many people in metropolitan Australia, but regional Australia hasn't
even had the three full commercial channels, just Seven, Nine and Ten. And what's happening now is
that those channels that haven't been available in regional and rural areas are now being rolled
out as part of the overall package that we're giving to all Australians.

We've also put a satellite up. So we're seeing a tremendous uptake. But there would be some key
events, for instance, like the Melbourne Cup or the AFL Grand Final, which we wouldn't want to see
on the multichannel because all Australians wouldn't then be able to get access to them.

TONY JONES: OK. Well the other critical part of that final question, the other critical part of
that is what will happen to FOXTEL, because their business model relies on getting access to this
material? Won't it weaken their business model if the digital channels of the free-to-air stations
are able to screen sporting events with they want to buy?

STEPHEN CONROY: Well, look, what we've got to try and achieve in this particular policy is to get a
balance. There's been a reasonable balance over the last few years. There's new technology come
along that's shifting the goal posts, there's new sports that have come along that didn't exist
when (inaudible) was first written, like Twenty20 cricket, which is quickly replacing 50-over
cricket. And only in the last 12 months you're seeing a tremendous interest and games of Twenty20,
as opposed to declining interest and less games in 50-over cricket.

So there's a whole range of factors; you've got to try and reach a balance, and that's ultimately
what Cabinet's job will be is try and find that right balance that ensures that the public - and
that's the most important part of the public policy here, that the public get access to as much
sport as they want.

TONY JONES: But will you be looking to protect the interests of FOXTEL because they rely on getting
these sporting events for people to buy their product?

STEPHEN CONROY: Well as I said, we've got to find the right balance, and I believe we're working
towards getting that right balance and ultimately the Cabinet will make that decision.

But we need to get a balance between the pay TV interests, the free-to-air interests, the consumer
who wants to watch the sport and the sporting associations.

So this has been a very complex set of negotiations. If you were to have visited my office today,
you might find a few lawyers from a few organisations collapsed in exhaustion in and around my
office today.

TONY JONES: Collapsed in desperation or just exhaustion?

STEPHEN CONROY: Exhaustion, I'd say, Tony.

TONY JONES: Did they leave happy?

STEPHEN CONROY: Look, they're still discussions going on even as the show goes to air.

TONY JONES: Alright, Stephen Conroy, we'll have to leave you there. Thank you very much for taking
the time to join us tonight.

STEPHEN CONROY: Thanks very much, Tony.