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Ali Moore speaks to Helen Coonan -

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Ali Moore speaks to Helen Coonan

Broadcast: 04/04/2007

Reporter: Ali Moore

Ali Moore speaks to Communication Minister Helen Coonan who says in the immediate future the
rollout of the fibre network for high speed broadband can only be done by Telstra.

Transcript

ALI MOORE: To look at today's media changes and the latest on the debate about who will build a new
fibre broadband network in Australia, I was joined in the studio by Communications Minister,
Senator Helen Coonan earlier this evening.

Senator Coonan, welcome to Lateline Business.

SENATOR HELEN COONAN, COMMUNICATIONS MINISTER: Thank you, Ali.

ALI MOORE: Let's start with these new media laws. When you first announced them, we saw a flurry of
deals and a fair bit of positioning. Today we're seeing Seven marginally up in stake at West
Australian Newspapers. Do you think from today we'll get another round of consolidation?

HELEN COONAN: I wouldn't want to speculate on this and when I did say that I didn't think that
there would be a flurry. What I was really talking about is that there is only a certain number
that are permitted under the new rules, and all of the pre positioning has largely been to do with
foreign investment and could have taken place under the old rules, the old media rules.

ALI MOORE: Do you acknowledge it is now going to be a world of fewer bigger players?

HELEN COONAN: I don't necessarily accept that. I mean it is possible that there can be some
sensible consolidation, but, when you look at it now with online, I recently saw a survey, it was a
Nielsen net survey which said that as of February 2007 the second biggest audience reached was
Google.

ALI MOORE: But the Internet isn't necessarily providing local content and if you've got a situation
where, let's say, Channel 7 does buy West Australian Newspapers, two owners become one, let's say,
Macquarie Media does buy Southern Cross Broadcasting, two owners become one, there is a whole range
of things that are being mooted where you are going to have fewer bigger players.

HELEN COONAN: You also might have new players. For instance, the potential play of Seven with West
Australian Newspapers - that's a new newspaper operator. It is not Fairfax and it is not Murdoch.
So I think we - rather than speculate about this, I don't think the sky will fall and the earth
hasn't moved today and we've known about the pre positioning now for months, and I do emphasise
that most of it, if not all of it, could have taken place under the old media laws and not the new
ones.

ALI MOORE: If we would look at telecommunications and the whole issue of who is going to build a
fibre broadband network, you made the point today that, for a competitor to Telstra to build one,
three things need to happen: you have to force Telstra to give access to its infrastructure for the
so called last mile - that is something Telstra says it won't do; you have to legislate to make
sure that Telstra won't duplicate any rival network; and, basically, you have to force Telstra to
use a rival network. You've called those three things almost insurmountable problems. They are not
almost insurmountable, they are insurmountable, aren't they?

HELEN COONAN: No, they're not insurmountable if you want massive intervention, but I think what we
need to do is to ensure that this network gets built, that it provides open access, that it doesn't
destroy competition, that it provides a proper commercial return for the builder and, ultimately,
that it looks after the long term interests of consumers. We know all of the elements and it is a
matter of ensuring that if Telstra, for example, was to risk its shareholders' capital, it does so
in such a way that it balances all of the other competing interests.

ALI MOORE: So, not insurmountable if you are prepared to have massive intervention. Are you
prepared to massively intervene?

HELEN COONAN: I've always said I'm not prepared to roll back the competition regime. That means
that there will - at least on my watch, there will be a competitive framework. I don't think that
is inconsistent, however, with making sure that Telstra's identified obstacles to investment can be
addressed within the existing regulatory framework.

ALI MOORE: So the only way we are going to get a fibre broadband network is if Telstra builds it?

HELEN COONAN: No, I don't think that is right. An infrastructure builder may build it.

ALI MOORE: You've just said yourself that there are three insurmountable objects -

HELEN COONAN: No, I didn't actually say "insurmountable". I said it is almost insurmountable. It
depends how much you want to pay for it, it depends what kind of technology -

ALI MOORE: And whether you have massive intervention, and you did say you're not prepared -

HELEN COONAN: We are talking about a fixed line investment of fibre. If somebody wants to build a
different kind of platform, that's another set of considerations. I don't think we need to get too
excited about just one, but if you are looking at a fibre to the node network, as opposed to the
fibre to the home network, different considerations apply, and what I've said is that I believe
that the regulatory environment that will enable a proper commercial response to roll out of this
magnitude are there, but I'm interested to ensure that all of the suite of things that can be
called upon will work to ensure that outcome.

ALI MOORE: Before we look at the suite of things, if we can clarify, we are talking fibre to the
node and that's all that G9 is talking, so, if it is fibre to the node, it really has to be
Telstra?

HELEN COONAN: In the foreseeable future, it would have to be Telstra. That's not to say that in the
long term, years perhaps, you might look at doing it a different way. If the people of Australia
want a fibre to the node network, a fixed new network - fibre to the node network and a fixed
network in an acceptable kind of timeframe before the technology might become redundant, you've
obviously got to look at how best to do it and you've got to do it in an efficient way, and,
clearly, the most efficient way is to ensure that Telstra is enabled in a way that they can build
it with a proper commercial return, but that there is proper access for competitors and that you
don't do it at the expense of simply winding back the competition laws.

ALI MOORE: So what can you do to enable Telstra? What is within your power?

HELEN COONAN: Look, there's a suite of things in the Parliament powers powers that Parliament gave
to the minister of the day to be able to do a whole lot of things and a lot of things interrelate.
For instance, the universal service obligation has long been a bone of contention for Telstra. They
have considered that they are not properly remunerated for supplying what is in effect social
obligations for rural and regional Australia. There is licence conditions, there's a whole lot of
things.

ALI MOORE: There's also ministerial pricing powers.

HELEN COONAN: There are.

ALI MOORE: Are you prepared to use them?

HELEN COONAN: I'm not contemplating using ministerial pricing interventions, but they are there.

ALI MOORE: What about pricing determinations?

HELEN COONAN: They are there, but they wouldn't be setting prices. That's a regulator's job.

ALI MOORE: How else then do you break this deadlock? You have Telstra over here saying they are not
going to build it, you're essentially are saying that, "This is what we want in a particular
timeframe, we have to enable them to build it."

HELEN COONAN: I'm sure you would love to, Ali, be in discussions that we are having. I don't think
it is appropriate or fair to anyone having these discussions that blow by blow descriptions of
issues are publicly ventilated. What I think is fair to say is that I think everyone would
recognise that, for a build of the magnitude, a commercial build of the magnitude, that is
contemplated here, will require a proper return. I think everyone would think that was appropriate.

ALI MOORE: How can you ensure a proper return, though, if you're not going to intervene on pricing?

HELEN COONAN: That is a matter for the ACCC, actually. The ACCC is there to set prices.

ALI MOORE: There is currently a complete and utter stand off.

HELEN COONAN: Well, I don't know that that is quite right. I mean, you've seen discussions as
recently as, I think, yesterday saying that the agreement had got to about 98 per cent between the
regulator and Telstra. Now, I haven't been privy to all of that but -

ALI MOORE: But that was months ago that they got to that point and there has been nothing further.

HELEN COONAN: Well, you don't know that.

ALI MOORE: Can you confirm there hasn't been anything further?

HELEN COONAN: What I can confirm is I'm interested in ensuring that - if there are regulatory
obstacles that can be sorted out within the existing regulatory framework, that is, in fact, I
think, an appropriate job for me to see if I can facilitate it.

ALI MOORE: So you're talking to Telstra and you are obviously talking to the ACCC. Are you close to
a resolution?

HELEN COONAN: That will remain to be seen. I'm not going to be predicting.

ALI MOORE: Senator Coonan, thank you for joining us.

HELEN COONAN: Thank you, Ali.