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Environment and Communications Legislation Committee
NBN Co Ltd

NBN Co Ltd


CHAIR: Welcome back to estimates, Mr Morrow. It is good to see you again so soon. I am presuming that you do not have an opening statement—

Mr Morrow : I do not.

CHAIR: given that you gave a very comprehensive one at the last estimates. Thank you.

Senator URQUHART: We have about an hour and 10 minutes of our questions, so we will try and get through quickly. I would ask you to condense your answers as well if possible.

Mr Morrow : I will do my best.

Senator URQUHART: Can you confirm whether you or Mr Rue recently initiated a study within NBN Co to explore how your assets could be leveraged to support a mobile network deployment?

Mr Morrow : No, we have not.

Senator URQUHART: If you were permitted, would NBN Co seek to build and operate a mobile network?

Mr Morrow : It is not currently in the remit today. It is not in any of our plans. It has not been anything that we have looked at, strategically, at this point. We consider ourselves a broadband provider, not offering mobility-based services.

Senator URQUHART: Is there anything in legislation that currently prevents NBN Co from building and operating a wholesale mobile network?

Mr Morrow : I believe the NBN act itself restricts us to broadband services.

Senator URQUHART: Can the fixed wireless towers be used to support a mobile network run by NBN Co?

Mr Morrow : Senator, just to be sure it is clear: when you are talking about mobile networks, classically, or typically, within the industry, mobility means 'handover from one cell to another'. Fixed wireless is wireless access that still uses a tower and provides a portable or stationary type of broadband service. As you know, NBN does deploy fixed wireless, and will do so with about 600,000 homes, or even a bit more. Those towers, obviously, can be used to share the facility with a mobile company who wants to put up radio equipment that offers that mobility of the handover. We work with the mobile carriers to see if they are interested.

Senator URQUHART: If NBN Co wanted to, you could use those facilities?

Mr Morrow : In certain circumstances, yes.

Senator URQUHART: How many internal studies have NBN Co undertaken into that?

Mr Morrow : I think it is more of a collaborative approach. We have been requested and encouraged to be able to work with the mobile carriers to see if we can share assets, reduce our cost and lower the cost to be able to have the mobile carriers move into the blackspot areas. In fact, we initiated the discussions a couple of years ago now. I think it was first with Vodafone and subsequently with Optus that we had had those sorts of discussions.

Senator URQUHART: Have NBN Co conducted any internal studies into whether or not your wireless towers would support a mobile network that you might run at any time?

Mr Morrow : No. Again, we have not considered nor looked into the mobility aspects of wireless communications.

Senator URQUHART: Do you accept that the fibre-to-the-node footprint is the most exposed to competition of wireless in the fixed-line footprint?

Mr Morrow : In terms of where potential competitive infrastructure plAyres would play, yes—but I would like to clarify that. Obviously, when you look at our satellite services and our fixed wireless services and the long loop lengths associated with fibre-to-the-node, you will see there are speed limitations against those three different categories. If there is a quick, easy-to-deploy technology solution by an alternative competitor and if the density is such to keep those costs down and the affluence is high enough to make their business model work, that is where you will see competition. Quite frankly, I do not see competition moving into the areas that we serve by satellite. I see very little competitive opportunity where they would move in to the fixed wireless. I do see competitive opportunities in certain areas around the nation where we have deployed fibre-to-the-node.

Senator URQUHART: Does NBN Co assume that copper fibre-to-the-node network is as resilient to wireless competition, more so than fibre-to-the-home?

Mr Morrow : It is accurate to say that fibre-to-the-home or fibre-to-the-kerb offers a lower failure rate in terms of outages per month; has easier upgradability characteristics to grow with speed as one moves further into the future and has better latency characteristics that could be a part of the future applications. It is true that fibre and those two applications would be better than fibre-to-the-node.

Senator URQUHART: Does the NBN Co model different wireless penetration rates across the different access technology footprints?

Mr Morrow : Yes, we do.

Senator URQUHART: What are they, and is this reflected in your corporate plan modelling?

Mr Morrow : It is in the corporate plan. For example, if you look at fixed wireless and satellite today and you compare that to where we are deploying fixed-line footprint with the three or four different technologies, you will see a higher take-up rate in the corporate plan associated with the fixed-line technologies. The primary reason behind that is that in the fixed-line technologies, as dictated by the agreements with Telstra that were struck back in 2011, Telstra must shut down those copper facilities, but only in the fixed-line network. If you are in a fixed wireless application, Telstra has no obligation to shut off the copper services and, therefore, you may decide that for your basic phone service you would rather stay on that copper network with Telstra, and therefore you do not need the NBN service. As a result, the percentage take-up in the corporate plan will be less in those areas.

Senator URQUHART: We are only talking about the fixed-line footprint. Does modelling with NBN Co assume that wireless broadband would achieve better market share than in areas where fibre-to-the-node compared to areas with fibre-to-the-homes?

Mr Morrow : No, absolutely not. I assume, just for clarity, that you are talking about, say, a capital city where there are attractive conditions to an infrastructure competitor coming in using wireless as a substitution to NBN. Because the wireless networks are not designed to carry the kind of traffic that NBN is currently carrying, or fixed broadband networks are carrying, they will do a spotty type of an application. I just confirmed with Horizon in the US, which is a leader in this space, and they have no intention of deploying that across the board in terms of the broadband access. But in a spotty, Swiss cheese-like application, I think we can expect to see a degree of that.

Senator URQUHART: How could you say that, at the margins, fibre-to-the-node is not more exposed to competition than fibre-to-the-premise? It is an inferior technology.

Mr Morrow : No, I said that fibre-to-the-node, in certain areas around the country where it is attractive to deploy alternative infrastructure, is more susceptible to competition than fibre-to-the-kerb or fibre-to-the-home.

Senator URQUHART: Thanks. Are the interests of government as a shareholder and consumers going to be best served in the future if NBN Co just continues to do what it is doing now, or with the NBN business model evolving to play a more expansive role in emerging and critical areas? What is NBN Co's strategy there?

Mr Morrow : NBN is constantly looking at technology development—the trends that exist and, of course, our own internal process improvements for efficiencies. The whole point is that we want to be able to stay on the $49 billion peak funding envelope, which we are doing, but we want to be able to deploy the latest technology that gives us the lowest cost and gives us the best performance relative to failure rate, speed potential and the latency issue that I mentioned earlier.

Senator URQUHART: What sort of technology developments are you looking at?

Mr Morrow : Fibre to the kerb, as an example, is something that we pay a lot of attention to. We are constantly looking for more innovative ways of how we can deploy that faster and cheaper. We are looking at other technologies, including even wireless-type technologies. When you think about enhanced 4G or enhanced 5G, which will come down the pipe in the next few years, is that something that we can deploy that will meet our remit and do so cheaper and faster and with better potential for the future?

Senator URQUHART: In your corporate plan modelling do you assume the same take-up rate across the fibre-to-the-node footprint as you do in the fibre-to-the-home footprint?

Mr Morrow : Yes.

Senator URQUHART: In the previous session the committee was advised that there were 3.2 million homes in design and 2.1 million homes in construction—I think from our last estimates hearing. Can you give me—

Mr Morrow : You are referring to fibre-to-the-node technology—yes.

Senator URQUHART: Can you provide a breakdown by technology for the 3.2 million homes in the design phase and where they are at now—since that time?

Mr Morrow : That was just a couple of weeks ago, so the number would not be—

Senator URQUHART: So nothing has really changed?

Mr Morrow : Well, no—of course, we make progress every week—

Senator URQUHART: So you do not have an update on that?

Mr Morrow : No; I would be happy to give you one if you like, but it is not going to have movement, really. Those are the broad-based numbers that—

Senator URQUHART: I know it was only a few weeks ago. We talked at that time about the number you do each week—

Mr Morrow : Yes.

Senator URQUHART: Can you give me the technology breakdown for those 3.2 million homes.

Mr Morrow : I am not sure what your question is—the 3.2 million—

Senator URQUHART: What is the technology for those 3.2 million homes? Is it fibre to the kerb? What is the technology breakdown?

Mr Morrow : When we talked on this a few weeks ago we were specifically referring to the fibre to the node type of technology.

Senator URQUHART: Can you give me a breakdown by technology of the 3.2 million homes in the design footprint, because you did not give us that.

Mr Morrow : That is what I am saying. They are all that technology—

Senator URQUHART: They are all that?

Mr Morrow : Yes. That was the design and construction number that we gave you last time.

Senator URQUHART: So it is all fibre to the node—3.2 million fibre to the node?

Mr Morrow : I would want to double-check that, but I believe that sounds right, because when you look at our—

Senator URQUHART: I did not think you gave us their breakdown. That is why I was asking it again. I was not clear that we actually got that.

Mr Morrow : Remember, on aggregate, for the entire nation we have 4.4 million homes—that is 40 per cent of the nation that is now complete and ready for NBN service to be sold through the RSPs. We have completed 9½ million designs to be able to move towards the full 11.3 million to 11.4 million homes within the nation and we have completed six million of those nine million in terms of the designs, leaving the 3.4 million designs left to go.

Senator O'NEILL: Those technologies—the 3.2, I think it is, you just said 3.4—

Mr Morrow : We have initiated 9.5 million designs that we have already started. We have completed six million of those, so 3½ million continue to be in the design portion of the pipe. I am excluding the 400,000 that are in the satellite LTSS.

Senator O'NEILL: So there is no design underway for anything other than FTTN?

Mr Morrow : No, that is incorrect. We have designs underway for HFC—

Senator O'NEILL: But that was the question—

Mr Morrow : We have designs underway for fibre to the premises, where it is a new development—that is still exists. There are some stragglers still on that classic FTTP brownfield that are still being worked through.

Senator O'NEILL: That is the question.

Senator URQUHART: Can you give us a breakdown of what that is?

Mr Morrow : I will take it on notice.

Senator URQUHART: In the last hearing, you advised the decision to deploy fibre to the distribution point to 700,000 homes did not increase peak funding.

Mr Morrow : Correct.

Senator URQUHART: You also advised that it had no net impact on the ready for service rollout target for 2020.

Mr Morrow : That is correct.

Senator URQUHART: Mr Rue is not here today.

Mr Morrow : No, he is not. He has a big job to do, so I asked him to stay there and finish a few things.

Senator URQUHART: I had a question for him, but I will ask you. You may be able to answer it. What would the cost per premise have been if NBN Co sought to upgrade the Optus HFC network?

Mr Morrow : Upgrade it from?

Senator URQUHART: To upgrade it. I presume it was higher than 2,300, but how much higher?

Mr Morrow : Let me make sure I know what you are asking for. The HFC network was already pre-built by Telstra over the last—

Senator URQUHART: No, I am talking about Optus.

Mr Morrow : We only have 20,000 or 30,000 homes that are using the Optus HFC footprint. Remember we took the decision that we were not going to go forward with the full 450,000 footprint that was surrounding the Optus HFC exclusive network. Instead, we were going to use fibre to the curb type technology. When we looked at the cost of what it would take to bring that Optus HFC network up to the level that we expect to offer service, and we compared it to the improvements and the developments that we have seen in fibre to the curb technology, we made that crossover point and said, 'That's why we can do this and keep to the 2020 schedule and keep within the $49 billion.'

Senator URQUHART: But if you had decided to go forward to upgrade the Optus HFC network, what would that have cost?

Mr Morrow : I do not recall the specifics on it, but again it would have been within the envelope that we had been talking about before.

Senator URQUHART: But it would have been higher than the 2,300, would it have not?

Mr Morrow : The 2,300 is an average across all of the various HFC premises that we would be working on. I will have to take that on notice.

Senator URQUHART: If fibre to the distribution point were deployed in a continuous manner across the Optus HFC footprint, would it cover the 450,000 or so homes that we talked about?

Mr Morrow : It is close to that. What we are trying to do is, again, a bit of study with this as well. So we will define an area by a geographical fence line, if you will, and we refer to those as our SAMs. Within that area, we may have a mix of different technologies. In this particular case, we want to be able to test how fast we can roll out, how cheap we can get that fibre to the curb cost down. We want to go with an area that is exclusively fibre to the curb. The idea of ring-fencing the Optus HFC footprint was about 450,000 premises. It does not necessarily mean we are going to do all 450,000 with FTTC. In some areas, it is outside of the HFC scope to keep that SAM pure and clean. In other areas we would not actually do the entire footprint, and they still may be left with a different technology. But that is on the margin.

Senator URQUHART: To confirm, do you expect most of those 450,000 to be covered?

Mr Morrow : Yes, with fibre-to-the-curb technology.

Senator O'NEILL: Mr Morrow, I see you are travelling light in terms of staff. I wonder if you have your corporate plan at hand, because I have a few questions around that.

Mr Morrow : I can grab one real quick.

Senator O'NEILL: That would be great. In the 2016 corporate plan, how many services did NBN assume would be activated by 2020? I was presuming it might be about 8.1 million, or something like that, that you are currently targeting.

Mr Morrow : By the time we get into the 2020 time frame, we expect there to be around eight million active end users that are using the NBN network.

Senator O'NEILL: So that was an assumption that you put into your figures for that financial year?

Mr Morrow : Correct.

Senator O'NEILL: So what is your assumption for financial year 19 in the 2016 corporate plan?

Mr Morrow : The last corporate plan that we had issued—let me pull up the numbers. The cumulative number of end users—sorry, which time frame were you asking for?

Senator O'NEILL: I am trying to get to the assumptions that underpin it, because we had that 8.1 million—

Mr Morrow : Yes.

Senator O'NEILL: What were the assumptions that you had embedded for financial year 19 in the 2016 corporate review?

Mr Morrow : That we would have 6.9 million active end users at the end of fiscal year 19, and that that would grow by 1.2 million over the following year, to FY20, to be 8.1 million. That assumes that we will hit 2.3 million end users this year, and grow that to 4.4 million end users next year.

Senator O'NEILL: If you can just go through that for me one more time?

Mr Morrow : Let me take it in sequence: we stated in last year's corporate plan that by the end of this year, we would be at 2.3 million active end users by 30 June 2017. That would grow to 4.4 million by the end of June 2018, to 6.9 million by the end of June 2019, and it would be 8.1 million at the end of June 2020.

Senator O'NEILL: Which corporate plan are you reading from; 2016 or 2017?

Mr Morrow : This would have been the corporate plan that was issued last July/August.

Senator O'NEILL: So 2017?

Mr Morrow : It is called the 17 plan, but it starts in this fiscal year. It was issued in August 2016.

Senator O'NEILL: I will get you to look to the 2016 plan and explain for me the assumptions that are embedded in there. It looks like you have got a copy.

Mr Morrow : Yes. In the previous year, so this would be in the middle of 2015, we indicated that by the end of this financial year, we would be at 2.3 million active end users—that is June of this year—and that in June 2018, that would go to 4.4 million, which is pretty much identical to the plan we issued in 2016.

Senator URQUHART: Sorry, can I just jump in? How many active services did you assume by 2020?

Mr Morrow : In terms of?

Senator O'NEILL: In that report.

Mr Morrow : At the time, in 2015, the government requirement was only to have a three-year plan, so we only forecast out to fiscal year 2018—so only out to June 2018.

Senator URQUHART: That is all you have gone out to; 2018?

Mr Morrow : In 2015's issued corporate plan. When we updated it in 2016, the government put out a new mandate that we must produce a four-year view in the corporate plan, and that happened to take us out to 2020.

Senator URQUHART: What was your working assumption? Put aside what the government requirement was—

Mr Morrow : It was around the eight million mark. It did not change in terms of the active end users.

Senator O'NEILL: I might have some more questions around that, which I might have to come back to. Could I touch briefly on some of the figures that you have got in the corporate plan; firstly, to confirm the base case numbers in the corporate plan and how they fit into the base case projections for peak funding?

Mr Morrow : There is our base case number that we typically will show. There are obviously moving parts within all of this plan. For example, just on the technology choice that we use in a neighbourhood, we do not know until we are in a truck with boots on the ground as to what the optimal technology is. We can only make some high-level planning, desktop analysis assumptions when we issue the plans. Therefore, we put a range against those, but, in order to calculate out, we have to put a base case estimate of what we think it would be to be able to calculate cost per premises and therefore how the corporate plan is going to look and whether we can stay within the $49 billion peak funding. Those base case numbers were all built up and led us to believe that we are within track of the $49 billion.

Senator O'NEILL: I may be looking at the correct document—page 27 of the 2017 corporate plan. Is that the right spot to get that information?

Mr Morrow : This again takes us out to 2020. Remember, the $49 billion is both the use of all of the equity and the use of the debt that we were recently granted by the government, and that puts us more in the 2020-22 time frame before you would start to operate free cash flow positive.

Senator O'NEILL: Just confirming: is the peak funding in the 2017 corporate plan $49 billion or $48.6 billion?

Mr Morrow : If you look on page 27, the second-to-last paragraph identifies that the plan continues to support a peak funding base case forecast of $49 billion and a range of $46 billion to $54 billion. As you know, we put those ranges in there to be sure that we can account for the unknown or the unexpected. Every year we will tighten those ranges because we know more about the build, we know more about the cost and we have the contracts in place to be able to assure more accurately where we are going to come out. It is our belief, and it is a strong belief at this point in time, that we will still be at the $49 billion level.

Senator O'NEILL: So, to be 100 per cent clear, the number is $49 million, not $48.6 billion?

Mr Morrow : Are you reading $48.6 billion somewhere?

Senator O'NEILL: Just the gap figure. Do you want somebody else to come to the table, Mr Morrow?

Mr Morrow : No, it is all right. What you are looking at is at the end of FY 2020. As we go into the next year, we will burn cash, meaning that we are not making an operating free cash flow profit yet. By the time we get to the point of making cash, which is more in 2022, we will have burned through $49 billion. So $49 billion remains the peak funding amount of money before we are free cash flow positive, and what you see is that we will have burned through $48.6 billion by the year 2020. We still have a bit of time to go before we are cash flow positive.

Senator O'NEILL: Say that again for me—the $48.6 billion to the $49 billion—

Mr Morrow : On the $400 million, look at it in a way between June of 2020, and at a point in time in 2022—call it 18 months, just as an example—we will have burned through another $400 million and that will reach the $49 billion, and at that point revenues will be coming in to actually make up for the cost and therefore we will turn a profit, meaning we do not need any more debt and we do not need any more equity to be able to run the business forward.

Senator O'NEILL: I will work through some of the assumptions that I have. You can explain to me if I have them wrong. If I go to the cost per premises for the HFC in the 2016 corporate plan, it was $1,800 per premises. That is correct?

Mr Morrow : Yes.

Senator O'NEILL: And the cost per premises for the HFC in the 2017 corporate plan was $2,300?

Mr Morrow : That is correct.

Senator O'NEILL: That means we have a total of four million premises now with a cost per premises of $2,300 in the 2017 plan?

Mr Morrow : Yes. I do not think we will be updating this year as well. That four million assumption has been reduced in terms of the number of HFC that we are planning. Again, even as an example, the Optus footprint is no longer going to be HFC. I would look at it right now as more around three million homes that will be receiving HFC technology. And it is fair for you to assume the $2,300 average cost per prem that it will take to be able to deliver the level of broadband service capability that we are aiming for.

Senator O'NEILL: Does the 2017 plan has that cost per premises at $2,300 instead of $1,800?

Mr Morrow : That is correct.

Senator O'NEILL: If I look at the amounts in the 2016 and 2017 columns of the CP, I have got $7.2 billion capex and $9.2 billion in 2017. There is a $2 billion difference there.

Mr Morrow : That is correct.

Senator O'NEILL: That accounts for that extra $500 per premises, does it?

Mr Morrow : It accounts for a portion of it. Again, you can find back in Hansard, we had a lot of discussion about this over the various hearings.

Senator O'NEILL: I am coming back to it because I want to understand it.

Mr Morrow : That is fair. That is no problem at all. But I want to make sure that we understand the storyline of where this has gone and why. The estimate of the $1,800 in the 2015 issued corporate plan was before we had any contracts in place on how it was going to be constructed, the equipment that was going to be necessary, the types of modems that would need to go into the houses—they were very high-level assumptions. So remember the corporate plan—

Senator O'NEILL: Then reality kicked in.

Mr Morrow : It did. But, fortunately, remember we had built in a contingency plan that had $4 billion of contingency to stay within the $49 billion because we knew that, without contracts signed, we had to make sure we had the buffer zone there. So we allocated a portion of that to come over but that did increase the $1,800 cost per premise HFC to $2,300, which stayed well within the peak funding envelope of $49 billion. It was only after we had the contracts established with the equipment makers and the network terminating device. Looking at the Docsis 3.1 modem capability, the contract that we have with Telstra is helping us design and build the network and we engaged other design partners in that. Once those contracts were in place then we had facts as to what it was going to cost us. Fortunately, with the wisdom that we had of putting in a contingency mat, we stayed within the envelope and hence the change.

Senator O'NEILL: So the $500 per premises for four million premises would be an extra $2 billion in capital expenditure. Step in and explain if I have got it wrong but it looks as though the NBN had to find $2 billion in extra revenue or in savings offsets.

Mr Morrow : Think three million times $500 so it is $1½ billion that you would look at on the capex portion of that. But remember, $4 billion is the buffer that we put in for the contingency of the unknown, until contracts are settled. So if you want to look at it a different way, we said that we were going to come in at $49 billion but in fact the assumptions were far less than that—it was $45 billion because of the $4 billion contingency that we had. We took $1½ billion of that contingency and applied it to the HFC. That took that $1,800 to $2,300 but that still left a large contingency available to us. Right now it is still below the $49 billion but there are still some things that are uncertain so we need the contingency in place to assure this committee and the public that we are not going to spend more than $49 billion before we are free cashflow positive.

Senator O'NEILL: Thank you for that extensive answer. But if there is $500 increase across four million homes—

Mr Morrow : It is three million.

Senator O'NEILL: Why is it three million and not four million?

Mr Morrow : Because as I mentioned—

Senator O'NEILL: It says: total premises, four million.

Mr Morrow : But remember, it is fluid, right? So the idea of how many we are actually going to deploy is more like a little over three million homes that will be getting HFC today. So if you want to take the $500, which is accurate in terms of the increase, it is $1.5 billion more than what we are estimated in 2015.

Senator O'NEILL: So we might debate whether it is four million or three million—

Mr Morrow : There is no debate; we have a plan.

Senator O'NEILL: I am reading off the plan. You are talking about a different number that you have got because—

Mr Morrow : And if you want to go back and reference the plan then you are absolutely right—it would be $2 billion the way they—

Senator O'NEILL: Working off that, where were the offsets found? How did you manage that?

Mr Morrow : This is the buffer. Again, our plan, with those assumptions of the $1,800 and the four million homes we were going to deploy to HFC, came out to $45 billion of peak funding. That is $4 billion less than the $49 billion we have stated publicly and been consistent with because we wanted to put $4 billion of the unknown, of the uncertain, of uncharted territory, to where we would not have to come back and ask for any more money. So we used a portion of that four billion buffer to be able to deploy towards the two billion that you are calculating. That is why it was not an increase in peak funding, it was not having to reduce costs elsewhere to be able to do it, it was largely against the contingency money that we had put in place there. And the contingency, by the way, has been practised since the inception of NBN. It is a very prudent approach to doing your corporate plans.

Senator O'NEILL: To be clear, there were no offsets that were found? Is that what you are saying to me, that you just had money in the kitty?

Mr Morrow : There are always offsets. It is so complex that you always have some things that cost a little bit more than expected and some things that cost a little bit less. So for me to say there are no offsets would be inaccurate. But the idea of what you call the 'kitty' and I call 'contingency', that is what that is there for and that is what we have tapped into mostly to be able to address that increase in cost.

Senator O'NEILL: In terms of offsets, what offsets are you talking about there?

Mr Morrow : We always find different ways in terms of deploying the technology. Is the labour cost going to be less? Is the IT system cost going to be less or more? It is across the board. Obviously, as you know, we look at revenues in, we look at capex costs and we look at opex expenditure over this period of time to calculate the $49 billion peak funding, and those things are always going to shift around and move to a certain degree.

Senator O'NEILL: When we go to the base case, where does the $2 billion savings fit in that?

Mr Morrow : Instead of having a $4 billion contingency plan, it would only be a $2 billion contingency plan. But remember now, as I said, we are only doing three million so that only takes away a billion and a half for that purpose there.

Senator O'NEILL: But what about the other premises that went to FTTN that also had a cost per premises of $2,300?

Mr Morrow : Which other premises?

Senator O'NEILL: The ones that were in that four million that you did not put to HFC?

Mr Morrow : Yes, correct. Some of them went to fibre to the basement, fibre to the building, because they were multidwelling units within that HFC footprint. Some of them do go to fibre-to-the-node type of technology, so instead of needing 1,800—remember, the cost per premise on fibre to the node when up to 2,300—so that had a slight increase in that as well. But again, all of this was addressed within the contingency, and hence the reason why there is not an increase in funding required.

Senator O'NEILL: You mentioned that one of the issues that helps you determine these figures and report on these figures was moving things around, one to another. You also mentioned, I think, the last time and implied in your answer this afternoon that there was going to be a faster rollout and increase in activations. Does that have anything to do with the figures that you are reporting to me around a base case and this additional cost?

Mr Morrow : We are hoping that the gentleman to my left is constantly reinforcing the fact: do this as fast as we can to reach every Australian home, do it at the least possible cost and make sure there is an upgradable path to protect our future. That remit we take seriously and we are constantly looking to how we can speed things up. Right now the plan is still 2020, it is still $49 billion and it is still within the range of the internal rate of return that we talked about at the last hearing.

Senator O'NEILL: Can I go to a friend of yours, Mr Terry McCrann—

Mr Morrow : Yes.

Senator O'NEILL: And comments made last weekend.

Senator URQUHART: I will jump in, if you do not mind?

Senator O'NEILL: Sure.

Senator URQUHART: I want to go to the estimates of 25 November last year. We asked you about service class 0, which is where the street has been cabled for NBN services but a particular premises cannot be connected for a range of reasons. Your evidence was that the number of those was around 10,000, but the most recent NBN weekly report says that it is around 108,606—would that be correct?

Mr Morrow : I am assuming that if you are looking at the report, it is, but I can tell you. It is roughly five to six per cent.

Senator URQUHART: It is a little bit out.

Mr Morrow : It is a little more than that in terms of the total.

Senator URQUHART: So 16 March 2017, the number of premises at service class 0 or equivalent:108,606.

Mr Morrow : I am sorry, the number is actually 98,000 now.

Senator URQUHART: Right. You also told us at the last hearing that it could take years to fix the service class 0 premises.

Mr Morrow : In some cases, yes.

Senator URQUHART: What are you currently doing to fix those?

Mr Morrow : Our commitment is everybody will have the broadband connectivity by 2020. Our objective is to go as fast as we can to serve as many Australians as we can. If we had to divert a bunch of resources, that would slow down the volumes to be able to handle one premises—I will use that example. That is not something that we will do. We made the commitment that it will be done by 2020. It could very well be that we have to come back to address that home next year or even, potentially, the year after. It is our objective and our desire to have everybody connected as soon as possible. We know how frustrating it can be for an end user if they know that their next-door neighbour suddenly can get fast broadband service and they cannot, and they are being told that they have to wait until 2019. We understand that frustration, but we are here to serve the entire nation not any one individual person. So it is a collective approach that we are taking.

Senator URQUHART: Can you tell us how many service class 0 and service class 10 premises were fixed in the last calendar year?

Mr Morrow : I can take that on notice.

Senator URQUHART: Do you think the number of service class 0 will escalate as the rollout ramps up? Is that what your expectation is?

Mr Morrow : Of course. In absolute volumes, when you look at what we are currently able to crank out, we have had weeks now that we are pumping above 80,000 new homes in a single week that we can declare ready for service. Those are astronomical numbers compared to anything we have done in the past. Even with a small percentage of homes that would not be able to get it that fall under this service class 0 or 10 or 20 related issue, that means the absolute volume is going to be increased against larger volumes like we are pumping through. Again, everybody will come back and be addressed no later than 2020, and hopefully sooner than later for those neighbourhoods that have already kicked in.

Senator URQUHART: So at the moment you are expecting that all the service class 0 and service 10 premises will be connected by 2020?

Mr Morrow : That is correct, or sooner.

Senator URQUHART: Given your comment about an individual as opposed to a group, would it be fair to say that you are prioritising the speed of the rollout over everything else?

Mr Morrow : We have been given direction that the underserved areas are our priority and then again the volume. So if we can go through and do 100 homes within a day in an area versus that same amount of resource doing three or four, we are going to wait on the three or four, get the hundred in and eventually come back after we have these big swaps of homes that are connected.

Senator URQUHART: My analogy would be that you put some customers in the too-hard basket because you want to get it rolled out and then come back and address it—is that fair?

Mr Morrow : Yes, it is complex. Everything is hard, as you know, and there are those that are so complex that require a whole lot more construction resources. I am on the radio a lot and I get a lot of calls from people saying that, for good reasons, they need fast broadband and why can't I, given the authority I have, just ask the team to move their schedule ahead just for them.

Senator URQUHART: Who makes that decision? If I go back to my analogy of the too-hard basket, who makes the decision about who goes in the too-hard basket or whether you should actually try and prioritise?

Mr Morrow : Our engineering team.

Senator URQUHART: Do you ultimately do that? Is it government? I am just trying to piece together how you do it.

Mr Morrow : No, the government is not involved in this. Again, our remit that we pass down to the teams is, 'Get the volumes through on this thing' because the more people we connect, the better off the people of Australia are going to be. And, quite frankly, for the investment we have in NBN, it means the retailers can start to sell earlier, which brings on more revenue, which helps with that cash-flow issue. So we are financially prudent and we are, on the bigger picture for Australia, being more prudent in this approach.

Senator URQUHART: How many fixed-wireless towers is NBN building? You look shocked.

Senator Fifield: A lot!

Mr Morrow : It is in the hundreds—2,300 in total.

Senator URQUHART: Can you give me a state-by-state breakdown?

Mr Morrow : We can take that on notice, yes.

Senator URQUHART: At the last estimates you told us that 30 per cent of the fixed-wireless towers would be co-located with a mobile-network operator. Is that still the case?

Mr Morrow : I believe so, yes.

Senator URQUHART: And is that figure still 30 per cent, or has that changed?

Mr Morrow : No, it has not changed in three weeks.

Senator URQUHART: In terms of regional Australia, what is the percentage—I have heard that about 75 per cent of regional Australia is now connected to the NBN.

Mr Morrow : Have access to NBN. So they can order the service, but that does not necessarily mean that they have gone through their retailer to connect to the service.

Senator URQUHART: What is the percentage that is connected? About 75 per cent have access.

Mr Morrow : I think 70 per cent was the number we have been given. We would have to take on notice the question about the number of end users that are in this remote area.

Senator URQUHART: Are you aware of feedback from people in regional towns like Young—I think I might have talked a little bit about this at the last estimates—in New South Wales, where they are frustrated with their copper fibre-to-the-node NBN and say it is a dud? There were some press clippings—

Mr Morrow : Most people do not even know what technology they are using, so we do not get customers calling in saying, 'I am frustrated with my copper fibre-to-the-node technology.' They may be calling in and saying, 'I'm frustrated because I'm not getting what I was promised or expected to get from the retailer.'

Senator URQUHART: There is a publication called the The Young Witness—it is obviously a paper in Young—and there are lots of stories in there about people being really disappointed. Are you aware of those?

Mr Morrow : I have heard incidents. We are quite conscious of this industry transformation that we have gone through and that the end users are frustrated that they do not know who to talk to and who is responsible for what—

Senator URQUHART: I understand all that, but these people knew it was fibre to the node, in the press reports.

Mr Morrow : But they are not necessarily saying fibre to the node is the problem—

Senator URQUHART: They are.

Mr Morrow : They do not know what the problem is. That is the point. They are not getting the proper information that they need, either from NBN or from the retailer, and that is the initiative that we now have underway—

Senator URQUHART: Sorry, they are in the press. They are complaining about fibre—

Mr Morrow : That is what I said: they do not know what the issue is or what is causing their issue.

Senator O'NEILL: We had meetings with the TIO this morning, and I have a couple of questions. One of the things that the TIO indicated was that there is no capacity for them to get you and the RSPs in the same room to actually resolve these problems. Is that the case?

Mr Morrow : I believe so. I do not believe that is the TIO remit. I can tell you that Senator Fifield has asked the board of directors and the management team to work with the retailers to ensure that we have a better experience given to these end users.

Senator O'NEILL: So there is nobody overseeing that process? There is no entity of government that is overseeing the communication lines between the RSPs and the NBN, which is causing all of these multiple problems for the community?

Senator Fifield: The NBN has staff who talk to the RSPs every day. Account managers are liaising with the RSPs every day. So it would not be correct to characterise the NBN as not talking to RSPs. That is just not correct.

Mr Morrow : And, Senator, as we have talked about many times, I think this is really important for the industry to step up to. There is no one single company that can solve the problems that you are bringing up here in the committee. We, NBN, have just recently sent a letter out to all of the CEOs of the retailers, asking them to engage in a collaborative approach with NBN to address this issue, and I can tell you I have been overwhelmed with the positive response coming back from each of these retailers' chief executives: 'I will put the resources on this; let's fix this together to make sure that it is better.' We are happy to share that letter that we sent with you, if so requested. But the good news here—

Senator O'NEILL: Did you communicate with all 1,500 of them?

Mr Morrow : There are not 1,500 retailers.

Senator Fifield: There are 150, I think.

Senator O'NEILL: We heard a figure of 1,500 this morning.

Mr Morrow : Yes, but, if you look at the active ones, there are fewer than 15 to 10 active retailers. We signed a lot of WBAs that are the agreements that we have where we sell or can resell NBN services, but most of them are not active and actually selling anything to do with broadband. So we are addressing those that are active with us, and again that is a number that is less than 15 that would represent the lion's share of the two million end users that we have on the network today.

Senator URQUHART: Mr Morrow, why is NBN doing that? Why is that not a role for government—to do that coordination between NBN and the retailers?

Senator Fifield: NBN's relationship is with the retailers, and the retailers have the prime relationship with the—

Senator URQUHART: So you do not see that as a government role?

Senator Fifield: I will finish my sentence, if I may. NBN has the prime relationship with the retail service providers, and the retail service providers obviously have the main interface with the end user. So there is no substitute for NBN and the retail service providers working together. Yes, absolutely, there is a role for government, which is why, when I have met with the board, I have made clear that the view of the shareholders is that no effort should be spared in making sure that the relationship between NBN and the retailers is such that it ensures the best possible end-user experience. And when I talk to the retailers I make exactly the same point. But again I emphasise that, as well as at the level that Mr Morrow operates at with his counterparts in the RSPs, there is daily contact between NBN account managers and the retail service providers. It is not as though they are operating in different worlds. They work closely together. Lessons are being learnt.

Senator O'NEILL: It does not look like that to the consumer sometimes, I can tell you.

Senator Fifield: Lessons are being learnt. NBN and the retailers are getting better and better, but there is still further to go.

Senator URQUHART: Do you think the level of customer service and complaints resolution is actually working?

Senator Fifield: I never want to diminish any individual's experience that has not been what it should be. To use one metric, the number of complaints per 10,000 customers is, I think, nine or 10, from memory—

Mr Morrow : That is right.

Senator Fifield: which is a relatively small number. Obviously, when you multiply that by the scale of the project, you are going to have a significant number of complaints. But that is partly by virtue of the fact that NBN is ultimately going to be interacting with 11 million or 12 million premises.

Senator O'NEILL: Which complaint number are you using for that calculation?

Senator Fifield: Sorry?

Senator O'NEILL: Where is the complaint register that you are using for that calculation?

Mr Morrow : Can I help a little bit on this, to put this in perspective? Remember, we are activating about 30,000 new end users every week.

Senator O'NEILL: Before you go there, are you using the TIO's complaint number or somebody else's complaint number?

Senator Fifield: That is NBN's.

Senator O'NEILL: That is NBN's number, not—

Senator Fifield: That is right.

Mr Morrow : You have to look through the lens of the end user. There are going to be far more complaints that the end user is registering than what NBN are showing in our statistics, because we are only a couple of links in this big, long chain.

Senator O'NEILL: So the complaints number is actually much higher than what your figures would reveal?

Mr Morrow : Let me clarify this. We look at faults that we receive: trouble tickets that come through the retailers. Customers do not call us directly for service faults. They are, by design of this industry transformation, to go through their retailer. The retailers have access to our IT systems. The retailer lodges or logs a complaint. We look at that. In terms of the complaints that we are seeing on the network, it is two for every 1,000 services per week that we see in terms of the network complaints that come through or the outages that we see—the service issues that we see coming through. That number is actually within an industry-wide standard, both here in Australia and around the world. The problem with this, Senator, is that this is just NBN's portion of this long chain of a network.

Senator O'NEILL: Can I go back to the minister, then. If that is only NBN's portion of the problems, where are you getting your 'realistic figures' about the level of complaint?

Senator Fifield: I am citing NBN's numbers. Obviously, there are people who go to retail service providers about retail service provider issues, which are the responsibility of retail service providers, which NBN is not necessarily aware of.

Senator O'NEILL: Are you aware of those levels of complaint and resolution?

Senator Fifield: I am aware of the TIO figures. The interesting thing about the TIO figures is that the complaints about the NBN—the TIO do not disaggregate those complaints by what is a retail responsibility and what is an NBN responsibility. I know the TIO would like to do that and would like to be more granular in what they provide.

Senator O'NEILL: I think if you gave them that direction, Minister, they might respond.

Senator Fifield: The TIO operate independently, but obviously I am in direct dialogue with them. They want to provide more and better information. The interesting thing to look at in the TIO numbers is that complaints about the NBN, in whatever form and whoever is responsible, are increasing at a slower rate compared to the NBN rollout. The complaints are not increasing in proportion with the NBN rollout; they are coming down.

Mr Morrow : There was a 12 per cent improvement.

Senator O'NEILL: One of the concerns, though, that we found this morning—

Senator Fifield: Sorry, I will just finish. As I say, I in no way want to, and never want to, diminish the suboptimal experience that any individual has had, because we all know just how frustrating that can be.

Mr Morrow : So that—

Senator O'NEILL: I am happy to hear from you, Mr Morrow, but one of the things that we established this morning is the indication that complaints are registered as one per premises. In the TIO's own explication of what is going on, they revealed a situation where there were six site visits before they got their matter resolved. We are hearing that right across the country. I have raised this question here before. Many of us do not use our positions to try and advance our own; we just sit in the queue with everybody else. The problem is that one complaint can be six, 10, or 12 incidents of four-hour waits by people across the country. It goes to the very question we were asking at the beginning: who has the capacity to put NBN and the retail service providers in together? We just heard from Mr Morrow that he has just initiated a process of communication formally with the RSPs to resolve some of this.

Senator Fifield: No, Mr Morrow is continuing in what has been an ongoing engagement, but he is redoubling his efforts, which is a good thing.

Mr Morrow : For clarity, just so that the committee is not confused on this: the design of this thing back in 2009 was an industry-wide transformation, which we have talked about before. It laid out what the responsibilities of the end user are, what the responsibility of the retailers is and what the responsibility of NBN is. We work very closely with the retailers to be able to handle whatever their complaints are and whatever the issues are for the end users, and the retailers have been great to work with on this. As these absolute numbers that Senator Fifield is referring to increase, while it is a 12 per cent improvement in terms of the per cent of complaints per user base, that the TIO themselves report on, with these kinds of numbers—2 million active end users—that absolute number goes up, and that is why your officers are hearing far more, because that absolute number is greater coming in. So I just want to clarify again—

Senator O'NEILL: I do not know if the absolute number is clear to anybody. And that is part of the problem here. You have got sight of some part of it.

Mr Morrow : That is a fair point.

Senator O'NEILL: The RSPs have got some sight of it. And the TIO have got only the people who are so frustrated with the finger pointing and the process that they have actually figured out there is a place they can go and have gone to the TIO. I really actually wonder how they get in touch with them if they have problems with the internet. They must be going to the local library to make their complaints. We have no clear oversight of the genuine level of complaint, as far as I am concerned. So I ask you again, minister, are you happy with the level of complaint and the processes in place to resolve the complaints around the NBN?

Senator Fifield: As long as there are complaints, I will not be satisfied.

Senator O'NEILL: Are you aware of the genuine figures of complaint across the different sectors?

Senator Fifield: As you point out, we have a number of sources of information. We have that from NBN, we have that from retailers and we have that from the TIO.

Senator O'NEILL: And who provides that to you?

Senator Fifield: NBN provide advice to me. I meet with the TIO. I meet with retailers.

Senator O'NEILL: When did you last meet with the TIO?

Senator Fifield: I last saw the ombudsman in an informal setting a couple of weeks ago. I think it was at the start of this year or the end of last year that I sat down with the ombudsman. I will take that on notice to let you know exactly when. My department liaise regularly with the TIO as well.

Senator URQUHART: Minister, I think you quoted something like nine complaints per 10,000 a moment ago. I understand that there are about 13,000 complaints in 2015-16 on services related to the NBN. I understand that NBN can only receive complaints for land access issues. So all the others are other issues, obviously. Every other NBN related complaint goes off to the service providers, which is what we are talking about. So with 1.1 million services by 30 June 2016, that is around 120 complaints per 10,000 services. Minister, you said nine per 10,000. It actually averages out to be around 120, which is a lot more. So I guess my question is: how many complaints have to be received before you as a minister can actually take these things seriously and step in and deal with the issues?

Senator Fifield: I do take these things seriously. I take these things seriously every day. There is no threshold that needs to be passed for me to take it seriously. If we were talking a quarter of the number of complaints, I would still have the same application to these issues, as I know Mr Morrow would, as I know the retail service providers would. There is no trigger that needs to be flicked to elicit sustained effort. There is sustained effort.

Senator URQUHART: But I understand that the TIO, when they collect data, are not actually collecting the data that probably matters. My understanding is that they told the committee today that, even though they could, they do not differentiate between the different technology types. When they get a complaint, they do not differentiate. Wouldn't a simple mechanism that could be quickly and easily remedied by you, minister, fix that? Why won't you fix that?

Senator Fifield: You just said the TIO could disaggregate in that way.

Senator O'NEILL: Yes.

Senator Fifield: In that case, that is for them. I do not direct the TIO.

Senator O'NEILL: How do you make policy and how do you respond to the needs of the Australian community around the NBN rollout? You only have one agency collecting the most egregious cases that get to it. And they are not even asking the question about what technology you actually have, or whether it is one of the many technology mixes.

Senator Fifield: When you say 'an agency', you mean an agency independent of government, the TIO.

Senator O'NEILL: They are your source.

Senator Fifield: They are all of our source, yes.

Senator O'NEILL: They are your primary governmental source of information.

Senator Fifield: They are not a government body.

Mr Morrow : They are funded by industry.

Senator O'NEILL: They are still a very significant source independent of the NBN provider and the RSP.

Senator Fifield: They are a significant source, but they are not an arm of government. You were presenting them as an arm of government that I can dictate to, and they are not.

Senator O'NEILL: I stand corrected on that, Minister. Are they of value to you as an independent organisation?

Senator Fifield: Absolutely, which is why I met with the TIO, and, as you would understand if you had met with the TIO, they are looking to provide greater granularity, and I want them to.

Senator O'NEILL: That is not the impression we got this morning, Minister.

Senator Fifield: You got the impression that the TIO are not looking to provide greater granularity of information?

Senator O'NEILL: Yes. They do not collect even the most basic data in terms of the complaint with regard to what type of technology is the failing point.

Senator Fifield: But can I make the point again that the TIO is an industry-funded body. It is independent of government. It is run by its own board. It is not a government agency, and the characterisation that you presented, that it is somehow a government agency that I can direct, is not correct.

Senator URQUHART: Minister, can I just go back? A moment ago when I asked you about the number of complaints being much larger than your nine out of 10,000, you indicated that you are making a sustained effort. Can I get you to clarify some of the things that you have done, maybe over the last six months, to address that issue about the complaints and how you are working towards that?

Senator Fifield: Okay. The sustained effort is by the NBN and the retail service providers and the government. Issues will be resolved by better performance by retail service providers and better performance by NBN. NBN is committed to doing that. NBN is committed to learning. NBN is committed to putting things in place as a result of the experiences it has every day. That is how these issues will be resolved. They are being resolved, and, as the TIO demonstrates, as a proportion of the rollout, complaints are reducing.

Senator URQUHART: Sorry, that did not answer my question.

Mr Morrow : Can I offer the committee some clarity. We are talking about a lot of different things here. Remember that I also came from a service provider background before stepping into the role here at NBN. So, when Senator Fifield is talking about nine out of 10,000 end users, he has asked to see that kind of data coming from us. That is a weekly report that we put, and those are direct complaints to us from end users.

Senator URQUHART: So that goes to the minister every week?

Mr Morrow : He has now asked for this data because he is interested in what we are doing to be able to sort it. Remember, that is 468 now within a year out of every 10,000 end users that we have within the network. But that is only somebody that is an end user calling us direct to lodge a complaint with us. The rest of the complaints go first through the service provider, and only when they do not feel satisfied will they call us—or if the service provider says: 'Why don't you call them? You might have better luck.' Or they get so frustrated, as mentioned earlier, that they will call the TIO. So the service provider is the entry point for all of the complaints that come through. I can tell you from the Vodafone days that we knew exactly how many complaints would come into that call centre or through the emails or through social, to where we could log and track how many complaints are coming through.

Senator O'NEILL: Minister, are you getting that data from the RSP?

Mr Morrow : No, and I would not provide that to the government if they asked for it when I was working at Vodafone. That is something that has a private industry basis that goes on. There is remit from any of the regulatory bodies or even the agencies such as the TIO that are industry funded. That is a private company matter, and it is not going to just be at the whim: 'Sure, let me produce all of these reports.' But I think the thing that is really important is that there are a lot of data points out there about what the net promoter score is and what the general satisfaction score is that are available that factor into this frustration that the end user has. That may be something, I think, where we look at industry, where we are talking about, 'Why don't we produce more of that?' to where we can show people what is happening. And the ACCC is looking to step into the role around the speed monitoring, as an example, to be able to do more and more of that.

Senator O'NEILL: They have been looking forward to stepping into that space since 2015. It is a very slow response from the government, I have to say. Hopefully something will happen soon.

Senator URQUHART: I am just going to jump in. We could talk forever about complaints et cetera. I have about two minutes left before Senator Duniam.

Mr Morrow : And I have some clarity about other questions you asked that I would like to provide too.

Senator URQUHART: Yes, absolutely. That would be great. But I have two questions that I really want to ask before Senator Duniam jumps in and asks his. I just want to go back, because we could talk a lot about complaints and I think we should spend more time, but it would be good to get some detail. Can you tell us about NBN's long copper loops program? When did it start? Why is that needed? Where is it currently working? And how many people work on that program?

Mr Morrow : Long copper loops are just our commitment based on the obligations we have from the government to get everybody at a minimum of 25 megabits per second in a fibre-to-the-node application—and again call it between three and four million homes right now. We will clarify that in a few months. But at those homes, where you are out in the 800 to 1.2 kilometres from the node, you might fall—many circumstances are factors—below the 25; therefore, we have to figure out a solution. We call that the long copper loop program that we look at. Either it is going to be met by fibre to the kerb or there might be some extension of the fixed wireless towers that we extend over. That has been an ongoing program in our commitment to be able to work on that. As far as the number of people is concerned, it is all integrated within our day-to-day engineering and operations teams.

Senator URQUHART: Where is it currently working? Is there anywhere where it is working?

Mr Morrow : Again, it is a replacement of that. The idea is that we will turn up a node, so all of us going around here are faster, depending on how long that loop goes. When we get to Senator Duniam out there, he might fall below 25. We are going to tell him, 'Senator, it's your choice as to whether or not you want to use the—call it—12 megabits that you are only eligible for right now because of the line rate, but we'll be back to you within a period of time to offer a different technology solution to lift you up to the 25 again.' Fibre to the kerb is our preferred approach that we are taking.

Senator URQUHART: This is my final question. How many homes and businesses in regional Australia have come under the long copper loops program? How many in total are there so far? And I would like you to take on notice where they are.

Mr Morrow : Sure, I will take that on notice. The number moves around, as you would imagine, because it depends on node placements and a lot of other factors, but we will take that on notice to be able to address that.

Can I clarify some of your other questions? First of all, you had asked about the numbers of service class 0 or 10 that were cleaned up and fixed within 2016; 90,000 of them were cleaned up and fixed. I mentioned a six per cent number that are in that state. I was only looking at our brownfields. When you take the aggregate, it is a little over three per cent that are in service class 0. And then, on the question of the retailers, the letter I mentioned and the active users: we sent this letter out to 25 RSPs because we feel that those are either currently selling or about to sell, and therefore we want to engage them in this initiative to give a better end-user experience.

Senator URQUHART: There are lots of people on the NBN that cannot get 25 megs now. Will they all get fibre to the kerb? Is that how the process will go?

Mr Morrow : It may or may not be. I think what is safe to say is that they will all get 25 megabits per second. How we do that is going to be based on economics and time frame to be able to deliver—

Senator URQUHART: But you can guarantee that they will all get that?

Mr Morrow : Not guarantee it, but again that is our preferred solution that we are looking at. Again, we are talking in the area of 100,000-ish homes here, just to keep it in perspective. But let me take the opportunity to take it on notice and get you the actual numbers.

Senator URQUHART: Okay. Thank you.

Senator O'NEILL: Can you guarantee Australians 25 megs down? Is that a commitment you can make?

Senator Fifield: That Australians will get to 25? That is the objective. It is that everyone will have 25.

Senator O'NEILL: Will you guarantee that for all Australians—25 megs down?

Senator Fifield: That is the objective.

Senator O'NEILL: So that is a yes?

Mr Morrow : The technology will serve 25 megabits per second according to the statement of expectations, but a retailer can choose to sell less than that. But the technology will deliver 25. But we have many people—in fact, 30 per cent of all of our two million customers are selecting 12 megabits per second today. So a guarantee that they are going to get 25 would not be the correct statement. A guarantee that the technology will serve 25 if the end user wants it is the direction that we are taking and the way in which we are building the network.

Senator O'NEILL: How does the end user identify that they want 25 meg down?

Mr Morrow : They talk to their retailer, hopefully, and this is why we are doing a bit of an education campaign. They need to know what they can talk to their retailer about. We found many cases where end users were not aware that they actually had a speed choice. They just thought it was superfast broadband.

Senator O'NEILL: One of the problems that we have got is that many of our end users do not know that they have got a speed limit. They are being sold 100 down and 25 up, but it cannot possibly be delivered on fibre-to-the-node technology.

Mr Morrow : I would say that that is true in some cases, Senator—you are right.

Senator O'NEILL: That is one of the sets of complaints. Minister Fifield, what do you propose to do about that problem?

Senator Fifield: We want to ensure that there is good information from the NBN. You would have seen that NBN now has an extensive advertising and information program to explain that there are speed options for people. I think the retailers need to do a better job. The ACCC, as you would be aware, have undertaken some work in this area and surveys to look at consumer experience. We also will be putting in place, with the ACCC, speed monitoring, which, again, will better inform consumers.

Senator O'NEILL: Are you making that announcement today, Minister?

ACTING CHAIR (Whish-Wilson) : Sorry, Senator O'Neill, I will go to Senator Duniam, who has not had—

Senator DUNIAM: Thank you. With the rollout ramping up, could you briefly outline what is being done to streamline connections and improve the consumer experience.

Mr Morrow : Every time we roll out a new technology, we go through a bit of maturity curve. When I say 'we', I am talking about the industry: the equipment that gets deployed, the retailers that are involved in it and, of course, the NBN people. Even our delivery partners have to ramp up a little bit as we go through the maturity curve. We have a very active internal process improvement program that we have extended to the delivery partners. We have, I think, one of the industry-leading educational institutions, which we have incorporated within the company to bring people in to train them on how to be able to make fast, rapid changes to improve the process, focusing on the end user and keeping the time low and the cost down.

Every time that we have introduced new technology, we have seen that we have ramped back up to a satisfactory or better level of end-user experience. Now that we have some maturity—for example, the long-term satellite, Sky Muster, which was a bit painful for us to go through with the volumes that we were seeing—we are up to a level where, 90 per cent of the time, our end users, as far as what we, NBN, are responsible for, are getting a very good experience. It is done right the first time and done within the commitments that we have given. We still have some way to go on HFC, but the teams are all over this in terms of improving that process. That is the last of the new technologies that will come through. I am not too worried about fibre to the curb. It is an extension between fibre to the prem and fibre to the node, so I am less concerned about that one. We are addressing this with HFC as well, and I think we should be in the clear within a matter of months.

Senator DUNIAM: Flowing on from that, with the life cycle of deployment, can you explain some of the refinements to processes and the fixes to problems that you have put in place along the way?

Mr Morrow : Yes. As we are building this network, because of the expectation that we have an upgradability characteristic to each of these technologies, anything that we can do now we try to prepare for to make sure that the life cycle of the asset we are putting in the ground can be extended for as long as possible—and again, more importantly, as the end-user experience in terms of what their demands are through the retailers and, of course, what the retailers would be able to charge. That is very much inherent in our thinking and incorporated within our processes.

Senator DUNIAM: Excellent. Thank you.

Senator URQUHART: Which towns in regional Australia are getting fibre to the curb?

Mr Morrow : Again, a little bit fluid on where it is. We mentioned before that it was up to 700,000. I expect that number to be higher as we wrap up this year's corporate plan and get the approval—

Senator URQUHART: Which towns, though? Do you have that?

Mr Morrow : We have some that we are targeting. We will take that on notice and get you that data.

Senator URQUHART: Can you also provide a list of the towns and the number of premises in nonurban Australia that are getting fibre to the curb?

Mr Morrow : Yes. Within a margin of change that will exist.

Senator URQUHART: I am sure you will write that as your disclosure.

Mr Morrow : Yes, we will caveat that.

Senator O'NEILL: Can I just confirm that, Minister, you did just announce that you are going to fund the ACCC for the speed monitoring trial?

Senator Fifield: A couple of weekends back, I indicated that the government was looking at this and that we would have more to say about it in the near future, which is the case.

Senator O'NEILL: So, this is the announcement: 'yes, it has happened'? How much are they getting?

Senator Fifield: Let me repeat what I said. A couple of weekends back, I remember doing a doorstop in front of Treasury Place, where I said that the government was looking at ACCC monitoring and that we would have more to say about that in the near future, and we will have more to say about that in the near future.

Senator O'NEILL: Can I thank Mr Morrow for his prompt response today to evidence that came up from the TIO around Kariong. I appreciate that. I will certainly be liaising with you to make sure that that community gets a good outcome.

ACTING CHAIR: That concludes the committee's examination of the communication and arts portfolio. Senators are reminded that written questions on notice should be provided to the secretariat by close of business Monday, 3 April 2017. I thank the minister and the officers for their attendance today. I thank broadcasting and Hansard.

Committee adjourned at 16:00