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Tuesday, 10 August 2004
Page: 26015

Senator LUNDY (3:54 PM) —I would like to make some remarks about this report entitled Competition in broadband services that has just been tabled in the Senate. As Senator Bartlett has said on behalf of Senator Cherry, who chairs the Environment, Communications, Information Technology and the Arts References Committee, this is the second report of this committee on related matters in two weeks. It is important to remind the Senate that the committee's report on the Australian telecommunications network was tabled last week. In many respects this particular report, Competition in broadband services, flows directly from many of the outcomes, observations and indeed recommendations that were found in the ATN report.

I would like to spend the next few moments going through the recommendations of this report because it builds very specifically on the findings of the Australian telecommunications network report. In fact, when we established the terms of reference for this committee, the Howard government tried to oppose them being referred to the ECITA committee. That was something of a surprise but true to form. The Howard government is reticent to really grasp the real challenges in telecommunications policy, one of which Labor and I have contended for a very long time is the importance of having a broadband infrastructure for Australia that is future proof.

The context of this report being tabled today is years and years of neglect and almost a conspiracy between Telstra and the government to help fatten up Telstra's bottom line in anticipation of privatisation, at the direct expense of improved services for Australians. Whilst the Howard government is very quick to claim some of the statistical changes in telecommunications services, what we know from the big picture is that we have been sliding backwards. This report documents very specifically the areas in which Australia is suffering, the areas in which Australia is going backwards with respect to broadband services. So let me turn to recommendation 1, which says:

The Government should set, in consultation with industry, a ten-year national target for an optic fibre consumer access network roll-out and should invest the necessary regulatory and compliance powers with the Australian Communications Authority to ensure that this target is met.

This is an incredibly important recommendation because it sets the vision. We have to accept that Telstra's copper network has been neglected to the extent that it is no longer going to be able to be future proofed in the way this country needs—in the way small business needs, in the way people who are furthering their education need, in the way schools need, and in the way government services and government departments need. This government has not delivered. What we really need to come to terms with as a country is getting the vision right. We need an appropriately rolled out fibre optic network that has the capacity to provide the real broadband that will be required in the future.

One question this recommendation introduces is: what will be the necessary incentives for investment in this infrastructure? This is a very big policy question because what we know and what we have been able to document through this report is that this government have not got the mix right. We know that competition policy is failing. We know that regulatory policy in some respects is actually hindering investment and fairness in the market and, therefore, certainly the quality of services for consumers. We know that the worst outcome is that this government could continue to put money in the pockets of Telstra so that they can continue to hinder the roll-out of the necessary services, like broadband, around the country, because that is exactly what has been happening. I turn to recommendation 2:

The Committee recommends that the Government's accepted definitions of ADSL and broadband speeds reflect international best practice standards and should not be determined or overly influenced by product definitions of speed offered by Telstra and other carriers ...

Those who get an ADSL service would know there is a choice of 256 or 512, or one megabyte or two megabytes—these are arbitrary levels set by Telstra. ADSL, we know, can provide a far greater bandwidth service, so why don't Telstra make that available? The fact is that Telstra are trying to inhibit the style of services because it suits their pricing model, it suits their service model and it suits Telstra to constrain the roll-out of broadband in this country. Recommendation 3 says:

The Committee recommends that the Productivity Commission be tasked to undertake a full examination of all the options for structural reform in Australian telecommunications, including but not restricted to, the structural separation of Telstra.

Structure has been a consistent theme right through both the Australian telecommunications network inquiry and the broadband services competition inquiry. There is no surprise in knowing that the one issue that the Howard government has consistently prevented being analysed to any great degree is structural reform. Couple that with the facts that competition policy, by the ACCC's own admission, is not working in these areas and that Telstra is too big to be regulated and it means that structural reform needs to be considered in a careful and sensible way. I think that the recommendation that the Productivity Commission be the body to finally consider the broad issue of structural reform in the telecommunications sector is timely and appropriate.

Recommendations 4, 5 and 6 relate to structural issues as well. This committee recommends that Telstra be required to divest its shareholding in Foxtel. This is unequivocal. The ACCC has said it, the National Competition Council, I believe, has said it and certainly Labor has said it as well. This is a big issue as far as Telstra's persistent involvement in and aspiration concerning the media are concerned. Very clearly, it needs to be addressed. Recommendation 5 reads:

The Government should direct the Australian Competition and Consumer Commission to provide further advice on its recommendations in its report Emerging Market Structures in the Communications Sector on the feasibility of introducing a content access regime ...

This builds on the commitments, given as part of the content-sharing deal by Telstra, which have not come to fruition. So there are issues on the basis of content and infrastructure, not least of which is Telstra's use of walled gardens to allow their Internet content to be favoured by their own Internet service provider customers and so forth. Recommendation 6 reflects on the issue of divestiture of the HFC network. The committee believes that it will be timely for the ACCC to revisit this recommendation in the context of other developments.

Outside these issues of structural reform, which I think are all part of the current debate, the rest of the recommendations relate to some of the failings of competition policy as they currently stand. Recommendation 7 says:

The Government should review section 151AKA(10) of the Trade Practices Act 1974 to determine whether, under some circumstances, it may prevent the Australian Competition and Consumer Commission from acting swiftly to address anti-competitive conduct. Consideration should be given to the necessity and the effectiveness of issuing consultation and competition notices in addressing anti-competitive conduct ...

That is a long way of saying that we need to make sure that our competition laws are actually doing their job, that they are effective and that if a competition notice is enforced it is having a desired effect. The committee took some evidence—and we heard from the Chairman of the ACCC itself, Graeme Samuel—that Telstra is too big to regulate. When we have a situation where the ACCC has used its trump card in regulatory power, the competition notice, and yet it does not seem to be having the desired effect on changing the behaviour of Telstra, we know we have a problem.

Recommendation 8 is that the ACCC further examine the anticompetitive effects of the current peering arrangements, and it cites cost disadvantages to smaller ISPs. Recommendation 9 relates to:

... the availability of access to, and cost of, backhaul services for carriers building or proposing to build new broadband infrastructure.

These two recommendations relate to the access regime in telecommunications—incredibly important issues. I turn to recommendation 10. The committee has identified that Telstra's current geospatial data sets, including exchange boundaries, exchange coordination lists of the RIM polygon mapping and distribution areas, are all critical for genuine competition. The committee recommends that these data sets be made available on request, in a useable format, to the competition—to other carriers and ISPs. Without that information Telstra will still have a perpetual advantage in the market, an advantage that this report has documented very specifically.

I conclude by saying that this inquiry has identified the structural impediments, the regulatory impediments and the competition policy impediments to a vibrant and dynamic level of investment in broadband in Australia. Without that investment we are being specifically hindered. This report details a way forward whereby the government could start to redeem themselves for the damage that they have caused in their close relationship with Telstra. (Time expired)