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Tuesday, 10 August 2004
Page: 26018

Senator TCHEN (4:04 PM) —I also rise to speak on the report Competition in broadband services by the Senate Environment, Communications, Information Technology and the Arts References Committee. The government members of this committee dissent entirely from the report by the Labor and Democrat members regarding this inquiry. This inquiry was given extremely broad terms of reference. There were five terms of reference. The inquiry was supposed to look at:

... the current and prospective levels of competition in broadband services,

... any impediments to competition and to the uptake of broadband technology;

... the implications of communications technology convergence on competition ...

... the impact and relationship between ownership of content and distribution of content on competition;

... any opportunities to maximise the capacity and use of existing broadband infrastructure.

These are brave targets indeed.

In the course of this inquiry 55 submissions were received and seven public hearings were held in various parts of Australia, including country centres, during which 67 witnesses representing 43 entities—including individuals representing themselves—including the Department of Communications, Information Technology and the Arts and the Australian Competition and Consumer Commission, attended to give evidence. This represented a significant community effort commensurate, perhaps, with the broad scope of the terms of reference. I take this opportunity to thank and commend all the witnesses who appeared before the inquiry and who made written submissions. Unfortunately for all the contributions made by these public-minded members of the community, the majority Labor and Democrat members of the inquiry turned it into an exercise of a solution in search of a problem.

This was the ninth Senate inquiry into telecommunications since 2000. The course of the inquiry ran almost in parallel with the inquiry into the Australian telecommunications network, the report of which was tabled last Thursday. That inquiry had a reference given exactly one year and one day earlier than this one. I raise this comparison because the preface to the report of this inquiry makes particular reference to the fact that, at the time that the Senate referred the inquiry, this committee was engaged in a comprehensive inquiry into the adequacy of the Australian telecommunications network. It is said to have found that the absence of competitive broadband infrastructure is a key constraint to the development of competition in broadband services especially in rural and regional areas, which was the conclusion found, allegedly, in this inquiry.

This inquiry follows that telecommunications network inquiry. What was found in that inquiry therefore must bear significantly on the deliberations of this inquiry. In this context, I think it would be helpful to quote the words of Senator Tierney, deputy chair of both inquiries, at the tabling of the earlier report:

It spun out to such a point that two years have now passed and a lot of the information collected in the early stages is now irrelevant because of the upgrade of the network by Telstra and the introduction of new technology ...

Can what was irrelevant and out of date for that earlier inquiry be relevant to this inquiry? It seems that senators who signed the majority report believe that is so. To them the mere fact that man has gone into space does not stop them from demanding that safety rails are placed around the edge of the world to stop seafarers, presumably unionised ones, from going over the edge.

From the government members' point of view, we believe that this inquiry is unnecessary, is based on false information and has come to a conclusion which was well developed beforehand. Throughout this inquiry uneasiness merged into hostility about Telstra's dominant position in the market. It was a constant and pervasive presence. A quick scrutiny of the 10 recommendations of the majority report show up this measure of hostility. I draw your attention, Mr Acting Deputy President, to the 10 recommendations of which at least seven specifically argue that Telstra should be reduced or restrained in one way or another. Of the other three recommendations, recommendation 5 does not refer to Telstra directly but refers to a report by the Australian Competition and Consumer Commission which again refers to Telstra.

The first two recommendations refer to a national target for an optical fibre consumer access network roll-out and also require the government's accepted definitions of ADSL and broadband speeds to reflect international best practice standards. These two recommendations assume again that broadband technology is in a state of standing still. Recommendation 1 assumes that optical fibre is the only or best way that broadband can be provided. In fact, evidence received during the inquiry demonstrated one thing in particular—the complexity of, and the fast-changing picture in, broadband technology. This is actually acknowledged in the majority report in the conclusion, which says:

The Committee acknowledges that the issues are complex and that there is no single solution to the impediments to broadband competition identified in this report.

Yet these majority members then blithely go on to recommend that a particular technology be identified as something which must be followed.

I have already referred to what appears to be the innate hostility of the majority members of the committee to Telstra. While it is undeniable that Telstra's performance has not been perfect, again from the evidence, from the community's point of view both the level of service and the cost of the service offered by Telstra to the consumer have improved significantly since 1996. There is no dispute about that. While it is also true that, as both the supplier of wholesale services to the other retailers and a direct provider of the same retail services to the public, Telstra is in a position to exercise unfair and predatory advantage over its competitors and that perhaps some form of Chinese wall should exist between Telstra's wholesale and retail businesses, there is no evidence to suggest that Telstra has behaved in such a predatory manner. There have been accusations but there is no proof that it has behaved in that way and there is certainly no suggestion that existing regulations have been powerless to prevent Telstra from behaving in a predatory manner.

It is true that the ACCC has called for serious consideration to be given to Telstra's divestiture of both its shares in Foxtel and the HFC network, which form one of the recommendations. However, the government members of the committee note that the ACCC has arrived at these views on the basis of concern about a perceived conflict of interest on the part of Telstra, which I have already mentioned, rather than on any actual predatory behaviour by Telstra in competition or on any firm knowledge of any real community benefits that would flow from such divestiture. One wonders if the ACCC would have come up with a different call if it were actually the `Australian Consumer and Competition Commission'.

In summary, the other thing that was obvious from this inquiry was that the government has in place a regulatory process which will provide for the management of the future growth of the broadband market and the introduction of broadband technology.