Tuesday, 16 November 2010
Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010
Consideration in Detail
The shadow minister, the member for Wentworth, is quite misguided in his understanding of what the ACCC will and will not be able to do. The ACCC will be able to undertake a competition analysis, and it will do that understanding that telco infrastructure, even at its most basic level, exhibits what economists call natural monopoly characteristics—things like high sunk costs, network effects and vertical integration. The role of the regulator is to ensure that that is regulated effectively. I note that Graeme Samuel of the ACCC backs up what the minister has said on the role of the ACCC. I quote from iTnews of 25 October this year:
ACCC chairman Graeme Samuel has outlined the competition regulator’s desire to have final say on undertakings submitted by Telstra and NBN Co, without facing the prospect of court appeals.
Samuel goes on to say:
the member for Wentworth—
had suggested that proposed legislation put forward by the Government ‘exempted [the NBN] from the provisions of the Trade Practices Act.’
Samuel said the ACCC—which enforces this act—would not be exempt from studying these undertakings.
‘If you examine the legislation carefully, I don’t think that the NBN is subject to exemption from ACCC examination’, Samuel said.
Samuel said the undertakings would be subjected to ‘very rigorous examination’ to ensure competition over several decades.
I will read one last quote on the issue of merits review for the benefit of the member for Lyne, which I will talk to when we get to those amendments. Graeme Samuel went on to say:
It should not be subject to any form of gaming, if you like, by seeking to have it taken on review to various tribunals and courts up the line.
The opposition has been peddling the notion of the elimination of competition and the creation of a new monopoly in NBN Co. I have heard the member for Wentworth come into this place and say that the government has to eliminate all competition for the NBN to be successful and will exempt the ACCC from determining whether this monopoly is in the public interest. The fact is that the ACCC, as I have said, will actually be tasked with approving Telstra’s structural separation undertaking under the government’s changes. Instead of exempting the ACCC from playing a role, the government has given the ACCC a central role in this whole process to ensure the restructure of the industry through the oversight of the structural separation of Telstra and the migration of connections to the NBN.
I will also say one thing about parts XIB and XIC of the Trade Practices Act. Like the member for Lyne, I love competition. I have spent most of my professional life working in the area of telco competition. NBN Co. will be subject to regulation by the ACCC under parts XIB and XIC of the Trade Practices Act, but it will not be the weak powers given to the ACCC in 1997 when the opposition was in power. The changes that are proposed here by this government will actually strengthen the role that the ACCC plays in the way it regulates Telstra and the NBN going forward by giving the ACCC what I have referred to as the up-front role in the process.
I continue to be fascinated by the fixation of the member for Wentworth with this notion of a new monopoly being created, when in fact what we are doing is getting a vertical disintegration of the sector. You cannot get anything more competitive than disintegration of the sector. There is widespread acknowledgment of those natural monopoly characteristics needing to be regulated. It is paramount, within the network architecture where you have the top layers, the content and applications, and the bottom layer, the network layer, that competition happens in those higher layers. You do that by disinfecting those higher layers by regulating at the wholesale level. Every liberalised country does it, and does it effectively, and is moving in that direction to ensure the most effective regulation at the wholesale level so that competition at the retail level can flourish.
This is certainly not some flight of fancy. The notion that you need to regulate as deep as possible into the network is something that I know the ACCC is very keen to pursue. Not only that but it results in what consumers want. It results in competition at the retail level that will ensure lower prices and that will lead to better price and non-price quality of services and a greater range of services and availability. This is what consumers want. If we regulate at the wholesale level, which is what the ACCC will do, we will see the benefits in the upper layers of the network architecture. So, far from the monopolisation that has been fixated upon, the fact is that disintegration will produce the results that consumers want.