House debates

Tuesday, 1 March 2011

Telecommunications Legislation Amendment (National Broadband Network Measures — Access Arrangements) Bill 2010

Consideration in Detail

9:08 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Hansard source

Our two leading telecommunications companies have made very good submissions to the Senate committee on this subject—PIPE Networks, which is a smaller company, and obviously Telstra itself. I want to refer the House to the submission of PIPE in particular. It states:

Cherry-picking … is simply put the practice of a competing network operator building its network in areas where it is profitable to do so, and not building its network in unprofitable areas. Notwithstanding the pejorative terms used to describe this behaviour, such as ‘opportunistic cherry-picking’, this behaviour in fact reflects the simple commercial reality that businesses—in telecommunications or in any other market—will only compete in a particular area if it is profitable to do so.

It goes on to say:

If building fixed-line networks in metropolitan areas but not regional areas constitutes cherry-picking, then PIPE and every other telecommunications carrier with infrastructure in the ground in Australia is guilty of cherry-picking.

As the PIPE Networks’ submission points out, what the government claims to be doing is creating a level playing field, but there is no level playing field. The NBN is a massively advantaged corporation. It has tens of billions of dollars of free capital provided by the taxpayer. Nobody else has got that. It has got an exclusive deal in respect of Telstra’s infrastructure. Their conclusion is—and this is PIPE’s submission, and indeed it is Telstra’s too, substantially:

… the proposed anti ‘cherry-picking’ regime will give NBN Co a de facto monopoly on future competition in fixed-line telecommunications networks in Australia.

The very purpose, they say, of the anti-cherry-picking regime is to deny network owners the benefits that flow from network ownership. It will require network owners to supply wholesale services to third parties on the same terms that they supply them to themselves and, in that way, disincentivise investment in competing fixed line telecommunications networks, leaving NBN with a de facto monopoly. That is exactly what the NBN implementation report says is the object of the policy.

The Telstra submission makes a very powerful point by saying that Telstra has a monopoly fixed line business because of its historic background. Telstra has had to put up with cherry picking in the past. As it says:

If by ‘cherry picking’ the Government means competitive entry in areas where this is efficient, then it is not clear why this should be discouraged. This type of so-called ‘cherry picking’ has been a feature of telecommunications markets in Australia and around the world for the past two decades. Telstra’s competitors have been able to enter in precisely this fashion, without access obligations being directly imposed by legislation.

In other words, Telstra has been able to cope with cherry picking but the NBN, with all of the billions of dollars of additional free capital behind it, will not be able to do so.

As far as regional and rural Australia are concerned—and the honourable minister talked about Marrickville in his electorate and Kempsey in my colleague’s electorate—the simple fact is this: the people of Marrickville should be able to get access to telecommunication services at the lowest cost the market will deliver and insofar as people in Kempsey or any other regional centre are not able to get comparable services because of distance then there should be a clear, transparent subsidy through a USO or some other provision that comes out of the budget. Cross-subsidising by preventing competition in the city is anathema to anybody who believes in markets, in economic efficiency and indeed in a competitive approach to telecommunications. This cherry-picking legislation is another example of how this NBN is designed to suppress and subvert competition and promote monopoly instead of fostering the competitive market we should all be supporting. (Time expired)

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