House debates

Thursday, 13 February 2020


Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019, Telecommunications (Regional Broadband Scheme) Charge Bill 2019; Second Reading

12:05 pm

Photo of Tim WattsTim Watts (Gellibrand, Australian Labor Party, Shadow Assistant Minister for Communications) Share this | Hansard source

I'm pleased to be able to rise in this debate on two separate but related bills, the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019 and the Telecommunications (Regional Broadband Scheme) Charge Bill 2019. Labor supports the Telecommunications Legislation Amendment (Competition and Consumer) Bill and the establishment of the statutory infrastructure provider regime outlined in it. The regime will provide additional certainty that, as we move beyond the initial NBN rollout, every Australian home and small business will continue to have the right to access a high-speed broadband connection. You'd hardly expect Labor to have an issue with this, given that it flows naturally from the arrangements that we put in place a decade ago through the statement of expectations issued to the NBN Co board. The statement of expectations at that time required NBN Co to make high-speed broadband available to all Australians, regardless of where they live or work, and this bill provides certainty that that will continue.

Labor wants today what it wanted a decade ago when we conceived of the National Broadband Network. We want every home and every small business in this country to have access to reliable, affordable, high-speed broadband. When the Rudd government was elected in 2007, Australian internet speeds and access badly languished. They really languished. The average connection speed was about two megabits per second, which ranked us shamefully low in global speeds. Today the internet is profoundly woven into our lives. It's very hard to overstate its influence. In the 1980s the author and journalist Tom Wolfe coined the phrase 'Masters of the Universe' to describe the potency of a new generation of young, ambitious Wall Street bankers. Today the new 'Masters of the Universe' reside in Silicon Valley.

The Howard government, though, apparently never saw this coming. The internet launched five years before that government was first sworn in, and they proceeded to ignore this increasingly central phenomenon for more than a decade. The Rudd government's sorry inheritance in 2007 was a telecommunications infrastructure in this country that had badly suffered through neglect and indifference, infrastructure that lacked a vision and imagination leading its rollout, infrastructure so inadequate that Australia was handicapped, and not just economically. It was what the Rudd government sought to address through the National Broadband Network. It was Labor that asserted the principle of universal access to modern technology—to fast, reliable internet.

Those opposite were fiercely opposed to this principle. Those opposite called it delusional. We really had to drag them, kicking and screaming, into the future. Labor understood the importance of the internet. We understood that it was world-changing technology, and the fact that we lagged behind much of the world in our access to it was an imperative to be remedied by the government. Labor understood its influence and acknowledged that its influence would only grow, sometimes in ways that we couldn't yet imagine. It would change the way that we consumed, sold, exported, imported, taught, learnt and communicated. It would change the way we listened to music and watched films. It would change the way we created and received news and would have ramifications for health, finance and even dating. It would have ramifications, really, for every component of our lives. This is how fundamental the underlying infrastructure was.

The Howard government, however, didn't care, didn't know or didn't understand. Labor is proud of the vision the Rudd government offered to Australians in the form of the National Broadband Network—proud, particularly, of its principle of universal access. So the National Broadband Network was born. It was an ambitious, nation-changing project, but one with a simple motto: do it once and do it right. That meant connecting the vast majority of homes in this country with high-quality fibre-to-the-home connections. Fibre is quick and enduring. It lasts and is futureproof. The network was simply too important to be compromised by political expediency or ignorance, but, unfortunately, that's exactly what has happened. In 2020 we have a network that is badly compromised. Having neglected the internet up to 2007, the coalition government has now neglected the National Broadband Network. Those opposite aren't great friends with the future.

In 2013 the degradation of the NBN began when the coalition was elected. This occurred with forewarning to the Australian public. When Tony Abbott gave Malcolm Turnbull the communications portfolio in 2010, he told the Australian public that Malcolm Turnbull would 'demolish the NBN'. Those were his written instructions and, sadly, he got to it when they won the 2013 election. It was one of the few election promises that they really did keep.

When Malcolm Turnbull came into the communications portfolio with the ignorant boast that he could deliver Australia a completed network much faster and much cheaper, he was wrong. He was badly wrong. The Abbott-Turnbull-Morrison government stopped an at-scale national rollout of the NBN. It stopped an at-scale rollout of a high-quality, futureproof, fibre-to-the-home network in favour of what they called a multitechnology mix—'a dog's breakfast' might be a better description for it—in which a patchwork of legacy networks were sweated throughout the country to cover the nation. They didn't just set out to retain the ageing legacy copper wiring for a fibre-to-the-node network deployment but actively started buying new copper to roll out across the nation, putting Australia on our own as the country investing in the past. It was like a nation greeting the arrival of the automobile age by purchasing new fleets of horses and carriages. They did it anyway and they boasted of saving money, except that they didn't. If your home wasn't utilising the old copper system, it was serviced by a mix of inferior fibres of HFC and the like. This requires future upgrading, unlike in the original plan. And guess what? The multitechnology mix is costing big dollars. NBN Co has calculated the multitechnology mix will cost $200 million more per year to maintain and operate while reducing revenue for NBN Co by $300 million compared to the original fibre-to-the-premises plan—that's an absurd half a billion dollars in the NBN Co's economics.

The legacy of the coalition government in this place is perverse. They promised to offer Australians a network that was completed more quickly than that proposed by the previous Labor government and offered faster speeds and lower cost, but it struck out on all three fronts. The decision to badly compromise the network has actually cost Australians more. We now have a poorer network at a greater cost. We've seen evidence for this this very week. The ACCC's latest broadband speed monitoring report is a scathing indictment of the Abbott-Turnbull-Morrison government's multitechnology mix. In a statement accompanying the release of the report, the ACCC couldn't have been clearer when it stated:

… many high speed fibre to the node (FTTN) connections still don't come close to performing as promised. The results show that about a quarter of those consumers on FTTN connections, who are paying for high-speed 50 Mbps and 100 Mbps plans, still did not receive anywhere near their full plan speeds, at any time.

The ACCC Chairman, Rod Sims, went on to say:

This Measuring Broadband Australia data clearly shows that too many consumers with FTTN connections are not receiving the speeds they are paying for …

This is the faster, cheaper NBN that the coalition government has delivered. It's a perverse outcome and a perverse legacy.

In 2013 the coalition was elected on a promise to complete the NBN in three years time at a cost of $29.5 billion. It was fanciful. Fast forward to 2020 and it's still not complete and the price tag is now more than $50 billion. That is $20 billion over budget and four years behind the schedule the Abbott-Turnbull-Morrison government promised the Australian public. It's a $51 billion network that can't even deliver the broadband speeds that Australians are paying for. Get this: in 2007, when Labor inherited the badly neglected telecommunications infrastructure bequeathed to it by the Howard government, Australia's internet speeds had roughly ranked 50th in the world. Today we're 68th, according to Ookla's global index. It's really poor company; it's the definition of a perverse outcome.

To add insult to injury, those opposite have neglected our regions. They watched NBN Co build too few regional wireless towers, so existing ones became overburdened, increasing congestion and slowing connections to regional mobile users. They did this to save money when their costs started mushrooming, and they bragged about it. What they didn't brag about, incredibly, was what we discovered in October last year—that NBN Co had cut $200 million from the fixed wireless network for the regions. This information wasn't publicly disclosed; indeed, it was deliberately hidden from where you would expect to find it, in the corporate plan. It wasn't disclosed until we came across this information in answers to a question on notice. This is typical of a government without a plan and a Prime Minister who can't be straight with the Australian public.

What's happening here is that the regions are being neglected so the government can desperately try to bandage their haemorrhaging costs, which brings us to the second bill before the House, the Telecommunications (Regional Broadband Scheme) Charge Bill 2019. I've worked in the Australian telecommunications sector, in one role or another, for near on a decade. If there's one thing that I've learnt from this space it's that, when you're dealing with the complex technological and regulatory legacies of this sector, when you change something in one spot you generally break something in another. The Australian telco sector, as it stands today, reflects decades of technology and policy trade-offs. These trade-offs interact with each other, so changes in the way that things work in one area have consequences for superficially unrelated areas elsewhere.

A good example of this is the trade-off between costs and pricing for telecommunications services in our cities and our rural and regional areas. When Labor conceived of its plan for a national broadband network, it understood the simple fact that in a country this large, with very low population densities in some parts of it, the costs for delivering services to our regions would be significant. The cost of a regional connection would be high, but we wanted it to remain affordable, so we rolled the NBN out based on a cross-subsidy model—that is, that metropolitan areas would pay a little more than their service costs so that the regions could acquire a service at a cost that was affordable. This cross-subsidy model generated $700 million and reflected the historic way that we've managed the higher costs in the bush against those in the cities in the Australian telco sector. It's an egalitarian settlement—perhaps not the most optimal form, from a purist's perspective, but the most workable in an Australian context.

There are those opposite, however, who have always wanted to play the purist in this space and unwind this egalitarian settlement. It was disappointing that, prior to the 2013 election, the Liberals encouraged other companies to deploy networks and compete directly against the NBN, in full knowledge that this would undercut the NBN Co business model—the city-regional cross-subsidy that has formed the basis of the Australian settlement on telecommunications policy for decades. But the ideologues in the Liberal Party have always chafed at this settlement, and they periodically break out from this settlement and start pushing positions that would break it and force the bush to wear the higher costs of telecommunications services on their own. Indeed, before the last election the minister repeatedly flirted with the desirability of infrastructure competition with NBN Co in the cities. What the National Party thought about this flirtation by the Liberal Party with breaking this NBN cross-subsidy, to the detriment of rural and regional Australia, remains unknown. Presumably they were too busy fighting each other to notice it at the time. But the minister played footsy with a development that would sabotage the NBN Co business model, and now they are introducing this new broadband tax to protect themselves from the consequences of their own flirtation. Now the minister wants to impose a new broadband tax on Australians who are on those competing networks that he wants encouraged. Like his leader, the minister can't be straight about this. But Labor will be upfront about what this bill actually does.

The bill will apply a new broadband tax of $7.10 per month on households and businesses connected to a non-NBN Co broadband network. It will add at least $84 to the annual bill for up to 500,000 residential and business services. This coalition tax on broadband is a new thing. It wasn't originally part of anyone's plan for the NBN. As I said earlier, the previous Labor government didn't contemplate having a broadband tax on top of an internal cross-subsidy. It was one or the other, not both. Yet now the Abbott-Turnbull-Morrison government wants both.

You might ask what has changed to prompt this. Well, you can observe what hasn't changed. The cost of a fixed wireless and satellite network had not changed at the time this new broadband tax was proposed. The cost is effectively what was forecast. What has changed is the damage that the Abbott-Turnbull-Morrison government's multitechnology model has done to the financials of the NBN Co. According to NBN Co's own analysis, this inferior multitechnology mix will cost $200 million more per annum to maintain and operate and will generate $300 million less per annum.

The effect of this new broadband tax will primarily be to add a price signal that deters duplication of NBN Co infrastructure in the cheaper city areas, enabling the cherry-picking of NBN Co revenues that can be applied to ensure universal access to broadband in rural and regional areas. I can understand the rationale for this. It is fair enough and it is why we're letting this bill go through the chamber unopposed. The shadow minister raised issues with this that we will address in the Senate. We will confront it at that time. That will be an issue for the Senate at that time.


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