Senate debates

Monday, 22 November 2010

Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010

Second Reading

Debate resumed from 17 November, on motion by Senator Feeney:

That this bill be now read a second time.

12:31 pm

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | | Hansard source

It is a pleasure to rise and to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. During the course of this debate in the Senate I have no doubt we will hear various interpretations from those opposite about what is actually in this bill and what the purpose of this legislative package is. Let us be under no illusions: this bill does, indeed, deal with matters that relate to the separation of Telstra; it does deal with matters that relate to various competition and consumer measures—some may say various anticompetitive measures; but at its heart this bill is interrelated with the government’s policy to build the National Broadband Network. There can be no disputing the fact that woven throughout this legislative package is the government’s $43 billion fibre-to-the-home NBN proposal.

We know that it is woven throughout this package because, indeed, you need only look at the bill or the explanatory memorandum to see just how clearly woven it is throughout the package. Through the legislation ‘NBN’ is mentioned some 62 times and ‘National Broadband Network’ on three occasions, for a total of 65 occasions. Through the EM, ‘NBN’ or ‘National Broadband Network’ is mentioned on some 204 occasions. All up there are 269 occasions in either the legislation or the explanatory memorandum where we have the NBN sitting at the heart and soul of this legislative package. So we should not be fooled by those opposite who will try to tell us during this debate that it is all about simply the separation of Telstra and the competition benefits that may or may not flow from that.

I want to deal firstly with issues around the NBN before I touch more particularly on some of the matters relevant to the bill. I have said before in this place that the commitment to fast, affordable and universal broadband access is nowadays a bit like motherhood in this place: everyone agrees to it, everyone supports it, everyone expects that that should be the policy outcome. It is the journey and the means to get there that matters most, and this is where the coalition and the government part company.

We believe the achievement of this goal is best achieved through a competitive telecommunications sector: a sector that encourages innovation; a sector that encourages sound competition; a sector that is driven by private investment, as it has always been; but, importantly, a sector where government has a role to play in filling the gaps where there is a market failure—where that ultimate policy goal of universal, affordable broadband access cannot be achieved. These we think are appropriate ways to go about achieving a sound policy objective.

However, the government seems to believe that it is far better to dismantle all that we have, to deconstruct the competitive and competition policy arrangements and frameworks we have in this country, and instead to build a new $43 billion government owned monopoly enterprise. It plans to do so by overbuilding and dismantling the entire existing framework—the copper network that currently exists as well as cable networks that exist around Australia. This will assist in creating its fixed line monopoly, yes, but it will see the destruction or the waste of much infrastructure that is already rolled out around Australia. It will see in places around Australia that already enjoy access to high-speed broadband the overlaying of a new fibre cable to deliver high-speed broadband. If this duplication of infrastructure is not waste then I am at a loss to see what could possibly be a wasteful outcome.

Of course this legislative package in many ways is all about entrenching the monopoly position that the government hopes its NBN Co. will enjoy, because this legislation does not just set out terms on which Telstra should be structurally separated; it goes further and in going further it actually puts in place and reinforces contractual arrangements that will prevent Telstra from using its HFC network to offer competitive voice and data services with the NBN. Let us be clear: the HFC network is not going to be decommissioned. It will still be providing pay-TV services and it will still be connected door-to-door to thousands of Australian homes, but it will be prevented from actually providing an alternative, competitive broadband service.

We recognise that Telstra shareholders—at least, the Telstra board—have indicated support for parts of this legislative package. After all, they are getting an $11-billion after-tax windfall as a result of the deal that has been struck between the government and Telstra, and good luck to Telstra shareholders in that regard. But I think we would be having a markedly different debate if this were not so integrated with the NBN proposal. It would be markedly different because we would actually be having a debate about how best to separate Telstra and doing so at the lowest cost for taxpayers whilst ensuring maximum value for Telstra shareholders. We would be debating how we would ensure ongoing competitiveness in the provision of broadband in Australia. Instead, we are going to have a debate that is focused on the government monopoly that they are proposing to build, because that is at the heart and centre of so many of the conditions that sit within this legislation.

I recall, in one of the many Senate hearings into the NBN proposal, asking David Forman of the Competitive Carriers Coalition what was more important: this legislation or building the NBN? Whilst Mr Forman said that he did not think it had to be a choice, he indicated that, ultimately, getting a separation of Telstra was far more important to competition in Australia than building the NBN was. I think it is important that we should have been having in this place a fair-dinkum debate—separate from the NBN debate—about how best to separate Telstra and how best to achieve those competitive outcomes. Sadly, the government’s approach has been to integrate the NBN throughout this. Many anti-competitive measures have been buried in this legislation to assist the NBN. That can only harm the quality of the debate we can have in this regard.

The government seems to be saying nowadays that anything less than a fibre-to-the-home package at 100 megabits per second is inadequate. Yet, in doing so, it is offering no evidence or rationale as to why that is inadequate—why Australia will suddenly reap enormous windfall benefits from such a huge transformation of speeds in the broadband space. We on this side have challenged the government to undertake a thorough cost-benefit analysis, a Productivity Commission assessment. Yet, sadly, the government has rejected those challenges from the opposition. If the government is so confident in its beliefs that the NBN is going to provide massive benefits for Australia, then why not undertake the Productivity Commission cost-benefit analysis that is being called for? Why shirk this type of scrutiny? Such scrutiny could tell Australian taxpayers once and for all whether putting $43 billion into fibre-to-the-home is a good investment and whether the idea of government picking the technology for the delivery of future broadband services is a good idea and, indeed, whether the technology picked is the right one. Such scrutiny could tell us whether, as we on this side believe, you would be far better off ensuring—for the vast areas of Australia where a competitive telecommunications market already exists and could be further enhanced by some of the measures in this legislation—competition and letting the private sector and private industry get on with the job of choosing the technologies for themselves. Such scrutiny could tell us whether, essentially, government should be technologically agnostic in the policy parameters it sets rather than trying to pick winners. Higher speeds of course sound attractive, but we are talking about investing a vast sum of public money and it is critical that the government justify the investment of that vast sum. The disappointment to date has been that the government has not been willing to do so.

We have seen the government fly in the face of its own guidelines, such as those released by Infrastructure Australia in October 2009 for better infrastructure decision-making. They stated that all initiatives proposed to Infrastructure Australia should include ‘a thorough and detailed economic cost-benefit analysis.’ The guidelines went on to state:

In order to demonstrate that the Benefit Cost Analysis is indeed robust, full transparency of the assumptions, parameters and values which are used in each Benefit Cost Analysis is required.

Those guidelines were released by an agency established by this government to look at how infrastructure should be built. Yet, for the largest infrastructure proposal of its kind, the government is tossing out its own guidelines.

Last week, the OECD handed down a report calling for a more robust approach and greater transparency in the way the NBN was developed—essentially, urging the government to hasten slowly in the progress surrounding its NBN. Yet the government still charges ahead, and refuses to undertake such a cost-benefit analysis. I hope that, during the course of this debate, we will see the government relent on this and acknowledge that there is benefit in doing so. The opposition is not, contrary to what those opposite say, seeking to hold the project up while this cost-benefit analysis is undertaken. We expect and accept that the government will continue with its deals and its build, but we believe that Australians would be better off if, by early next year or the middle of next year, after a thorough analysis, we were informed as to whether this was on the right track or not. Then Australia could make appropriate considerations about the government’s expenditure of so many billions of dollars.

A key concern of ours in relation to this legislation is that it is occurring under duress for Telstra. The government is essentially holding a gun at the head of one of Australia’s largest publicly listed companies in order to ensure that it gets its way and its NBN Co. is protected into the future. We do not think that such a deal is appropriate, especially not when it is aimed at trying to create a whole new government monopoly. As I have said before, any restructuring should be on terms that are fair to Telstra shareholders and to taxpayers—and on both those counts, it seems, this deal fails. Telstra shareholders are expected to operate under the duress of a threat that they will be denied access to future investment opportunities in the telecommunications market if they do not deal with the government, and taxpayers are denied the opportunity to see and know whether this is a wise policy and a wise investment of taxpayer funds.

The opposition have stated that we believe a separation could occur, on terms that are attractive to Telstra shareholders, if a resulting network company were given regulatory certainty and the knowledge that as a regulated utility it would be able to charge prices that deliver a reasonable rate of return on its assets. We think this type of separation could achieve a better outcome for the broadband sector in Australia, for Telstra shareholders and, importantly, for Australia’s taxpayers.

As well as driving the separation of Telstra, there are some key objectives in this legislation. In the competition space, the bill seeks to exempt the proposed Telstra-NBN Co. agreement and possible NBN Co. deals with carriers such as Optus from the normal operation of the Competition and Consumer Act. We see this deal as anti-competitive because it envisages Telstra being contractually required to decommission its copper network—an asset that still has value, even if that value is lessening—even as the NBN is rolled out. Once again we have a situation where the government is seeking to eliminate all competition or alternatives. As I have stated before, Telstra and, presumably, Optus will be prohibited from offering broadband and voice services over their HFC pay-TV cable networks. This infrastructure passes 30 per cent of Australian homes already and could be tuned up to deliver over 100 megabits today, yet it will be expected to lie dormant in the broadband space. The HFC network will not be decommissioned; it will continue to provide pay-TV services only. This is an approach that is without precedent anywhere in the world. The government is trying to eliminate all other forms of potential fixed line to the household competition in Australia in order to establish its significant new monopoly.

The third key area that the bill seeks to address is in relation to the access regime. The existing regime is widely seen to be only partly effective, since Telstra has frequently been able to negotiate and arbitrate a framework to delay and frustrate access seekers. We acknowledge that and, indeed, there is space to improve that. The bill seeks to amend the access regime included in the Competition and Consumer Act away from these traits and, instead, to a new model where the ACCC sets upfront price and non-price terms for declared services for periods of three to five years. This shift to a set and forget model would provide increased certainty for access seekers and carriers. But, in providing more certainty for Telstra’s competitors, we need to be careful not to tip the balance too far and unfairly limit the company’s scope to appeal if the ACCC gets it wrong. Therefore, in this space as well as in the others that I have mentioned, we will have some amendments to try to restore merit review processes and reinstate the ACCC’s procedural fairness obligations when it issues competition notices.

Finally the bill reinforces existing consumer protection safeguards, including the USO and the customer service guarantee. While these changes place an increased burden on carriers, the coalition does support them and will not be moving amendments in this area. In particular, we believe it is critical that consumer protections be meticulously upheld in rural and regional areas, which is where we believe the No. 1 focus of broadband policy in this country should be.

The coalition will be seeking to move a series of amendments during the debate on this legislation. Most of these have been covered and countenanced in the House of Representatives already and we look forward to considering the amendments of those from the crossbench too. I do note that there is some media coverage today speculating that amendments have been struck, or agreed to, between the Greens and the government. I note that, irony of all ironies, those amendments suggest that the government is willing to accept a Productivity Commission assessment of the NBN—once it has finished spending the $43 billion on building it—to determine whether it should be privatised. This is the ultimate case of the government putting the cart before the horse. The government has an opportunity here and now to have a Productivity Commission analysis; it can do it today, it can get it underway right now, and it can do it without waiting until the end of the cycle. The fact that the government has agreed, in a dodgy deal with the Greens, to have it put in at the end of this process rather than upfront is an outrage and it is something the government needs to look long and hard at because all Australians will see the folly of assessing the state of the market and the expenditure of some $43 billion after it has happened rather than before.

The coalition’s amendments seek to achieve a fair outcome for Telstra shareholders and Australian taxpayers, to remove the gun at the head of Telstra shareholders and to ensure that taxpayers get a fair deal. I would hope that Senator Xenophon, Senator Fielding and the Greens will be amenable to considering these agreements and, importantly, I hope that, at the end of this debate, the government acknowledges that a Productivity Commission analysis today is the right thing to do. (Time expired)

12:51 pm

Photo of Kate LundyKate Lundy (ACT, Australian Labor Party, Parliamentary Secretary for Immigration and Citizenship) Share this | | Hansard source

It is my great pleasure to rise to speak in the second reading debate on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. I listened very carefully to Senator Birmingham’s contribution, and I think it is important to highlight some of the fundamental contradictions in the coalition’s position. On the one hand, the opposition claimed that there is a need to separate all matters associated with the National Broadband Network and NBN Co. from the telecommunications structure—to separate the structure of the industry, the regulatory environment, from the matters of substance that are contained in this bill.

This is contradictory. The two are invariably associated because the telecommunications industry structure needs to adjust to accommodate a wholesale-only open-access fibre-to-the-home network—that is, the NBN. It is essential that the competition and consumer safeguards bill accompany the progress of the National Broadband Network policy. To argue for a complete separation of the issues denies that there is an association between the progression of the policy and the build of the National Broadband Network. This legislation is motivated to facilitate the structural adjustment the industry needs to make to sustain this excellent model of an open-access, wholesale-only, independently regulated fibre-to-the-home network.

The argument that we should separate the two issues is just another tactic in the opposition’s attempt to delay consideration of this legislation and the National Broadband Network. In a previous contribution—in relation to, I think, a general business notice of motion—I covered what I thought the political motivation of the opposition was in that regard, and it was not auspicious. I thought it exposed the opposition’s complete lack of vision in relation to the internet, telecommunications and the network for the future.

Another contradiction is their ‘go fast-slow down’ approach. Almost every question time the government receives questions about how many people have been connected to the National Broadband Network. The question is asked with a pejorative, accusatory tone: ‘How come so few are connected to the National Broadband Network?’ In responding to that, we inform the coalition that far more people than they purport are actually connected. So, in the chamber the coalition is pleased to place pressure on the government for more NBN connections. ‘Why aren’t there more?’ is the implication of their questioning. Yet, in the debate on this bill and their utterances outside of question time, their argument is, ‘We don’t need to go so fast.’ We just heard very clearly from Senator Birmingham, from the Liberal opposition, that we ought not to proceed, we ought to delay—we ought to have a Productivity Commission inquiry before we progress, we ought to have a cost-benefit analysis before we undertake this build.

There is a profound contradiction in what they convey in the public arena of question time and what they convey elsewhere. As I stated recently, local Liberal members are clamouring for the NBN to come to their communities. Yet, in this formal debate, when the rubber hits the road and it is about progressing legislation to facilitate the regulatory environment so that all of these policies can progress, they want to stifle, inhibit, delay, block. There is no reconciling those two positions. I think this exposes the very shallow political opposition to the National Broadband Network and to this legislation, which facilitates the regulatory regime.

The idea that Telstra is very much under duress brings up another contradiction. If what the opposition is saying is true—that this bill somehow facilitates the establishment of a new monopoly—which, quite frankly, ignores the fact that there is independent regulation associated with it, why would Telstra be under duress? We know, colleagues, that Telstra fought for the retention of their monopoly for many years. To imply that they would somehow be under duress to participate in a future monopoly defies belief. The fact is that Telstra and NBN Co. have entered into a practical agreement, which the coalition clearly lauded and encouraged. They criticised Labor for the process not occurring—now that it has occurred, it is suddenly problematic.

I am speaking on this bill today as an ACT senator. I have strong views on, and a strong history in the area of, public policy. I want to make it very clear that my comments relate to my experience. I would like to turn to a little bit of history in the telecommunications debate. Senator Macdonald does not fall into the following category, but some of his colleagues would. This discussion has been going on for a long time. Senator Macdonald would have been participating in the debates about the privatisation of Telstra, the various Estens reports about regional telecommunications services and so forth for a really long time and would have an appreciation—even though, obviously, a different political view—of how hard it is to get the telecommunications regulation and policy right in this country. Some members of the coalition who appear not to be apprised of this history seem to think there is a simple solution. Senator Birmingham’s in his contribution said very clearly, ‘Surely there’s a way that we can just organise this, commission a report and fix the policy so everybody’s happy.’ Well, Senator Birmingham, the coalition government had many years, 13 years, of government in which to do that. Some 14 different Senate inquiries across telecommunications, information and communication technologies, and internet have occurred over those years. Many more reports were commissioned by the former government about the challenge of regional telecommunications services and what was needed to provide universal, affordable access. And there has been recommendation upon recommendation—some accepted by the previous government and some rejected. None of them fixed the problem.

The only thing that will fix the problem is Labor’s vision and policy for a national broadband network, which is informed in part by a series of successive Senate inquiries into various bills and into the general issue of broadband. One of those inquiries was by the broadband select committee, which I think at one point you were chair of, Senator Macdonald.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Yes; that is true.

Photo of Kate LundyKate Lundy (ACT, Australian Labor Party, Parliamentary Secretary for Immigration and Citizenship) Share this | | Hansard source

Indeed. This broadband select committee took a great deal of evidence which served, in some part, to inform the development of our policy. One of the areas it informed the policy was in the great strength of the fibre-to-the-premises model of a national broadband network. We have learnt, through the evolution of policy, certainly in my time in parliament, that all of these inquiries and reports have informed how difficult it was to get the policy right. So when Labor announced a national broadband network that was open access, fibre to the home—and 93 per cent of that, fibre to the premises—wholesale only and independently regulated, it was the right model for Australia. That model recognised that we needed a network that was future proof. It recognised that the copper network that is currently in place was finite in its capacity.

We heard it described, as I have said many times before, by representatives of Telstra and many of the colleagues in this place, as ‘five minutes to midnight’. We also know, again through many inquiries, that the copper network is riddled with pair gain systems which prohibit the expansion of the ADSL-style high-bandwidth services and that there is a choke point that is being experienced currently in many Australian communities. How that choke point manifests itself is that people who want a broadband-style service like ADSL2+ cannot get it. There is no capacity in the system and they are placed on waiting lists and told repeatedly, by Telstra and other service providers trying to connect those customers, that there is no physical infrastructure available within that network.

Some on the coalition side point to wireless as somehow being a solution, but it is worthwhile placing on the record again—as the minister has, many times—the capacity constraints of the wireless network. It too has finite capacity. The style of that network means that the more people use the wireless network the less bandwidth each person gets because it has to be shared around. We know that wireless has these capacity constraints, and to continually introduce wireless as being somehow analogous or alternative to a fibre-to-the-premise network represents a complete misunderstanding of the physical attributes of these networks.

It is absolutely a statement of fact to say that the science is in on the future-proof nature of fibre-to-the-premise network. Light based or fibre optic technology has the capacity to increase its bandwidth as the technology at either end of that fibre continually improves. We are very pleased to hear the news from the NBN Co. that whereas our policy requires 100 megabits, their network will be able to deliver a gigabit in terms of bandwidth speeds. That is evidence of the future-proof nature of the fibre to the home network.

This legislation, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, forms a critical part of the landscape because it addresses the issue of what is needed in the competition regime and what is needed to protect consumer interests. Most of the provisions in this bill, introduced back in 2009, were obstructed by the Senate and we are now still trying to debate this bill. We are seeking the support of the Senate in doing so. The measures in the bill position the telecommunications industry to make a smooth transition to the National Broadband Network. As I said, the changes to the bill reflect the announcement earlier this year of an agreement with NBN Co. on the migration of fixed-line services. So the bill now reflects that up-to-date situation.

These are very important agreements to progress the National Broadband Network. The reintroduction of the bill provides for much of the legislative framework to support the arrangement to deliver the structural reform of the sector. I will just run through some of the features of the structural reform contained in this bill. The structural reform restructures the telecommunications market and promotes greater competition and consumer benefits. These are outstanding issues; they have been outstanding for a long time and they need to be addressed. It seeks to strengthen the telecommunications-specific access regime to provide more certain and quicker outcomes for telecommunications companies. It seeks to streamline the anticompetitive conduct regime by removing procedural impediments that in the past have restricted the effective operation of the regime and it seeks to strengthen the consumer safeguard measures. The bill represents a balance between providing Telstra with sufficient certainty to progress with structural separation while, at the same time, protecting access seekers and consumers in that transition. It sets out a framework for Telstra to seek approval from its shareholders.

All of these issues are important and I think it is worth saying that many of them have existed for a very long time. Those of my colleagues who have been around for a while will remember the endless debates about the regulatory gaming that has occurred in the telecommunications sector and would understand the importance of these adjustments to the competition regime. They would also understand that having a wholesale-only open-access independently regulated National Broadband Network is the ultimate solution to what has been a very fraught sector, whereby Telstra’s presence as a residual monopoly within that sector has prevented the kinds of investments that only the government, through the NBN policy, can progress.

We experienced market failure and the minister’s very diligent efforts to test the market in responding to the needs of this nation were exemplary and very thorough. It was in response to that market failure that our policy for a national broadband network emerged. I am very proud of that. It was visionary policy that has captured the attention of governments around the world who grapple with similar problems of people clamouring for affordable universal broadband access. The respective telecommunications industries are incapable of providing that on a ubiquitous basis and governments seem to find some constraint in responding to the needs of their populations, usually by virtue of the efforts of the incumbents in the markets to protect their own patch. In Australia, Telstra has shown that it is incapable of making the future-proof style of investments that could have characterised our progress in the digital age through the late nineties and the early part of this decade. As we know, through the policy failures of the former government this did not happen.

In closing, I return to the point of why we need a national broadband network. Senator Birmingham and other coalition senators always return to this fundamental question. It is an interesting characteristic that only now the Leader of the Opposition and his shadow ministers have raised the question. The characterisation of the debate up until we announced our national broadband network policy was which party could do it better, which party could do it faster and which party could do it most efficiently. The political debate was characterised by whose policy settings were going to get us as a nation there first. The coalition said this was the objective, whether it was Senator Coonan’s contributions as the former Minister for Communications, Information Technology and the Arts or the more recent utterances of the coalition. We want to have as many people as possible on as high a bandwidth as affordable in this country. That would be good for our economy. That would be good for our society.

Why is it only after the announcement of a national broadband network policy that will get us to all of those places that we have recognised we want to be that suddenly the opposition says, ‘We’re not so sure that is where we want to be,’ and starts this contradictory debate that is effectively a tactic in delaying, stifling, inhibiting and ultimately trying to block the progress of the National Broadband Network and its associated telecommunications amendments. It is unfortunate. I think it speaks to the character of the opposition at the moment and I know that there are many people who believe in the National Broadband Network and who want to see it proceed. We have a great opportunity to progress the issue today.

I make it clear that I am speaking as the senator for the Australian Capital Territory, as a member of the Senate who has had a longstanding interest, and not in my executive capacity as a parliamentary secretary. I am contributing to this debate very much as a member of the Senate with an abiding interest in telecommunications policy.

1:11 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It is always good to hear Senator Lundy in these sorts of debates as I know she has a very longstanding and precise understanding of this area. In fact, as I said jokingly—but only mock jokingly—I think Senator Lundy would have made a far better Minister for Broadband, Communications and the Digital Economy than the current incumbent. I know it embarrasses Senator Lundy to have me say that, but I sincerely believe it because Senator Lundy does actually understand these things and, despite her protestations, I am quite confident that had she been the minister we would not have had the absolute mess before the parliament and in Australia that we have now.

As each day goes by, more and more people are questioning the spending of $43 billion of taxpayers’ money on what many are now calling a white elephant. I continually make the point that had the coalition won the 2007 election a broadband would be operating nationally at very high speeds today—no ifs, no buts, no maybes, no looking eight years down the track and perhaps more waiting for this NBN conglomeration to become effective. It would have been operating today. Had the coalition been able to implement its policy, that national broadband network would have been a mix of copper, HCF, fibre to the node or to the home and wireless. That would have been up and running. People that I represent in Northern and remote Australia would be enjoying the benefits of a very high-speed broadband today, as I speak, yet because of this government’s three or four years of vacillation people in many parts of remote Australia still cannot get a decent mobile telephone system. That is what they would have you spend some of the $43 billion on rather than on what is increasingly being called a white elephant.

I ask senators and I ask the people of Australia: if Senator Conroy’s NBN is as good as he says it is, then why do you need this legislation, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010? Why do you need to threaten Telstra with a shotgun if Senator Conroy’s NBN is so good? If Senator Conroy’s NBN is as good as he says it is, you would think that people would be rushing to it and you would not need any legislation to destroy competition. In fact, if it were as good as Senator Conroy tries to make out, then in Tasmania you would have more than a 50 per cent take-up and you would have people actually paying to go onto the system. I keep mentioning the fact—I am waiting for Senator Conroy or someone on the other side to tell me I have got it wrong here, but no-one ever will—that in Tasmania NBN Co. are giving away their part of the $43 billion investment for free. They are not charging the internet service providers a cent for this network which in Tasmania has already cost $100 million. You would think that if you were getting that $100 million input into good telecommunications in Tasmania for free then more people would be rushing to join up, but they are not. Quite frankly, most of us will never want 100 megabits per second. Those who want to download the latest in movies—certainly something I do not want to do and I suggest very few Australians want to do—will perhaps like the 100 megabits per second. But for normal average use, 12 megabits per second will be more than sufficient for what most Australians will need.

Taking the case of people in Tasmania, they are getting the service for free at the moment. The price to customers, we heard the other day, was from $49.95 up to $89.85, depending on the service they got, but that is about what people now pay for the same service on Telstra’s or Optus’s copper line system. It costs everyone $300 to get the connection box on their house, but so few people were interested in this that NBN Co. said, ‘We’ll put in the $300 box free of charge.’ So not only are NBN Co. not getting any revenue for their $100 million investment but they actually paying out—they are paying people $300 so they get the connection box in the hope that they might then actually connect to the system.

If Senator Conroy’s NBN is so good, why aren’t more people being involved in it? If it is so good, why do you have to force Telstra to shut down their copper network? If it is that good, surely people will line up to join into the fibre-to-the-home network, then we will not have to pay Telstra $11 billion for them to shut down their copper network. That is what we are doing: the taxpayers are paying Telstra $11 billion to shut down their copper network. Telstra, of course, are laughing all the way to the bank—and why wouldn’t they? It would be completely unnecessary if Senator Conroy’s NBN were as good as he makes it out to be.

This bill before the parliament gives the minister power to shut down Telstra’s, and I assume others’, HFC cables if the minister thinks that leaving them operating would give Telstra the potential to compete with the NBN service. If this is as good as Senator Conroy always tells us it is, why is this legislation giving the minister power to shut down the HFC cable network in Australia? If this is so good, why is this draconian legislation needed? This is the sort of legislation that would have had an everyday place in communist Russia—telling companies what they can and cannot do and threatening to take off them part of their business if they do not toe the government line. That is what this bill says.

There are in this bill, I might say, some elements with which the coalition certainly agrees. The pieces of the legislation that deal with consumer protection are appropriate, we believe. They reinforce the existing consumer protection safeguards in the industry, including the universal service obligation and the customer service guarantee. These changes do place an increased burden on carriers but, nevertheless, we on this side of parliament still support them and we are not going to be moving any amendments in this area. In particular, we believe it is very important for consumer protections to be meticulously upheld, especially in rural, regional and remote Australia where, as we all know, access to reliable communications services is critical. So there are certain elements of the bill which we support. But, as Senator Birmingham indicated when he led the debate today, we will be moving a number of amendments to remove some of the more draconian elements of this bill. I understand that both Senator Fielding and Senator Xenophon will have amendments as well and we are interested to see what they are.

In passing, I recall the debate on Thursday when Senator Xenophon said he was not going to insist upon the cost-benefit analysis because he had been offered a briefing by the government. He obviously had not read the fine print, because he now discovers that that would have required him to have a seven-year confidentiality clause imposed upon him. He could not have talked about his briefing for another seven years. I understand from reading the newspapers that that has moved on a bit. But I also understand that for that reason Senator Xenophon, according to the newspapers—I have not spoken to him myself—is not now going to take the briefing, which makes me wonder why this matter was not referred to the Productivity Commission for proper assessment.

This legislation, in spite of Senator Conroy apparently not knowing this, is all about trying to make the NBN work. It will not work in a commercial way. The leading telecommunications experts have all been to Australia and cannot believe that a government monopoly is going to waste $43 billion of taxpayers’ money on a fast broadband service that private industry could have equally well provided—and businessmen around the country agree. In Australia private industry was well on the way to providing that. Sure, there have been complaints. In the number of communications committee hearings that I have been involved in over the years there has been a litany of complaints about access to Telstra’s network by competing carriers. I accept that in many cases those complaints are accurate and justified. But you do not need a sledgehammer to crack that nut. What you need is decent legislation and clever negotiations between the parties to bring about a result.

This proposal to spend $43 billion to shut down a current network that, for the majority of Australians, is okay, to build a competing network, or duplicating a similar sort of network, to me is just crazy. I am pleased to say, as I mentioned before, that every day that goes by more and more Australians are questioning the sense of this. Sure, we all want fast broadband. But, as I have said a number of times, had the coalition’s plan been adopted, that would have been up and running now. Even the most optimistic estimates of this plan suggest that it will be seven or eight years before it is properly operational.

Why do we need 100 megabits per second? We are told that it makes e-health much better. Sure, e-health can work better if you have 100 megabits per second, but that is available now. In fact, I understand that 100 megabits per second has been available for some time if you are prepared to pay the price for it—and nobody will. But I understand the carriers can provide that if you want to put your money up. I note that in the United States the minimum broadband target is four megabits per second. As I recall, the coalition’s 2007 proposal provided for 12 megabits per second—more than enough for the average Australian.

If this proposal is so good, why, oh why, oh why will Senator Conroy not allow it to go for a rigorous, independent cost-benefit analysis? If he is that confident, you would think he would be the first one to push it in there so that an independent and well-regarded authority could come out and say: ‘Senator Conroy is absolutely right. This is going to be at a cost which is bearable by the nation and it will provide all of these benefits that will justify that cost.’ It is incomprehensible that Senator Conroy would object to that if what he has said about his NBN proposal is accurate. But the corollary is obviously the case. Even Senator Conroy, nice fellow that he is, knows that all his rhetoric is not accurate. Even Senator Conroy knows that the value for money is not there, in spite of what he says here. If it were there, he would be the first one pushing it into a rigorous, independent cost-benefit analysis.

What Senator Conroy is doing is locking us into what today is the very latest of technology but tomorrow may be old-fashioned. That is one of the concerns that we have with this. Why Telstra are being forced into a position where the minister may be able to shut down their HFC pay television cable network completely escapes me. That sort of draconian, un-Australian approach to any business activity in Australia defies logic. It certainly defies our understanding and defies what we accept as the norm in a democracy like Australia. Those HFC pay television cables, I have to tell you, pass about 30 per cent of Australian homes at the present time and they could easily provide 100 megabits per second if you wanted to pay for it. But, as I say, take a poll. Who needs 100 megabits per second? We are being locked into Senator Conroy’s view of the world, when tomorrow there could be all sorts of new technologies.

That is what was so good about the coalition’s original proposal: it included copper, it included fibre, it included the HFC cables and it included, most importantly, wireless—because the thing people want more than anything today is not necessarily 100 megabits per second but a mobile telecommunications arrangement. As old-fashioned as I am, I take my laptop everywhere and, in fact, with the little stick I shove in the side of the laptop I can actually send messages as I drive between my office and my home or if I am travelling overseas. Of course, with our little mobile phones, we can also send emails wherever we like and get internet access. So what we are all seeking is that mobility, and locking Australia in, at $43 billion, to a fixed-line fibre network is in my view not appropriate.

I return to the matters I raised when I started this contribution. If the system is as good as Senator Conroy says it is, why do we need this legislation? Why do we need the draconian bullying of a major Australian company that is in this bill before the parliament today? If it is as good as Senator Conroy says it is, why in this bill does he give himself the power to shut down the HFC network? If it is as good as Senator Conroy says it is, why is it that in Tasmania, where the service is being given away, at no cost at all, only 50 per cent of the people have even bothered to have a look at the proposal? It does not make sense. The coalition, as I mentioned, will be supporting parts of this bill, but we will be moving amendments to attempt to correct some of its more draconian elements.

1:31 pm

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to make a contribution on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. This bill introduces measures that were in the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, which was introduced in the parliament in September 2009. This new bill contains amendments to the original bill. The 2010 bill will make significant amendments to the Telecommunications Act 1997, the Trade Practices Act 1974 and the Telecommunications (Consumer Protection and Service Standards) Act 1999, plus other consequential amendments. We have before us a substantive regulatory reform package that will deliver a more efficient and effective telecommunications market with appropriate consumer safeguards.

The primary aims of the bill are: to address Telstra’s vertical and horizontal integration by providing stronger separation arrangements for Telstra, including a legislative framework to voluntarily structurally separate by migrating its consumers to the National Broadband Network, as agreed in the financial heads of agreement between Telstra and the NBN Co.; to strengthen the telecommunications-specific access regime to provide more certain and quicker outcomes for telecommunications companies; to streamline the anticompetitive conduct regime by removing procedural impediments that in the past have restricted the effective operation of the telecommunications-specific competition regime; and to strengthen consumer safeguard measures.

The case for telecommunications reform is clear. These amendments provide the opportunity to overcome the vertically integrated, privately owned monopoly that Telstra enjoys in the Australian telecommunications industry. These amendments make fundamental reforms to existing telecommunications regulations in an attempt to rectify the anticompetitive nature of the industry. We need to address the mistakes of the past and establish an effective and efficient regulatory framework for telecommunications. The way forward is a mix of strong measures to open up the sector, alongside appropriate safeguards and incentives for consumers. This bill will reshape regulations for the telecommunications sector and will allow us to deliver better and fairer outcomes for Australian consumers, businesses and the broader economy. These reforms will allow the sector to smoothly transition to the NBN. They will increase competition and they will improve consumer safeguards. I certainly hope that those opposite will vote to give consumers a fair go.

Telstra is one of the most integrated telecommunications companies in the world. It is extremely vertically integrated. Telstra currently owns the only fixed copper-wire network in Australia that connects to almost every premise in Australia, as well as the largest hybrid fibre-coaxial cable and mobile networks, and it has a 50 per cent stake in Australia’s largest television subscription provider, Foxtel. The proposed legislation will help promote greater competition in the industry by requiring Telstra to split its functions through a voluntary separation. The vertical separation will reduce incentives for discrimination against wholesale competitors and will result in increased competition. The legislation will also address Telstra’s horizontal integration across the copper, cable and mobile platforms. Separation allows for the open-access market structure, which we are delivering through the National Broadband Network.

The bill will provide more legislative and regulatory certainty for Telstra and its shareholders as it transitions into a retail company. Through these reforms, it is possible to create a win-win situation for Telstra, its shareholders and Australian consumers and businesses. These legislative changes will deliver much needed benefits for consumers while simultaneously protecting consumer interests. I know Senator Bushby, who is in the chamber, would be very supportive of any safeguards to support consumer interests, as he took up a case—as many did in my home state of Tasmania—involving Bruny Island, which we unfortunately have not had a good result on yet, under the current regime.

Photo of David BushbyDavid Bushby (Tasmania, Liberal Party) Share this | | Hansard source

Senator Bushby interjecting

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

I will declare a conflict of interest: I have a shack on Bruny Island. But I am sure Senator Bushby would be supportive of consumer safeguards.

By addressing Telstra’s integration across the fixed-line copper, cable and mobile platforms, and by delivering a structural separation of the company, consumers stand to benefit from the increased competition across the sector. With NBN Co. to be a wholesale-only communications provider with open-access arrangements, the rollout of the NBN is already reshaping the competitive dynamics of the communications sector.

Senator Conroy has already highlighted the beginnings of benefits to consumers and an increase in competition in my home state of Tasmania with the rollout of the NBN. We have seen introductory offers from internet service providers at prices as low as $30 for 25-meg download speeds. Other companies are offering packs for $90, which include all your broadband and phone calls. The equivalent Telstra package currently offered in Tasmania is around $130. This is clearly a result of the threat of entry of competition from the National Broadband Network. Competition will only increase with the ongoing rollout of the NBN and with the separation of Telstra. As Senator Conroy said when he first announced the proposed changes:

For years industry has been calling for fundamental and historic microeconomic reform in telecommunications.

And:

Today we are delivering this outcome in Australia’s long term national interest.

This legislation presents an opportunity for Telstra to forge a new identity and will translate as a win-win outcome to be achieved by Telstra, its shareholders and by Australian consumers and businesses. This bill will address the longstanding deficiencies in the regulation of the sector and it will also drive growth, productivity, regional development, social equity and innovation. We will have proper regulation of the wholesale company and we will have proper scrutiny.

This legislation has been informed by the discussion paper on telecommunications reform which was released on the same day as the announcement of the National Broadband Network in April 2009. The discussion paper on telecommunications reform received a strong response, with 140 submissions received from a wide range of stakeholders. These submissions included all major telecommunications service providers, broadcasters, media companies, state and territory governments, the ACCC, disability and consumer groups, business organisations and unions. Their response was clear. Across all of the submissions, the unanimous feedback was that the telecommunications industry is uncompetitive, it does not assist consumers and it does not assist businesses. That is why we have initiated fundamental reform to the telecommunications industry, to address the high level of vertical integration amongst both Telstra’s wholesale and retail services. And, of course, these changes come alongside the rollout of the NBN—one of the largest infrastructure nation-building projects of our time, a project which will drive Australia’s future productivity and growth.

We must have the appropriate telecommunications regulation in place to ensure that the NBN is affordable and able to deliver high-quality services to businesses and consumers. The proposed changes to the telecommunications regulations have been met with a positive response from the Australian Competition and Consumer Commission. Speaking after the announcement of the proposed split of Telstra, Chairman of the ACCC, Graeme Samuel, praised the changes saying the public is best served by having a competitive telecommunications sector. Mr Samuel went on to say:

There are 21 million Australian consumers, about 16 million of them are using some form of telecommunications service and they are the big winners because, at long last, we’re seeing competition quite clearly infused into the telecommunications sector.

This legislation has widespread support across the telecommunications sector. I received a letter earlier this year—as I am sure other members of parliament did—from the Australian Communications Consumer Action Network, the Competitive Carriers Coalition, iiNet, Internode, Macquarie Telecom, Netspace Networks, Primus Telecom, TransACT Communications, Vodafone Hutchison Australia and the Australian Telecommunications Users Group. The letter, which related to the original bill and was co-signed by those 10 major groups, pleads the case for passing the bill with signatories arguing that we need these ‘comprehensive and coherent reforms’ to improve competition and consumer protection in Australia. These groups also emphasise the need to deliver these reforms for consumers in regional Australia. I read from the letter:

Australian consumers deserve and need these reforms, none more so than those in regional Australia. These Australians have been let down repeatedly by policies that have sought to paper over the symptoms of poor competition without addressing the root causes.

Through this legislation, we are bolstering consumer safeguards and protecting consumer access to affordable telecommunications services. The legislation retains and strengthens the universal service obligation. Telstra, as the universal service provider, therefore must ensure all Australians have reasonable access on an equitable basis to standard telephone services including payphones.

The customer service guarantee will be bolstered through minimum performance benchmarks to require telephone companies to meet or exceed the CSG requirement. If the standards are not being met, those companies will incur civil penalties. There will be additional priority assistance requirements for telephone companies. Through enhancing the powers of the Australian Communications and Media Authority, ACMA, to issue infringement notices, we will also have more effective enforcement of our bolstered consumer safeguards. The Senate Environment, Communications and the Arts Legislation Committee report also provided an endorsement of the legislation. The final report concluded:

The committee believes that the bill in its current form provides important and timely reforms to Australia’s telecommunications regulatory regime that will be of benefit to providers and consumers

The committee recommended that the bill should be passed.

We cannot let those opposite deny Australians better broadband and telecommunications services whilst they try to work out where they sit on the issue. Given that a few weeks ago Mr Malcolm Turnbull agreed at the Melbourne communications conference that ‘If vertical integration is the problem, then separation—structural or functional—is the answer’, we must ask how, in spite of these comments, those opposite still will not fully support the legislation that provides for the separation of Telstra. What is the reason for objecting to a bill which breaks down the telecommunications monopoly? Why oppose legislation which finally gives consumers and businesses a fair go? We need to act now to deliver fundamental reform to the telecommunications industry—reform which will benefit both consumers and businesses in the future. I commend the bill to the Senate.

1:44 pm

Photo of Nick MinchinNick Minchin (SA, Liberal Party) Share this | | Hansard source

I rise to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 as the former shadow minister for communications throughout 2009 when most of these developments took place, and also of course as the last shareholder minister for Telstra and the minister responsible for T3. The first version of this bill appeared when I was the shadow minister and we made clear then our profound concerns about it. This second version really is no better than that first one. We indicated over a year ago that we could support parts 2 and 3 of this bill but that we were fundamentally opposed to part 1, and we still are.

This bill is in many ways a complete con. It is just a clumsy camouflage for the government’s true objective of creating a new government owned telecommunications monopoly in the form of this NBN Co at massive cost to the taxpayer. This is in fact a radical leap into the dark of telecommunications policy to create this new government monopoly and, as a result of another sleazy deal between the Labor Party and the Greens, we now know this company will probably never be privatised. So taxpayers will have billions tied up in this company forever.

This bill proposes to allow the government to use the force of law to break up a great Australian company owned by millions of ordinary Australians in order that this NBN can operate as a government monopoly without any competition, simply to prop up the shaky finances of this company. It really is an admission that this NBN would be completely unviable unless, as this bill proposes, competition law is suspended and Telstra is bought off. So the passage of this, frankly, quite offensive bill would pave the way for the government to use taxpayers’ money to buy off Telstra. What is on the table is an $11 billion bribe to buy Telstra’s agreement to cooperate in the creation of this new government monopoly. The government wants taxpayers to hand over $9 billion in cash to Telstra—and that is presumably on top of the $26 billion that they were going to hand over to this company—to rip up its copper and close down its HFC network, and then give Telstra on top of that a $2 billion gift by relieving it of its universal service obligation.

We learned just last week from the minister’s statement on the NBN that this USO deal that they have cooked up is going to cost taxpayers $100 million in the first two years—and this is on top of the $11 billion—and $100 million every year for at least a further eight years. The government has got itself in a position now where it has got to create yet another new quango—they are calling it USO Co—which, believe it or not, is going to rent copper from Telstra to ensure that the seven per cent of Australians not getting a fibre service under this wonderful NBN can still get a fixed-line service. The minister said:

... USO Co will have responsibility for delivering—

among other things—and this is not English; this is the minister—

ensuring the continuity and ongoing maintenance of the copper network for premises in the last 7%—in effect, those premises that are not connected to the fibre network;

                  …              …              …

USO Co will deliver these responsibilities through contracts, initially with Telstra.

So we are paying Telstra on the one hand to rip out its copper. On the other hand we are going to pay them $100 million a year to keep the copper for the seven per cent of Australians who will not be getting the fibre.

And we all know why this happened. It is a consequence of questions we raised at estimates with Senator Conroy last year, when we said, ‘Minister, how are you going to guarantee that every Australian who currently gets a fixed-line phone service is going to get one under your NBN?’ He clearly did not have a clue as to how that was going to be achieved. The question stunned him. He looked like a rabbit in the spotlight, and now he has come up with this extravaganza that is going to cost taxpayers $100 million a year to keep the copper in the ground for the remaining seven per cent.

The worst thing about this bill, frankly, is its cynical disguise as being virtuous in seeking to break up a great Australian company, Telstra. The government is really only doing this to prop up its $43 billion NBN. This is looming as Australia’s greatest ever white elephant. I place on the record—and I ask anyone to demur—Labor has never before formally advocated the structural separation of Telstra. It has never been a policy of the Labor Party before this bill was dreamed up. Labor created Telstra as a fully integrated telco and, while Labor quite hypocritically opposed privatisation, having sold the Commonwealth Bank and Qantas, at no stage did it advocate breaking up Telstra. Only last year when pressed on this question at Senate estimates, Senator Conroy said he was not an advocate of breaking up Telstra and the coalition quite properly has not been an advocate of breaking up Telstra. The coalition quite deliberately and properly and without criticism from Labor, retained Telstra as a fully integrated telecommunications company.

I remain completely opposed to the structural or functional separation of Telstra by force of law. It is an outrage that this is being perpetrated. The structure of the company is a matter for its millions of shareholders and our government was absolutely right to sell Telstra as a fully integrated telco. We followed sound international practice. We maximised the return to taxpayers to help pay off the $96 billion debt that Labor left us, and we ensured that Australia has a strong, financially viable, major public company able to invest billions of dollars—which it does—in our telecommunications network.

Extensive studies here and overseas make very clear the virtues for consumers and national economies of fully integrated incumbent telecommunications companies and the very considerable risks there are in trying to break them up. Study after study shows the substantial benefits for investment, efficiency and innovation from the existence of fully integrated telcos. That is why most incumbent telcos around the world actually remain fully integrated. As the Productivity Commission noted in a 2005 report on telecommunications, only a few countries have ever proceeded with separation initiatives and, at least in the United States, those structural changes have since been reversed. The Productivity Commission noted that the OECD has made an exception to the general position on vertical separation in relation to network infrastructure—in other words, telecommunications—and the OECD, which was, I must say, quite critical of this NBN proposal concluded that full vertical separation was unlikely to deliver a net benefit to telecommunications markets. That is the position of the OECD. The Productivity Commission in that paper that I am referring to did not support either the vertical or horizontal separation of Telstra, and that is one of the reasons why the coalition and the Labor Party have not previously supported such separation. The Productivity Commission, in relation to the telecommunications market, said:

… liberalisation has delivered a much more competitive environment. For example, since 1997, the number of carriers has increased from 3 to over 100, with new players significantly eroding Telstra’s market share in the long distance and mobile call markets …

And, of course, that market share has continued to erode since this report.

One of the world’s leading experts in this field, Eli Noam, Professor of Finance and Economics at Columbia University, published a very significant paper on this subject last year in which he recanted his previous support for separating telecommunications companies. As Professor Noam said:

In the past, I strongly supported divestiture.

But after a detailed study of the actual outcome of divestiture in the United States he concluded that it had comprehensively failed to achieve its objectives. The empirical evidence is in, and it does not work. As he stated:

… structural separation may have made sense in theory, but the numbers do not substantiate the benefits in practice.

                  …              …              …

Separation is a tool, not a goal. There are other tools to achieve the same legitimate objectives, and they would be simpler and cheaper.

So separation is certainly not the international norm. It is not supported by our leading analyst, the Productivity Commission. I, for one, certainly believe that Australia derives a net benefit from Telstra’s current structure. I strongly oppose this bill to force the break-up of Telstra and to use $11 billion of taxpayers’ money to buy Telstra’s silence simply to prop up this $43 billion outrage. Frankly, worst of all is that this government is insisting on this parliament passing this radical and extraordinary piece of legislation in the absence of either the business case for this $43 billion extravaganza or a decent cost-benefit analysis of the NBN. This bill simply should not proceed, at least until the business case is made public.

1:54 pm

Photo of Dana WortleyDana Wortley (SA, Australian Labor Party) Share this | | Hansard source

I welcome the opportunity to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 and, in doing so, I would like to refer for a moment to the present debate surrounding the passage of this legislation in light of the government’s present scrutiny and release, in due course, of the National Broadband Network Company’s business plan. Let us not assume that those opposite are motivated by anything other than political expediency in calling for the immediate release of the plan. They know that, given their long—far too long—occupation of this side of the chamber, that documents of this scale and complexity require careful consideration before entering the public domain. I note the remarks of Mr Windsor from the other place on the ABC’s Lateline program. He said:

I think the Opposition’s agenda has been very clear. Tony Abbott made statements earlier today that it was about demolishing the NBN. So, I think any amendments now that they introduce have one aim in mind and that’s to delay rather than assist in terms of scrutiny or transparency.

In their zeal to wreck and destroy, those opposite would have our country lose out on cutting-edge, 21st-century technology, the benefits of which already have been so widely acknowledged. There is widespread acceptance throughout Australia that the federal government’s National Broadband Network is critical infrastructure that needs to be rolled out around Australia. The opposition need to take a good look at themselves and the needs of their constituencies, put aside their determination to demolish and destroy, and consider what will lead this country forwards rather than, as they seem to prefer, backwards in terms of opportunity, productivity and competitiveness.

I turn to the bill. This piece of legislation will overcome the constraints on reform presently operating due to one entity’s dominance in the telecommunications marketplace. Its aim, simply put, is to strengthen protections for consumers in the telecommunications environment as we move towards the implementation of the NBN. The bill does this in three ways. First, the legislative scheme will result in the structural separation of Telstra so that services to consumers will operate in a new, entirely wholesale arena. Next, the conduct regimes of the Competition and Consumer Act 2010 with regard to anticompetitive behaviours and access will be rationalised to foster competition in the market. Finally, the current consumer protection regulation will be strengthened to facilitate consumers’ transition t the NBN.

This government is entirely committed to the program of reform laid out in the competition and consumer safeguards bill. The reforms we discuss today are reforms that constitute the most wide-reaching overhaul of our telecommunications sector since the introduction of competition in 1997. They are in the interests of consumers and businesses and, therefore, by extension, in the interests of the broader economy. At present Telstra is highly integrated, providing both retail and wholesale services. While it is strong in asset base and resources, owning the fixed line copper network, the most sizable mobile and hybrid fibre-coaxial cable networks and half of Foxtel, Telstra’s level of integration has been recognised as a fetter on competition, with the result that Australia is not keeping pace with other developed economies in this field. This is because Telstra presently has the capability to place its retail concern ahead of the business of its wholesale customers. This has been well and truly recognised by Telstra’s competitors. As an example, the Director of Government and Corporate Affairs for Optus recently said:

We believe that the telco reform bill – including the structural separation of Telstra and greater power for the ACCC to enforce a level playing field in the fixed line market – must be a priority for the new Government.

One could not find a more considered endorsement than that of the Telstra CEO. He was quoted in the Australian on 20 October saying:

On balance we support the passage of the Bill …

                  …              …              …

We believe the interests of Telstra shareholders would be best served by the Bill being passed this year so that a definitive agreement on our involvement in the NBN can be reached quickly.

The legislative scheme proposes that Telstra migrate its fixed line traffic to the NBN. This would be achieved under a settled regulatory scheme as the network is introduced.

Debate interrupted.