Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Hansard source

My friend and colleague the member for ‘paradise’ mentions Woodside and other companies where there might be some disputes about access to rail lines, access to infrastructure and those sorts of things. What do you do? Do you just break up the company? Do you just march on in and bust up a corporation with the most spurious of explanations about why it is necessary and then dress it up under some sugar-coated term like a ‘national broadband network’ when really that is no more than a thought bubble by this federal Labor government, which has campaigned on it and seen the political virtue of trying to attach its brand to a concept like the National Broadband Network with no idea at all about how to actually go about implementing it?

This is at the heart of the opposition’s objection to those provisions in this bill. The bill seeks to prevent Telstra from acquiring specified bands of spectrum, which could be used for advanced wireless broadband services, unless it structurally separates and divests its hybrid fibre-coaxial cable network and its interest in Foxtel. So that is the deal: you cannot expand your wireless service offer or engage in what is in many people’s eyes the most dynamic and exciting area of telecommunications innovation reform in the wireless space unless you do certain things. Telstra will be nobbled from engaging in the telecommunications future because of this bill.

In addition to the prevention of access to spectrum in the absence of a structural separation undertaking accepted by the minister and the ACCC, the bill provides for functional separation of the company on terms defined by the minister. Have you ever seen a minister out of depth? We have had to save Minister Conroy from himself time and time again since he was appointed the Minister for Broadband, Communications and the Digital Economy. Even in Senate estimates yesterday he could not even explain a basic tenet of the government’s sound bite about broadband. He could not even make the maths add up in terms of technological reach and the like. Yet this bill seeks to give him the power to dissect and fillet out bits and pieces of a vertically integrated company like Telstra. If he cannot work out what percentage of customers will get wireless, copper or broadband—simple maths; my son could work that out and he’s 11; he’s pretty smart, but that is not hard maths to work out—how on earth is this minister going to start the difficult and complex of task of from Canberra dissecting parts of Telstra in a way that achieves a kind of separation that he had difficulty even defining?

The bill also contains, as I mentioned, amendments to increase the powers of the ACCC under the Trade Practices Act and changes to the universal service obligation and consumer service guarantee. Quite obviously, the amendments that hold a gun to the head of Telstra and seek to force the company into a structural separation undertaking are of greatest concern to the coalition and the millions of Australia who are shareholders, employees and customers of Telstra. It is quite clear that these amendments aimed at Telstra are about one thing and one thing only, and that is a blatant and naked attempt to make the government’s poorly conceived NBN viable.

This was confirmed during a recent public hearing when David Foreman, CEO of the Competitive Carriers Coalition, said:

If you suggested to me that the NBN was likely to succeed in the absence of this legislation I would say that’s a pretty big bet.

There is a direct correlation between the provisions of this bill and the political motive of trying to make a poorly defined NBN thought bubble somehow morph into reality.

I will give the government credit for one thing. When I was shadow minister for broadband and communications, I made the point over and over again that there will be no such thing as a National Broadband Network. Ultimately, it will be a network of networks. For anyone listening to this broadcast or interested in this policy area, there is already abundant fibre based infrastructure that represents not only a down payment but substantial progress to the kind of coverage all Australians would hope for in terms of higher speed, more affordability and more available broadband. That infrastructure is there now. As I have argued over and over again, and today I again submit this to the government for them to consider, a network of networks is the only realistic, conceivable, cost-effective and affordable way for this ambition to be pursued. But in the pride that Senator Conroy brings to most things—for he must win the argument even if his proposition is wrong—he will not accept that and will not move in the collaborative way that the coalition has advocated for some time.

Watching the minister’s attempts to implement Labor’s 2007 campaign promise to build a National Broadband Network has been like watching a slow motion train wreck. For almost two years, the telco sector, consumers and taxpayers have had to endure a sorry sage of incompetence, uncertainty, delays, bungles, wasted millions, announcements, re-announcements, refined announcements and even an attempt to say, ‘Look, we’ve messed this up but we’re going to go bigger and better’—from $4.7 billion of shambles to a momentous $43 billion of undefined objectives around a broadband thought bubble. All of this has gone without the delivery of a single new broadband service under this federal Labor government.

All they have achieved in the fog and the confusion has been to freeze investment from other telecommunications providers. They have effectively cryogenically frozen broadband while they have tried to work their way through a model of their own making. While ‘cryogenic Conroy’ has frozen the communications sector, millions of Australians have missed out on service improvements that would have ordinarily been undertaken through the normal course of commercial investment and service innovation and improvement.

More worryingly, though, is the blatant disregard for rural and regional Australia, as evidenced by the cancellation of the OPEL program. That program, put in place and carefully worked through by the former government, would have been delivering services to underserviced communities in remote, regional and outer metropolitan Australia. Most of those services would have been well underway now and all of them would have been fully rolled out by the end of the year. Kids could have been studying using that technology now. They would have started perhaps in year 7 at a secondary school and been able to use broadband to support their education. Now, they will have left secondary school before much of anything happens in terms of improving broadband in their areas.

We saw cynical promises to voters prior to the election, when federal Labor went around suggesting that a vote for Kevin Rudd would turn the Flintstones age into the Jetsons age in terms of broadband. And it has been nothing more than a cartoon animation ever since. What we have now is very little activity. Not a single new broadband connection has been delivered under the failed NBN mark 1 or the NBN mark 2. The federal Labor government under Prime Minister Rudd and Minister Conroy have been anointed the net negative combo for our nation, freezing improvements in services.

This legislation stemmed from a discussion paper, The national broadband network: regulatory reform for 21st century broadband. The discussion paper was released in April when the government announced that it was abandoning its proposal to provide up to $4.7 billion towards a fibre-to-the-node broadband network upgrade in order to attempt to build and operate a $43 billion fibre-to-the-premise network. Until 15 September 2009, when this bill was introduced, structural separation had never been Labor policy—not when it was last in government, not during its many years in opposition, not in the lead-up to the last election and not since its election. It has not been coalition policy, either. Telstra had been corporatised under the previous Labor government, not structurally separated, even though it was entirely in the government’s hands. OTC and other assets were rolled into it to make that corporatised Telstra. When the Howard government privatised Telstra, it was not separated, either. It was recognised that there would be difficulties in achieving that goal at a time when there were abundant challenges in dealing with the privatisation. It was also recognised that that would have an impact on the value of the asset.

In the lead-up to the last election, Labor’s 2007 federal election policy stated:

Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company …

It was not that that would be in separate companies but ‘distinct within the company’, and that seemed to echo a lot of the operational separation arrangements that had been put in place by the previous government. Admittedly, not everyone was convinced that they were effective but unscrambling the egg was not on the table for either side of politics at that time, notwithstanding some views that it may have been a virtuous thing to do in the distant past.

Federal Labor did not indicate before the election that structural separation was on the table and shareholders, the company and consumers took them at their word. As recently as May, during Senate estimates, Senator Conroy was questioned on his current position regarding structural separation and he replied:

I am not advocating it. I have never advocated it.

In less than two years, Labor have gone from promising to contribute up to $4.7 billion to a $10 billion to $15 billion fibre-to-the-node upgrade of Telstra’s copper network, reaching 98 per cent of Australians, to creating a new government business enterprise to build, own and operate a fibre-to-the-premise, wholesale-only network to 90 per cent at around four times the cost.

We have even seen the description of what the government is trying to do in learned journals like CommsDay Australia, in articles written by the shires representative Luke Coleman, who has captured the essence of the confusion Senator Conroy injected into the debate yesterday. During Senate estimates Senator Conroy was asked what would happen to the fixed line connections under the NBN. In the bravado that he brings to most things he does, Senator Conroy said:

Everyone who receives a fixed line service, through a variety of policy mechanisms, will continue to receive one.

Those were his words; that is what Senator Conroy said. As the discussions evolved around the USO, Senator Conroy went on to speculate how that might be provided and who might provide fixed services to the last 10 per cent, saying that these are matters for Telstra. He said:

But I am sure all of these will be matters that Telstra will represent to us as part of our discussions.

He reaffirmed that copper would remain in place.

Now, if the NBN is expected to deliver fibre services to 90 per cent of the population, we ask: what is happening with the other 10 per cent? The throw away line is, ‘Well, they’ll get wireless or satellite services.’ That is what the government has been saying until this week when Senator Conroy provided the assurance that if you have a fixed-line service now you will continue to have one. How does he deal with the fact that the copper service is currently available to 97 to 98 per cent of the population, which suggests that there will be a need to provide copper and wireless, and possibly satellite, to seven to eight per cent of the population if the government’s stated intentions are to be fulfilled?

If that is happening—if the existing fixed lines need to be maintained alongside wireless broadband and the NBN—what does that mean for the promises as to the NBN itself? Are we going to see a government operated national broadband network running a service supposedly to 90 per cent of the population? Having stripped assets from Telstra and stripped out its most profitable areas of business, is the government going to have to set up an NNBN—a non-national broadband network, which is the copper—for the seven to eight per cent that does not factor into Senator Conroy’s figuring? And then are they going to put in an NNNBN, which is a ‘not here, nowhere near, national broadband network’ because they are talking about the satellite? You would end up with Ruddcom running, potentially, three wholesale carrier networks, all supposedly doing the kinds of things that Telstra does now, under this proposal that is so poorly conceived that the minister cannot even answer basic questions about service delivery.

You can see why people are confused. You can see why the market is not investing. You can see why consumers are terrified about what this might mean. You can see why experienced people, such as Paul Broad from AAPT, who have skin in the game—that is, their own money and businesses operating in this space—are characterising this federal Labor government plan as a phenomenal waste of money. They have gone on to talk about it as nothing more than a negotiating tactic. What an expensive posturing exercise by a federal Labor government! Right now they are spending $25 million of taxpayers’ money trying to translate the government’s and Senator Conroy’s NBN thought bubbles into an implementation plan. An implementation plan sounds like something concrete that works out how to operationalise it. If only it was that. It is actually a conceptualisation plan. It is a canvassing of possibilities—a fleshing out of the sound-bite of federal Labor on NBN and trying to map a pathway out of the confusion of Labor’s own making. We are spending $25 million to get some idea of how to do that.

While that work continues the government is dropping bills like this into this place. It is dropping these bills into this place to break up Telstra without any of that analytical framework that you would have thought such a big decision would have justified. You would have thought that if there were a strong, concrete, considered, evidence based conclusion from research and analysis—publicly available and able to be scrutinised and assessed—then there would be a pathway forward that may include something of this kind. You would think you would do that work first, wouldn’t you? No; not this crowd. They are known for not operating on an evidence based policy arrangement but on a policy based footing, which is that they know the outcome they want and they spend like hell—$25 million—to try and find someone who will give them some basis on which to arrive at the conclusion they have already made. That is what is going on here.

And a part of that fraud is this bill which pre-empts what may be required to bring about the NBN when Telstra has indicated a preparedness to negotiate commercially with the government, when there are other telco providers with assets—in the ground and aerially deployed—that could well complement a network of networks delivering the ambition for NBN that Labor talks about. But, no, the government is not doing that. It will hold a gun to their head, start the process of busting them up and then at some point down the track, in February, the implementation plan—the game plan; the ideas that might actually bring about action on the thought bubble—will appear. Why would you not do the analytical work first?

I have seen some of the commentators getting quite excited about that and my friend Graeme Samuel at the ACCC can barely contain his joy at seeing Telstra broken up. I know he has had his arm wrestles with Telstra and I know he was quite upbeat about the regime change at Telstra and the change of its posture and negotiating approach. The ACCC have not given that much of a chance to work, have they? They are already out there ready to bludgeon Telstra with a baseball bat even though a whole new team is on the pitch, even though Telstra said they are prepared to negotiate, even though Telstra and its people and its leadership know the nation, the parliament and many consumers are frustrated about their previous behaviour and are looking for a more collaborative approach.

The ACCC seems to recognise that a market intervention requires transparency. In today’s papers there is talk about Woolworths venturing into hardware. The ACCC has had a bit to say about all that and some anxieties have been captured and carried forward about the competition space around Woolworths plans to venture into hardware. The ACCC has outlined issues of concern. That is serious stuff in the eyes of the ACCC. It is stuff that basically says, ‘It makes it hard to move on this.’ Issues of concern are a red light to the industry. Down from that, the second level is those issues that may raise concerns and require further analysis. That is an amber light. Lastly there are issues that are unlikely to pose concerns. They are read as green lights.

That is what the ACCC does ordinarily, but where are the lights when it comes to this? Where is the competition perspective on having a government nationalise a key communications asset? Where is the open analysis that would accompany even a price determination? Right now there are discussions going on about what access prices and arrangements should be in place in the telco sector. They are advertised up hill and down dale so competitors can make a contribution and challenge some of the analysis that is being brought forward. They can put their point of view into the mix. They can make their case in a transparent way and that is right and proper because the impacts are felt in the share market, in the investments that people make and in the business viability of those governed by this competition framework. That is what happens with price determinations and a whole lot more happens with hardware.

When it comes to telcos, the ACCC can cheer all it likes, but where is the analysis? The ACCC are letting themselves down by being some sort of cheap-tart cheer squad over this decision to bust up Telstra whilst happily ignoring all of the disciplines that accompany any other ACCC engagement in market regulation. Where is the analysis? Why are they not demanding a transparent exposure of the material that gives rise to this decision? Where is the opportunity for other stakeholders and interest groups to have their say, to point to other possibilities, to look at the overall health of the telecommunications system? Where is the ACCC on that stuff? This is all being done behind closed doors and by stealth. It is deal-making Conroy writ large. He even ventured down to my electorate to try and stitch up preselection deals in the humble seat of Dunkley while all of this is going on during his watch. He has got no idea what is happening in the telco sector, but he can push people around when it comes to preselection in the ALP down on the Mornington Peninsula—quite extraordinary.

Where is the Productivity Commission analysis and all of the cost-benefit work that the coalition has argued for over and over again? Where is the cost-benefit analysis? Where is the transparent evaluation of policy options? Where is the canvassing and public challenging of assessments about policy alternatives? Where is all this stuff that goes to sensible governance of a crucial part of our communications sector? There is nothing. Whilst the ACCC might cheer the headlines of this piece of legislation, they damn themselves for doing so because of the lack of accompanying analysis and transparency. What a remarkable impact on a key shareholder-interest corporate enterprise sector of our economy, and all the ACCC can do is cheer about the headline of the bill. They let themselves down badly with that. They should be arguing for analysis and evidence based policy evaluation. Is that not what good governance and good regulatory and competition policy is really all about?

We have got a massive spend on the horizon and no cost-benefit analysis. We have got to wait till February before anyone has got any idea how the government hopes to translate its audio bite and thought bubble into some kind of sound public policy, yet we are busting up the major participant in the sector in advance without the justification and policy rationale to accompany it. What this legislation shows is that we are witnessing in this country an extreme form of legislative blackmail of a private enterprise business that is crucial to the wellbeing of so many Australians, and it is being done with barely a whimper. What is happening is that the veil of the NBN is being draped over this legislation to disguise the ugliness that is happening within it. The legislation proves that the government cannot build the NBN without Telstra, as the opposition has been saying all along, and that the government is desperately attempting to find a way to salvage something that it can dress up to be the NBN.

There are so many unanswered questions about the NBN. Each time we ask a question about how the rollout will occur and what price consumers can expect to pay for services, we are told the implementation study will provide all. Yet now we are being asked to pass a bill intrinsically connected to the NBN and in so doing give unprecedented powers to the ACCC and the minister before we know how the NBN rollout will occur, what the utility of this legislation is and why it is required to bring about that outcome. Labor does not have a mandate to renationalise telecommunications by establishing a government owned monopoly at a cost to the taxpayer of at least $43 billion, nor does it have a mandate to force structural separation on Telstra in order to pinch its fixed line customers and reduce its capacity to compete. If the government is having trouble with competition, it should deal with that. If you bust up the company, you go into a way new space.

This is primarily what Labor is seeking to do in forcing Telstra’s fixed line customers to prop up the NBN. This is the biggest hoovering up of customers and of revenue streams I think we have seen in this country, and it is being done by a government business. As I say to the business community: ‘Where are you, guys and gals? If it were your company, I reckon there would be a whole lot more being said about it.’ The minister confirmed as much when he outlined one of the somewhat dubious choices the company is being forced to make when he introduced this bill. He said:

… it may involve Telstra progressively migrating its fixed line traffic to the NBN over an agreed period of time and under set regulatory arrangements and for it to sell or cease to use its fixed line assets on an agreed basis.

The government of course cannot afford to have any genuine competition against the NBN because it is more than likely that the vast majority of consumers would choose cheaper fixed line options over the NBN. We hear about 100-megabit service but, as we have heard in Senate estimates, there is no guarantee that that is what will actually be delivered and be available for people.

The coalition have long argued and worked for and delivered faster, more affordable and reliable broadband. As technology has moved, so have policy and strategies to achieve that aim. We fully support the continued enhancement of broadband services, including the deployment of next generation networks and services, and that is why Labor’s spectrum threat is so disingenuous. I have argued that for taxpayer funding to address broadband black spots and bottlenecks it is reasonable to ask for a wholesale provider as an outcome of that taxpayer spend, but that would be a policy outcome you are purchasing, not one you are ripping off through this legislative assault on an Australian company. The coalition believe government funding for broadband should be specifically targeted at underserviced areas, and I touched on OPEL earlier. The OPEL approach provides a useful and practical model for how you go about delivering improved affordability, accessibility and performance of broadband services and achieve a wholesale service provider as part of the public policy outcomes you purchase with carefully targeted and thoughtfully arrived at taxpayer investment.

There is so much that can be said about the Senate inquiry and what commentators have had to say about this, but this is a very interesting day for the Australian parliament. People might take some comfort, even those in the telecommunications industry, that Telstra is getting roughed up and beaten up with a baseball bat and told that if they don’t like it there is more heavy artillery coming their way. You might get a thrill out of that—but just imagine if it were your company. (Time expired)

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