Craig Thomson (Dobell, Australian Labor Party) Share this | Hansard source

I rise to support the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. It is a little bit sad to hear the contributions from the member for Groom and the Liberal Party. After 12 years of office, after this being a major issue for the economy in terms of e-business and so forth, the best they can come up and lament is: ‘We had a plan when we were in government. We didn’t actually do anything, but we had a plan.’ It is terribly sad that their sum contribution to this debate is lamenting the fact that the plan they never put into action, the plan that they could not get up and going when they were in government for 12 years, is not what we have adopted. On this side of the House we are about actually doing something to improve broadband for ordinary Australians.

It also should not come as a surprise to anyone here that we find the Liberal Party again weighing in on the side of the big bosses, big companies. They did it with private health insurance. They did it with the alcopops. Now we have the big gorilla Telstra, and they are in there behind them again. They are putting the interests of big companies in front of the interests of the communities and ordinary citizens. That should not come as a surprise to anyone.

This bill amends the Telecommunications Act 1997 to require Telstra to functionally separate unless Telstra voluntarily structurally separates. It is to prevent Telstra from acquiring spectrum for advanced wireless broadband unless Telstra submits a voluntary enforceable undertaking acceptable to the Australian Competition and Consumer Commission to structurally separate, divest its Foxtel interests and divest its ownership of its hybrid fibre-coaxial network.

It includes a provision which enables the minister to exempt Telstra from the requirement to divest its Foxtel interests and divest its ownership of hybrid fibre-coaxial network, where the minister is satisfied that any concerns arising from Telstra’s market powers are sufficiently addressed by the enforceable undertakings to structurally separate as accepted by the ACCC. It seeks to retain the priority assistance requirement on Telstra in requiring other providers to either offer a priority assistance service or inform customers of providers from whom the customer can purchase a priority assistance service if they require it. It enables the Australian Communications and Media Authority to issue infringement notices for contravention of civil penalty provisions as an alternative to the institution of court proceedings, with the details to be confirmed in consultation with the Attorney-General.

Many of my constituents on the Central Coast of New South Wales will tell you about the shortcomings of their existing broadband services. Some of them do not even know why the service is called ‘broadband’, because it always seems to be so slow. In particular, in the lower half of my electorate, around the Wyoming area, all current solutions simply are inadequate. Wireless just does not work. People are reduced to trying to run their businesses on dial-up. Simply, broadband is not available as a solution for their businesses. In the business park, which is where my electorate office is at Tuggerah, we experience, as does everyone else in the business park, extremely slow broadband services several times during the week. As anyone knows, that is extremely frustrating if you are trying to carry out work. Shortly, our office is moving to the other side of the main trunk route, where broadband speeds are much faster. That this situation was allowed to develop shows the lack of investment by the former government in this technology.

On the Central Coast there are many businesses—including home based enterprises, services and government departments—and thousands of individuals looking forward to the day when they can have a real broadband service. It is virtually impossible in the modern, technologically based commercial environments for businesses to function without a proper broadband service—one that does not let them down with slow, inefficient speeds and bandwidths.

At Ourimbah, which is just 10 minutes away from my electorate office, we have the University of Newcastle campus. Among the many degrees and courses it offers is a bachelor of information technology. The irony is that the broadband, even to the campus on the Central Coast, is below standard and technically not up to scratch for what the students are studying. Nevertheless, these keen students will still manage to do well—going on to graduate and secure careers in managing and processing information, especially in large organisations. From the first year the IT students work on industry-relevant projects and case studies involving such areas as digital media, e-commerce and medical information systems. They learn the principles of good design, using interfaces, databases and systems, and they can choose from three majors—business information and communication technology; digital media and entertainment; and software development and application. Students at the Central Coast campus work on real world projects. Current students have set up an internet radio station and they review audience, content and funding sources to keep the station operational. They do all this despite these broadband limitations. They really should be commended for their ingenuity given the circumstances under which they are operating.

Without proper broadband services, the careers of these future interactive web developers, programmers, business analysts and project managers will be limited, especially if they want to work locally. Graduates of this program who want to go into leadership roles in companies involved in the development, innovation or application of information technologies will probably only be able to do that in the big cities like Sydney because companies that need proper broadband to do business have yet to invest on the Central Coast, where broadband has been inadequate. Indeed, this requirement is not exclusive to IT-specific businesses because a growing range and number of businesses need good broadband to be competitive.

The proposed reform package featured in this bill will have a positive impact on regional Australia in areas such as my electorate of Dobell on the New South Wales Central Coast. Consumers of telecommunications services in regional Australia are more exposed to any shortcomings in the effectiveness of consumer safeguards, such as the universal service obligation and the consumer service guarantee, than urban Australia. The proposed strengthening of the consumer protection framework will reduce the potential for regional and rural customers to experience falling service quality.

Let us take a look at the overall context of how this bill will affect the future telecommunications landscape of Australia. The enhanced National Broadband Network initiative announced on 7 April 2009 outlined the government’s commitment to the rollout of the NBN as a wholesale-only, open access network. The government also announced on 7 April its commitment to reforming the existing telecommunications regulatory regime. A discussion paper canvassing options for regulatory reform was released on the same day. There was a strong response to the discussion paper, with 140 submissions received from a broad range of stakeholders. These included all major telecommunications service providers, broadcasters and media companies, state and territory governments, the Australian Competition and Consumer Commission, disability and consumer groups, business organisations and unions. The overwhelming message from almost every submitter was that the current regime did not work effectively to achieve its goals. They said it was failing business and consumers and that reforms were urgently required.

Taking into account public submissions, the bill proposes a package of reforms to deliver a more efficient telecommunications market with appropriate consumer safeguards as the NBN rolls out. The telecommunications regulatory reform package represents the most significant reform to the telecommunications regime since open competition was introduced in 1997. Amongst the important reforms is Telstra’s vertical and horizontal integration. Telstra remains one of the most integrated telecommunications companies in the world. It owns the only fixed line copper network in Australia, which connects almost every premises in Australia, as well as the largest hybrid fibre-coaxial cable and mobile network and it has a 50 per cent stake in Australia’s largest subscription provider, Foxtel. The government believes that the failure to address the issue of Telstra’s level of integration has meant that current regulation has failed to promote effective competition. The lack of competition in the telecommunications sector has resulted in Australia lagging behind other developed economies on a range of telecommunications indicators.

Telstra, as a vertically integrated company, provides both wholesale and retail services. As a result of Telstra’s vertical integration, Telstra has both the incentive and the ability to favour its own retail businesses over its wholesale customers. The overwhelming message from industry and the regulator, the ACCC, is that the current arrangements to address the issues arising from Telstra’s vertical integration are inadequate.

Most of the industry and the ACCC have called for stronger functional and structural separation measures. It is the government’s clear preference for Telstra to voluntarily structurally separate. Such an outcome would be consistent with the wholesale-only, open access market structure to be delivered through the National Broadband Network. It is important to note that the structural separation can be achieved in different ways. It does not need to involve the creation of a new company by Telstra and the hiving-off of its fixed-line assets through the new company. For example, to achieve the aim of structural separation, Telstra could migrate its traffic to the National Broadband Network and sell or cease to use its fixed-line assets. This would result in full structural separation in time.

The reason the government is not imposing structural separation is that the structure of Telstra is a matter for Telstra shareholders. It has been widely observed that imposing mandatory structural separation on Telstra is likely to raise compensation issues. However, if Telstra does not voluntarily structurally separate, Telstra will be required to separate along functional lines. Even though structural separation is considered to be the better option, functional separation will significantly reduce the incentives for Telstra to discriminate against its wholesale competitors which will result in increased levels of competition. The ACCC supports functional separation as the next best option to structural separation.

Functional separation may take time to implement. However, it is expected that there will be early benefits for competition in the sector. This was the experience in both the United Kingdom and New Zealand which have implemented their functional separation arrangements. The independent regulator and competition authority for the United Kingdom communications industry, Ofcom, has said that the net effect of the BT functional separation undertakings has been positive for both competition and consumers. While structural separation in New Zealand is still in its early days, the results appear to be positive. In addition to its vertical integration, Telstra is also horizontally integrated as it owns and operates multiple different platforms: copper, cable and mobile. Such horizontal integration across platforms is in contrast to most other developed countries where there are restrictions on incumbents from owning both cable and traditional fixed-line telephone networks. Provisions in the bill intend to correct this unusual and inherently anticompetitive situation by requiring Telstra to choose its future path. The proposed amendments would prevent Telstra from acquiring spectrum for advanced wireless broadband services unless it structurally separates, divests its fibre-coaxial cable network and divests its interests in Foxtel. If the minister is satisfied that Telstra’s undertaking to structurally separate is sufficient to address its market power, the provisions allow the minister to exempt Telstra from either or both the requirements to divest its cable and pay-TV interests to acquire spectrum for advanced wireless broadband services. These measures in the bill will promote competition and will deal with the mistakes of the past when opportunities to prevent the problems created by Telstra’s vertical and horizontal integration were missed. Generally the reforms in this bill will address the current regulatory framework and improve competition.

During the transition to the National Broadband Network environment, the existing telecommunications regulatory regime will remain important for delivering services in the interests of Australian consumers and businesses. The vast majority of industry submissions received by the department claimed that the regulatory framework is ineffective due to the ability of parties to engage in regulatory gaming—litigious obstruction aimed at delaying regulatory outcomes. For example, by mid-May 2009, 157 telecommunications access disputes had been notified since the commencement of the regime in 1997. By contrast, only three access disputes had been notified in other regulated sectors, including aviation and energy.

Under the proposed changes, the ACCC will set price and non-price terms for access to declared services in an access determination to apply to all parties. The bill will also remove the right to seek merits reviews of the ACCC’s regulatory decision. This approach is being pursued because Telstra has continually used the regulatory and legal avenues available to frustrate regulatory outcomes and cause uncertainty for its competitors. By providing the ACCC with the power to issue the rules of conduct, the ACCC will be able to immediately address problems relating to the supply of declared services. The overarching objective of the reforms is to streamline regulatory processes and provide the industry with a greater degree of certainty in relation to regulatory outcomes. This certainly will encourage infrastructure investments, including in areas where it is most needed such as in my electorate on the Central Coast.

Other reforms will mean that the ACCC will no longer be required to consult with a party before issuing a competition notice. This is aimed at ensuring the ACCC can act swiftly when it believes anticompetition conduct is occurring in a telecommunications market. The scope of another part of this bill will also be clarified to ensure that anticompetitive provisions apply to content services supplied by carriers on carriage service providers. This will prevent a dominant provider from using its power in one market to damage a competitor in another.

This bill also reflects the government’s commitment to protect consumer access to affordable telecommunications services. The package of reforms strengthens the regulator’s ability to enforce existing consumer safeguards and mitigate the risk of Telstra reducing service quality on its copper network pre National Broadband Network. Specifically, the amendments contained in this bill are focused on retaining and strengthening existing regulation to better protect consumers’ access to, and reliability of, basic telephone services and to address concerns with the removal of payphones and in giving the Australian Communication and Media Authority more effective enforcement powers through the use of infringement notices.

The measures reflect the government’s decision to retain the existing universal service obligation for Telstra for voice telephony and payphones for the time being  and to require improvements to service quality by introducing new minimum performance benchmarks in meeting the customer service guarantee. The new universal service arrangements will make it clear for consumers and Telstra the services, both voice and payphones, that Telstra must supply in fulfilment of the universal service obligation, including reliability and repair requirements, rather than these decisions being left up to Telstra’s discretion. This will address the concerns raised in the Regional Telecommunications Independent Review Committee report that the universal service obligation arrangements are vague and are difficult to enforce. New requirements on Telstra regarding payphone removal address widespread concerns that Telstra has too much discretion in removing payphones.

The Regional Telecommunications Independent Review Committee report highlighted a declining effectiveness of the customer service guarantee. New requirements on service providers will be imposed to ensure statutory performance benchmarks are met. If not met, the service provider will be subject to civil penalties. The bill will give ACMA broad powers to issue infringement notices or on-the-spot fines for breaches of civil penalty provisions in the Telecommunications Act 1997, the Telecommunications (Consumer Protection and Service Standards) Act 1999 and chapter 5 of the Telecommunications (Interception and Access) Act 1979. Looking forward, the government will consider the broader range of issues associated with the delivery of universal access in the NBN environment once the detailed operating arrangements for the NBN have been settled.

Another important aspect of the bill is the removal of red tape. Consistent with larger commitments to address impediments to Australia’s long-term productivity growth, the government is committed to reducing red tape where the need for it no longer exists. Smaller carriers will be exempt from paying an annual carrier licence charge, from contributing to the universal service and national relay service levies and from reporting to ACMA as the costs of compliance for these carriers is often considerably higher than the monetary contribution. Redundant reporting requirements under the customer service guarantee, priority assistance and the network reliability framework will be removed so long as benchmarks are being met. The government will repeal unnecessary accounting and operational separation requirements once a new market structure—functional or voluntarily structural separation—is in place. The government will remove the outdated requirement for Telstra to provide internet services with speeds of 19.2 kilobits per second. The Australian broadband guarantee offers broadband speeds of 512 kilobits or more.

To sum up, Australians can no longer afford to be left behind in world telecommunications. This bill puts in place the changes we must make if we are to keep up with other countries that have already made the necessary technological advances. I commend the bill to the House.

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