Brett Raguse (Forde, Australian Labor Party) Share this | Hansard source

I acknowledge the last speaker and certainly some of the concerns raised. But I felt rather depressed by the end of that particular contribution, because you would expect some youthful exuberance over the government’s moving forward and what we are trying to do as a major part of infrastructure rollout and the business models that sit behind that.

The concerns and fears probably need to be considered, but really the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is about the future. It is about moving forward and taking ourselves from a position where our telecommunications systems do not work. There is a lot of history involved, and to a large degree it is about political positions that have been taken in the past, to the point where Telstra has become very political in its own structures. This government has taken action to get some clarity about the business model and the way the business model needs to be proposed for the future. In fact, we can almost suspect that things had stalled rather radically. I have spoken many times in this chamber about issues relating to telecommunications and certainly to Telstra and their response and non-response to a whole range of issues.

So this telecommunications legislation that I rise to talk about tonight is very important, not only for the people of my electorate but certainly for the country. I will give a bit of detail about the bill before I talk about some of my own observations, some of the effects and what I believe are some of the benefits of this particular approach.

As I said, this legislation is very much about improving competition. It strengthens our consumer safeguards and removes redundant red tape. This is very much like the analogy of the old Holden, which I think I have used before in this chamber. You have put on the dual exhaust, you have put on the triple carbies, you have put on the headers and have even put on a foxtail, but you find that the car still uses too much fuel and continually needs maintenance. That is the old system that we have. There is a point at which you decide that you have to get rid of the old Holden and invest in a new super-fast vehicle. Essentially that is what we are doing as a government. But to do that we need to consider the business structure and the level of competition that should go with that particular structure.

The choices of successive governments to move to a privatised telecommunications system have changed the nature of telecommunications in Australia. While many people in my electorate question these decisions to this day, we must make the best of the environment in which we find ourselves. An effective privatised telecommunications system requires effective competition. The nature of fixed-line telecommunications has always presented a fundamental challenge in this regard, because it is impossible for a company to economically justify installing its own wire throughout our large country. This has meant that most fixed-line service competition continues to occur at the retail level. To differing extents, these retailers remain dependent on the substantial Telstra-owned infrastructure we all enjoy—or have difficulties with.

Of particular note is that Telstra also competes at the retail level. The transition to a privatised system has therefore presented a myriad of challenges to providing effective competition. This legislation targets the systematic and developing challenges of telecommunications in Australia.

Currently Telstra has formidable market power in Australian telecommunications through fixed-line copper, cable, pay TV and mobile phone and retail assets. This part of the reform targets Telstra’s motivation to favour its retail arm over its other retailers. This bill seeks to ensure that Telstra splits its network operations and wholesale functions from the remaining components of Telstra. The preferred approach of the government is for Telstra to structurally separate voluntarily, but options are left open should this not occur.

The separation of Telstra’s wholesale and retail businesses must be considered within the broader context of the National Broadband Network. The NBN company is to be a wholesale-only telecommunications provider with open-access arrangements. This structure will allow effective and efficient competition amongst retailers. The government is open minded on the model used for Telstra’s structural separation. One of the more interesting options involves Telstra gradually moving its fixed-line network to the NBN, which would result in a wholesale-only network not controlled by any retail company. I believe that this particular approach would probably be a great outcome for Australian consumers.

While the big news in this bill relates to vertical separation, meaning separating wholesale and retail components, the bill also proposes horizontal separation. Reforms in this area are to tackle the market power wielded by Telstra’s copper, cable and mobile assets. It is proposed that Telstra’s acquisition of wireless signal spectrums be dependent on structural separation and, if deemed necessary, on Telstra’s divesting itself of its hybrid fibre coaxial cable network and Foxtel interests.

Telstra sometimes gets an unfair cop about the state of broadband and other telecommunications services in Australia. We live in a large, decentralised, hot, sparsely populated part of the world. The SCAX huts do not just appear in the middle of nowhere. They require expensive planning, equipment and continual maintenance. On this ground alone Australia’s communications systems are not directly comparable to those of the UK or most OECD countries. The fact that we have some effective communications systems in Australia at all is a credit to Telstra’s past work, particularly going back to the days of PMG and Telecom Australia.

It is important to note that Telstra’s actions in the current system are mainly a reflection of that system. As a private company Telstra’s prime responsibility is to its shareholders, and its actions reflect this commercial reality. Telstra and other industry players will always seek to maximise their position within the provided regulatory framework. It is our role as a government to ensure that this framework provides the best results for the Australian people.

Other changes include competition reforms of the Trade Practices Act. Changes to the Trade Practices Act are proposed to manage competition issues in relation to the telecommunications access regime. Telstra’s competitors have long been frustrated by issues of access to infrastructure such as local telephone exchanges. The ACCC has received more than 150 access disputes when, incredibly, only three disputes have arisen over other regulated industries. The changes in this area aim to clarify pricing terms and conditions for declared services, putting in place binding rules of conduct for services and immediate remedies for violation of these rules, determining fixed principles to apply beyond access to termination durations, removing merits, reviewing certain regulatory decisions made by the ACCC, removing the ACCC requirement to consult with a party prior to issuing a competition notice and clarifying the application of competition notices to content services.

These changes will clarify where telecommunications industry players stand and allow the government to act more quickly and decisively when issues arise. Furthermore, they will limit the ability of industry participants to stall compliance when it comes to competition issues.

Another component involves the strengthening of consumer protections. A number of telecommunications industry consumer safeguards are currently in place: the universal service obligation, or USO, which applies to the supply of telephone and payphone services; the Customer Service Guarantee, or CSG, which contains performance requirements and penalties for when these requirements are not met; and priority assistance arrangements for individuals with a diagnosed life-threatening medical condition.

The proposed changes in this area are to modernise consumer protection regulation. Modifications to the USO are proposed to make it a requirement of Telstra to supply a basic service with specific connection and repair periods, reliability requirements and performance benchmarks. Telstra payphone and universal service requirements will be tightened, with ACMA to have more of a say on whether a payphone is removed. As telecommunications service quality standards have been falling, minimum performance requirements will be put in place for the CSG. Civil penalties and infringement notices imposing fines are proposed to manage noncompliance. New time frames for connections and repairs will apply to wholesale service providers. The intention of these changes is to minimise the ability of retailers to blame wholesalers for poor retail service.

Consumers may still choose a service where the CSG does not apply. However, it is proposed that they will have to fill out a standard form of agreement to waive their service provider of CSG obligations. This will help ensure people are aware of the implications of their choice to forfeit CSG consumer protections. All telecommunications providers will now be required to offer priority assistance to customers or inform customers of providers that offer this service. This will ensure that people who need an ultrareliable service are aware of and able to access a priority assistance service.

The fourth component includes removal of red tape. The government has had a hard look at the existing regulation structure to ensure that unnecessary and redundant regulation is removed. The proposed changes include: small carriers are to be exempted from an annual carrier licence charge, universal service live charge and national relay service charge; reduced CSG and priority assistance reporting if performance benchmarks are achieved; redundant Telstra reporting to be scrapped once separation has occurred; and the removal of the Telstra requirement to enable consumers to achieve 19.2 kilobits per second internet services.

That last change may appear unusual on face value. However, 19.2 kilobits per second is less than three kilobytes per second. By modern standards, a three kilobyte per second internet connection is also not good enough. So modern internet speed demands, along with the variety of products and options available now, render this requirement redundant. Individuals in situations where they struggle to reach 19.2 kilobits per second are likely to also have difficulties receiving ADSL broadband. However, the Australian broadband guarantee initiative, where the federal government provides subsidised wireless or satellite services, provides assistance to people in this situation. It is an option for the future to put a higher speed data requirement in place through the universal service obligations. The challenge in this area is that imposing this requirement on any particular company would place that company at a competitive disadvantage. Inevitably, there would need to be compensation to a company or companies affected.

Within the electorate of Forde there are significant telecommunications issues, and I have spoken about those a number of occasions. They range from cows chewing temporary copper line solutions in Running Creek through to difficulties accessing ADSL2+ in new areas of the electorate. Some of the strangest and most perplexing issues my office has had to deal with relate to the relationship between wholesale and retail telecommunications companies. The strangest issues tend to arise from the interface between Telstra Wholesale and retailers. I am sure many members in this House have had ongoing issues about getting information, and the fact that one company controls the access to that information makes it very difficult to break through. I will give some examples.

Mr Bob Whitten recently came into my office with what appeared to be a relatively simple problem at his end. Bob was trying to sort out an ADSL service for a property near Yatala, which is less than 40 kilometres out of Brisbane. Two things made this case unusual. Firstly, a basic ADSL service had been on the property for two years before he attempted to access the ADSL2+ service, but he was then being told he could not receive the ADSL2+ and nor could he receive the ADSL, which he had been receiving for two years, because he was on a pair gain phone line. The pair gain explanation was as much as Bob could be told by his retailer. In turn, this explanation was all the retailer appeared to be able to get from Telstra Wholesale. This was an amazing situation when you consider that the pair gain explanation probably was to do with some sort of hub or splitting box, that essentially he had the service and it was later taken up. But despite the efforts of my office and his own inquiries, we could not get to the bottom of it and his service completely dropped out. We could not inquire with Telstra as the service was provided by a retailer other than Telstra. We were told to go to another phone number, but that number simply gave us an understanding of who our local retailer was, so we were going round and round in circles. In the end, all we could do was speculate on what the issue was. Our best guess was once the system reached capacity it could no longer work for anybody, so that was where we sat: with no service.

Overall correspondence from constituents has been that resolving Telstra infrastructure problems through the retailers other than Telstra is difficult. In Munruben, a lady called Carol spent months seeking answers to an intermittent ADSL problem through her retailer iPrimus, but it was not resolved. In Buccan, which is a very close suburb to Beenleigh, another consumer attempted to get a landline service with retailer Dodo and was stalled indefinitely by Telstra simply because they were not prepared to lay the specific cables and lines. In the end that person gave up and put in a satellite phone when only 50 metres up the road people had a normal landline service.

In my experience in our office, the main difference between being a Telstra retail customer and a customer of other retailers is one of information. Better information and advice on wholesale issues appears to be available through Telstra Retail rather than other retailers. Structural separation of Telstra will place all retailers on an equal playing field. What we need to ensure is that this is a responsive and effective playing field. Retailers and customers need to be able to access timely, valuable and accurate feedback on these wholesale issues. The wholesale entity will need to have appropriate drivers to ensure this occurs. In light of the concerns experienced in the electorate, whatever business model we propose as a government—and I believe this is a good business model—will provide the impetus to allow further competition and the cleaning up of a system that has been broken for a long time. The member for Lindsay spoke at length about his experiences in his electorate. I think we have all experienced the same problems and getting them resolved is always very difficult.

I acknowledge that not all people are supportive of this legislation, and we have heard the varying arguments in this chamber, particularly on structural separation. However, to allow the current arrangements to continue would exacerbate the problems. It is like knowing that you are sick and need medical assistance but pretending you are not ill. Eventually, illness will catch up with you, and I think that is what has happened with our telecommunications system. This legislation will cause some short-term pain to Telstra. However, either now or in the future, the structural separation of Telstra is going to be necessary for Australia’s privatised telecommunications system to deliver for consumers. The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is critical legislation that will modernise telecommunications regulation, improve competition, strengthen consumer safeguards and remove redundant red tape. I therefore commend this bill to the House.

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