Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

I welcome the opportunity to speak on the Telecommunications Legislation Amend­ment (Fibre Deployment) Bill. I think there is agreement in this House over the need for high-speed broadband, but the issue is how you get there and how you provide those services in the most efficient and effective way—a way that provides an acceptable return on funds invested, a way that ensures there is excellent competition in the market and a way that delivers services to Australians at a price they can afford. The purpose of this bill is to facilitate the installation of fibre into new developments and housing estates and to ensure that the telecommunication infrastructure placed in new developments meets the technical requirements of NBN Co.

There are four measures in this bill in total. Firstly, the bill enables the minister to specify new developments in which fixed lines for installation must be optical fibre lines and must comply with technical specifications. The bill calls this rule the optical fibre line requirement and requires NBN Co. to be the installer of last resort, where a developer does not choose a commercial provider. However, it is becoming clear that the terms of this legislation will see NBN Co. becoming the installer of first resort, rather than last.

Secondly, the bill requires that facilities installed in a development must be fibre-ready. This will be called the fibre-ready facility requirement and will ensure that passive infrastructure such as underground ducting and pits and pipes allow the ready deployment of optical fibre cabling. Thirdly, the bill prevents corporations from selling or leasing land or buildings in new develop­ments unless fibre-ready facilities have been installed. Finally, the bill implements a regime for carriers to secure access to fixed-line facilities such as pits and pipes owned by non-carriers to ensure fibre can be rolled out using those facilities. Access to these facilities will be on terms that are negotiated commercially by the respective parties, or determined by an agreed arbiter. The bill creates a mechanism whereby the Australian Competition and Consumer Commission will be the default arbiter where an alternative is not selected by the respective parties.

The coalition believes that the government has taken the same approach with this bill as it has with the entire NBN project. The government's approach is to establish a monopoly at a huge cost to the Australian taxpayer and destroy competition at every opportunity. Through NBN Co., the govern­ment is completely dismantling competition in the wholesale telecommunications ind­ustry—all so that the business case and the potential return of NBN Co. can be propped up. But, like all government monopolies, this approach simply creates a poor allocation of resources and massive cost blowouts for taxpayers. This legislation is being debated within an environment where NBN Co. is already facing these blowouts and delays to the rollout. We have seen the cost of installing the NBN into Tasmanian homes reach $7,500 per premise. On the mainland, NBN Co. suspended its construction tender in April because bids by companies familiar with the industry came in at around $8 billion above NBN Co.'s budget.

Most insulting of all to the Australian taxpayer is the announcement last week that the Gillard government will be paying billions of dollars to Telstra and Optus to transfer their customers from copper and wire infrastructure to the NBN. We have the situation where NBN Co. is paying the two largest wholesale operators billions of dollars all to acquire customers and charge them a higher price for broadband.

Yet, despite these billions of taxpayer dollars being spent, the NBN only has around 728 customers receiving the service for free. It is spending $132 million on the cost of employing around 1,000 NBN Co. staff members, with 51 executives earning over $300,000 a year. Within this context, we have this bill which will destroy the ability of fibre installation companies to compete with NBN Co. for the rights to install fibre in new developments.

The coalition agrees that it is desirable to encourage the installation of fibre in new developments. It has been a farcical situation allowed by this government, where Telstra has been required to install copper into smaller developments of less than 100 premises with the knowledge that the infrastructure will eventually be overbuilt by fibre. What a waste of money it is to overbuild infrastructure—no wonder Telstra has been reluctant to install copper and has left developments at a standstill while the government takes its time rectifying the situation.

The coalition completely welcomes the chance we have to ensure that fibre is installed in all new developments. However, we believe that the private sector has been facilitating the installation of fibre in new developments for many years and that this bill unfairly removes this competition to NBN Co. There is already an active and productive market between competitive greenfield operators, or CGOs, to secure contracts from developers for the purpose of installing fibre. This point was made clear in hearings of the Joint Parliamentary Comm­ittee on the National Broadband Network into this legislation. The industry group Greenfield Fibre Operators of Australia—which consists of seven installers of fibre including OPENetworks, Service Elements, TransACT, Comverge, Broadcast Engin­eering and Pivit—submitted to the comm­ittee:

GFOA companies have been competing with one another, Telstra Velocity, Opticomm, VicUrban, Multinet Broadband and other carriers/operators ... for over ten years.

... there is already a very healthy competitive market between experienced wholesale network carriers in Greenfields ... that is not acknowledged by Government.

The submission by GFOA also states that competition in the market has produced enormous reductions in the cost of installing fibre. In an environment where NBN Co. are using public funds to create a wholesale fibre network, surely the taxpayer should expect the government to pursue the lowest costs available. However, GFOA state:

Deployment of FTTP networks by GFOA carrier/operators are currently costing $1,500 per lot ... for networks where the functional performance specifications and standards equal or exceed the current functional performance specifications and standards of NBN Co networks that cost more than double the price to build.

In Tasmania during the installation of fibre for premises with pre-existing infrastructure, NBN Co. has spent an average of $7,500 per premise connected. Clearly a competitive market would allow cheaper costs and a better outcome for taxpayers. We hear the government give lip service to competition. According to the minister, this legislation will implement a regime where NBN Co. is the installer of last resort where the developer does not choose a competing installer. However, the bill effectively destroys any competition for two reasons. Firstly, developers can incur the expense of building trenches and fibre-ready facilities and then employ NBN Co. to install the fibre at zero additional cost to the developer. What possible incentive will a developer have to hire a competing fibre installer to roll out fibre when the developer can hire NBN Co. to do the same work at no cost?

The second way the government is ensuring an NBN Co. monopoly in installing fibre is by enforcing standards for a fibre-ready facility in greenfield estates. In practical terms, this means that the pit and duct infrastructure used to facilitate the installation of fibre must meet standards set by the minister and specified by NBN Co. So, we will have a situation where the dominant operator in the market will have the power to set the technical specifications and requirements that its competitors must meet. This was the situation prior to 1989, when the then Labor government transferred Telecom Australia to an independent body and started the process by which telecommunications were recognised in the Trade Practices Act and overseen by the ACCC. The impact of this bill should clearly be prohibited by the ACCC, which the government is effectively turning into a toothless tiger with regards to telecommunications regulation. Rather than implement NBN Co. as the installer of last resort, the provisions of this bill ensure that NBN Co. will be the installer of first resort because developers have absolutely no incentive to consider another installer. This point is felt strongly by existing private installers. For instance, TransACT submitted to the committee that:

... it appears to be the intent of the Government and NBN Co, that it plans and needs NBN Co to be the monopoly provider of FTTP in Greenfields developments;

The impact of the government's policy on new housing developments is that the competitive industry will simply cease to exist. The Greenfield Fibre Operators of Australia made this clear when they told the committee that the bill will simply put them out of business. So here we have a Labor government that claims to support competition and that a monopoly wholesale network is the only way to promote retail broadband competition, but is completely destroying competitive industries while it sets up the NBN Co. monopoly. This approach will have devastating effects not only on niche industries such as fibre installation but also on the entire telecom­munications industry in Australia. As the Victorian government recently said in its submission to the NBN inquiry being undertaken by the House of Representatives:

After over two decades of national economic and financial reform, the NBN proposal in its present form represents a very serious threat to the long-term competition in the telecommunications sector.

The Victorian government went on to say:

The increasingly apparent risk is that the commonwealth could, over time, fully replicate a dysfunctional telecommunications market structure that has hindered investments in the current broadband market. This would be the result if it simply replaces Telstra's market power with an NBN Co infrastructure monopoly with all the attendant inefficiencies and constraints on investment, innovation and future policymaking.

Through this bill, these predictions are already coming true in the market for fibre installation in new developments. We will see competition wiped out and NBN Co. installing fibre at a higher cost per lot than could be achieved by private enterprise, with the taxpayer footing the bill every step of the way.

The coalition will be introducing two amendments to protect competition and ensure that taxpayers benefit from the efficiencies of a competitive marketplace for fibre installations in new developments. We believe that the bill should be amended to remove the disincentive for developers to use private operators to install fibre infrast­ructure. The bill would be amended to enable developers, whose project has an installed fibre network in compliance with the minister's specifications, to have the option to require NBN Co.'s purchase of the network at a reasonable price. A reasonable price would be determined by the minister with consideration of current market prices and costs. The developer will then have an incentive to use private operators because the costs of doing so would be recouped from selling the network to NBN Co. Essentially, developers will face the same costs regardless of whether they employ a private operator or NBN Co. to install the fibre. By protecting competition in this manner, the government would be ensuring competitive pressures keep down the costs of installing fibre in new developments and taxpayers will benefit from getting the best market price for the installation of fibre. This amendment will also impose a cost discipline directly on NBN Co. If NBN Co.'s competitors can build connections at a lower charge than NBN Co., then there would be a cost saving to NBN Co. and to all taxpayers.

The second coalition amendment would see certain fibre networks exempt from the operations of parts 7 and 8 of the Telecommunications Act, which will require that all fibre networks must operate under the same technical standards as the NBN. The amendment will ensure that those networks not owned or operated by NBN Co. or Telstra, and where those networks only delivered retail services to persons residing in the development, would be exempt from these parts of the act. NBN Co. would still retain the option to build its own network in the development if it wished and would have access to the fibre-ready facilities which the developer is required to build, but the network would still be placed under the same access conditions as stipulated for NBN Co. This amendment would ensure that competition continues to exist for private networks in new developments and that developers are given maximum flexibility in choosing services for their future residents.

The warning signs are all there that this project will suffer from low demand, be months or years behind schedule and end up costing taxpayers billions above the $50 billion that they are already projected to be paying. The coalition urge the government to adopt our amendments to ensure that we can salvage at least some competition in the market while NBN Co. continues destroying all competitors in its wake.

Just two weeks ago we saw yet another example of NBN Co. destroying competition with its announcement of the terms of the Telstra agreement, presently valued at some $11 billion, and the announcement of the deal with Optus, proposing to spend $800 million to do nothing more than purchase customers from the network and take out competition. We believe that competition is the cornerstone of delivering lower prices for consumers. Why then are we going to use taxpayers' dollars when the only return on investment for those very taxpayers who are paying out the money to purchase customers is that they will be paying a higher price for their broadband?

It seems that only Labor could come up with such an interesting business proposal: to charge taxpayers, in the case of Optus, $800 million to purchase customers for no other reason than to charge those very same taxpayers more for their own broadband. We know that cost is a major impediment to many people accessing high-speed broadband, so we should be really focusing on delivering those services at the lowest possible price. Eliminating competition and creating an artificial monopoly are not ways to achieve that goal and are certainly counter to the objectives of good telecommunications policy and are counter to the objectives of the coalition.

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