Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Hansard source

The Broadcasting Legislation Amendment Bill allows the commencement of telecommunications and broadband services in the so-called 'digital dividend' spectrum—to be made available by the switch from analog to digital television—which will be auctioned in April and used for next-generation telecom services before the spectrum is removed from the broadcasting services bands. Given the long delay between the date when the telecoms companies pay for the spectrum—assuming any of them do—and when they actually obtain access to it, we welcome facilitating timely, expeditious use of those assets.

However, as is typical of this government, this issue has been monumentally mismanaged and mishandled. While the broadcasting and telecommunications industry are broadly supportive of the changes proposed in the legislation, there are several important issues that this bill raises regarding the government's handling of the spectrum auction and spectrum management in regards to wireless audio device users.

Turning to the bill, it amends the current datacasting regime by introducing the concept of designated datacasting services, which will be defined under the legislation as those provided by a commercial television broadcasting service, a commercial radio broadcasting service or a national broadcaster. Datacasting is a service which delivers content—whether in the form of text, data, speech, music or other sounds, or visual images—to those who have the equipment able to receive it. Today, that is most digital-ready televisions. Datacasting services are different from traditional television services. They are unable to broadcast a range of material that may be considered to be the equivalent of television news programs, drama, lifestyle or entertainment, for example—in other words, datacasting services must not act as a de facto television broadcast. Datacasting licensees are allowed to transmit extracts of television programs; however, those must be not more than 10 minutes and must not be strung together, in effect creating a program.

As part of the transition from analog to digital television, the broadcasters are freeing up spectrum and delivering high-quality content, an issue the coalition got underway during the Howard government. By transitioning from analog to digital, the switch-over, which is in process at the moment, as honourable members know, television broadcasters are clearing 126 megahertz of broadcasting services band spectrum, otherwise known as the digital dividend.

The spectrum, of course, is a very scarce and valuable public asset. As part of the transition, the digital dividend spectrum will be auctioned off in April this year—just a little over a month away—and the spectrum, in the 1,700 megahertz band, is so coveted due to its suitability for LTE or 4G wireless broadband services. That of course is the hottest property in the spectrum world at the moment. The spectrum is due to be cleared by the broadcasters for use by January 2015. That is a significant delay; however, it is necessary to ensure there is a comprehensive clearing of the spectrum before the telecommunications providers move in and start offering 4G wireless broadband services using that spectrum.

However, in the case that there are blocks of spectrum within the digital dividend that have been cleared prior to the licence commencement period, this bill allows the ACMA the discretion to allow successful bidders the opportunity to use the spectrum for services while it still technically remains in the broadcasting services band. Of course, any legislative changes related to the spectrum auction remind us all of the government's earlier bumbling activities in this area, which have included the setting of a base-price spectrum which is remarkably high by any international standards.

In what can only be described as a desperate attempt to achieve a budget surplus, Senator Conroy has intervened in the auction process and set an unprecedentedly high minimum reserve price for the spectrum, previously the role of the ACMA, of $1.36 per megahertz per head of population. This auction was originally due to take place in November last year. However, in June 2012 Senator Conroy announced there would be a delay and the auction would be pushed out to April this year to allow more time to prepare for it. Then in December last year he set a reserve price for the 700 megahertz spectrum. That is, as I said, remarkably high by world standards. This was a classic case of Senator Conroy putting politics before policy, all in order to achieve that elusive yet razor thin budget surplus now since abandoned.

As Optus's head of corporate and regulatory affairs, David Epstein, not unfamiliar with the machinations of Labor Party budget preparation himself, noted the reserve price is effectively double the basket of outcomes achieved in comparable advanced economies over the past two to three years. Only recently we saw in the UK in the auction of the 800 megahertz spectrum, also likely to be used with 4G mobile broadband services, the spectrum sold at a price of 23c per megahertz per head of population. The revenue the government raised was approximately a third less than it had anticipated—perhaps forecasting that Senator Conroy cannot bank on reaping the full $3 billion he expects to raise from the auction. Optus have called this option unworkable while Vodafone said it will not participate at all.

We have three registered bidders for the auction. Vodafone , however, said it will not bid in the 700 megahertz spectrum and instead will focus on the 2½ gigahertz spectrum set at a far more reasonable 3c per megahertz per head of population floor price. Senator Conroy risked having an auction with no bidders at all. So what did he do? He changed the size of the maximum block size bid from 2x20 megahertz to 2x25 megahertz out of a possible 90 megahertz.

Previously the auction had been designed to provide for competition by ensuring there was spectrum available to each of the three major telecommunications carriers. Out of the 90 megahertz of spectrum available, a carrier was not allowed to acquire more than 2x20 megahertz—that is, two blocks. Effectively, Telstra could have had 40, Optus could have had 40 and Vodafone or Telstra could have had 10. However, by changing and expanding the maximum block size for a bid, Senator Conroy ensures that, even without Vodafone's participation, he can be sure to extract every last cent he possibly can from the telcos. This is in stark contrast to, for example, how they operate in the United States where the regulator is prohibited by law from taking into account how much money is raised from spectrum. Yet in Australia that appears to be the government's primary objective in setting this reserve price changing the competition limits.

All of this will have the effect of significantly restricting investments and inflating costs, which will only be passed on to the consumers. Honourable members will immediately think that the response to this is to say: well, should not the minister be protecting the public purse? Should he not be seeking to get the maximum price for this valuable public asset? The answer is that protecting the public purse and revenue and ensuring a fair price is paid is a very important consideration but it is not the only consideration. There is an enormous productivity benefit, an enormous benefit to the overall economy—which the government in many respects through the tax system is the largest single shareholder in—in spreading the use, the affordability and the availability of wireless broadband services. So the more affordable wireless broadband services are, the more those productivity benefits can be obtained.

You have the remarkable situation that the government is, by any view, subsidising by many tens of billions of dollars a fixed-line broadband rollout in the form of the NBN, yet at the same time seeking to extract the absolute maximum price for wireless broadband spectrum, which will only make wireless broadband more expensive and less affordable. I think Honourable members would agree with me that the big change, the remarkable change in business practices in all of our efficiency and productivity has been the spread of wireless technology whether it is all of us doing our work when we are on the road or whether it is the tradesmen who can take a picture of a damaged part on his iPhone and then quickly email it to a supplier who can then send him exactly the right part. All of these millions of applications are made available by wireless technology. That is the great, in my submission, productivity driver—yet it is far from being subsidised; it is actually being gouged by the government. At the same time it is putting tens of billions of dollars into fixed-line broadband connections to residences for the most part and that bandwidth overwhelmingly will be used for the downloading and streaming of video entertainment.

It is as though they are subsidising the former broadband that has the smaller contribution to productivity and gouging the medium of broadband that has the maximum benefit.

This is all from a minister who goes from one bungle to the next. We have seen him announce 2½ years ago a deal on anti-siphoning. These are the rules that determine how much premium sport can be shown on pay television and how much has to be reserved for free-to-air television—arguably the single most important, from a financial point of view, regulation that deals with broadcasters. That deal, a new regime, was announced 2½ years ago. It has no statutory basis at all because the minister has not been able to get any legislation in a form to present to the parliament—completely unfinished work. We have seen the shocking performance of the NBN and the way it has run over budget. Now, as more information came out about the rollout only this morning, and if the figures published in CommsDay this morning are correct, and they certainly have not been denied or contradicted by the NBN Co, it not only appears that it is running behind schedule—and we knew that, because their original plan, for example, said by June 30 this year there would be 1.3 million premises passed with fibre, and then they amended that to say that it would be something in the order of 350,000 premises passed by fibre in August last year, and now we are learning that the rollout will miss that target considerably—but it also appears, incredible though it may sound, that the NBN is passing houses or premises this calendar year at a quarter the rate it was passing them in the previous six months.

The project is failing. Far from having a ramp-up there is, in fact, a 'ramp-down'. We know that the NBN's contractor for South Australia, Western Australia and the Northern Territory, which has been constructing the network for about 20 months now, is not in a position to connect one premise as a result of that 20 months' work. This is a project that is in catastrophic state, at least as far as we can see. But we are yet to hear it get a full mea culpa from the minister. He does not have a lot of time to focus on his failures with anti-siphoning or the NBN Co. or this legislation, because he is now endeavouring to impose the first government regulation of the content of newspapers in our history in peacetime, outside of the First and Second World Wars to be precise. We have been told that that legislation, which was only shown to us last Thursday, has to be passed by this Thursday. We have had committee meetings going today with broadcasting executives—

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