Anne McEwen (SA, Australian Labor Party) Share this | Hansard source

I am very pleased to contribute to the debate this evening on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. The Rudd Labor government is determined to have the best possible infrastructure in place to underpin Australia’s economic future and economic prosperity and to ensure that all Australians can enjoy that prosperity. We are committed to building the best possible broadband and telecommunications system, the best transport corridors, the best schools and the best health facilities. Despite the continued obstruction of those opposite, we are determined to honour those commitments to the Australian people.

I note that the government recently released its exposure draft of the legislation intended to establish the regulatory framework for the National Broadband Network company, NBN Co. That was another significant step in the massive reform of the Australian telecommunications sector that the government has embarked upon. As is appropriate, that exposure draft is available for consultation with stakeholders and the government has, as the Minister for Broadband, Communications and the Digital Economy has said, an open mind on any amendments that can improve the bill before us today.

The government is always mindful of the necessity to consult widely about the transformation of Australia’s telecommunications infrastructure and systems; however, the opposition does not participate meaningfully in this debate at all. It just opposes everything we do. While failing to come up with any coherent plan of its own, there have been numerous press releases—currently more than 100—and at least 18 different failed broadband plans. There is no coherent plan and no vision for the future from the coalition. Given the coalition’s recent complete conversion to a party full of extremists, wackos and conspiracy theorists, we can only anticipate that their next pronouncement on telecommunications will be to either institute a national smoke signal system or bring back carrier pigeons.

The amendments proposed in the bill we are debating come after telecommunications companies, industry experts and the regulator have been calling for years for fundamental reforms in telecommunications. The government has listened to those calls and, with this bill, will deliver historical reforms in Australia’s long-term national interests. The legislation before us will address Telstra’s high level of integration to promote greater competition and consumer benefits; it will streamline and simplify the competition regime to provide more certain and faster outcomes for telecommunications companies; it will strengthen consumer safeguards to ensure service standards are maintained at a high level; and it will remove red tape affecting productivity and innovation.

The Senate Environment, Communications and the Arts Legislation Committee inquired into this bill last year. As the committee’s report noted:

The bill seeks to introduce a series of regulatory reforms intended to enhance competitive outcomes in the Australian telecommunications industry and strengthen consumer safeguards. It seeks to ‘promote an open, competitive telecommunications market to provide Australian consumers with access to innovative and affordable services’.

That was a laudable conclusion for the committee to come to. It is a pity that the coalition senators could not support it.

The amendments proposed in this bill will assist us to modernise our telecommunications industry and benefit all 22 million Australians. At the moment, Australia sits in the bottom half of OECD countries in terms of broadband take-up. Australia has slower and more expensive broadband compared to many other countries in the OECD. In fact, the OECD ranks Australia 16th in terms of broadband penetration per 100 inhabitants. We also rank fourth, fifth and ninth for the most expensive low-speed, medium-speed and high-speed average monthly subscription broadband prices respectively. That poor standing of ours on the international scale is largely due to the lack of competition in the telecommunications market.

The bill before us is designed to restructure the regulation in place in the sector in the interests of consumers, business and the economy as a whole. Additionally, it is designed to position the telecommunications sector to make the smooth transition to the NBN environment as the new network is rolled out and implemented across the country. The measures incorporated in the bill will provide flexibility for Telstra to choose its future path and to streamline the regulatory framework.

The bill is split into four elements of reform, which I will now outline in a bit more detail. The first is vertical and horizontal separation. Unlike many other countries, the Australian telecommunications sector is dominated by one company, which owns Australia’s only fixed-line copper network, the largest cable network, half of the largest pay TV provider and the largest mobile phone network in the country. That high level of integration that Telstra has over the telecommunications market is highly unusual when compared to most other countries. Integration to that extent is anticompetitive. To avoid the detriment caused by an anticompetitive framework, many countries have already implemented restrictions to ensure that the total monopolisation of the telecommunications sector does not occur.

The bulk of the current telecommunications regulatory regime has been in place since its introduction in the 1990s. It is the government’s view that, even after more than 10 years of open competition, Telstra’s high level of integration across the telecommunications sector is hampering the development of effective competition. In owning the fixed-line copper network as well as the largest cable network and holding a majority share of the nation’s mobile phone network, the government believes Telstra has disproportionately high levels of ownership and that has contributed to Australia continually lagging behind other developed countries on the availability, price and quality of telecommunications services.

The first element of reform in this bill will focus on the current structure of the telecommunications sector, implementing vertical and horizontal separation and aiming to correct the mistakes of the past. While significant structural reform has occurred in other key infrastructure industries, previous governments from both sides have failed to undertake the necessary structural and microeconomic reform in the telecommunications industry. The government has devised a plan for the functional separation of Telstra, unless of course Telstra decides to voluntarily structurally separate in a way acceptable to the ACCC. Of course, the best outcome for the transition period to the NBN is for Telstra to voluntarily structurally separate in line with NBN arrangements. If the company chooses to voluntarily separate, the minister will provide guidance to the ACCC on the matters it would need to take into account when considering whether to accept a separation undertaking. If Telstra chooses to not voluntarily structurally separate, this legislation provides for the government to impose a strong functional separation framework on the company.

The bill also includes provisions to address the horizontal integration of Telstra across copper, cable and mobile platforms. Telstra will be prevented from acquiring additional spectrum for advanced wireless broadband while it remains vertically integrated; while it owns a hybrid fibre coaxial cable network; and while interests in pay TV channel Foxtel are maintained at the levels they are now. The legislation provides scope for the minister to remove either or both of the second and third requirements in the event that Telstra submits an acceptable voluntary structural separation to the ACCC. I note that functional separation has been used as a regulatory tool successfully in other countries, including the United Kingdom and, more recently, New Zealand. It is also being considered currently by the European Commission. In a range of countries a fixed-line incumbent does not also own the largest mobile carrier, as is the case here in Australia. The government, through this legislation, intends to rectify the deficiencies in our unique and highly integrated telecommunications market with the aim of promoting competition across different delivery platforms while still allowing Telstra to choose its own future path.

I will now go to parts XIC and XIB of the Trade Practices Act. The second element of this bill addresses the competition framework. It seeks to reform the telecommunications access regime and the way in which anticompetitive conduct is handled by the regulator. The existing telecommunications anticompetitive conduct and access regimes in the Trade Practices Act have been widely criticised as being cumbersome, open to gaming and providing insufficient certainty for investment. The government, rightly, wants to change that and to improve the conditions of the current regulatory framework.

As evidence that things are not working well in terms of that regulatory framework, I note that in the period from 1997 until mid-2009 there were 157 telecommunications access disputes lodged with the ACCC. In comparison, other regulated sectors, including the energy and aviation sectors, only saw three access disputes lodged in the same period. It is clear also that access seekers have been frustrated and unhappy with the constant delays and disputes in the industry, a fact that was reiterated during the Senate committee inquiry, where many of the submissions were strongly in favour of improving the process. A reform of the telecommunications access regime is most definitely needed to ensure it is a more effective and therefore a more acceptable regime for access users.

The proposed changes outlined by this bill will also reform the Trade Practices Act to streamline the arrangements through which telephone companies access wholesale services so that, firstly, the ACCC will determine upfront terms and conditions for a three- to five-year period; secondly, the ACCC can determine principles to apply for longer periods; and, thirdly, the ACCC can make binding rules to immediately address problems with the supply of regulated wholesale services.

The bill also reforms the arrangements in part XIB of the TPA so that the ACCC can address breaches of competition law and conduct damaging to the market. These reforms will provide more timely outcomes and greater regulatory certainty for both access providers and access seekers. Providers and seekers will be able to invest in infrastructure and expand their service offerings. Competition in the telecommunications industry will be far improved, and, of course, consumers and businesses will benefit from lower prices, better services and greater product innovation.

Also in this bill there are matters dealing with consumer protection measures. The platform of reforms that we are debating today in this bill takes into consideration the implementation of the National Broadband Network. During the period of transition to the NBN environment the existing telecommunications regulatory regime will remain important for delivering services to Australian consumers and businesses. The government is committed to ensuring that consumers are protected during this phase and that service standards are maintained at an affordable and high-quality level. The reforms proposed strengthen the regulator’s ability to enforce existing consumer safeguards that are in place and will not remove any of the existing protections that are currently in place for consumers. With this bill the government will ensure that Telstra does not reduce the quality and reliability of services on its copper network during the transition to the NBN. In fact, this bill aims to make sure that existing protections are better enforced in order to provide higher quality services and a greater responsiveness to faults.

The government is particularly concerned about access to modern telecommunications. The reforms that this bill presents will be good for all Australian consumers and businesses no matter whereabouts in the country they are located. Rural and regional Australia has suffered disproportionately from the inadequacies of the existing regulatory framework. For example, only 59 per cent of payphones in remote areas provided under the universal service obligation were repaired within the three-day period specified in Telstra’s Standard Marketing Plan—a stark contrast to the 82 per cent repaired within two days in rural areas, and 91 per cent of phones repaired within one day in urban areas. In the Regional Telecommunications Independent Review Committee report released in September 2008, the universal service obligation arrangements were highlighted as being very vague and too difficult to enforce. The government have recognised that the universal service obligation is the key to the ongoing protection of consumers’ rights, although we have also recognised the need to improve quality and service benchmarks.

The measures outlined in the bill reflect the decision to retain the existing USO for voice telephony and payphones, but we require a marked lift in the service benchmarks to increase consumer satisfaction. Improvements to service quality will be made in order to meet the customer service guarantee. New service arrangements will make clear to both consumers and Telstra the services Telstra must supply in fulfilment of the universal service obligation, including reliability and repair requirements, rather than the decisions being left to Telstra’s discretion. 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 our fabulous 21st-century broadband network are finalised.

The fourth plank of the reforms proposed in the legislation before us today is to do with the removal of red tape. The Rudd government have consistently been dedicated to modernising infrastructure and maximising productivity and growth. We have made large commitments to address any impediments that stand in the way of Australia’s long-term productivity growth. The final element of this bill is intended to remove regulation red tape, specifically in areas where it is no longer needed, and, more specifically, in areas where the need for regulation no longer exists. There are a number of these red-tape removal proposals, including exempting all carriers from paying the annual carrier licence charge if their annual revenue is under $25 million per annum; reducing the reporting requirements under the customer service guarantee, priority assistance and network reliability frameworks so long as performance benchmarks are being met; repealing any unnecessary accounting and operational separation requirements once functional separation is in place or Telstra has submitted an enforceable undertaking to structurally separate that is acceptable to the ACCC; and, finally, abolishing the Telstra licence condition that requires Telstra to provide technical assistance to enable customers to achieve 19.2 kilobits per second internet services.

As I have said, the object of the bill, with the splitting of Telstra, is to promote innovation and increase competition and responsiveness within the telecommunications sector. The reforms proposed in the bill are well-timed to benefit both telecommunications providers and consumers. The government wants to create a more efficient telecommunications market with more competitive services for the benefit of all Australian consumers, including businesses and households. Although we have seen attempts from the opposition again today to frustrate the passage of this bill, it is hoped that these benefits will be seen relatively soon so that we can carry them through for the long-term benefit of the country.

The government is determined to act in the best interests of industry, but the coalition, with their activities today, are clearly opposed to doing that. The action the coalition took today to delay debate on this bill fits in with their long track record of failure in the area of telecommunications regulations. After all, the coalition presided over a regulatory system which has failed telecommunications companies, consumers and businesses. They privatised Telstra without ever properly resolving the conflict of Telstra being the network owner while also competing against its customers in retail markets. The opposition are again trying to delay these reforms and they are again failing Australian businesses and consumers.

The reforms in this bill are critical. Every day that these reforms are delayed, Australian consumers and businesses will continue to pay higher prices and have less choice and see less innovation in telecommunications services. In case we were in any doubt about the importance of these reforms, I should point out that many in the industry and stakeholders support them. On Lateline Business last year, ACCC Chairman Graeme Samuel said:

The view of the ACCC for many years is that the reforms proposed in the legislation that’s been tabled by the Government are long overdue, are necessary, are reforms that infuse the whole concept of competition into the telecommunications sector, an infusion that itself is long overdue since about 1992.

I commend this excellent legislation to the Senate.