Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

I move opposition amendment (R5) on sheet 7049 revised:

(R1) Clause 9, page 15 (lines 4 to 8), omit the clause, substitute:

9  Supply of eligible services to be on wholesale basis

        (1)    An NBN corporation must not supply an eligible service to another person unless:

             (a)    the other person is a carrier or a service provider; and

             (b)    the eligible service is supplied on the basis that the other person, or a member of that person’s immediate circle, must:

                   (i)    re-supply the eligible service; or

                  (ii)    use the eligible service to supply a carriage service or content service to the public.

        (2)    For the purposes of this Subdivision, a service is supplied to the public if:

             (a)    it is used for the carriage of communications between 2 end-users, each of which is outside the immediate circle of the supplier of the service; or

             (b)    it is used for point-to-multipoint services to end-users, at least one of which is outside the immediate circle of the supplier of the service.

        (3)    In this section:

immediate circle has the meaning given by section 23 of the Telecommunications Act 1997.

This is one of the more substantial and significant amendments the opposition proposes and it is of particular substance and importance to this debate. Senator Conroy has said time and time again that it is to be a wholesale only network—that NBN Co. is to operate on a wholesale only basis. In fact, let us look through some of Senator Conroy’s quotes, even some of his recent quotes. In March 2010 Senator Conroy, talking on Lateline, said:

… the National Broadband Network Bill that we’ve put out is a draft exposure. In actual fact, puts regulations around the National Broadband Network.

If I can just digress for a moment in terms of it being an exposure draft, the number of changes the government has had to make to it shows just how much of a draft it was. He went on:

So it looks at what constraints would we need on a company that could ultimately become a wholesale monopoly. And so they’re important regulatory protections for all Australians so that in the future, when the National Broadband Network is up and running, that it has some regulations, powers for the ACCC to deal with the National Broadband Network, because there’s no point in creating—getting rid of one vertically integrated monopoly to create another—

vertically integrated monopoly. He continues:

So this bill around the National Broadband Network is actually an important bill to ensure that the NBN Company ultimately down the track is not able to abuse its position.

‘To abuse its position’—very important words from Senator Conroy and a very important sentiment. Notwithstanding the opposition’s concerns about the entire concept of the NBN, if you are to go down this path, we want to make sure and guarantee that NBN Co. cannot in future abuse its position. We do not want to find ourselves in the future in a situation where we have gotten rid of one vertically integrated monopoly to create another unregulated or poorly regulated monopoly.

We note that in the NBN implementation study, or at least those parts of it that we have seen, NBN Co. states that:

NBN Co’s wholesale-only, open access mandate is crucial to achieving the Government’s competition objectives. A great competition is held back in telecommunications in many markets around the world by a monopoly wholesaler offering better wholesale services to its own retail arm than to the retail businesses of competitors.

These are important points. These are critical points that the government has made time and time again. So it is of great concern to the opposition and industry that we have come along here to debate this bill, the National Broadband Network Companies Bill 2010, to discover that the government has not put an appropriate fence around what the NBN Co. can do in future.

I turn to the substance of this amendment—clause 9 in division 2 of the NBN Companies Bill. It is a pretty simple one. It states:

An NBN corporation must not supply an eligible service to another person unless the other person is:

(a) a carrier; or

(b) a service provider.

That is it. They are the only criteria of clause 9. The opposition is proposing to amend clause 9 in the means and ways listed on sheet 7049 revised. This amendment will provide a far clearer definition as to where and to whom services may be supplied. It will provide a far clearer definition to ensure that services are supplied on a wholesale basis and that services are supplied in a manner where, to paraphrase Senator Conroy, ultimately down the track NBN is not able to abuse its position.

The amendment we have proposed provides a lot more clarity and substance than the proposal in the government’s legislation. The amendment we have proposed provides that:

(1) An NBN corporation must not supply an eligible service to another person unless:

             (a)    the other person is a carrier or a service provider; and

             (b)    the eligible service is supplied on the basis that the other person, or a member of that person’s immediate circle, must:

                   (i)    re-supply the eligible service; or

                  (ii)    use the eligible service to supply a carriage service or content service to the public.

        (2)    For the purposes of this Subdivision, a service is supplied to the public if:

             (a)    it is used for the carriage of communications between 2 end-users, each of which is outside the immediate circle of the supplier of the service; or

             (b)    it is used for point-to-multipoint services to end-users, at least one of which is outside the immediate circle of the supplier of the service.

        (3)    In this section:

immediate circle has the meaning given by section 23 of the Telecommunications Act 1997.

The opposition has proposed this amendment that goes into far more detail as to what an eligible service supplied on a wholesale basis is because we think it is important that there is not mission creep or scope creep in what NBN Co. does and that when NBN Co. says it intends to be a wholesale only provider and the government says NBN Co. should be a wholesale only provider that is what actually happens, that is what the public gets and that is what consumers get. We think that is only fair and reasonable. We think it is important to hold the government to its word in this regard and that we ensure that NBN Co. are not able to step out of being a wholesale only provider and in doing so risk having that situation where down the track they are able to abuse their position so that we will have potentially gotten rid of one vertically integrated monopoly and instead created a poorly regulated monopoly that is able to step, in some way, into a field of vertical integration.

We heard during the Senate committee inquiry genuine concern from carriers that there were real prospects of NBN Co. supplying directly to end users of services and that there were real prospects that there were carriage service providers, companies and organisations, who already met the definition of being a carriage service provider who would be eligible under the government’s act, if it is passed, to be able to get services directly from NBN Co. We heard everything in that regard from library groups, local government groups, supermarket groups to potentially big banks. You can only imagine what would happen if NBN Co. were able to snatch all of those big customers—the supermarket groups, the big banks, the big companies, large local government entities and big library services—and provide services directly to any of these bodies. It would rip the more profitable aspects out of the retail market. It would leave the retail service providers providing smaller services to large numbers of people. It would take out some of the biggest customers and in the process NBN Co. would have stretched ‘way beyond’—your words—your promise throughout the entirety of this debate that NBN Co. would be a wholesale only provider. What would have happened is that they would be quite clearly providing retail services. They would be providing retail services because they would be providing to customers at the end point of that service. There is no denying that is what it would become in those circumstances. Indeed, in evidence to the Senate committee, it was clear that NBN Co. was quite happy with that situation, that they saw nothing wrong with the situation of them being able to provide services directly to end users. Under questioning from Senator Ludlam, the revelation became quite clear that NBN Co. saw nothing wrong in providing services directly to end users.

So, Minister, the question for you to answer here relates to this very narrow definition you have provided, where many entities, who will have absolutely no intention whatsoever of on-selling communications services but who are defined as carriage service providers, would actually be able to buy services direct from NBN Co. without on-selling them. Why should those companies be able to meet it? We have the example that was given of Woolworths, who meet the definition of a carriage service provider because of some of the mobile services that they sell—that is all. That is how they meet that definition. But if Woolworths were to find it cost effective to buy their services direct from NBN Co. there would be nothing in your legislation at present that would prevent them from doing so. They would be, therefore, a retail customer if that is all they were doing. If they were buying the service, if they were using it themselves, if they were not on-selling it, they would be a retail customer—a total retail customer.