Nick Xenophon (SA, Independent) Share this | Hansard source

I rise to indicate my support for the second reading of the Telecommunications Legislation Amendment (Fibre Deployment) Bill 2011, but I reserve my position in relation to the third reading. I am open minded when it comes to the amendments that will be moved by the coalition in relation to this bill. Clearly this bill is necessary, but it is the way that it is implemented that is the key question. I think it is important that we reflect very briefly on the history of this legislation.

I voted for the structural separation of Telstra last year. I did so because I supported what many independent commentators said in relation to telecommunications in this nation—that it was held back because of the vertical integration, the virtual monopoly, that Telstra had. It was necessary to structurally separate Telstra. It was a case of trying to unscramble the egg, in a metaphorical sense—very difficult. It was a difficult reform exercise, but it was an exercise that many in the OECD thought was a good thing to do because, in OECD terms, Australia really lagged behind in telecommunications reform. So I supported that structural separation.

I also supported the government's NBN bill, with significant amendments that the government agreed to that would level the playing field to enable smaller operators to compete fairly in the marketplace for business at the retail level, so there would not be price discrimination. I am grateful for the advice of Associate Professor Frank Zumbo in relation to those amendments about non-price discrimination. I thought there were some elegant ways around the concerns that were expressed by some, to make the NBN legislation fairer, to make it more effective and, above all, to allow more competition in the marketplace, which ultimately is unambiguously good for consumers.

Here we have this legislation about fibre deployment. The issue is:

It is estimated that 150 000 new dwellings and approximately 60 000 other types of premises (commercial, industrial and government) are constructed annually. NBN Co has calculated that 94 per cent of these new premises (or around 197 000) will be within the fibre footprint.

I am quoting directly from the recent report of the Joint Committee on the NBN, a committee that was established as a result of the negotiations I had with the Prime Minister last year in relation to my support for the NBN legislation. The Joint Committee on the National Broadband Network is an important transparency and accountability mechanism for the rollout of Australia's biggest infrastructure project. The committee report indicates:

The cost of installing fibre-ready infrastructure has been estimated at about $800 per lot or building unit. The cost of retrofit of fibre where no passive infrastructure has been supplied is estimated to be approximately $1300 a lot or unit.

The legislation will be reviewed in five years to assess if it is still required. This legislation essentially is saying that NBN Co. will be responsible for fibre installation for all premises in the fibre footprint which are at the development stage. In other words, NBN Co. will be given a virtual monopoly for those greenfield sites. That applies to all broadacre developments, all infill developments where it has fibre that is ready for service and capable of connection and new approved infill developments of 100 or more premises.

Those are the basic criteria, but there have been concerns expressed. In the course of the inquiry, while the majority of contributors agreed with the general premise of the bill, there were a number of commercial fibre providers and industry groups that raised concerns about the bill's potential to do a number of things. Again quoting from the committee report, which I think gives a very fair summary of the evidence, the concerns were that it could:

There was a concern that those smaller providers would be disadvantaged. That itself should not be the only criterion. But, if the consequence of those providers being disadvantaged is that you have less competition and a blowing-out of costs and it puts those smaller providers at an unnecessary competitive disadvantage, then these are matters that we ought to be concerned about. The legislation outlines NBN Co. as a fibre provider of last resort. But the concern is that the way that this is structured means that effectively it will be a provider of first resort. That, to me, may pose a number of issues. A number of concerns have been expressed by the GFOA, Greenfield Fibre Operators in Australia, and I think those concerns have merit. Those concerns included, as I indicated, that NBN Co. is in fact promoting itself as a provider of first choice and not of last resort as is intended in the legislation. In other words, the structure of it, despite what the legislation says, is quite the opposite of what it is meant to be.

Another concern is that the Australian government is ignoring its own competitive neutrality policy for government owned businesses. This policy, it is important to note, dictates that no competitive advantages should be given to government owned businesses over private sector competitors by virtue of their public sector ownership, nor by using their fiscal or legislative powers. All those elements are blended into this.

I have never had an issue with NBN Co. being a government owned enterprise. For such a major piece of infrastructure that has the potential to be a nation-building piece of infrastructure that will improve telecom­munications and include a whole range of benefits that go with that, whether in health, commerce or technological advances, I think it is important that we have it set up as a statutory entity, as a government business enterprise, for when there is market failure. But it is important that it operates fairly.

A concern with this bill that the greenfield operators have indicated is that, if the bill is not amended to provide for protections and to encourage competition in deployment and the operation of fibre networks in green­fields, the competitive neutrality policy of the Commonwealth government will effectively be abandoned. There is a real concern about that. The government has responded to those concerns and it has discussed them comprehensively in the report, but the concerns of greenfield operators have not been addressed in the bill in its current form. I propose to detail and discuss this further. I think it is appropriate that the government be robustly questioned in the committee stage about the whole issue of competitive neutrality.

The greenfield operators association has indicated that two of its members have lodged complaints with the Australian Government Competitive Neutrality Com­plaints Office—it has the acronym AGCNCO; I have no idea how you would pronounce that!—situated within the Productivity Commission. This office is yet to report on the matters raised. That concerns me too because it clearly is a complex issue.

Another issue is: what do you do with services for new developments of fewer than 100 premises? TransACT here in the Australian Capital Territory has expressed some concerns in relation to this. It is concerned that there will be an anti-competitive and unlevel playing field for other infrastructure and service providers. This is what it stated in its submission:

This process has the potential to create a ‘digital divide’ between developments with less than 100 premises and those with more than 100 premises, both during and after the roll out of the NBN. It also creates an anti-competitive and unlevel playing field for other infrastructure and service providers. It seems that Telstra could determine unilaterally that it will service a development with a fibre-to-the-node (FTTN) or fibre-to-the-building (FTTB) solution, or even a mobile voice and broadband solution, which would prevent other service providers from accessing those networks given they are not regulated. This would further entrench Telstra as the monopoly provider in these markets, while also giving it first mover advantage to acquire the end-users as Telstra Retail customers, pending migration to NBN Co’s fibre network.

The concern raised by TransACT goes beyond complaints; it goes to some broader principles. It goes to the whole reason why we went through the very painful and costly process of structurally separating Telstra with the multibillion dollar deal to induce them to go down this path. It goes to the issue of whether we are replacing one monopoly with another, in the process giving Telstra some in-built advantages. I thought the reason we went down the structural separation path, which I supported, was to free up the telecommunications market to make it more dynamic, competitive, effective and consumer friendly in the sense that with more competition consumers get a better deal, price and product. TransACT is expressing very serious concerns about that. The broader implications of that worry me.

TransACT has suggested that the bill should be amended to:

… include provisions that ensure these developments are serviced by copper from the local telephone exchange wherever reasonably possible. This would ensure the ULLS26—

which I am sure means a lot to the six people listening to this on the parliamentary news network—