STEPHEN CONROY: I hope you enjoyed the presentation by McKinsey's. I've heard it a couple of times now so my eyes are glazed over but I hope you genuinely found that worthwhile. We thought it was important for you to be able to get an off the record briefing and be able to work your way through the report.
In April last year, the Government made its historic announcement to invest in a $43 billion national broadband network. The NBN will ensure that every Australian home, school, workplace and hospital, no matter where they are located, can get access to affordable world class high speed broadband.
Communications services based on a high speed broadband platform are the arteries of the 21st century digital economy. They are a vital input into every conceivable function of business and daily life and will become even more so in the future.
Just as governments have previously invested in electricity, rail and ports, government also has a role to invest in the nation-building infrastructure of the future.
The Australian telecommunications market has failed to invest in the necessary infrastructure and services for all Australians or keep pace with the rest of the developed world. And past governments of both persuasions have failed to put in place the policy settings to safeguard genuine competition, innovation and choice for consumers. That is why the Rudd Government has made investment in wholesale only, open access, high speed broadband network a top policy priority.
Since April last year the company established to build and operate the network, NBN Co, has been getting on with the job of detailed technical planning, rolling out the first parts of the network and engaging across the industry.
Substantial progress on the rollout of NBN has already been made. The rollout in Tasmania has been under way since last year and the first services from the NBN will be delivered in just a few short weeks in July.
The construction of 6000km of fibre optic backbone links connecting 100 regional locations and benefiting around 395,000 regional Australians is under way with over 540km already laid.
NBN Co has announced five first release sites where it will deploy fibre access networks on the mainland. NBN Co continues to build a team of highly skilled people to deliver on the Government's NBN objectives and is engaging across the industry on harnessing the capability to do this.
The NBN is a critical nation-building investment for Australia's economic future for our productivity growth, for competition in rural and regional areas and for the delivery of innovative health and education services. It is the largest infrastructure project in Australia's history. It is not an overnight solution. It is not a quick fix for an election.
It is an historic reform. The economic and social effects of which will be felt for generations to come. Therefore it is important to get the implementation of this project right. That's why last April we announced an Implementation Study into the NBN.
The purpose of this study was to provide expert independent advice on a range of matters that will guide the rollout of the NBN and the policy settings around it. The study undertaken by the lead adviser, comprising of McKinsey & Company and KPMG, was handed to the Government on 5 March this year and after that briefing I'm sure you'll agree we certainly did receive expert advice.
It covers issues around the technology, financing, ownership, policy framework, a market structure of this important infrastructure project. As you now know, the study contains 84 recommendations for government and over 500 pages of analysis. It is the result of the lead adviser consulting with over 140 key stakeholders and drawing on international experience and research.
After months of detailed and rigorous analysis the Implementation Study confirms that high speed broadband over a wholesale only network for all Australians is achievable and can be built on a financially viable basis with affordable prices for consumers. In fact, the Implementation Study finds that in a number of areas it is possible to not only meet but exceed the Government's original objectives.
The Government will provide a formal response to this report in the coming months after a period of public consultation. It's important to note that this analysis and recommendations are those of the lead adviser and they will be considered by government in consultation with the NBN company.
Before I take questions, I will make some comments on some of the key areas. Regarding cost, the study confirms that the NBN can be built within the $43 billion total capital cost estimate. In fact, the study finds that this is a conservative high end estimate and that there are opportunities to significantly reduce the total build cost.
The study also finds that, within this estimate, the NBN fibre footprint could be extended from 90 to 93 per cent of premises and it recommends that it also cover the 1.3 million new premises expected to be built by 2017/18.
This means that, in effect, the study recommends that we extend fibre to the premise to around 1.6 million extra premises.
Regarding the financial viability, and I'm sure Lindsay will have a few comments as well, of the NBN and the role of government in this project. The study finds that NBN Co can build a strong and financially viable business case. Importantly, the study confirms that this is the case even without the participation of Telstra.
However, the release of the study does not change the Government's objective to finalise productive negotiations with Telstra that result in a win-win outcome.
On this point, negotiations between NBN Co and Telstra are continuing. Not surprisingly, with an infrastructure project of this scale, the NBN involves significant upfront capital investment with revenues increasingly coming on stream as the network and take-up grow.
The study recommends Government retain full ownership of the NBN during the early build phase to ensure its policy goals around competition and affordable services are achieved prior to privatisation.
Twelve months ago the Government committed to investing in a $43 billion NBN. The study confirms that the company will generate sufficient earnings by the end of year seven so that the Government's recommended investment peaks at $26 billion.
The study also confirms that the NBN business model establishes that taxpayers are paid back their investment with a modest return of around six to seven per cent by year 15 of the project on the basis that privatisation is completed. This level of return on the Government's equity investment ensures the Government fully covers its cost of funds.
Now let me turn to the issue of technology. The Government NBN policy includes delivering fibre to the premise technology to 90 per cent of premises with Next Generation wireless and satellite serving the remaining 10 per cent.
The Implementation Study suggests this objective could be exceeded. Since we announced the NBN, there has been speculation about whether investment in fibre is necessary or whether wireless will surpass it. The findings of the Implementation Study put this issue to rest once and for all.
The study confirms fibre to the premise is widely accepted as the optimal future-proof technology. It can deliver speeds well beyond the 100 meg objective and has a low fault rate and its physical deployment in the ground may last 50 to 60 years.
It also confirms that, while wireless broadband will continue to be important, it will be mostly complementary not a substitute for fibre particularly with the inevitable growth in the demand for band width in the coming years.
The study does find, however, that Next Generation wireless and satellite services are a vital part of the solution for less densely populated areas and those outside the fibre footprint will get average data rates at least 20 times high than most users experience today and much higher than the average DSL usage today.
There has been considerable and speculation as to the prices that will be available on the NBN for consumers. Some of these have lapsed into quite wild claims that consumers would end up paying hundreds of dollars a month to buy services on the network.
The study recommends that wholesale prices should be set at affordable levels to drive the uptake by consumers at the retail level and finds that the network can still become financially viable. In the study, this equates to entry level wholesale prices of $20 to $30 per month for a basic broadband service of 20 meg, $30 to $35 per month for broadband and voice and around $50 per month on average for a higher speed broadband service.
Combine this with the fact that the NBN will be a wholesale only network, an open platform for competition and consumers are going to be the big winners. They will have more choice, faster broadband speeds and better download limits for comparable prices to what they pay in the market today.
It will put affordable genuine high speed broadband within the reach of every Australian household, small business, school and hospital. Consumers will not switch the NBN unless they can get a better deal. As a wholesale only network, NBN Co will not set retail prices. But if you look at what's happening in the market today, Internode are offering $50 per month - this is the retail price, $50 a month - for 25 meg retail over fibre and $100 per month for 100 megs over fibre.
That's today before the NBN's competition kicks in. And we are starting to see even more competitive offerings for better quality services. Competition on the NBN will drive even better outcomes for consumers.
If you look in just today's Financial Review, you'll see a story written about a Tasmanian offering that's been talked about where they're actually going to charge zero for broadband and a dollar per gig download. That's a game changer. Now, that's a company publicly stating that's what it intends to do. So this change in the competitive paradigm is what is being delivered because of the NBN.
The study also makes a number of key recommendations that will enshrine a competitive telecommunications sector for decades to come. The NBN is a once in a lifetime opportunity to achieve an historic vision for telecommunications and to ensure Australia can prosper and grow in an increasingly connected world.
The release of the Implementation Study today, and the Government's formal response in the coming months, provides further momentum to this important project.
I would, again, like to acknowledge and thank my department and the lead adviser, McKinsey & Co and KPMG, for their work on this important study over the last eight months. It will further guide the Government towards getting the settings around the NBN right for Australia's long-term national interest.
The Rudd Government is committed to building the NBN for the benefit of all Australians now and for the future generations. The study shows that we can make this vision a reality.
Thank you very much, and I might throw to Lindsay at this point.
LINDSAY TANNER: Thank you very much Steve.
Stephen Conroy and I are the joint shareholders of NBN Co and, of course, I have a wider responsibility as Minister for Finance for both government business enterprises generally and also the wider health of the Federal Government's balance sheet. So I've got a range of different interests in the Implementation Study.
There are a number of key points that I want to highlight in commenting on the Implementation Study. First, this study confirms clearly that the proposal that the Government put forward about a year ago, is entirely financially viable, and can be proceeded with within the outer limits that were set by the government at the time of a total cost of $43 billion across the entirety of the project.
Second, it notes that the scale of the government direct investment that will be required would be expected to peak at approximately $26 billion in year seven of the project. And in the year before that it is projected that NBN Co would have sufficient cash flow in order to be able to borrow on its own account which, of course, is a normal situation for a government business enterprise to do, to have debt on its balance sheet that is separate from any government debt.
The study also concludes that on the basis of what are very conservative assumptions, both with respect to the future labour productivity, technological change, any dealings with Telstra, that as well as this project being capable of being delivered below that $43 billion ceiling that was set that also it is reasonable to expect that on the basis of take up rates, about half of the available population or available customers, maybe a little bit more, on prices that are comparable with prices for existing products today but with much faster speeds, so a set of assumptions that are broadly pretty conservative that, as Stephen Conroy indicated, the government would both get its investment back and also, over the course of the investment, earn a modest return of somewhere in the vicinity of six to seven per cent on that investment.
Now that is a crucial finding of the Implementation Study, that this is an investment that will earn a return for the government, that the government will cover the cost of its capital in this investment over the longer term and, of course, it also produces a huge ongoing return for the nation, for the community, a huge kick start to our productivity, a huge improvement in competition, and a huge improvement in options for consumers and businesses in the way that they go about their business.
Finally, the Implementation Study is very bad news for Tony Abbott on two fronts; first, it does conclude, as I indicated, that the project is financially viable within the limits that the government established when it put forward the proposal a little over a year ago.
Secondly, it confirms that the government contribution is an investment and not a grant. It confirms that the government contribution to NBN because it will be earning a return and the government will get its money back and a modest return, is to be accounted for as an investment and is therefore on the capital side of the budget and is not recurrent spending.
Why that is particularly important is because Mr Abbott, in this usual loose-tongued way, has been suggesting recently that he will cancel the broadband project and could therefore have up to $43 billion of saving available to him to spend in other ways.
Well, I've got bad news for him, he won't, he doesn't, because this is an investment that is accounted for in the government's accounts on the capital side. It is not recurrent spending, it cannot be therefore converted into spending without hitting the budget bottom line, without hitting the recurrent spending bottom line.
This is a similar situation to that which prevailed with respect to the privatisation of Telstra. John Howard was unable to spend the proceeds of the sale of Telstra because they were capital receipts. Yes, they could be invested in another way, and some of them were invested in the Future Fund, but he was not able to turn them into Family Tax Benefit increases, for example.
So the same logic applies here; Tony Abbott has got a lot of homework to do, it's about time he started dealing with some detail instead of spending his whole time out there on the bike and with the surf board, and just letting forth with endless one-liners and TV grabs, because he clearly doesn't understand that even if he were to commit what I regard as an economically disastrous and foolish act of cancelling this project, he simply does not have a big pile of money that he can then proceed to spend there because this is an investment that will be earning a return for the government's balance sheet, and it is therefore accounted as such.
And if you want the simple illustration of this point, if you sell your car to pay this month's rent there's a slight problem, you've still got to ask where next month's rent's coming from, and you've also got a problem getting around. That's why we have recurrent and capital budgeting, and therefore anything that occurs on the capital side of the budget is not immediately capable of being transferred into recurrent spending.
So the notion that Mr Abbott appears to have in his head that somehow he's got a giant pile of spending money available to him here is simply not correct. And the track record of his own government and the fact that it was not able to spend the billions upon billions of proceeds from the sale of Telstra, just underlines that point.
So he will need to go back to the drawing board and he will finally, belatedly have to start thinking about precisely what he is proposing to do with respect to specific policy commitments for the future of this country, and also how he intends to pay for it.
Should he choose to cancel the Broadband Network proposal then the funding that is attributable to that will be able to be invested in other things that earn a return. It will not be able to be spent on recurrent spending without a very big negative impact on the budget bottom line. Thank you.
QUESTION: Would this be built without Telstra as the recommendation suggests it should be?
LINDSAY TANNER: Sorry?
QUESTION: Will this be built without Telstra as the report recommends?
LINDSAY TANNER: The report modelled the no build - the no deal with Telstra scenario. We, as I said, are in lengthy and very complex negotiations with Telstra. They are ongoing. If both parties felt there was no point in those discussions continuing, we would terminate them.
Clearly we have not reached an agreement with them at this stage and therefore the discussions are ongoing. I wouldn't imagine that we could keep talking through to the end of the year, I wouldn't imagine we could keep talking through to the end of June. At some point you've got to make a decision, either we're going to get there or we're not, and you shake hands and walk away if you can't.
But at this stage the complexities are still enormous, but the constructive dialogue which has been going on over the last four or five months now, continues.
QUESTION: Stephen Conroy, the report makes no finding on retail prices but do you think that the overall message from this report is that consumers could get a faster network service at today's retail prices or could even get a better service at a retail price lower than today?
STEPHEN CONROY: I think if you look at the examples that are in the marketplace today of fibre offerings you can see that the wholesale prices that are being talking about here are very, very competitive with that. They're very, very competitive with ADSL prices, and so I think that's a reasonable position to draw.
QUESTION: On that wholesale price can I just clarify?
STEPHEN CONROY: Yes.
QUESTION: You said 20 …
QUESTION: … Tony Abbott not having a pot of money that he can play with if he cancels the broadband network that this project doesn't show up in the budget papers either as expenditure or deficit from your perspective, and also, just one more question if I may, does this report envisage that the government would be able to get special dividends from NBN Co in the way that you do from Australia Post or from other GBE?
LINDSAY TANNER: On the first point there is provision in the budget - it was actually in last year's budget and will be carried through to this year's budget, and there is an initial foundation investment sum that's been provided for in the budget of 4.7 billion. There is also a substantially larger figure that has been provided for in the contingency reserve, which is the amount is not disclosed, and of course that is the reason it's in the contingency reserve is that amongst various other things, things like this implementation study negotiations with Telstra mean that at the very least timing considerations about when amounts are invested are still obviously subject to some variation.
But the key point is that those amounts are on the capital side of the budget, they do not hit the underlying cash figure that you all see as the budget surplus or budget deficit figure. And that's because they are earning a return and they are an investment. If they're a grant and nothing's coming back the other way, then they hit that bottom line.
STEPHEN CONROY: Sorry, special dividend.
LINDSAY TANNER: Sorry, special dividend. We would certainly have no plans for a special dividend and I think if you look at the advice in the Implementation Study, it's difficult to see anything of that kind in the foreseeable future given that we have an explicit plan to privatise once the broadband network is both constructed and embedded and up and running, I think the prospect of that occurring is remote, but we wouldn't, I think, be putting any specific structure in place to prohibit it because in many respects that then begs the question of what is the normal dividend which in turn you wouldn't want to prescribe at a specific percentage in advance anyway. So I think the answer is in practical terms extremely unlikely that you would ever see that occur, given the nature of the investment and the projected pattern of returns. But I wouldn't anticipate us putting any kind of artificial structure in place to preclude that occurring.
QUESTION: Just a clarification on your opening statement, you said the wholesale price would be $20 to $30 for 20MB plus voice.
LINDSAY TANNER: $25 to $30 I think I said.
QUESTION: In the briefing in the release it says $30 to $35.
LINDSAY TANNER: That's with voice. It's $25 to $30 without voice, $30 to $35 with voice.
QUESTION: You'd raise the money in the same way, wouldn't you? You'd sell bonds in the same way. This is an accounting nicety that you're talking about. Your return on investment isn't fully realised until this is privatised and that's a very long way down the track. So if Tony Abbott chooses to spend that money, that $26 billion, in another way, it's just a different way of accounting for it.
LINDSAY TANNER: No that's not at all the case and I tried to explain this Chris, that the key difference is between spending and investing, spending and investing. If he chooses to cancel the plan and invest in some other way in something that will deliver a return - and keep in mind that that can include dividends, it doesn't have to be the full capital value of the project at the end, it can include dividends - if he chooses to do that, that option is open to him.
But he can't simply say here's a big pile of money that I can use to for example to increase the rate of Family Tax Benefit A for the next five years, because if he were to do that then the magnitude of what he's doing hits the budget bottom line, because he is shifting what is a capital item onto recurrent.
So I think the example - and I can remember having these debates with people in the gallery for a number of years about Telstra privatisation who kept saying, the Government's expecting to get $30 billion from selling Telstra shares, can't they use that for tax cuts? And my answer of course was no they can't and they didn't because the sale of an asset, the sale of a financial asset, stays on the capital side and it therefore can't simply finance recurrent spending.
QUESTION: Can I just ask, you said it would be a return on investment. As I understand it though, you're not going get a return on investment for 15 years under this plan, one; two, how are you going to pay for the $26 billion, how are you going to raise, are you just going to find that somewhere in the capital account of the budget or do you need to borrow it and…
STEPHEN CONROY: This is three, that's two so far Janet, if you just hold up there. On your first one, I think if you - the graph's not up there again but I think it's in your papers - it says they start to pay a return back in year eight or nine, I think. That's when they begin to pay back by introducing private equity into the company. So they start returning money, that's why they use the phrase, peak, that's why you saw that graph go like this and then go like this, because money is being returned from that point.
COMPERE: Lindsay I think is going to deal with the second.
LINDSAY TANNER: As I indicated there is already substantial provision in the budget for capital so it's already embedded in the budget papers and part of it is upfront, part of it is actually formally there, which is $4.7 billion. The balance is covered in the contingency reserve but keep in mind of course that the picture here we're dealing with actually goes quite some distance beyond the forward estimates and we now have to study in further detail and engage in further consultation with NBN Co regarding in a sense the ebbs and flows of money that are involved here because we're not talking about a huge pile of money just simply being slapped down on the table today and everybody running off and dealing with it.
What you're dealing with of course is money that needs to flow at given times at a given velocity and there'll be some peaks and troughs in that. So part of the purpose of this implementation study is to illuminate some of those things, but the answer is that you will see this now, it's embedded in effect in the Government's balance sheet but it doesn't show up as recurrent spending.
In the same way if we were to do what Tony Abbott proposes to do, it couldn't be claimed as a saving, as a recurrent saving.
QUESTION: You get money back after seven years but you're not going to get it back with interest or anything like that, that's just getting the money back.
LINDSAY TANNER: No, that's not the case. Over the extended period what the advisors are saying is, over that 15-year period you will get back your money and a modest return of six or seven per cent, so maybe a little bit over the current bond rate but certainly not in the zone that would trigger a kind of ordinary commercial investment. But nonetheless the government will earn a return.
What of course if yet to be determined is what the pattern of that of that return will be over that period. So it doesn't necessarily have to be all at the end, but clearly there are a range of complicated detailed issues there that ultimately connect with our policy imperatives about the pattern of that return.
The key thing is though, that this demonstrates that this is the classic case, the absolute classic case when government investment is justified, because a return in the narrow sense on the financial side will be generated but broadly it is not of the scale that typically, in pure market circumstances, will general private investment. Nonetheless the government is still covering the cost of its money, so the return is expected to be marginally above the bond rate.
So you've still got the, in a sense, the implicit cost of finance covered, but there is a wider public purpose involved. What this implementation study really does demonstrate is that this is a classic situation where government investment is amply justified in order to both achieve the public policy objective, but also to ensure that the effective value of taxpayers' money is preserved over that period of time.
COMPERE: Alan had a question, did you still want…
QUESTION: In a sense this is the worst case scenario for taxpayers. What is the hold up with Telstra in a broad sense? In effect, aren't you going to use government money to buy back from Telstra what the Howard Government flogged just a few years ago?
LINDSAY TANNER: Well NBN are engaged in the negotiations with Telstra and the presentation went through extensive discussion about buy or build. So NBN's position is that it would cost us x amount of dollars to put the trenches, hang it from the telegraph poles, lay the fibre. Telstra have their own value on what they think this is worth. Clearly at the moment there's a difference between those two things.
That would be a very commercially sensitive figure to reveal. We said from the day we entered the negotiations back in December that we wouldn't be commenting on a day-to-day basis about matters like that. So I'm planning on keeping faith otherwise the gentlemen and ladies from ASIC may want to have a chat with me later today.
QUESTION: What kind of price difference do you anticipate between those who get fibre straight to the home compared to those who have been put on satellite and the likes?
STEPHEN CONROY: We're still in the early stages of the wireless and satellite proposals. We've got recommendations from them; as we said across the footprint of fibre we'll look at a universal price. It doesn't matter whether you live in the CBD of Sydney, Melbourne or Brisbane or you're living in Broome or Kalgoorlie or Tennant Creek, it's going to be the same price for the same wholesale product.
In terms of the wireless and satellite, we're looking at that. NBN Co has got expressions of interest out for satellite capability. They're also in negotiations with incumbent satellite owners about what sort of deal they can do. So we're in the middle of those negotiations at an NBN level at the moment and we want to make sure that we are competitive and providing a better service with the existing prices.
We're not talking about increasing prices, we're talking about being competitive with existing prices and faster speeds. The 12MB speed that we're talking about delivering is quantumly better than if you talk to anyone who's on the satellite at the moment, they're getting download speeds if they're lucky if - 512 would be a dream for the majority of satellite customers at the moment.
Most of them get 128 down and if they're lucky, two up. So the sort of product we're talking about delivering, the 12MB product, is a quantum leap, a quantumly improved service.
QUESTION: Is there anything to prevent Telstra building its own fibre links to the most valuable homes in the country if it doesn't play ball with you and how would…
STEPHEN CONROY: You would have ask Telstra what its strategy would be in a compete scenario.
QUESTION: That would be a nightmare scenario, would it?
STEPHEN CONROY: You would have to ask Telstra what its strategy would be.
QUESTION: The Australian people pay for this and if so, will you be selling bonds to the Australian people to raise money for this and if so, when will they be sold?
LINDSAY TANNER: The answer is yes, that was announced in April last year as one part of the picture, not necessarily the whole picture, but one part of the picture and that proposal is still in development. So the answer broadly is yes to that. In effect what you might call a retail bond, but it wouldn't necessarily be doing the entirety of the heavy lifting there but nonetheless it was part of the announcement last year and we intend to proceed with that.
QUESTION: … times of that?
LINDSAY TANNER: Apologies, I can't enlighten you there and it's actually in Wayne Swan's direct responsibility so I'm not directly handling it, but it is in development.
QUESTION: When will home owners find out whether or not they'll be able to be covered by fibre or whether they'll have to rely on satellite technology and get an antenna on their roof?
STEPHEN CONROY: The recommendations are recommendations at this stage. We'll be consulting with NBN over the next couple of months about what they think of the recommendations, what we believe we should adopt as part of the recommendations and I'm hoping that NBN will start a roll-out pattern and be able to give some indication - obviously 93 per cent of the population is the vast, vast majority of people to receive this service.
As Angus explained, this has been mapped using every single street, every single home address, every single piece of fibre length that we need to do the costing on this. We've worked out as best we can; there could be some quirks. There could be ducts that aren't available; there may be no telegraph poles that you can string from. So there's a variety of issues that we have to look at on an on-the-ground basis. But NBN would be hoping to start the early roll-out pattern and we've got those first five sites I mentioned and you saw up on the slides the construction work there will start in the second half of this year. Services are expected to be on in February/March next year and then after they've trialled all the different technologies and types of build that they're going to do, then they'll be able to start talking about where they're going next.
QUESTION: Can you rule out any further government contribution or investment to try and bridge the gap between NBN and Telstra? Also you were very optimistic last year about the prospect of private investment in this network in the construction phase. That seems to have disappeared entirely.
STEPHEN CONROY: In terms of the Telstra negotiations, again I'm not going to be able to comment on any part of those negotiations whether they're between ourselves and Telstra or NBN and Telstra. In terms of this is the recommendations from the lead adviser on how we should structure the build, they've taken the view that it is in the public policy best interest to maintain 100 per cent ownership through those first six or seven years.
We'll be considering that and responding to that following public commentary, as we said in the middle of the year.
QUESTION: Will you be proceeding with the greenfields legislation?
STEPHEN CONROY: Yes. One of the recommendations you might have saw which I mentioned was that NBN Co should become the provider to the new homes that are being constructed and that company with the 93 per cent extension from 90 I think equated to 1.5 or 1.6 million extra homes to be covered within the same financial envelope. So the lead adviser suggestion is that NBN Co should be the provider and pay for that aspect.
QUESTION: A related question on that is does this report indicate that there's not really a huge urgency with the structural separation legislation because it …
STEPHEN CONROY: There isn't any structural separation legislation before Parliament. There's a functional separation package but there's not a structural separation package. Again one of the misconceptions is that the bill before Parliament at the moment actually falls in structural separation, that's not the case.
This bill deals with the existing structure of the market today. It talks about a whole range of new powers for the ACCC to try and deal with some of the problems that this sector has had endemically. I think you know the last time we talked about this I said, in all of the other infrastructure sectors, whether it's rail, ports, airports. In the 12 or so years there have been four access disputes, as in access to infrastructure.
In the Telco sector in the same period there's been over 150. Clearly the structure of the market is not working. This bill is necessary to provide those consumer protections like at the moment Telstra are ripping telephone boxes out of suburbs, out of communities, out of regional towns at an extraordinary rate, 5000 or so in the last 18 months, I believe.
This legislation can introduce a stop mechanism. If the local community want to keep their local phone box, they can go to ACMA, because this legislation provides power for ACMA to actually say, no you cannot. So for all those regional Australians who are losing their phone boxes off their street corners, this bill is a must. Telstra are ripping phone boxes out of the ground at an astonishing rate.
QUESTION: I get the message, but just to clarify, are you doing everything you can to get that legislation through in the very few days you've got left over the next couple of months?
STEPHEN CONROY: We've got it listed for Wednesday. Let's be very clear about this. The Opposition has employed every tactic possible to delay even debating this bill. We've had I think three debates about whether we should even debate it. It has been an enormous time-wasting exercise. In the last few weeks of when we were last sitting they put on every speaker they could.
They hijacked the Senate's actual procedures. They brought on bills that they wanted to debate in conjunction with the Greens rather than allow the government to bring forward our own bills. So the Opposition has actually been using their numbers in coalition with the minors and the Greens at times to actually debate bills that they want to bring on.
Notwithstanding a Thursday in the Senate is known as Opposition business time. It's set aside for the Opposition to bring their bills on. This Opposition is fundamentally rewriting the rules of the Senate in the way they are behaving. They are hijacking government business time. They're refusing to extend the parliamentary sittings at all. As you all know for many, many years the governments of the day have got extra days on a Friday, we've got extra sittings late on a Monday or a Tuesday or a Thursday and they have given us not one extra hour.
They are an Opposition that is set out to block and frustrate our legislative program. They've been quite successful in a whole range of areas. We've had a press conference about it, you might remember with five of us, I think Lindsay was part of it. Then they can go out and say we've reneged on our promises, after they've actually blocked our bills.
QUESTION: Mr Conroy when you say that 93 per cent of homes will be covered, you mean the actual address itself, not the premises. I think the report advises that not to connect to the premises because that would be a significant additional cost and would delay the rollout further. So how much more then would the user or owner have to pay?
STEPHEN CONROY: No, the proposal talks about making sure it's fibre ready, which means that as soon as an RSP says that that house has become my customer we then pay to put the last part in the box on the side of the wall. So that's all factored into the NBN build. We're connecting the wands that say yes up front and then the RSPs - we call them retail service providers now, RSPs, apologies for the change from ISPs - the RSP's job then is to sell the actual service to the customer in the home and we then connect that.
So once the order book fills up, we then go back and actually connect the box on the side of the home at our expense.
QUESTION: … study is predicated on the fact you might use the poles or the ducts from say power companies or does it literally assume digging all your own trenches?
STEPHEN CONROY: No, I think the ratio is 55 per cent over head, 45 our own trenching.
QUESTION: You'd dig it up all yourself, you wouldn't use power company's assets like …
STEPHEN CONROY: Well we wouldn't put up our own poles. We'd be stringing out along, as we're doing in Tasmania with Aurora which is the electricity generating company in Tasmania, we'd be talking with the energy companies around the country and we're already in dialogue with them.
QUESTION: … environmental concerns for over 55 per cent of the population…
STEPHEN CONROY: We haven't had anyone complain in Tasmania so far. A lot of Greens down in Tasmania. What I tend to find is because this is a very different piece of cable to the HFC rollout which was bundled, it had big fat things handing off it, it was looped so it was very low. It was quite an ugly thing to look at. When you look at the piece of fibre that we're installing it is nowhere near, because it's thinner, it's higher, it's not hanging low, it's not got things hanging off it so to speak. The amenity issue has not been as severe. But what I find as I travel round Australia particularly is regional councils. They are begging to be first. We have councils competing to get us to roll out the broadband network in their vicinity first. We are not finding community based campaigns, this has been out there for nearly a year. Nick Minchin tried to whip up a campaign posing overhead stringing up and so far local councils recognise that this is delivering a ubiquitous service.
That's the other key difference between the HFC rollout and the fibre rollout. The HFC rollout was for those who wanted to pay so everyone had to put up with their cable in the street for maybe only two or three people in the street. This is about ubiquitousness. It's about getting it out to the 93 per cent. We're just not finding the resistance. I'm not saying there won't be some people who do object, what I'm saying is we're not finding that level of resistance and more importantly the councils are working very closely with us to deliver on this project.
QUESTION: … conference the ACCC would let you get Telstra's HFC broadband customers…
STEPHEN CONROY: You're asking me to speculate on what you speculated on might be a discussion point between Telstra and the NBN and obviously I'm not going to comment on you speculation.
QUESTION: You'd be taking competition out of the marketplace wouldn't you if you did that?
STEPHEN CONROY: As I said, you're asking me to speculate on something that may or may not be part of a negotiation and I'm just not in a position I can do that.
QUESTION: Senator Conroy you said in your opening remarks that consumers are going to be the big winners. Could you just explain clearly how exactly consumers will win from this?
STEPHEN CONROY: At the moment with DSL products, a couple of base products. You pay $29 or $30 for the line to start and then you pay for broadband on top of it. So your basic service is $60 or $70. With NBN Co, the wholesale price for voice and broadband of $30 to $35 wholesale, as you've seen, Internode themselves are offering 25 MB for $50. So that is a very, very competitive offering.
They're the only provider. What you're going to see is competition. As I mentioned the small ISP that's in today's papers has actually said, we're going to break the paradigm on how we actually price the broadband product completely because the NBN for the first time gives the chance to break that paradigm.
As I said and in the Fin Review today, gentlemen announced they're going to actually charge zero and then charge you a dollar per GB download. So if you only download 5 GB a month it's $5. If you download 50 GB a month it's $50. So they're talking about an entirely different pricing model. If that comes to reality that is a significant win for consumers.
QUESTION: Are you saying that people could get faster and cheaper?
STEPHEN CONROY: Well I'm saying that the gentleman who's announced that today clearly is talking about a product that is faster and cheaper.
COMPERE: Thank you very much everyone.
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