Preliminary Pages

Chair’s Foreword

This Second Report of the 57-member strong oversight committee of the National Broadband Network (NBN) is the first report that examines detailed performance measures provided by the NBN Co and Government, and allows for a direct comparison of the foundation documents of the NBN Co Corporate Plan 2011-2013 with the Shareholder Ministers’ letter to NBN Co dated 17 December 2010.

While there are several differences between these foundation documents and the recently provided performance update, it is evident that 2012 will see NBN Co transition from a company working through the frustrating and tangled regulatory stages, and the testing of first release sites, to provide the NBN rollout a broader engagement with retail providers and communities.

Compared to the NBN Co Corporate Plan, a lower than expected capital expenditure (capex) and higher than expected operating expenditure (opex) result, will be watched closely by the committee. This could be an early warning that it is costing more to do less, when compared to the expected results in the NBN Co Corporate Plan, even though the committee has at this stage accepted the argument from NBN Co that other reasons are behind this. The committee will watch this capex/opex combination closely, as value for money to taxpayers is the critical key performance indicator in turning this good concept into an even better reality for all.

Compared to the NBN Co Corporate Plan, timeframe slippage has also occurred, largely due to the number of unresolved issues between the Australian Competition and Consumer Commission (ACCC) and various stakeholders. The competition and consumer “rules of the game” remain unresolved at the time of writing. Certainty for markets, investors and consumers demands greater attention from Government to resolve outstanding regulatory matters, so there are no further schedule slippages.

It is understood by most that Australian telecommunications is currently not a level playing field. It is also understood this historic imbalance means decisions are being made on the front-end of this infrastructure project to eventually achieve a more competitive environment and better consumer result for the future, even if decisions may look anti-competitive in the short term. It is also understood and acknowledged that this is initially challenging-challenging for regulators like the ACCC, challenging for some existing business models like those wanting to both wholesale and retail in Greenfield sites, and challenging for those looking for investment opportunities in the new markets that are coming with the NBN rollout. Even with this all being understood, however, it should also be understood by the relevant stakeholders involved in these regulatory decisions that challenging does not equate to delay, and should not be an excuse for delay.

If these matters can be addressed quickly and thoroughly, 2012 has great potential to be the Year of the NBN. The move from test sites to broader rollout will engage more people, and will see more retail engagement, and more innovative strategies and products introduced into Australia as a consequence. Regional and rural Australia will now, finally, have the opportunity through the next steps of interim satellite, wireless and FTTP to be better engaged in the Australian economy and services. And to add to this, the committee has made recommendations for better low socioeconomic engagement, and better remote indigenous engagement, so that these opportunities actually turn into real, ongoing and sustainable change for the better in regional, rural and remote information communication technology. I would hope key decision-makers consider these recommendations in detail and in good faith.

The committee will continue its work in the next six months on several key areas, including workforce related matters, and private sector engagement. Both are touched on in this report, however, the committee believes even more work needs to be done in detail on both. Personally, the options for privatisation of the NBN’s national wholesale platform remain unclear. If the current model is a public sector “build-own-operate” project, then questions still remain as to where, when and how a “transfer” to the private sector is going to occur, if it is going to occur at all. The reason this is important to consider earlier than currently legislated, is because a sale, if tightly contracted, could occur in several sections, and considerations therefore need to begin on what terms and conditions on behalf of consumers such a model could take place.

Of course, if the majority parliamentary view is not to sell it, and indeed to keep it as a public asset returning an annual dividend to the taxpayer, then this change in the final policy position also needs to be made explicit for legislative reasons, and a debate about this deserves to occur soon. This public debate about the sale of the NBN, and the new process that is established as a consequence of such a debate, could be bought forward for the next NBN Co Corporate Plan. For this reason, work on exactly what the final product that is being built-whether a private or public one, whether sold in parts, as a whole or not at all-will be undertaken by the oversight committee throughout 2012.

Once again, the committee thanks all those who have taken the time to give evidence over the past six months. This all helps with the committee’s independent considerations. Likewise, on behalf of the committee, I thank the secretariat for their ongoing diligence. This a large committee overseeing one of Australia’s largest ever infrastructure projects, and the secretariat is showing great skill in managing it all. Well done and thanks once again.

Robert Oakeshott MP

Chair

Committee Membership

Participating Members

Committee Secretariat

Terms of Reference

The resolution of appointment establishing the Joint Committee on the National Broadband Network was passed by the House of Representatives on 1 March 2011 and by the Senate on 3 March 2011 and provides:

(1)               That a Joint Committee on the National Broadband Network be appointed to inquire into and report on the rollout of the National Broadband Network (NBN);

(2)               That every six months, commencing 31 August 2011, until the NBN is complete and operational, the committee provide progress reports to both Houses of Parliament and to shareholder Ministers on:

(a)                The rollout of the NBN, including in relation to the Government’s objective for NBN Co Limited (NBN Co) to:

                                             (i)                    connect 93 per cent of Australian homes, schools and businesses with fibre-to-the premises technology providing broadband speeds of up to 100 megabits per second, with a minimum fibre coverage obligation of 90 per cent of Australian premises; and

                                           (ii)                    service all remaining premises by a combination of next-generation fixed wireless and satellite technologies providing peak speeds of at least 12 megabits per second;

(b)                The achievement of take-up targets (including premises passed and covered and services activated) as set out in NBN Co’s Corporate Plan released on 20 December 2010 as revised from time to time;

(c)                Network rollout performance including service levels and faults;

(d)                The effectiveness of NBN Co in meeting its obligations as set out in its Stakeholder Charter;

(e)                NBN Co’s strategy for engaging with consumers and handling complaints;

(f)                 NBN Co’s risk management processes; and

(g)                Any other matter pertaining to the NBN rollout that the committee considers relevant.

List of abbreviations

Recommendations

2       Review of National Broadband Network Rollout Progress

Recommendation 1

The committee recommends that where possible tables and graphs be used in the Government’s Six Monthly National Broadband Rollout Performance Report to enable information to be compared across years.

Recommendation 2

The committee recommends that the Department of Broadband, Communications and the Digital Economy review its existing clearance processes for providing answers to questions on notice with the aim of providing answers to questions taken on notice where possible on the notified due date or within a reasonable timeframe thereafter.

4       Access to Broadband Services in Regional and Remote Areas

Recommendation 3

The committee recommends that, as a matter of urgency, the NBN Co formalise and publicise its policy for the provision of costing extensions to its planned National Broadband Network fibre footprint, especially for regional and remote Australia.

Recommendation 4

The committee recommends that NBN Co: