Additional Comments - Australian Greens
1.1
The Australian Greens welcome the opportunity to provide additional
comments to the report of the Select Committee.
1.2
Early drafts of the report would probably have read as a balanced
assessment of the historic, technological and economic contexts within which to
assess the current proposal for a National Broadband Network. The report as
printed unfortunately reflects a tone of partisan bitterness and suspicion
which reflects poorly on the collaborative and diligent way in which the
committee and its staff undertook the research, field trips and public
hearings. Reading between the lines to filter out the political positioning,
the report is still an extremely valuable record of where the NBN has come
from, its technological underpinnings, and what to look for in the future.
1.3
The Australian Greens were broadly supportive of the government's
announcement in April 2009 that the RFP process for a fibre-to-the-node network
had been terminated and a vastly more ambitious fibre to the premises network
would be built and operated by the Commonwealth Government.
1.4
The need for this massive public investment, and the parallel process of
painful telecommunications market reform that is proceeding alongside it, is
partly due to the dysfunctional state of the market resulting in the
privatisation of the vertically integrated monopoly provider Telstra.
1.5
The issues raised by the Australian Greens in our earlier contributions
still stand. In our first 'dissenting report' of 2 December 2008, we noted:
...the Australian Greens urge the Government to hold its nerve
with regard to the RFP, and insist on taking a majority equity stake in the
National Broadband Network and operating it as a competitively neutral, open
access network.
1.6
We were therefore pleased when the government's expanded proposal for a
FTTP network adopted precisely this formulation. As always however, there was a
catch. As the report notes at 2.12, the government intends to build the NBN
with a substantial investment of public funds, and then privatise it all over
again five years after it is operational. No justification is provided for this
incongruous and retrograde policy, which the Australian Greens oppose. We await
the publication of the implementation study and the tabling of substantive NBN
legislation to assess whether the government has thought through the costs and
consequences of privatising the network all over again.
1.7
Much of the debate since the announcement of the policy has turned on
the absence of a rigorous cost-benefit analysis of the project. In our view
this issue, while important, risks become something of a red herring. We
certainly concur that a detailed assessment of the project's commercial
viability is essential, given the wildly divergent estimates of the wholesale
costs of access to the network which have begun to flourish in the information
vacuum.
1.8
Questions of cost-benefit analysis were clouded in our view by the
presentation of Professor Ergas to the committee of the only real attempt to
conduct such an analysis to date. During this presentation, the impossibility
of accurately monetising the intangible future benefits of an enabling network
such as this were laid bare. In analyses of this kind, a series of mathematical
fudges and assumptions are used to lend an appearance of rigour and precision
where none really exists. This was tacitly acknowledged by the Productivity
Commission in their evidence, as outlined at 6.23 of the report.
1.9
One aspect of the project for which a detailed cost-benefit analysis
would be valuable concerns the choice of underground or overhead cabling. The
report canvases the arguments well, and notes how difficult it was for the committee
to get an accurate idea of the relative short and long-term costs of the
different options. The Australian Greens believe that as much of the network as
possible should be underground, for all the reasons stated in the report, but
until reliable cost estimates are made available it is difficult to reach a
final conclusion. An interim implementation study report as proposed by the
committee – before 31 December 2009 - would be an appropriate time to provide a
costed analysis of the options.
1.10
In the most recent round of hearings the committee heard evidence – at
last – that went to the question of what the network will actually be used for.
The end-user, and the services that the NBN will host, have been largely
ignored in the debate thus far which has largely turned on questions of
competition and market structure. It was therefore refreshing to hear the
evidence given by various witnesses covered in chapters 6-7 relating to
research, e-health, e-governance, smart grids, remote education and so on.
1.11
These sessions left the committee in little doubt that as the network
approaches ubiquity and hosts more and more services, it will approach the
status of essential service (there are arguments that this has already
occurred.) Questions of equity then come to the fore, whether geographic or
social. In an age of ubiquitous connectivity, the disconnected and the
disadvantaged will find themselves further isolated on the wrong side of the
digital divide. Apart from ensuring that backhaul and FTTP infrastructure
target undeveloped and under serviced areas first, the Australian Greens urge
the government to undertake detailed consultations with social justice
advocates and consumer groups to ensure that the network makes a strong
contribution to the government's social inclusion agenda.
1.12
The final chapter of the report dealing with proposals to undertake reforms
of telecommunications markets are where the Australian Greens part company with
the majority report. The Australian Greens views on this bill are contained in
our dissenting report on the Telecommunications Legislation Amendment
(Competition and Consumer Safeguards) Bill 2009.
Senator Scott Ludlam
25 November 2009
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