PM: I'm here with Minister Conroy on what is a landmark day for telecommunications in our country. Today the ACCC, our competition and consumer watchdog, has given the approvals necessary for the structural separation of Telstra.
Structurally separating Telstra is an achievement of this government. We got the landmark legislation through at the end of 2010. What structural separation means put simply is that Telstra provides wholesale services and people can compete for the provision of those services to consumers. It means real competition in telecommunications for the first time in our nation's history.
The decision today means that there can be genuine competition in telecommunications from today on. But it particularly means that we are able to deliver the National Broadband Network with the wholesale price around the country that we have promised. That people in the country would get the same benefits, the same wholesale benefits, as people in other parts of the nation. This is an important development. We now have the funding, the legislation, and the regulatory approval we need for the rollout of the National Broadband Network.
By the end of this year around three quarters of a million Australians will see the National Broadband Network completed or underway - so actually in their own communities where they live. This is an important development for those Australians and the NBN is vital to our future competitive ability as a nation.
It makes clear the choice at the next election, it'll be a very simple choice, one between broadband or no broadband, we are delivering broadband, Mr Abbott is committed to demolishing the NBN.
I'll turn to Minister Conroy now for details and then we'll take your questions.
MINISTER CONROY: Thank you Prime Minister. I have previously described the structural separation of Telstra as the Holy Grail of microeconomic reform in this sector. And today's decision by the ACCC means that structural separation should now be locked in for the future.
The telecommunications industry has been seeking this outcome for two decades. The ACCC made this point in its report today when it said, and I quote, “together the SSU (structural separation undertaking) and the migration plan implement a form of structural reform of the telecommunications sector that responds to a long standing competition concerns that have arisen from Telstra's vertical integration.” And this echoes what Paul O'Sullivan, the CEO of Optus, said in 2009, “Telstra's vertically integrated structure has been the key impediment to competition in the fixed line market for many years.”
The structural separation of Telstra is, as the Prime Minister has said, an outcome that only the Gillard Labor government has been able to deliver. Let's be very clear about this, Telstra did not voluntarily agree to this separation, Telstra has made this undertaken in response to the policy and legislation of this government.
The government always had structural reform of the industry as one of its goals in its development of broadband policy. We provided them with a clear choice - they could choose to remain a vertically integrated fixed line business or they could choose to separate and be able to participate in offering a full range of services.
They could choose to keep the vertically integrated dominance of the fixed line market and divest Foxtel, or they could choose to separate, keep Foxtel, and be able to participate in the auction for spectrum for mobile broadband later this year.
Telstra has chosen the route of separation; Telstra's shareholders have supported the decision with 99.45 percent voting in favour of it. The structural separation undertaking sets out how Telstra will decommission its copper network, as it progressively migrates customers to the NBN.
The migration plan that accompanies the undertaking sets out how Telstra will shut down its copper network. As NBN Co completes its fibre network in an area, an information campaign will commence advising customers that the copper line will be disconnected. Consumers will have the option to choose from any of the retail providers offering services over the NBN.
In every greenfield estate above 100 premises, new housing estates, each new premise is already served by structurally separated access - there is no copper - and as we progressively close down the copper network other providers still need to access Telstra's coppers to provide services.
The undertaking also includes measures to improve the terms under which they do this. This delivers equivalence and transparency in the supply of regulated services to Telstra's wholesale customers. This ensures that these services are supplied to wholesale customers on the same terms as they are supplied to Telstra's retail arm.
Levelling the playing field in the telecommunications sector will result in better services to Australian consumers at lower prices. We have already seen the emergence of strong price competition and service innovation from a range of providers to the NBN.
The acceptance of the undertaking will also trigger the finalisation of the agreements between NBN Co and Telstra that will advance the rollout of the NBN. ACCC approval of the SSU is one of the final steps in completing the definitive agreements between Telstra and NBN Co.
Once finalised, NBN Co will gain full access to detailed information about Telstra's network of pits and ducts. This data is vital for NBN Co in confirming its three-year rollout schedule, which will be released before the end of March.
NBN Co has already announced its 12 month fibre rollout schedule, which will see construction underway or completed as the Prime Minister said in 758,000 Australian households - so completed or construction underway by December this year - that's households, businesses and public facilities by December this year.
Australians are already seeing the benefits of retail competition over the NBN, with retail service providers announcing some very competitive NBN plans. In fact many of the current broadband service offerings offered over the NBN compare favourably to prices for ADSL2+ in the marketplace today.
For example, many of you wouldn't have seen this, but a company called SkyMesh is offering NBN fibre services from $29.95 per month. That's it, one price, no line rental, $31 on top, $29.95 for NBN Co services. Optus plans start from $39.95 per month for a bundled plan, and a number of other retail service providers are offering plans starting from $34.95. So this is a very exciting time to be a broadband consumer.
The NBN will cater for Australia's future telecommunications needs and will connect our cities and our regional centres to make us a world-leading digital economy.
PM: Thank you Stephen, we'll take questions.
JOURNALIST: Australia is a big country in terms of geography but not that big in terms of population what are the prospects for vigorous competition in this sector in the long term, or will it settle down to be a few major players?
MINISTER CONROY: This is national pricing from these companies. I mean this was our commitment, this is our fundamental difference between us and Tony Abbott and Barnaby Joyce. We are delivering universal pricing across the country. We're not promising to deliver metro-equivalent, we are actually doing it. Across Australia everyone gets the same price.
Now there was a lot of debate earlier in this process about how many Points of Interconnect, or POIs, there should be. And arguments about whether we should have a smaller number of POIs. What that did that debate, that decision by the ACCC, was ensured that everyone gets access and that across the country everyone gets the same price offering from the NBN.
They've got to interconnect with other parts of the network but fundamentally, as you've already seen despite claims that it was going to be more expensive because of the ACCC's decision - national pricing, it's locked in, we are delivering it. We're not promising metro-equivalent, we delivering universal prices across the country.
JOURNALIST: (Inaudible)
MINISTER CONROY: We've already seen that Vodafone have announced they are going to enter the fixed line market for the first time. Vodafone, the world's largest telecommunications company, is actually entering our market. It has its first customers in Armidale at the moment - never been in the fixed market before, so you've got a big new international entered.
SkyMesh, not a company that's done fibre before I believe, it's done satellite, entered the fixed line market. And there's a number of local providers as well as competition already coming from Optus, iiNet, which have merged with Internode, you've got TPG yet to announce their prices and you've got Dodo yet to announce their prices.
As well as Telstra's prices yesterday - which despite some of the ill-informed commentary, is actually just the top range of prices, they have more plans to come - they are guaranteeing in their press release that they will maintain their pricing for people who just want to use the telephone and who don't want broadband, that's in their press release.
But yesterday's announcement by Telstra was simply their top range prices as they begin to get NBN-ready. It's not their final prices and they've said publically and repeatedly that there are more packages to come.
JOURNALIST: Prime Minister I guess you've just come from a caucus meeting this morning and I suppose you were able to share the good news about this policy advance. What was your general message to your colleagues about this policy and about the events of the past week and how you want your government to go forward from here?
PM: I think we're getting some head tossing in the rest of the group about whether that is a connected question or not to the subject of this press conference. I'm prepared to pay that one so we'll rule it in as question as a result. Anthony will do the normal caucus briefing.
My message to my colleagues in caucus was the same as my message publicly yesterday. The nation is now watching us, and we need to get on with the job and here we are today getting on with the job delivering our vision of the nation's future. We've talked a lot about the NBN today, and so we should because this is a landmark day. But let's talk about the purpose of the NBN.
The NBN is an instrument to make us a more prosperous nation in the future. We won't be able to compete with nations around the world and in our region without the NBN and it's an instrument to give us 21st century service delivery. So you can be in a country town and you can see an inner city specialist to meet your health care needs, and it will be like you are talking to him or her face to face, something people have never had before. It means our kids in our classrooms in our schools around the country can be connected with the best educational resources on earth, something we have never had before.
JOURNALIST: Minister back on Telstra, is the final step of the Government as the major shareholder of the NBN signing the agreements, is that the final step and when will that happen?
MINISTER CONROY: The Cabinet has to approve the final instruments in case there were any changes to the early one, I think there have been some changes along the way, some discussions with the ACCC, so there are two different things. There's the SSU and the SAU. The NBN one has to come back. This one doesn't have to come back to Cabinet.
So this announcement today doesn't come back to Cabinet, but the NBN in its negotiations with the ACCC, if they make substantive changes, and they've already resubmitted their documents, they will come back to Cabinet. So this particular part of the process doesn't; the next part does.
PM: Just before we go to another question, you might want to just explain those two acronyms.
MINISTER CONROY: Yes, sorry, structural separation undertaking is what we've got today; the special access undertaking that NBN Co is negotiating with the ACCC does need to come back, if there's changes - and there's already been a change for instance to the marketing clause, if you remember there was a lot of controversy around whether or not they could misrepresent their products as equivalent, so that's already been changed, that needs to come back for approval, and any other as part of this final iteration - but that's separate from today.
JOURNALIST: Can I just clarify on the NBN and structural separation, for those of us non tech-heads, if for example the Coalition wins government, and says it's not going ahead with the NBN, would structural separation still work?
MINISTER CONROY: It depends on what their plan is. That's why I say this should be locked in. If they return back to their fibre to the node proposal, that they flag at the moment, and they've not fleshed out a price yet - I mean, Citibank priced it at $16 billion, I think Malcolm in a speech recently said his FTTN proposal would be about a third of the cost of the fibre to the home, that's still $10 billion, let's be clear, so $10 billion as opposed to $16 billion.
If they return back to that, then by definition there is no automatic structural separation, and if you see in the Fin Review today, in your paper, you'll see he's been challenged by Paul O'Sullivan, and others, to say how will you deliver structural separation under your policy, because he had no, he just said blithely, Telstra shareholders will understand this, they'll know that it's better for them.
So the question is, well Malcolm, 99.45 percent or whatever it was said that they disagree with you, and they've taken this package. So he's going to have to not only pay for a $10 billion to a $16 billion actual build cost, he then has to put on the table a whole heap of money to get them to agree to structurally separate. So, it's done. If we stick with this policy, it's done.
If you go back to Malcolm's policy and Tony's policy, then you end up having to renegotiate the whole thing, and there's no reason for Telstra to agree to this - as some people suggested, we gave them some pretty harsh alternatives, and Malcolm ruled out the issue of the wireless, the spectrum, the wireless spectrum auction. He said no, we won't do that - well, it won't matter, because the auction will have taken place before the next election. So he has no mechanism whatsoever to convince Telstra, other than an even bigger bucket of money on the table than he's prepared to admit to.
So there are billions and billions of dollars that will have to be on budget from Malcolm if he wants to go down the path of changing this policy. But the sector, even Telstra now, have accepted that this is the best place to be, and Malcolm's policy takes you backwards.
PM: And can we just say, for the non-aficionados in the room, can we just remind ourselves, that means in 2013 when communities vote, they'll be voting on a very simple choice: broadband or no broadband. Andrew?
JOURNALIST: On a connected question, pardon, Minister, sorry, by the time of the next election - say it's October next year - how many houses will have been connected, and how many houses or premises will have been passed by, and how close is this to the 20 percent threshold, which is the point at which Telstra (inaudible).
MINISTER CONROY: Even on the original corporate plan, which was released just over a year ago, I think the calculation would have been about 14 per cent - one four - so
JOURNALIST - It was 14, but there have been delays - what's the latest estimate and (inaudible).
MINISTER CONROY: No, we'll be releasing the new corporate plan over the next few months, we've received the draft, we're having discussions, and we'll release the final plan in a few months, so you'll get an absolute, definitive indication. Now you mentioned delays - this is the single greatest delay, getting this signed.
The original plan based its calculations on this agreement which we're talking about today having been finished in June last year. So there's about eight months difference. What that's meant is that the start date for the rollout's moved forward by eight months, so those figures that existed in that original corporate plan were based on an assumption that they would have been starting from June last year.
So we'll be releasing the updated figures - we haven't finalised them all yet - there's still some issues around the corporate plan that we're in discussion with NBN Co about, but the corporate plan will be released and you'll all get to see those sorts of calculations. But in terms of the 20 percent, the original corporate plan only has us at 14, that wasn't reaching the 20 percent, because of the eight month delay in getting this agreed, it's not likely to threaten the 20 percent either.
PM: And can I just say, Ed, the statistic I referred to very broadly in my introduction more specifically is by the end of this year, 758,000 households, businesses and public facilities will have the NBN construction underway or completed.
JOURNALIST: Minister, given that this was, the delay to this agreement has caused problems for the whole roll-out in terms of hitting the original targets, are you confident now that they're rolling out right now enough fibre to hit the target at the end of the year - do you think that now this is agreed there is any prospect that the March update could be better than you might originally have thought?
MINISTER CONROY: Look, the deal that was struck between Telstra and NBN Co allowed them to pass a small amount of information to us to begin the announced sites. So I'm confident that the sites that have been announced, we already have all of Telstra's information. What you'll see, probably in the very near future, is with the final signing of the DAs - definitive agreements.
So when we sign that very shortly, the rest of the information gets passed over, so we'll then have everything we need to be able to confidently say that the three-year plan will meet its projections. But the actual construction that's underway, we already have all of the information from Telstra.
I'm very confident that we'll have the construction underway for the 758,000 by the end of the year. We already have all that information and those announcements have been made, and the contracts have been let, and they're being built around the country. If you go around the country now you'll find that they're doing the early prep work, and they're at different stages in different places of the preparation work.
I mean it comes down to opening pits up, dragging a piece of fibre through, I mean it's very basic early construction work like that, as well as connecting things to the side of people's houses.
JOURNALIST: Can you say now how many would be passed by September 2013?
MINISTER CONROY: We'll be able to have a better guide from that when the corporate plan comes out in a few months.
JOURNALIST: Minister, you've said that this was the Holy Grail of microeconomic reform in this sector. Is that based on how difficult it is to get this approved, is it how difficult it is to get this negotiated, or is this directly related to the wider economic benefits that you've been told this will have on the economy?
PM: We'll go to Minister Conroy, but let's be very clear - we talk about this as such an important microeconomic reform because of the outcome for Australians, the difference it will make in their lives, in their own lives at home and in their businesses.
We've lived with this tyranny of distance for a long period of time in telecommunications, where everything has been so much more expensive for people who live outside the real centres of our cities - once you've got out to regional centres and beyond, things have been so much more expensive, which is why this separation, giving you wholesale and retail competition, makes such a difference.
It's about fair pricing for people, and with the NBN it's about uniform wholesale pricing for people, so it's no longer true - the way it has been for years - that if you picked up the phone and made a call then you're getting charged different rates than someone calling in the city, from one point in the city to another, if you call that point in the city it's different for you. With NBN, with the movement of the information, that won't be true for people who live in country Australia.
MINISTER CONROY: I mean let's be clear, this is a debate that goes back to the Hawke-Keating government, and I've said this to you many times, this is a mistake that goes back twenty years, that's stretched over two governments, and this is finally resolving what many people believe was unfinished business; that they should have gone for the interconnect policy, rather than the infrastructure competition policy that they ended up with, and we believe this sets this into the right mode.
We've separated it, you can now get the innovation. And as to the benefits, I mean I was in Blacktown last week, and I visited a home - and he runs his, it's a guy he runs this business from his home. And at the moment, it's a data-heavy business, he works for the AFL, his job is to go and record all the local Sydney grade matches - he was at the NAB Cup the other day and he does all the stats. He watches them, he does all the stats and then he sends them up to Melbourne, so they keep this all updated. At the moment, he does it on a - he records the matches, starts doing the data, and then he gets - because it's so much data - he gets a CD, and he sends it via the post. And they send it back to him. This is the 21st century!
So he literally does this - he's a small business owner saying I'm begging you to connect my home as fast as you can, because I'll just press a button and it'll be done in seconds, and it'll come back in seconds.
So those are just one small example of how a business in Blacktown - not in a regional centre, in Blacktown - will benefit because of the numerous blackspots across metropolitan as well as regional Australia.
JOURNALIST: If you want to reduce this absolutely to the retail level, to an audience level in a sense, are you saying this is cheaper, faster internet access wherever you are. Is that fundamentally what this is about - what it will mean to the end user? And if I could ask you another question, on indulgence as they say, have there been any discussions with Bob Carr for the Senate vacancy; has the foreign ministry position been part of those discussions?
PM: Alright, why don't we go to Stephen on the faster and cheaper and then I'll deal with the second part.
MINISTER CONROY: There is no question that, despite the claims from Paul Fletcher, Tony Abbott, and Malcolm Turnbull that it would be more expensive that it would be more expensive broadband, the market - the plans in the marketplace - disprove this categorically. They disprove this.
And what you see now is better services, for the same prices in some cases, and cheaper prices. The $29.95 SkyMesh plan is the cheapest price I've seen. You've got to remember, the wholesale price is $24, so they're making basically $6, across the country an offering - that's an extraordinary price, and Exetel I thought was going to be about the cheapest price at around $35. And then SkyMesh have come in at $29.
So you're already seeing price pressure, if you remember Internode created a bit of a stir, they put in their first top price at $189 for the new 100 megabit plans; they've already reduced their prices twice. They've increased their cap and reduced their prices twice, because everyone else came in below them. So you're already seeing price competition, cheaper prices being delivered, faster speeds and more consistent and purer service.
PM: Okay, and then on the second part of your question, obviously there is speculation today about a number of names for the Senate vacancy arising from Mark Arbib's resignation. Something tells me we will see more speculation over coming days about more names. I'm not going to be drawn into a continuous round of commentary about this speculation but before everyone here works themselves up into fever pitch I would remind that Bob Carr, over a long period of time, has said that he's not interested in coming to Canberra.
JOURNALIST: Prime Minister, notwithstanding that you're waiting for the review, are you still philosophically committed to the internet filter, and is that something you'll introduce this term or next term?
MINISTER CONROY: Well, two companies, in fact three companies have already introduced it. It may come as a great surprise to you that the internet hasn't slowed down or collapsed. Telstra and Optus and a small - apologies to the third company - have introduced the filter.
They're testing it against the Interpol list, and overwhelmingly Australians have not noticed any difference, any difference whatsoever. We've seen announcements by a whole range of other companies that they're going to introduce it themselves voluntarily. We welcome this, we think this is a fantastic step forward. I've been calling on the sector to stand up and move forward, I think I've only seen now one company that has indicated it may not introduce voluntarily the filter.
So we welcome - well, we're still going through the review at the moment, but I'm very, very excited that the industry has stepped forward. And at this stage I'm only aware of one company that said it won't, and there are discussions taking place with them. And if we were to achieve an outcome where everyone actually introduces it themselves, well then that is the best possible outcome.
JOURNALIST: Prime Minister, you say that Bob Carr himself has said he doesn't want to come to Canberra, but clearly as one of, or I think the longest-serving Labor New South Wales Premier, he would have the credentials to come here. Do you believe he would be an asset to your team, and would you entertain the thought of someone new to Federal Parliament taking on the Foreign Ministry straight away?
PM: Look, on reshuffle questions, as I said yesterday and said this morning when interviewed on the ABC, I'm not going to be answering questions about the reshuffle. I'll announce the reshuffle when I announce it, and I won't be engaging in commentary on the period in between. On Bob Carr's attributes and abilities, of course I am a huge fan of Bob Carr, remarkable Premier of New South Wales, a very intelligent man, I'm a huge fan of Steve Bracks too, and John Brumby and I could keep adding to the list, Mike Rann, and the list goes on.
MINISTER CONROY: (Inaudible)
PM: I'm getting helpful suggestions here now from Stephen Conroy, I think he just added Stephen Conroy to the list as someone who should be talked up, but I refer you to my earlier answer.
MINISTER CONROY: I'm a born diplomat.
JOURNALIST: Prime Minister, what involvement would you expect to have in the selection of a candidate for the Senate - it's a choice for New South Wales but you're the Prime Minister, how much involvement will you have?
PM: Well as Prime Minister, I will be making sure that there is a candidate selected who is of high quality and can make a contribution to the Labor team as we get on with delivering all of the things that we have promised the Australian people.
JOURNALIST: But would you expect to have a veto or a vetting role in that?
PM: We, and by we I mean Labor and me as Prime Minister, will present a candidate who's got the attributes and capacities to add to the Labor team - we've got a lot of work to do, we've got a huge program of reform this year, whether it's skills, getting the budget into surplus, building the National Disability Insurance Scheme, supporting jobs, getting about the big, big task of building the economy of the future, including through making sure that the NBN is there and that people understand its capacities - we've got a lot of work to do and of course I want the next person who joins the Labor team to be able to make a great contribution to us getting that work done.
JOURNALIST: Prime Minister, in recent days you've said that you've thought it was good that a more full and better explanation of the events of June 2010 had been given to the Australian people. Wouldn't it assist that even further if the Bracks/Carr/Faulkner review was released in full?
PM: Well the events of 2010 that I've spoken about, how I became Prime Minister, I did say publicly last Thursday that I'd thought the Australian people did need a fuller explanation of that, and I've provided it in recent days. It's not my intention though to dwell on events in 2010, I'm focused on the future.
JOURNALIST: Ms Gillard, there's been some suggestion this morning that a Minister might have exercised a sort of effective veto over Mark Arbib continuing in the ministry. Can you tell us unequivocally that this was not so?
PM: I've got absolutely no idea what you're referring to, absolutely no idea.
JOURNALIST: Have you spoken to Bob Carr in the last 24 hours?
PM: Look, I'm not going to get into my private conversations, thanks Phil.
JOURNALIST: Minister Conroy, you just joked that you were a born diplomat.
MINISTER CONROY: Irony, joke, call it what you want.
PM: I'm not going to rule anything in or out on the reshuffle, but some things are towards the outer edge of possibilities.
MINISTER CONROY: That would be kamikaze.
PM: Have we got any other questions? Good, thank you.