Transcript: Media Conference Q&A with Stephen Conroy

Staff Writers
Tuesday, 15 September 2009 12:50

IT Industry - Market

The following is a transcript of the questions and answers discussion conducted by Stephen Conroy, Minister for Broadband, Communications and the Digital Economy at Parliament House, Canberra on Tuesday September 15.

QUESTION: When is it going to happen, and what is the staged process and the deadline that Telstra faces in order to make the decision it is required to get to?

STEPHEN CONROY: The bill will be tabled in the House of Representatives today. It will be referred off to a Senate committee. And the bill will be debated in Parliament in the October/November sessions.

So we believe that for the triggers and the flexibilities that are inherent in this bill to be activated, those discussions need to be complete by around the end of November, beginning of December. So there is a lot of flexibility here about how we go forward, depending on the choices Telstra makes.

And I believe that, as I said, Telstra are very constructively engaged in discussions with us already. We are not going to be talking about them publicly. We are acknowledging they're happening so that people understand they are actually happening.

But neither, I believe, Telstra or myself or will be commenting on them as they go along, despite many phone calls from all of you to me and to Telstra, I'm sure now. But we will not be talking about them; we will be engaged in those discussions.

QUESTION: Isn't it hard for Telstra to make a decision in that timeframe when the implementation group that you've got started won't actually report back until next year, maybe even considerably the middle of next year?

STEPHEN CONROY: I think it would be fair to say Telstra have been preparing for today for a considerable period of time. I think since the change of leadership at Telstra, they put an enormous amount of work, very constructive work, into being prepared. So without revealing the extent of the negotiations and discussions, they were very well prepared already when we had our first meeting.

QUESTION: Is the government facing any compensation bills in relation to this?

STEPHEN CONROY: Well, we don't believe, on our legal advice, that there's any legal issues around compensation. We are offering a choice whether they want to be in this market or on this market. We are not requiring them to do anything. We are saying if you want to move into another market, well then there are some conditions before you can move into that market.

But we are not actually requiring Telstra to make a choice to structurally separate. It's a voluntary situation where they get to choose how they want to go forward, what sort of company structure they want into the future.

QUESTION: But aren't you demanding that they sell interest in Foxtel and divest other interests?

STEPHEN CONROY: No. We are offering them a choice. If they want to purchase the new spectrum that will be necessary for the future wireless technologies, then they need to divest a number of other platforms. So what we are saying is you can't be in all platforms. You can stay as you are, not a problem, you can stay as you are.

There are some regulatory changes and there are some improvements in the competition regime, and there's some tough changes, but they do not have to go down that path. This is a choice for the Telstra board, management and shareholders to decide where they want to be based.

QUESTION: Isn't that what you're doing? It's not really a choice; you are offering them a lock-out on the future.

STEPHEN CONROY: Telstra are a very profitable company. They're making very significant profits at the moment. If we were to say that the future we believe to be a combination of fibre and wireless because there's obviously, they're complementary things.

I mean we have believed for some time, and whenever anyone wants to advocate - and I think Nick Minchin. And look, we should give Senator Minchin congratulations. Today marks his 150th press release without a single policy announced in any press release. One hundred and fifty since the day he became the Shadow Communications Minister, not a single policy.

But for those who want to say wireless is taking over the world, if you talk to any of the technologists, any of the companies who build wireless, they will say to you that they are complementary. Whether it be Intel, Ericsson, any of those major companies, they will tell you wireless and fibre are complementary; they are not competitors.

QUESTION: The Australian Government sold Telstra to the Australian people and encouraged them to buy shares. Are you not now destroying the value in that company?

STEPHEN CONROY: Look, we believe that we can reach a win-win for Telstra shareholders and management and the Telstra company and the Australian people. There's always been an inherent conflict when the former Government decided to sell a company into the market that was a fully integrated company. The Productivity Commission, most experts at the time, said for goodness sake you must make this change.

Well, as we transition from the end of the copper era to the fibre era, we are offering an opportunity to change the structure of the industry, and Telstra have a fabulous opportunity to decide the future of their company, whether they want to be based in what is the end of the copper era or they want to move into the fibre and wireless future. So that's the opportunity that is on the table for Telstra and other telcos as part of the NBN arrangement.

QUESTION: Is this not about you gaining access to their infrastructure, though, so you can build the NBN?

STEPHEN CONROY: Not at all. We're, we said from day one we are prepared, if we have to, to go it alone. Now, we don't, we've never believed we would need to. There are, other than Telstra - people tend to focus on Telstra, obviously, because it is such an enormous and important company.

But there are many other of Telstra's competitors who are actively engaging us in conversation about how we can construct the NBN. So it's not it's only Telstra or there's nothing going to happen. We're providing Telstra with a range of choices about how they want to go forward. We believe there is a win-win there.

And can I say, as I said, from discussions with Catherine Livingstone, the new chair, and David Thodey, they believe, they said in New York last week that there is, all of the options are on the table. That was David Thodey last week.

So there's a, there will be some hard-nosed negotiations. I do not for a moment want to suggest there isn't going to be some hard-nosed negotiations. We've got Mike Quigley, we've got McKenzies, we've got some seriously well briefed and understanding telco analysts who are working for NBN Co. And Telstra, well they speak for themselves; they're as hard-nosed as they come.

So this will not be an easy commercial negotiation. But what we've seen is a change in attitude from Telstra. They have taken the view that what the Government is trying to do is a good thing. We are trying to modernise the telco industry, moving from the dying days of copper to the new era of fibre.

QUESTION: Will there be a trade-off? Will they perhaps get an easier ride in the negotiations and join the broadband…?

STEPHEN CONROY: I'm sure you would love me to speculate on any ongoing discussions. But it's fair to say that, as Telstra said, it's all on the table for us to nut our way through. And it's going to be a pretty tough, you know, 8 to 12, 13 weeks towards the end of the year.

But we won't be daily speculating. You won't be getting me giving a running commentary, or I believe Telstra are giving a running commentary, on where those negotiations are at. They'll be tough. But in the end, Telstra can only agree to this if they believe it's a win-win, if they believe it is value-adding for the Telstra shareholders.

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