Transcript: Media Conference Q&A with Stephen Conroy

Staff Writers
Tuesday, 15 September 2009 13:50

IT Industry - Market

QUESTION: Just to be clear, are you saying that you would not force them to divest, and therefore you don't trigger any legal liability on the Government's part, because of course the Commonwealth sold, did the T3 sale, with an undertaking that that was the regulatory regime that applied to the company?

STEPHEN CONROY: I think for two years. I think there was a time that it was on the - and I'm happy to be corrected - but I think there was a time limit on the. It wasn't there would never be another regulatory change. I think there was a time limit, firstly.

But yes, how you described it at the beginning of your question is completely correct. We do not believe by not requiring Telstra to do anything that we are incurring any potential legal liability. Sorry, David?

QUESTION:   What do you say to shareholders who will be nervous about these new conditions that you are placing on the company, and how do you envisage this can be a win for shareholders?

STEPHEN CONROY: Because, as I said, the CAN or Copper Access Network is literally collapsing in the ground. Every time there is a flood, every time that there is heavy rain in New South Wales, Northern New South Wales, Queensland, there is a further degradation of some part of Telstra's copper network. There's an enormous maintenance requirement every year to continue to just try and keep it where it's at.

The other issue - and I'm not critical of this in any way - at the time when people were putting this copper into the ground, people were thinking about how can I get the cheapest possible phone service to people's homes. So pair gains and RIMs, which are technical terms which some of you may or may not have heard of, is broadband-inhibiting infrastructure.

And Telstra, if they want to move to be able to deliver ADSL2+ under copper, they are going to need to address a massive amount of a rollout around the country that actually was put in place before broadband exploded in the way that it has. And you can't deliver broadband through a pair gain, and you struggle to push it through a RIM.

So despite claims that there is 80 per cent coverage, even Telstra said there is nowhere near that. It's probably below 50 per cent, I think the last figure I saw, of people who can actually get access to ADSL2+. Not that they're not in the footprint of a DSLAM in an exchange. What people tend to go is right, we've covered 472 exchanges; this means we have covered 90 per cent of the country.

It's what happens once you leave the exchange. And if the infrastructure in the ground actually blocks your capacity to deliver decent broadband, you are not actually reaching the sort of those figures. And to be fair, Telstra don't make those claims. Others in the industry - and some of my Opposition colleagues - make those claims about the extent of ADSL2+ coverage.

But there is an inherent end to the copper era coming. If you look around the rest of the world, and particularly our region, what you're actually seeing is hundreds of millions of homes in the Asia region being connected to fibre.

If we want to take the step, if we want to give our kids, if we want to give our small businesses, our home-based businesses, the opportunity to compete in the 21st Century, we need to give them the best possible infrastructure.

And struggling through on 512 kilobytes or one megabyte, or even two and a half meg if you are really lucky and you live close to an exchange, is not the way that we are going to provide the best opportunities for our kids, our health care system, our education system, our small or even our big business.

If you talk to an architect who works from home - a lot of architects do - it takes them all night to download a huge file; you know, a big architect, you know, 3D they do them nowadays. It takes them all night to download a file.

They need to be able to do it like that. They want to be competitive. They want to bid for things around the country, not just in their own backyard literally, but around the world. They need to be on the super highway. They need to be having access to the best available technology.

And for many, many years we have been happy to sit back and say no, no, that's okay, the copper will get us there. We're now reaching a stage where around the world people are moving to fibre to the home, in the Asian region particularly.

QUESTION: Minister, have you done a cost benefit analysis on spending $43 billion of taxpayers' money, should Telstra not come to the party on this?

STEPHEN CONROY: We've always said that was the outer end of an estimate. And we don't believe - and we've said this a number of times - that it would ever require that sort of expenditure.

The way, let's pretend 43 was an actual figure. What we've always said is that the company NBN Co would finance half of that through bonds. It would raise its own capital, just like Australia Post does.

So the worst the Commonwealth would be injecting would be say $22 billion. And of that, we've said we're prepared to sell 49 per cent. Now, we believe we have sufficient interest in the telco sector that we will not ever be up for anything like even the 22.

And we are talking about 11 or 22, worst case scenario, over eight years, which is not that significant a number if it's over eight years. So we never believed it would cost 43. We never believed that we wouldn't have people in the sector interested. And that's demonstrated by the discussions we've had since April.

Telstra are sitting at a table discussing this at the moment. We've sat down with a range of the other telcos, and each of them have indicated they're willing to potentially vend in, at the right price - there's always an argument around price, but they're willing to vend in assets.

So we've never believed that it was going to be - have we done a cost benefit analysis? We've said from day one, no. We've had eleven and a half years of watching while the economy suffers, while small businesses are held back, while our kids can't get the best access to education system.

The cost benefit analysis is staring at us in the ground. But it's like trying to pretend that the copper's not crumbling, literally. We know there's going to be a need for an upgrade to fibre, and this is about the market, when we went through this process, didn't deliver us an outcome.

So we said we're prepared to do it ourselves and partner with the private sector to do it.

CONTINUED