I refer to the government's national broadband network tender process and associated issues for end users of the network, which has been significantly shaped by the previous government's decision to privatise what is fast becoming an essential service. The winner of the tender to build the national broadband network will have control of what is essentially a natural monopoly. Given the high degree of concern expressed in the telecommunications industry about monopolistic and litigious practices by Telstra, will the minister consider in your deliberations the possibility of public ownership of the national broadband network so that the public interest is prioritised at all times over the interests of shareholders?

Senator CONROY-I thank Senator Ludlam for that question and for his indication that he would be asking questions on these broad issues. I do appreciate that...

Senator CONROY ... When the government established the national broadband network process, it indicated that its preference was for an equity contribution of $4.7 billion. Depending on the final size of the network, that could be 50 per cent or it could be 30 per cent. That is actually stated in the RFP. That is in actual fact our preferred model, but we are prepared to consider other models. We have always made it clear that we believe that there is a role for the federal government. That contrasts to those opposite who, for many years, apart from 18 pork barrel efforts, completely and utterly rejected any public participation in the telecommunications sector. Your predecessors, Senator Ludlam, and mine all voted against the privatisation of Telstra. It was a great disappointment that those opposite chose to go against the will of the majority of Australians by privatising Telstra. We have made it clear in the RFP process that we are prepared to consider this as one of the options. In fact, we expressed it as our preferred option. Let me be clear about this: we have put forward $4.7 billion to deliver the necessary outcomes for the benefit-(Time expired)

Senator LUDLAM-Mr President, I thank the minister for the answer and I ask a supplementary question.
My supplementary question goes to the end users issues which I foreshadowed. Can the minister tell us the status of the new consumer protection body, the Australian Communications Consumer Action Network, in particular what date it will be established, who is on it and what role this network will play in the deliberations on the National Broadband Network tender?

Senator CONROY-The government has already taken active steps to improve the level of consumer representation in the telco sector. Unlike the previous government, we actually care what consumers and their representatives think. Better representation and a stronger voice for consumers lead to better consumer outcomes. However, for many years the consumer voices have been somewhat fragmented. Earlier this year, after extensive consultation with the sector, we supported the establishment of a new national peak body to provide telecommunications consumers with a
stronger, unified voice. This body, the Australian Communications Consumer Action Network, or ACCAN, has already established its founding board and constitution. This is an important development for consumers, who, through this new group, will have a more powerful voice. They will be better represented in the establishment-(Time expired)

Senator LUDLAM-Mr President, I ask a further supplementary question. Perhaps the minister could take this on notice. My question was specifically on what role this network will be playing as the tender process unfolds. Further to that, given that the operator of the network will, in effect, have control over a natural monopoly and that Telstra has indicated that it wants an 18 per cent return on investment, which according to some commentators could raise broadband prices by 50 per cent per month for users, what measures will be taken to protect consumers from pricegouging, particularly in regional areas?

Senator CONROY-I will happily get you the rest of the information on ACCAN. I think you asked for its membership as well. There is no more important outcome than delivering faster, cheaper broadband to Australians. For 12 years, those opposite just did not get it. They did not understand the transformation that is taking place. They are happy now to retreat back to the old arguments and the old debates. Let me be clear: we are determined to deliver faster and cheaper broadband. We are putting in place, as part of the RFP-it is there in the documents, which people have submitted against today-that they have to-

Senator Minchin-Telstra haven't.

Senator CONROY-You can continue to believe what you like, Senator Minchin, but I quoted to you
exactly, word for word-

The PRESIDENT-Senator Conroy, ignore the interjections.

Senator CONROY-I accept your admonishment. We have put in place a range of measures in the RFP to ensure those outcomes. I am sure, as you would understand, that those opposite-(Time expired)

(later...)

Senator LUDLAM (Western Australia) (3.34pm)-I move: That the Senate take note of the answer given by the Minister for Broadband, Communications and the Digital Economy (Senator Conroy) to a question without notice asked by Senator Ludlam today relating to the national broadband network.

I want to make a few brief comments on the occasion of the deadline for tenders for the National Broadband Network and in response to some of the minister's answers to my questions earlier. I have been involved in the National Broadband Network inquiry, which is being chaired by Senator Fisher, which has heard evidence from a broad range of players in the telecommunications industry. We have heard strong evidence all the way through that Telstra has played an aggressive and litigious hand in its activities as the incumbent market player and that we seriously risk entrenching this behaviour, depending on the final market structure adopted as the process that is underway rolls out.

The ACCC, as the regulators, have been tied in knots with a multitude of appeals against regulatory and pricing decisions. They told the committee on 18 October that telecommunications litigation outweighs all the rest of their caseload and workload in the regulatory area combined. So, everything else that the ACCC has oversight of is outweighed by the amount of telecommunications litigation, much of it brought by Telstra on pricing and regulatory decisions.

One solution to this behaviour of monopolistic practices by the incumbent that was advanced by many witnesses was that of structural separation-that is, that the ownership of the network backbone be separated from industry participants who might be providing retail services. I put this proposition to Mr David Quilty, Telstra Group Managing Director, Public Policy and Communications, when Telstra eventually appeared before the committee a couple of weeks ago. I asked what his thoughts were on structural separation as one possible means of reducing the apparent covert cross-subsidisation that occurs under the current market structure. He said:

The bottom line for us is that we have to act in the interests of our shareholders. We cannot do anything that we do not consider is in the interests of our shareholders. There is no doubt in the mind of Telstra management, and all of the analyst reports concur, that further separation of Telstra is not in our shareholders' interests. We simply cannot contemplate it.

They essentially gave the minister an ultimatum, which has certainly not been resolved today, that they will not participate in the national broadband network if their shareholders' interests are not taken into account as the primary concern. I am afraid that is not good enough. Broadband services are approaching the status in Australia and around the world of an essential service. It is essential that a broadband network be regulated in the public interest and not in the interests of the shareholders of one corporation that happens to have the upper hand so far.

So the question I put to the minister earlier this afternoon this afternoon was, rather than handing over and further entrenching the role of Telstra, or any other player for that matter, perhaps we should take the matter back into the public arena to operate the network backbone so that proper competition can be assured. I think this is one case study, if ever we needed it, of why you do not privatise essential public services. We have created something of a monster and I think ministers on both sides of politics who have had to grapple with the behaviour of Telstra have had to deal with the fact that it is behaving as large corporations do when they are given a monopolistic position in an extremely important market. So Telstra is not behaving in any way unpredictably; I think they are behaving entirely predictably. But they are, as they have told us so on many occasions, putting their shareholders' interests-as they have to-above the public interest. And of course that is not the minister's job in the provision of $4.6 billion worth of public funds, which the public is putting towards the broadband network. I think it is essential that we consider taking matters back into public hands and operating the national broadband network in the public interest.

Question agreed to.