Consumer Protection and the National Broadband Network

estimates

Senate Committee on Environment, Communications and the Arts
Budget Estimates for 2008-09 (Supplementary hearings)

Senator LUDLAM- In evidence that the department submitted to the select committee, you referenced a group called the Australian Communications Consumer Action Network, but there was not a great deal of detail as to what that network is, the make-up of the group, its activities and so on. I want to bring us around, I suppose, to a consumer focus or a user focus. Can you just fill us in on what that group is and what it will be doing?

Mr Besgrove-The Australian Communications Consumer Action Network is a body which is currently being formed. It was being developed as a direct result of a consumer forum, which the minister organised and which he attended, on 1 May here in Canberra. It will be brought together over the next few months, we believe. I understand that its business name was registered only a few weeks ago. It will be a peak body for communications, consumer and disability groups. The number of groups likely to participate in the new peak body is still growing, but at last count there were over 30 different organisations that had expressed some interest in being part of the new entity.

Senator LUDLAM-Okay. So it is still the process of formation. When will the group convene?

Mr Besgrove-It is likely that the group will actually formally commence operations at the beginning of next financial year. I think the government's intention is that it would be funded under the section 593 grants. Those grants have been provided to consumer and disability groups over the last 10 years, I believe, and in the past there has been funding for up to about 10 or 12 different small groups. Part of the intention behind the formation of ACCAN, as it is becoming known, is to have a single funding arrangement with a peak body which would subsume a number of those smaller functions. What the government is, I think, attempting to achieve is a consolidation and some economies of scale and to try and, if you like, place the representation of consumer and disability groups on a more professional footing than we have been able to see over the last couple of years.
If I might just digress, part of the background to the formation of this group was a growing dissatisfaction by all of the stakeholders that were involved. The consumer groups themselves had some dissatisfaction with their ability to pull together well-resourced and professional submissions to government and to industry. The industry itself had expressed some dissatisfaction, and, for the government's part, I think there was a concern that these groups could be placed on a more professional footing.

Senator LUDLAM-Thank you. Presumably there would be funding to match to enable them to perform that role; do we see anything in the forward estimates about what kind of funding that body will require?

Mr Besgrove-The current funding for section 593 is $800,000 per annum, and there is one more year of that to go. Any discussion or decisions in relation to future funding are subject to the budget, and I cannot go into that.

Senator LUDLAM-Okay. I note you said that it is not likely that that group will convene before next year, so I take it there is no formal role for that group then in determining the way this bid process will be undertaken. Who is providing the consumer or the user input, if you will?

Mr Besgrove-There are a number of existing groups which are funded under section 593. We can table that information. I think there are a total of nine or 10 groups that are currently receiving this year's funding, and they are continuing to perform their existing roles, but a number of them were directly involved in the discussions which resulted in the proposal to form ACCAN. Those groups formed a working party which provided a report to the minister on 1 August; the minister is currently considering a range of recommendations which were included in that report.

Senator LUDLAM-I am trying to work out whether this process of the formation of ACCAN and the NBN tender process are in any way kind of informing each other, or they are separate processes. I am just wondering particularly if these groups have informed you, formally or informally, of dissatisfaction in not being able to fit into the process, effectively. It sounds as though they are going to miss the boat, really, because they are not forming until well after the tender will have been let.

Ms Scott-Senator, I might have a go. Mr Besgrove's answers are correct, but this will just put it in a bit more context. There has been a feeling for some time that it would be ideal if some of these groups that are very small in their nature-they often have only one or two employees and rely on voluntary research-could come together in some sort of a federation, not dissimilar to what I guess happened with ACOSS. The minister and the government have effectively facilitated this by first off holding a forum where both industry and consumer groups were represented. That was very well attended and there was lively discussion. That occurred in May this year. The government has provided some seed funding to allow facilitation of those groups to bring them together to see if they can work on a constitution and work together. It is the case that many of those groups have got very harmonious working relationships, but it is whether they can form a concrete body or a common alliance that is really at the heart of this matter. They have effectively formed an interim board, with board members determined.

I guess what you are seeing are the early signs of an important convergence of consumer groups. In some ways the importance of the NBN has acted as a spur to that but it is also happening because I think the government is keen-as is the department-to ensure that we try and bring these groups together because they will have a more effective voice if they are actually united. There is a relationship between the two processes, but it is not as though one is dependent on the other. They can be considered exclusive events but they do interact with each other. I think the consumer groups are very conscious that this is a very important process and they would like to have a very strong voice in it.

Senator LUDLAM-To be clear: the Commonwealth government will be resourcing this non government network to look after the interests or advocate for consumers. The direction of where this is going is this. It was put to the select committee that the national broadband network or broadband services in general are taking on the characteristics of an essential service, particularly in regional areas. People are banking and getting medical advice. More and more are converging and will continue to converge into the broadband network. There seems to have been very little conversation in public about the consumer end. We have spoken a lot about the competitive process and open access and so on, which has obviously important equity implications, but there has been very little discussion about the consumer end or the user end. I am just wondering what the government's strategy is. There is a non-government network forming, which you are helping to enable.

Ms Scott-Correct.

Senator LUDLAM-What do you see as the government architecture of consumer protection as far as broadband is concerned?

Ms Scott-The fact that the ACCC is involved in the process and it has, obviously, consumer interest-

Senator LUDLAM-Sorry-just to hold you up there. We put these questions to the ACCC in the hearings and they were actually very hands off as far as the consumer side of things was concerned.

Ms Scott-Yes, but the fact that the-

Senator Conroy-They have legislative requirements.

Ms Scott-Yes. I think we might be talking at cross-purposes. The ACCC will be involved in the process of advising the expert panel on its perspective. Senator, I think before you were in the room we answered a number of questions about the role of the ACCC. Part of the role of the ACCC in the process is to safeguard aspects of consumer outcomes. The expert panel has had the benefit of submissions from consumer groups in relation to the NBN process.

Mr Lyons-Several consumer organisations responded to the government's invitation for submission on regulatory issues to do with the NBN, including: the Australian Telecommunications Users Group; the Telecommunications and Disability Consumer Representation, TEDICORE; and a number which have representation on the founding board of the Australian Communications Consumer Action Network, such as the Internet Society of Australia and the Consumers Telecommunications Network. It is probably worth detailing the relevant provisions in the request for proposal which go to the question of consumer safeguards.

Mr Mason-I was just going to draw the committee's attention again to the objectives. I was not proposing to read them but I just wanted to emphasise that the majority of them really do go to improving the outcomes in the broadband space for consumers. For example, we obviously have objectives in relation to coverage and speed, the quality of services, the range of services, pricing approaches and capacity. Objective 12 in particular, for example, is about the network providing benefits to consumers by providing choice to run applications, use services and connect devices at affordable prices. So the RFP is very much focused on consumer outcomes. I think one reason that is the case-apart from the obvious, which is it is what the government wants to achieve-is there was a consultation process in relation to the drafting of the RFP to which many consumer organisations submitted.

Another point of the RFP that I would draw your attention to is in the schedule which relates to the kind of information that is requested of proposals, and section 3 deals with legislative and regulatory issues. Section 3.1(c), for example, particularly indicates that proponents should specify any changes arising from proposed arrangements that affect, but are not limited to, the following areas of regulation, which include consumer safeguards quite explicitly. So there is a large focus on consumers in the preceding paragraph. Again, there is a request for information from proponents about the impact of any proposed legislative changes on consumers.

Senator LUDLAM-Okay. So that is how it is fed into the process thus far. What can you tell me about what sort of consideration you are taking about potential once the tender has been let and networks are under construction? What is the consumer protection architecture looking like from the government's point of view-for example, what role for an ombudsman, given the fact that this is becoming, every day, more and more of an essential service?

Mr Lyons-It would be a matter for government to determine the regulation framework that should apply once the national broadband network has been rolled out, including in relation to consumer issues. That is all part and parcel of this competitive process. The public submissions have been received, then there are the specific proposals in regard to regulation and then the government's final decision on what regulatory proposals are acceptable and what regulatory framework should apply to the national broadband network, including in relation to consumer issues.

Senator LUDLAM-Perhaps this question is to the minister. So the government does not have a formal view as yet as to what role the government is going to take in consumer protection? Are you waiting to see what the proponents propose?

Senator Conroy-Unfortunately, you are moving slightly into an area that will be part of a negotiation that is going to take place after 26 November. We are acutely conscious and have stated upfront for many years since we first released our policy that it has got to be open access so that people can get a competitive position.

There are a number of other areas about pricing. They are critical and at the centre of the negotiations, so open access and pricing, which are two of the most fundamental-if you talk to any of the consumer groups- consumer issues, go to the heart of the actual negotiations. I am not in a position to comment too much more than that. If you would like to expand on your question, I might be able to give you a better indication.

Senator LUDLAM-I think we are somewhat at cross-purposes, Senator.

Senator Conroy-We might be at cross-purposes but some of those absolute core issues go to the heart of the negotiations.

Senator LUDLAM-What I am trying to get to, I suppose, is: as it becomes more and more of an essential service, are you satisfied with the level of consumer protection that is in place at the moment? Particularly, considerations of open access are of much more interest to service providers and companies that are providing services online, which is very different to a person sitting at home trying to use the network when something is going wrong with that service provider or so on. It is at the consumer end of things, the user end. All we really have heard about is at the service provider end, with the open access and the pricing and so on. Very different questions emerge as more and more people are coming onto the network and using it for more essential services. Is the government going to wait for proponents to put forward ideas about consumer protection or are you bringing things into that debate?

Senator Conroy-There are an existing set of mechanisms at the moment that cover telecommunications: customer service guarantees, universal service obligations and a raft of protections like that. We have them under ongoing review all the time as to whether they are meeting the needs. The TIO, for instance, has been flooded by mobile service premium complaints, and so the TIO has been struggling to meet all of its consumer complaints. We have met and talked with the TIO; it has been part of these consumer negotiations you have just been having outlined to you. It is very supportive of the changes that we are making. We are not sitting on our hands saying, ‘No, we don't think there's any need for improvements at any stage.' We do not want to jump the gun.

One of the reasons we have embarked on this process with the consumer groups is to give them a stronger voice because we do not want to see what has happened over the last 11½ years, where consumer groups have been defunded, gagged and basically neutered in every way, shape and form. We actually want to empower consumers, so we have set out to empower consumers. There is no gag. I have said to them openly that I expect to hear from them; I expect them to be saying what they think are the flaws in the system. So we are not going to hide behind gags or behind pretending we are funding them when we are really cutting back their funding.

Senator LUDLAM-I have put this question to the department before, but you might have a different take on it: what sort of budget should we be looking for?

Senator Conroy-That is just a little too early for us. We are in the early stages of the budgetary process. We are obviously in a situation where we want to give them a greater ability to be in the debate, but I think it is probably just a little too early.

Ms Scott-Yes.

Senator Conroy-But we are looking at all of those sorts of issues.

Senator LUDLAM-Okay. I will leave that line there. Madam Chair.