Minister for the Department of Communications and the Arts

Senator the Hon Mitch Fifield

Minister for Communications

A/g Minister for Regional Communications

Minister for the Arts

Manager of Government Business in the Senate

3AW Morning program with Neil Mitchell

9 November 2017

MITCHELL:
This is one of the most complained about issues in the country. It is not working.

Plays audio of Prime Minister

“Well Neil firstly it is working. It is rolling out to around 40,000 people a week”

He then went on to concede that there are some frustrating problems with the NBN. He said that he and the Minister Mitch Fifield were personally overseeing it to make sure it was sorted. Since that discussion with the Prime Minister the Competition and Consumer Commission has announced two different enquiries into the NBN. The level of service and also, well it's not so much an enquiry it's an examination of what's happened with Telstra and now Optus in selling internet speeds that they couldn't actually deliver.

In the studio with me, and we will take calls 96900693 131332. Is it working? Have you got a problem with the NBN? And if you think it's going well by all means. Senator Mitch Fifield the Minister good morning.

FIFIELD:
Good morning Neil.

MITCHELL:
Telstra and Optus have both been found to be advertising and selling internet speeds that they can't deliver. Are they incompetent or crooked?

FIFIELD:
Well the ACCC Commissioner Rod Sims said that it was misleading behaviour. That is was bad behaviour. And that it was wrong.

MITCHELL:
So they have deliberately mislead us.

FIFIELD:
I'd leave it to the ACCC to form a judgement on that and for the retailers themselves to speak to how it happened. But what is absolutely clear is that if you are a retailer and you are selling a product to consumers you must deliver what you undertake to do.

MITCHELL:
There's no option though is there. Either they didn't know they couldn't deliver the speeds or they knew they couldn't deliver them and they conned us. It's either incompetence or a con isn't it?

FIFIELD:
It's one of the two. But it's good that the ACCC now has enforceable undertakings from the retailers. That they will make remedy for consumers. And that they won't do this again.

MITCHELL:
So they are also for this they announced an inquiry into the level of service being provided by NBN. So we've got both the telcos, the retailers and the NBN all under some sort of cloud.

FIFIELD:
This is the ACCC doing its job. It is the legislated consumer cop on the beat. What they've made clear is that for retailers they need to advertise their products appropriately and deliver what they say. And because of the action that the ACCC have taken, we will now know in the future if consumers aren't getting the services that they should be, that it will be that the retailers aren't purchasing from NBN the capacity that they should. That's that issue.

The other issue which you raise is that the ACCC is looking to see whether they should regulate in some way the service standards that NBN provides to the retailers. Now at the moment those service standards are embedded in contracts. The ACCC has the power to look at this. They are doing that and they will determine whether they will take some regulatory action.

MITCHELL:
A broader issue. Do you believe the NBN rollout is working well?

FIFIELD:
There are things with the NBN that are travelling as they should. It's on time. It's on budget. We now have it available to more than half the nation. More than six million premises. More than three million people have hooked up to it. And as you would have heard the PM say, the NBN will be completed by 2020 and at a cost of about $30 billion less than would have been the case under our predecessors.

MITCHELL:
So what is the bottom line? What is the cost?

FIFIELD:
It will cost about $49 billion all up. Labor's approach would have seen it cost about $30 billion more and would have seen the project take an extra six to eight years. That's what's going well. Where we want to see improvement is in the customer experience. You've had callers present to you what their experience has been. We want to make sure that we do everything we possibly can to see people get what they expect.

MITCHELL:
Have you got NBN yet?

FIFIELD:
I don't Neil, it's a couple of months away.

MITCHELL:
Would you mind putting on your headphones we have quite a few people who would like to speak to you if possible. What do you use the internet for?

FIFIELD:
I essentially use the internet for looking at websites, for email.

MITCHELL:
And what do you need. What sort of download speed do you need for that?

FIFIELD:
You can get those sorts of services for only a few megabits per second. If you are wanting to watch high definition Netflix you need about 5mbps. One of the things that people are discovering through the transition to the NBN is what are the speeds they actually need for the services that they want?

MITCHELL:
You're saying 5mbps to watch Netflix, to watch a streaming movie.

FIFIELD:
That's right.

MITCHELL:
Hello Neill. Go ahead Neil.

CALLER:
Good morning Neil. Good morning Senator. Brighton East area in Melbourne, our broadband cable which services Foxtel and our internet service has been off since Saturday afternoon. I contacted Telstra who told me that apparently this has something to do with the cable work that's being done for the NBN. And I was told don't worry it will be on at seven o'clock tomorrow. Now that was for Sunday, for Monday, for Tuesday, for Wednesday. And I just lost it last night and I just said that's it all this duck shoving is nonsense because you sent me a text on Monday afternoon to say hi from Telstra your Telstra broadband service should be back to normal it's best to restart your modem.

MITCHELL:
So Neil your question or your point.

CALLER:
My point is that everybody is duck shoving and blaming everybody else. The service has been out. We actually run a small business from home and you cannot make contact with anybody.

MITCHELL:
OK see the Minister won't be able to fix that personally. But it does go to a broader issue Neil, thank you for that, which comes through continually. People with problems find it damn near impossible to get anybody to address them. You have got a problem you go to the NBN and they say it's your server go to the telco. You go to the telco and they say no it's the NBN. You end up going around in circles. Why can't we have one central point where they all come together? And I've talked to Bill Morrow from NBN about this probably a year ago and he thought it was a good idea. In fact he even suggested it. One central point. I've got a problem with my connection, with the internet, with the NBN or the telcos, I ring this number and get some answers.

FIFIELD:
Well there is a one stop shop Neil and that is your retail service provider.

MITCHELL:
But they send you to NBN.

FIFIELD:
Well they shouldn't.

MITCHELL:
I know they shouldn't but they do.

FIFIELD:
But they shouldn't. The retailer is the one stop shop. The retailer have your account details. They know what product it is that they've sold you. They know what your contract is. And they have the relationship with NBN. And if there is a fault it is the retailer's job to track that through to see if it is on their side. And if it is on NBN's side, to track that through with them. So that is the retailer's responsibility.

MITCHELL:
It's not working. How do we make it work? How do you as Minister bang some heads together and make it work?

FIFIELD:
Well I am banging heads together. I meet with Bill Morrow and his management team every week. I talk to Bill most days. And I have now put in place a telco CEO forum where I meet with the CEO of NBN, Bill Morrow, but also the CEO's of the retailers on a monthly basis. And I sit there and I take them through those things that aren't working. They go away, they undertake to come back, we meet again. So we work through these things issue by issue.

MITCHELL:
Do they understand that they are about as unpopular as a politician at the moment?

FIFIELD:
Surely they can't be that bad, Neil.

MITCHELL:
Well you are on the nose at the moment all of you. But do they understand that they've got this crisis of confidence around it?

FIFIELD:
Look they absolutely understand that they have an obligation. That they have a duty. That the community aren't happy. And that the community want better. That is the message that I send to them every day. It's the message that the ACCC sends to telcos as well. That they are watching. That they are looking. And if they don't believe that behaviour has improved then they will act. And Rod Sims has demonstrated that.

MITCHELL:
You mentioned a cost of $49 billion. Now you have a commercial return you need to hit. What is that?

FIFIELD:
The internal rate of return is between 3.2 and 3.7 percent. Which is about one percent above the long term inflation rate. Now that is a very modest internal rate of return. Our predecessors had an internal rate of return of about seven percent. Now if they had stuck to that and the cost of the NBN under them as was projected, Australian's would be paying an extra $500 a year more in their internet bills.

MITCHELL:
So are you confident you will get the return on the $49 billion?

FIFIELD:
That's what's projected. And thus far NBN is on track.

MITCHELL:
You don't sound overly confident about it.

FIFIELD:
NBN is on track. And I guess one of the best predictors of future behaviour is past behaviour. And NBN over the last thirteen or fourteen quarters have nailed every financial milestone.

MITCHELL:
But the telecommunications experts I read say you won't be able to charge retailers the prices you need to get that sort of return. Are they right?

FIFIELD:
NBN has its product pricing. It hasn't had that set in stone. You always have an ongoing discussion between wholesalers and retailers. Retailers always want the wholesalers to drop their prices. NBN have made some changes there. But NBN needs to meet its internal rate of return because we want it to cover its costs. They want it to cover its costs. And they want to be in a position where over time, as it's needed, they can upgrade the network.

MITCHELL:
So can we be sure sitting here now that taxpayers will not have to take a haircut of a couple of hundred million or even more?

FIFIELD:
Well if Labor get in I can't give you that guarantee.

MITCHELL:
Sure.

FIFIELD:
Lord knows what they might do.

MITCHELL:
Can you guarantee us there will not be a loss to taxpayers here?

FIFIELD:
The NBN is currently valued in the budget at about $15 billion. The Commonwealth has put equity into the NBN of $29.5 billion. We don't know what NBN will be sold for when we get to that point. But NBN has an internal rate of return which it is currently on track to deliver.

MITCHELL:
So it's cost us about double what it's worth so far.

FIFIELD:
This was a model that was essentially set when we came into office.

MITCHELL:
Is that right? It's cost about $30 billion and its worth $15 billion.

FIFIELD:
The valuation is there to be seen in the budget, Neil.

MITCHELL:
Okay. So I pay a million dollars for a house and it is worth five hundred thousand.

FIFIELD:
Well it was an unusual approach that our predecessors took. New Zealand, as a contrast, decided that they would incrementally upgrade the existing network using the incumbent telcos and a mix of private and public money. Our predecessors decided that they would set up a bespoke government entity to build a brand new network and to essentially shut down the old network. A lot of these economics are flowing from the model of our predecessors.

MITCHELL:
Is there any way then that we can get through this whole exercise. To have the NBN up and working and getting a rate of return that means taxpayers are not badly out of pocket?

FIFIELD:
We don't want taxpayers to be out of pocket, Neil, which is why we embarked upon a different path that will see this project cost $30 billion less. We don't want taxpayers to have to put their hand in their pocket in addition to what they already have, which is why NBN has a rate of return that it can cover its costs. But Neil sitting here today I can't tell you what NBN will sell for when that day comes, and what the difference will be between what NBN is worth and what the taxpayer has injected into it in the form of equity.

MITCHELL:
So we have got the system that has been put into place. We've got NBN being investigated for its service delivery. We've got the telcos either conning us or being incompetent. We've got a service a lot of people are desperately unhappy with and it's costing us a fortune. Good work Minister.

FIFIELD:
It is costing a lot, absolutely. But it's costing a lot less than it would have had we stuck to Labor's plan. It would have cost $30 billion more Neil. A lot of people on NBN are having a good experience. But I never want to diminish the experience of an individual or a business that isn't all that it should be. We want to do everything we possibly can, working with the retailers, working with the ACCC, to improve the customer experience.

MITCHELL:
And what would the average internet speed be around Victoria? Maybe that's too broad, around Melbourne?

FIFIELD:
It depends the technology that you are looking at. So about 83% of people who are on the NBN are purchasing speed packages of 25mbps or less. If you are talking about the fibre to the node network, you are having people experiencing on average speeds of about 70mbps.

MITCHELL:
Well I checked mine last night and I'm not on NBN and I was getting 36.

FIFIELD:
Well, that's good.

MITCHELL:
So why do I want NBN?

FIFIELD:
Our predecessors set upon a path that everyone had to shift. New Zealand, you don't have to shift off your existing network if you don't want to. You can stay on that. You can switch to their equivalent of the NBN if you want. But Labor put in place a process that said, no its mandatory switchover and everyone has to move across to a new network.

MITCHELL:
Look I'm ignorant in this area, but I'm surprised that you tell me I only need 5mbps to get Netflix, that's right, is it 5?

FIFIELD:
That's right.

MITCHELL:
96900693. 131332.

MITCHELL:
Senator Mitch Fifield is with you, the man in charge of the NBN. We'll take another call, Samantha, hello Samantha.

CALLER:
Yeah, hi guys. My mum has the internet.. ah the NBN in her area. She's not hooked up to it. Telstra have been ringing and hounding and hounding and hounding her, up to three, four phone calls a day. She finally gets through to them, they made an appointment for her, then she heard yesterday about all the problems. She rang them, she said I want to wait 18 months, because of all the problems and they turned around and said, no, no, no there's no problems with the NBN. And they're trying to talk her out of not getting the NBN. You know, trying to make her connect.

MITCHELL:
So what's your question, does she have to join?

CALLER:
Well, she's got 18 months to join. But the fact is that they're hounding and hounding people and people shouldn't have to be hounded like that. It should be their choice unless it's like the cut off time, it should be their choice as to whether they want to connect or not.

MITCHELL:
Minister, do you agree?

FIFIELD:
Yeah, absolutely. It's an individual's choice over that 18-month migration period when they shift. But it sounds like there's an overzealous retailer seeking to push their wares.

MITCHELL:
So what does she do?

FIFIELD:
She could put herself on the Do Not Call Register, I guess. But look, retailers should not be harassing and harranging people. They should be making their products known. And then it's up to the individual to make a choice.

MITCHELL:
Thank you Samantha. Keep in touch. Trevor, hello.

CALLER:
Morning guys, how are you?

MITCHELL:
Well. We're going well.

CALLER:
Look Neil, you spoke about Telstra and Optus with the internet speeds. I'm currently with TPG and I sent you an email yesterday. I ran a test yesterday and I'm paying for a hundred megabits per second and but the test yesterday was 39 and I've just run another test now and I've got 46.4 download speed with TPG. What am I supposed to do?

MITCHELL:
What do you do? What's the answer there Minister?

FIFIELD:
The first thing you should do is to call your retailer and to say this is what I've purchased, this is what I'm getting, is my line capable of actually delivering the product you have sold me which is the whole issue that Rod Sims brought into focus yesterday. If you don't have satisfaction then you can get on to the ACCC or you can leave your details with Neil and we'll follow it through.

MITCHELL:
Hold on for a moment if you would Trevor. I'm starting to wonder whether it doesn't go a lot further than Telstra and Optus are there a lot of retailers who in fact are doing the same thing.

FIFIELD:
Well Rod Sims…

MITCHELL:
Selling them speeds they can't deliver.

FIFIELD:
Rod Sims said that he thinks that other retailers are guilty of the same behaviour. And that he'll be seeking to enter similar undertakings with those retailers as he has with Telstra.

MITCHELL:
That makes it one of the great cons of Australian history?

FIFIELD:
Well it's important that we have transparency. That's why the ACCC's work is important. And that's why we tasked the ACCC with embedding 4000 probes in people's premises around the nation which they're doing. So the ACCC can monitor and report publicly what are the speeds that people are actually getting by retailer.

MITCHELL:
So, ok. So if I'm not getting the speed I'm paying for and it's not capable of delivering that speed whose fault is it? Is it the retailers or the NBN?

FIFIELD:
The retailer should never sell you a product that your line is not capable of delivering. Now with the NBN we have a mandated national minimum speed of 25mbps. We also have mandated to NBN that 90 per cent of the fixed line footprint should be able to get speeds of 50mbps. And obviously there will be many people who will be able to get speeds higher than that. So they're the speed limits I guess of the network itself. But retailers should never sell a product that they can't support.

MITCHELL:
So if it's not NBN telling the retailers that it's got greater speed than they can deliver. It's the retailers knowing the speed and lying to us about it.

FIFIELD:
NBN tell the retailer their assessment of what the line can do. And then once the retailer actually hooks someone up they can then do a speed test themselves to find out what the real life limit is.

MITCHELL:
And now they've set these minimum speeds at peak times, the prices going up?

FIFIELD:
Well look, we'll have to see how the market tracks. The ACCC have given very clear and specific guidance to the retailers as to how they should market their speeds. They've given them three months to put those arrangements in place and we'll see what happens after that.

MITCHELL:
Okay, thank you for coming in, I know you need to get away, I really appreciate it. We'll keep in touch. Just finally on this citizenship mess. Are we going to have an early election do you think?

FIFIELD:
Look we're focused on the business at hand. I'm not thinking about elections Neil, what I'm thinking about is the NBN.

MITCHELL:
Okay, you've checked out your own eligibility? What relatives have you got born overseas?

FIFIELD:
My situation is very straight forward. Myself, my late mum and late dad and my late grandparents were all born in Australia in New South Wales.

MITCHELL:
You could end up Prime Minister.

FIFIELD:
[laughs] Wrong house, fortunately.

MITCHELL:
It could change, there could be nobody left. But it is paralysing surely, or at least distracting the Government what's going on?

FIFIELD:
And that's why we think it's important that we have a process in the Parliament. The PM has outlined what he thinks that should be. And we hope that the opposition come to the party there very, very quickly.

MITCHELL:
Thank you for your time, thank you for coming in.

FIFIELD:
Thanks Neil.

[ends]

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