Chapter 1 Introduction
Background
1.1
The Shareholder Minister’s[1] Fourth Performance Report
(the Performance Report) on the rollout of the National Broadband Network (NBN)
details performance information relating to progress of the NBN rollout for the
six month period from 1 July to 31 December 2012.[2]
Issues arising from recent NBN rollout events which cover the four-month period
after the Performance Report are also included in this review report.
1.2
While the Performance Report was received by the committee on
28 March 2013, the statistical NBN rollout data contained in the
Performance Report was earlier publicly released by the NBN Co Limited (NBN Co)
on 29 January 2013.[3] This data revised down
the combined target for satellite and fixed wireless, which represents a further
revision of targets since the release of NBN Co’s 2012-2015 Corporate Plan. In
addition, at its 19 April 2013 public hearing, the committee received an update
on the NBN rollout financial and rollout data already provided in the Performance
Report.[4]
1.3
On 21 March 2013, the NBN Co announced an approximate three-month delay
in the NBN rollout (fibre network) which meant that the newly revised NBN
rollout targets for its fibre network were unlikely to be met and so were
subsequently revised down to reflect the time delay. For its volume fibre
rollout the NBN Co stated that its ‘public projections have been underpinned by
commitments from … four construction contractors that they would meet the June
30 target.’[5] The NBN Co has stated that
it has ‘taken immediate action’ to remedy the issues causing the delay.[6]
1.4
In regard to regulatory matters, the NBN Co Special Access Undertaking
(SAU) was withdrawn and replaced with a new version. The new SAU was lodged
with the Australian Competition and Consumer Commission (ACCC) for
consideration in December 2012. In early April 2013, the ACCC issued a draft
decision ‘proposing a number of changes, and consulting on the precise form of
those changes’ to the NBN Co SAU.[7] The statutory deadline by
which the ACCC is required to make a final decision on the SAU is currently
19 July 2013.[8]
Committee’s Role
1.5
Pursuant to its Resolution of Appointment and in accordance with its
terms of reference, the committee is required to report to the Parliament and
the NBN Shareholder Ministers every six months ‘until the NBN is complete and
operational’.
1.6
The committee is primarily enabled to examine and report on matters
relating to the NBN Co objective to connect Australian premises to the NBN
which includes:
n the achievement of
take-up targets as outlined in the NBN Co Corporate Plan
n Progress of the NBN
rollout and performance matters relating to the NBN Co such as consumer
engagement, complaint handling, risk management and
n ‘any other matter
pertaining to the NBN rollout that the committee considers relevant.’
1.7
To date, the committee has reviewed and reported on a number of
significant and ongoing issues associated with the NBN rollout which include:
n progress of the NBN
rollout across the three technologies of fibre, fixed wireless and satellite
n issues raised and
faced by regional and remote areas, including extension of the fibre and fixed
wireless networks and the scope of mobile telephony
n regulatory issues and
events associated with establishment of the NBN
n affordability and
pricing issues for consumers
n E-readiness of small
business, communities, governments and individuals, and associated consultation
by the NBN Co
n connecting
multi-dwelling units to the NBN
n medical alarms
n funding arrangements
directly and indirectly associated with the NBN
n Workforce issues
associated with the NBN rollout including the Telstra Retraining Funding Deed
under the Binding Definitive Agreement between the NBN Co and Telstra
Corporation.
1.8
The committee has in its First, Second, Third and Fourth reports
commented on:
n specific key
performance indicators (KPIs) to be included in future Shareholder Minister’s
reports, and
n the delay in
receiving answers to questions placed on notice with the NBN Co and the
Department of Broadband, Communications and the Digital Economy (DBCDE).
1.9
The committee has continued its commentary on a number of these matters
in this report.
Reporting Timeframe
1.10
Following the committee’s establishment in March 2011, its first report
was presented to the Parliament in August 2011 and a second report was
presented in November 2011. This enabled the committee, with agreement from the
Shareholder Ministers, to alter its reporting timeframe so that it reported biannually
in June and December. This alteration in reporting timeframe by practice did
not prevent the committee from reporting later in line with its original reporting
dates.
Previous Reviews
1.11
In line with reporting requirements, the committee previously reported
(Fourth Report) in February 2013 on the progress of the six monthly NBN rollout
period from 1 July to 31 December 2011. This report, similarly to previous
review reports, where relevant includes examination and comment on a number of issues
and events which took place outside the six month timeframe reported on in the Performance
Report.
1.12
This is the committee’s sixth report on NBN related matters and the fifth
and final NBN rollout review report for the 43rd Parliament. The
Fifth Report includes continuing examination and commentary on the progress of
the NBN rollout and associated regulatory matters, initially reported on in the
First Report and continued through to the committee’s Second, Third and Fourth
reports.
1.13
Information contained in the Performance Report forms the basis of the
committee’s six-monthly review, and is supplemented with submissions, published
reports, hearings and answers to questions placed on notice which are part of
the formal parliamentary committee inquiry and review process.
About the Review
Objectives and Scope
1.14
As part of its Fifth Review, the committee examined and provided comment
on:
n The NBN rollout
through the fibre, satellite and fixed wireless networks and associated issues;
n KPIs included in the Shareholder
Ministers’ six monthly performance report and Corporate Plan targets; and
n ongoing regulatory issues
1.15
The committee has also continued its examination of:
n The potential of
private equity to fund the NBN and
n Workforce issues
associated with the NBN rollout, including the Telstra Retraining Funding Deed
under the Telstra Agreement.
Conduct
1.16
A media release issued on 1 March 2013 announced the commencement of the
Fifth Review and called for submissions to be received by 12 April 2013.
A similar advertisement also appeared in The Australian on 20 March
2013.
1.17
A total of 20 submissions were received as part of the Fifth Review
and are listed at Appendix A.
1.18
The committee subsequently held a public hearing in Sydney on 19 April 2013.
Witnesses who gave evidence at this public hearing are listed at Appendix B. A
transcript of the public hearing is available at www.aph.gov.au/jcnbn.
Information Provided to the Committee
Timing of Shareholder Ministers’ Performance Report
1.19
In its First Report (August 2011) the committee recommended that it
receive the Performance Report no less than three months before it was due to
report to the Parliament.
1.20
This recommendation was made as the First Report could not include
current NBN rollout information, as the Performance Report was delayed until
late September 2011, which was a month after the committee’s required reporting
date.
1.21
The committee’s Second Review (December 2011) then reported on NBN
rollout information provided in the first Shareholder Minister’s Performance
Report.
1.22
The Shareholder Ministers’ Second Performance Report was received on
10 April 2012, which was six days before the scheduled public hearing with
the NBN Co and the DBCDE on 16 April 2012.
1.23
In its Fourth Report (February 2013), the committee again recommended a
timeframe for receiving the Performance Report, but reduced the timeframe from
three months to one month prior to a scheduled hearing with the NBN Co and the
DBCDE.
1.24
In regard to its Fifth Review, the Shareholder Ministers’ Performance
Report was received at the end of March 2013, which provided the committee
three weeks to review the information contained in it. As the statistical
information contained in the report had earlier been publicly released on 29
January 2013, the committee had previously been aware of this information.
Answers to Questions on Notice
1.25
For the committee’s previous reviews, the timeframes for receiving
answers to questions on notice from the DBCDE were extended as a courtesy and
to enable the committee’s report to be drafted.
1.26
Following extensions, on most occasions answers to questions on notice
were received either late in the report drafting process or after the draft
report had been completed. The committee has previously commented on the
importance placed on information provided by the DBCDE and NBN Co in
assisting the committee to undertake its reporting role to the Parliament.
1.27
Following the committee’s hearing on 19 April, it placed a large number
of questions on notice to the DBCDE and the NBN Co. In response to the volume
of questions received, the DBCDE advised that it would ‘endeavour to meet the
committee’s timeframe for lodging responses’, but that ‘due to a large number
of complex questions, and a range of competing priorities in the lead-up to the
2013-14 Budget it is unlikely the department and NBN Co will have finalised all
the responses by the 3 May and 13 May 2013 deadlines.’[9]
1.28
The DBCDE also stated:
We acknowledge that a number of the responses relate to
questions around NBN Co’s financial information, corporate plan and contractual
arrangements and come at a time when NBN Co is finalising a number of other
priorities and reports, including the preparation of responses to 81 questions
on notice from the Additional Estimates hearings held in February 2013 and
finalising the 2013-2016 Corporate Plan.
To assist the committee in preparing its fifth report on the
Review of the NBN Rollout, NBN Co and the department will prioritise the
questions that are relevant to the performance of the NBN in the current review
period.[10]
1.29
The committee has in all its previous review reports commented on the
lateness of answers to questions placed on notice by members, in addition to
the limited information contained within responses.
Report Outline
1.30
Chapter 2 examines the Shareholder Ministers’ latest six monthly NBN
rollout performance report and associated issues. This includes discussion
about: KPIs and NBN rollout targets contained in the NBN Co Corporate Plan; and
the NBN Co financial result for the period. The status of outstanding regulatory
matters in reference to the NBN Co SAU and Wholesale Broadband Agreement is
outlined. Additional NBN rollout issues include discussion about costing
alternative network models and connecting multi-dwelling units to the NBN.
1.31
Chapter 3 continues the examination of the NBN rollout of fibre, fixed
wireless and satellite to regional and remote Australia. Network extensions and
improving mobile networks are also discussed.
1.32
Chapter 4 continues the committee’s ongoing examination of private
equity funding of the NBN and workforce issues associated with the NBN rollout,
including the Telstra Retraining Funding Deed.