JOURNALIST: Penny Wong is the Minister for Finance and Deregulation and joins us now. Good afternoon Senator.
WONG: Hi, how are you?
JOURNALIST: Very, very well thank you.
WONG: Good.
JOURNALIST: Now I think most of us perhaps have only a very broad understanding of the NBN.
WONG: No pun intended! (laughs)
JOURNALIST: Indeed. A very broad one. Not to the specifics. So what did this business plan look at?
WONG: What this Business Plan looked at was what are the financials of building the National Broadband Network? And what it came back with was this: that we can afford to fund this taxpayers can put money in and earn a return on it. So it is what you call an income generating project. But it also, on top of that, delivers the important infrastructure of this century broadband across the nation.
JOURNALIST: During the federal election campaign, we were hearing figures of $43 billion. Has this business plan shown that it will actually be cheaper to build?
WONG: It will be slightly cheaper to build. We will see tax as a Government equity injection of around $27.5 billion, a total capital expenditure of around $35.9 billion. But what we also see is that what we call the internal rate of return so thats how much is generated from the taxpayers investment will be above 7 per cent.
So thats good news. It means that we can make a return on the investment just as a financial proposition before we even consider all the economic and social benefits of having a National Broadband Network delivering a uniform wholesale price, access to broadband across the whole of the country.
JOURNALIST: And will that rate of return come from those of us who join up to this NBN?
WONG: It will come from the fact that we will for the first time have a uniform wholesale provider across the country. We know part of the challenge weve had in Australia over many years is that we havent had the right structure in our telecommunications system. Weve had Telstra which has owned both the copper network and also provided retail services. What we want is a structure of the industry which drives competition in the retail sector. So consumers get better products at better prices.
But we have the wholesale provider the network being able to be rolled out across the nation. And then retailers can access that at prices that are fairly set. Thats the best structure for an industry that will enable Australians across the country to get access to affordable broadband.
JOURNALIST: So what controls will there be in place to make sure that we arent charged exorbitant fees within this whole competition framework?
WONG: The best control is competition. I mean, thats the way in which markets work. The more people you have competing in the market, theyre going to have to compete on price as well as on services and products. And what we havent had enough of in this sector is competition. Were going to see more retail competition.
What we know today is that the NBN Co has said that they can offer a basic service which is better than the service that most Australians would ever have access to, which is at 12mbps starting at $24 a month for a wholesale price. Now what we know is that on top of that, well see retail providers utilise that service and offer products to Australia.
JOURNALIST: Is it possible to say at this point the range of figures that we might be paying to access that?
WONG: What weve said is this is the wholesale price. But what NBN Co have also said is that this is a conservative starting point. And what they have indicated in the business plan weve released today is that these prices that is, the wholesale price will fall in real terms over time, and also in nominal terms. So they anticipate the price Ive just quoted to you getting cheaper over time.
JOURNALIST: Probably a fair question, I think, on our SMS line from Marty. He says Senator, how is it that as a community were paying to build the NBN then to use the NBN, an asset that we the community own, we all have to pay retail prices? Why is there so much emphasis on profits?
WONG: Its not so much an emphasis on profits. The fact is if we decided not to build this, if we decided just to leave it to the private sector, what we know is that the private sector wont build this. So the reason we are saying that taxpayers and the Government need to invest in this infrastructure is because without that investment, it wont happen. Thats what weve seen over the last ten years. Its one of the reasons why Australia doesnt perform well internationally when you look at comparable economies and their both penetration and takeup of broadband. We need to make the investment now.
But its an investment like the copper network was an investment. Lets remember, Australia made a decision to build the copper network which has formed the basis of our telephone system and our telecommunications system for what is it four or five decades. That was built at a significant cost to the nation in the post-war period. This is the next generation.
JOURNALIST: I guess the other question people will have then is timing. Once we start seeing this rolling out and being built, how quickly will many people within Australia get access to it? Particularly those areas that havent had access before.
WONG: Look thats a good question and obviously the fact that there is an in-principle agreement with Telstra will help the rollout more quickly. But the estimates that we put out today suggest that about 1.6 million households will have the ability to access by 2013. Around 600,000 will actually have access by that time. But we are talking about a project that were looking at over nine years to build. That is because its a very significant project across the country.
JOURNALIST: Will it cost more depending on where you are to access the network or will they be flat prices? WONG: We have made it very clear we want a uniform wholesale price nationally. So what retailers charge will be obviously that will be a matter of competition. But for the first time in this country, what we are going to be providing through the National Broadband Network is a uniform national wholesale price.
JOURNALIST: A couple of questions from our text line if you dont mind, Senator. One of them says how can the community access wholesale prices? Are there things like buyers groups? Or do we have to go through retail outlets?
WONG: Thats a good question. And I think what the Australian competition body that has had had a look at this and the Governments worked closely with what the ACCC has said is that they would anticipate that we are likely to see more retail competition. I think what that says is once you get a structure of this National Broadband Network with a uniform national wholesale price, that you will see more competition in the retail sector and different types of competition.
Its not possible at this part or end of the project to predict all of what will be able to be found by consumers. But what we know is that were likely to see more competition which is a better thing for Australia.
JOURNALIST: And Brian from Lower Mitcham has sent a couple of text messages raising concerns about the black cables of the NBN. Is it going to be an eyesore? Or is it something that we wont see at all? What form does it take physically?
WONG: It is a cable but the benefit of the Telstra deal is that we have access to whats called this is all getting very technical but the Telstra, I suppose, copper network. So that means less of the fibre, which is the basis of the National Broadband Network, would have to be used above ground. More of it could be used basically where the old copper network went.
The one thing I do want to say is this. I think its really important when we think about the National Broadband Network to understand the various things it can provide. For example, there are things in the health area where we know already health services are transmitting your MRI scan or your CT scan over the network to radiologists, to somewhere else. Those sorts of services can grow even more when we have a National Broadband Network that is affordable and available.
JOURNALIST: And Senator Wong, with the release of the business plan today, whats the process now as far as getting this project moving?
WONG: Well the project is already being rolled out. You might recall that weve had a rollout in Tasmania. Senator Conroy has announced what we call the first release site. In fact, one of them in South Australia and Willunga. I think that might be second release. And we will continue to roll it out.
Why we put the business case out was because this is such an important project. Its a project where we know theres a lot of interest, a lot of focus on it. Its important to be as transparent as possible.
JOURNALIST: Thanks for your time.
WONG: Good to speak with you.
ENDS