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Conroy charts national broadband agenda

newsmaker When the Australian Labor Party's (ALP) Stephen Conroy publicly asked a Telstra executive what the letters CDMA stood for, he wasn't just reading from prepared notes. The politician, who holds the roles of Shadow Minister for Communications & Information Technology, and is the ALP's deputy leader in the Senate, has a good technical understanding of issues facing the ICT industry.

newsmaker When the Australian Labor Party's (ALP) Stephen Conroy publicly asked a Telstra executive what the letters CDMA stood for, he wasn't just reading from prepared notes.

The politician, who holds the roles of Shadow Minister for Communications & Information Technology, and is the ALP's deputy leader in the Senate, has a good technical understanding of issues facing the ICT industry.

He has broadband at home, throws around terms like DSLAM, ADSL2+ and fibre with aplomb, and has even experimented with Voice over Internet Protocol technology.

Armed with this knowledge, Conroy has for some time been enmeshed in the nation's vitriolic debate about the future of telecommunications regulation.

ZDNet Australia caught up with Conroy to find out his thoughts on the current state of affairs in the telecoms arena, and what type of issues IT workers found most challenging.

Q: What would you say to the argument brought up by analysts that Telstra and its chief executive Sol Trujillo are only doing what any big corporation would to keep their profits in line -- and that's what corporations should do?
Conroy: I would have to agree with the analysts, they are maximising their profits. They have responsibilities under the corporations law.

However when the profits have been generated under a monopoly infrastructure asset, then there is a need for governments to have tough regulations. Every other industry where there's monopoly infrastructure assets, operates under a heavily regulated market, and in the other infrastructure markets, there's structural separation.

In gas and electricity there's been structural separation. Telstra are taking a very unusual approach by saying: "We want to be regulated like them, but we don't want to have to structure ourselves like them."

In the last six months we've seen Telstra and other telcos taking the regulatory debate to the public, in a way that wasn't really done before. For example, some of the telcos placed advertisements in newspapers. Should the average Joe care about regulation of the telco sector?
Conroy: The object of regulation, and the object of public policy in the telco sector, should be about delivering cheaper prices and better services.

Everybody has their Telstra horror story -- you can go anywhere in Australia and get your Telstra horror stories.

What this company should be aiming to deliver to its customers is cheaper prices, and better services.

The government must resist Telstra's claims to have an access holiday on a new fibre network.

Telstra stands up in front of the analysts and says "We want to return to 50 percent plus rates of return." This is unsustainable and has only been around because it's been a monopoly infrastructure asset.

I think ultimately the public wants cheaper prices and better services, and they're not interested in Telstra's bleatings.

Most people would believe we've got a better level of competition than we've ever had before. Do you think we're in danger of moving backwards?
Conroy: Right now we are poised on the brink of moving into the new generation, the fibre networks, which other countries around the world are already moving to.

British Telecom, they've already announced they're going next-generation. Telecom New Zealand, going next-generation. Australia? No, we're going to keep sitting on the copper, says Telstra.

So there's a real danger that if the government gets the policy framework wrong, in the next couple of months, this could set Australia back ten years, and take it back to the times when Telstra had an almost complete monopoly.

So right now is a critical stage of the debate. The government must resist Telstra's claims to have an access holiday on a new fibre network.

[Federal IT Minister] Senator Helen Coonan has said if Telstra wants an access holiday they're able to apply using the proper procedures. But it doesn't seem likely that the Government will give Telstra an access holiday. Do you think it's likely to happen?
Conroy: When we asked Telstra executives at [the Senate Estimates Committee] the other day what they thought of the regulatory framework, they said: "We don't agree with any of it. We have a fundamental opposition to every piece of the regulation and the way it's structured."

When the company is prepared to declare war like that on every single piece of regulatory framework and engage in massive regulatory gaming, you have to question whether they are fair dinkum about delivering their obligations.

Just recently you've seen them try and sneak a plan to axe 5,000 pay phones and claim it's within the Universal Service Obligation (USO). It smacks of an arrogance born of a monopolist.

Do you think Australians pay a lot of attention to payphones, in an era where we have millions of mobile phones?
Conroy: There are still plenty of Australians who don't have mobile phones. There are children. Many parents don't want to give their kids a mobile phone. But they do want them to be able to call up and say: "Hi, I've finished soccer training, I've finished at school, or I've finished batting practice, come and pick me up."

There is a role for payphones. Telstra's desire to try and squeeze as much as they can out of the USO, so that they can just maximise their profit at all costs, is in defiance of their USO obligation, it's certainly not what Labor is willing to support, and ultimately I don't think the government will let them get away with this.

There are plenty of areas where there isn't mobile coverage, that you can use payphones, there's still lots of individuals, whether they're from a low socio-economic background, or people like children, who actually have an access need.

If an emergency suddenly comes up, your mobile phone is dead or you're out of range because you're in a blackspot, you need the access.

They are an essential community service. For example, if you're out in the country and you see a bushfire and you need to call quickly but you don't have mobile phone coverage.

You can say "Well, that's an uneconomic phone". But if it's the phone that alerts people about the bushfire and gets it put out before it can cause a conflagaration, it's earned its money.

But Telstra can't quantify that.

Telstra sent out a statement recently saying that if communities are concerned that their payphones are going to get removed, then they can go through the normal channels.
Conroy: But as was revealed in the The Financial Review, Telstra had a very underhanded and deceitful campaign strategy devised. They were putting stickers onto these boxes, not saying they were taking them away, but instead saying they were re-locating them.

They had a call centre set up so that they could route people into the nether-nether. They said: "We are going to minimise our consultations with local communities". They said: "We're going to engage in a media strategy to confuse". This was not genuine community consultation. They were going out of their way to deceive the public in their conduct.

Do you have broadband at home?
Conroy: When I became shadow minister for IT I felt I should get broadband put on, so I had some understanding of what this debate was about.

I have 256kbps, I think -- the standard Telstra broadband. The sooner we get over this debate that 256kbps -- or even 512kbps -- is broadband, the better.

This is not [true broadband] ... international standards are around 2Mbps. And until we get that here in Australia, we are being conned. It continues to be a source of constant amazement, that there isn't more of an outcry about this.

I guess people don't know what they're missing yet. I used to have dial-up -- once you turn on broadband and you realise what is available, you will never go back. Once the majority of Australians actually understand what it is they've been missing out on, there will be an outcry.

Telstra's desire to keep people at the lowest common denominator speed has been strangling the economy; it's been strangling the futures of children's education, it's been strangling small businesses.

We held a Senate enquiry into some of these issues in Townsville. An Aboriginal Arts service didn't have broadband. It's trying to upload images of its paintings, and it can't.

We went to Dubbo. We had businesses that sat in front of a Senate committee and said: "We'll close down and move to Sydney, because we can't get decent broadband access in Dubbo."

This is a good little company, and it's deserting where it grew up -- not because there's a better market, but simply because they couldn't get decent broadband out of Telstra.

Stories like this are all over Australia. Half of Perth can't get broadband. I'm embarrassed. People come to Australia and we say: "I've got 256kbps". They laugh at you openly.

It's a disgrace, and we have to elevate this debate. We have to have a national broadband target, and we have to say this is what we want to deliver. We've got to get all schools fibred up. We've got to get the hospitals fibred up. This is what the debate should be about.

Should it be Telstra or the government that's looking closer at this?
Conroy: I believe there is a role for the government in giving leadership in this. Because at the moment, everyone's sitting around waiting for someone else to do something.

All of the telcos say: "We remember what happened last time we tried to roll out infrastructure. We watched what Optus did, we remember [then Telstra CEO] Frank Blunt saying I'm going to lose $4 billion by rolling out a cable next to the Optus cable, because it's going to save me $10 billion in the future."

Every single one of them remembers it. Some companies have told me they are considering decommissioning DSLAMs. Which is a disaster. And this is purely because of Telstra's aggressive behaviour in the marketplace.

The telcos can't get guarantee of supply at the moment. Telstra's got them on six month contracts. Telstra's threatening to put up the price of a DSLAM product to $30. Companies are selling it at less than that. So they're immediately faced with a loss. If Telstra get away with their current behaviour, we are going to see companies getting out of the market.

What about Voice over Internet Protocol (VoIP)? Have you tried Skype at home?
Conroy: I actually experimented at a computer centre with VoIP. It's quite an incredible idea. This could end the tyranny of distance.

No more STD or ISD ... [especially] for people who live in regional and country areas or even outer suburbs. In Melbourne, you live on one side of the line in Cranbourne, you're inside the Melbourne 03 number, you live outside it you're paying an STD rate if you call in.

This is absurd. VoIP is going to completely and utterly change the nature of voice. People will be giving voice away, in the future.

If you were on a different career path and you were placed in charge of Telstra right now, what moves would you make?
Conroy: Part of the problem is that [Telstra CEO Sol Trjuillo] has actually told the truth about the state of the Telstra networks. We've had a "conspiracy" between the government and the board, about talking up how good a state Telstra is in.

Remember six to eight months ago, go back to June 30 last year. Telstra was up to scratch. John Howard, Mark Vaile, all of the political people, the board, Ziggy, all of them were saying Telstra is up to scratch, whatever "up to scratch" meant.

They're not trying to pretend that now. Sol put up his hand and said: "I've got to tell the truth -- we have underinvested in the network. We have not invested in the next generation, and because of that, our future revenue is going to suffer". These are Sol's own words. So he's got to take some pretty drastic measures, to take Telstra into the twenty-first century.

British Telecom, Telecom New Zealand, they're going next-geneneration. This debate about whether or not Telstra are in a position to sit on their hands, or take their bat and ball and go home, is just a false debate.

The world's moved on, and the only reason we haven't been able to move on is the government's obsessed with the sale price of Telstra.

The government should be out there putting down a tough regulatory package to ensure access on a fibre network. Now yes, that is likely to cause a few analysts in the market to say "goodness me".

But, if you're being fair dinkum about the [Telstra full privatisation] prospectus, you have to have a discussion about this in the prospectus. There are laws about prospectus-issuing.

Because the future for Telstra has got to be fibre, they're going to have to do it, no matter what their stance and belly-aching is at the moment.

I mean they haven't actually advised the Australian Stock Exchange that they're cancelling the fibre to the node network -- this is a negotiating position to squeeze concessions out of the government, and the government should call their bluff.

What do you think is the biggest issue facing the IT industry?
Conroy: I think we are headed for an absolute skills crisis. University enrolments are dropping, TAFE enrolments are dropping, at a time when in three years' time, people are going to be screaming for skills. We had the boom, we had the bust, and the industry took a hit. But what's happening now is disastrous.

There's already a skills crisis now, and enrolments are collapsing. Imagine what it's going to be like in another three years. We are going to be importing people because we haven't got the foresight to plan ahead.

What do you think has caused such a skills crisis?
Conroy: I think the bust obviously discouraged people from going into the industry. A lot of people were attracted by the hype, the money, the stories of success, and people wanted to get into it.

I think the government's got to be promoting the industry more at school level, we've got to be talking the industry up.

We have to say: "Yes, we had a bubble, but there is serious long-term potential in this industry. It's part of the future, it's part of the smart, clever country, it's what we want and it's what people should be focusing on."

What can governments do to promote skills development? For example, government purchasing?
Conroy: Under the Free Trade Agreement (FTA) with the US now, you can't have quotas, depending on the size.

Some projects are below the size, you'll still get by, but fundamentally, you can't have an industry support program like that under the FTA.

The first thing you should be doing is getting universities and TAFEs together with business, chairing some meetings, saying: "What does the industry need?"

One of the great cries from business at the moment is that the students coming through aren't being trained with what business needs today.

We need to have greater cooperation and understanding between business and the educational institutions, about what business needs.

Because this is an industry that moves so fast. At the beginning of your degree you think: "This is really important, I've got to learn this strand," and all of a sudden the industry evolves.

Universities are a bit slow, a bit bureaucratic and they don't adapt to the changing market. And so we need to have that constant dialogue. We need to have training of the teachers and lecturers, so that we understand when the market's beginning to move.

Now that's not to say you can jump around for every fad that comes along, but you shouldn't just say: "This is what we teach" and send people out unprepared for the real world.

It's a bit early, but what will be the planks of Labor's ICT election policy?
Conroy: You start with skills. We've got an ICT deficit. The worst part is not that we've got one, because Australia will always have a deficit in some areas.

But what really frightens me at the moment is that exports are going down -- and that's a very, very bad sign. We've got to get the infrastructure right. And that consists of two things.

Getting the skills base right is critical. We are a clever country. Often people are more than capable of competing internationally. We have plenty of success stories.

The second part of the infrastructure is broadband. The basic infrastructure -- call it the road network. Broadband is the key piece of national infrastructure that this country is crying out for.

If we don't get 2Mbps up, to as many people's homes as we can, and decent broadband as close to that to everybody, we are holding the country back.

They are the two most fundamental planks of Labor's policy. We want a network, and we want a skills base to exploit that network.

Unless we've got both, we are going to continue to see exports in this area fall.

What do you think about the 3G mobile networks being rolled out at the moment?
Conroy: Shared infrastructure is a good model. We've actually recently talked about a joint venture, based on some of those shared mobile networks.

Because we actually see this working. We actually have competition in mobiles. Where Telstra have not got control of the infrastructure, for example in mobiles, we've got genuine competition.

We've got falling prices, we've got bucket plans where you can get cheap deals by the month. This is caused by competition. This is what we should be getting in broadband.

This is what the problem is. The shared infrastructure models that have happened are a pointer to what we should be trying to achieve on the broadband/fixed line cable.

What do you think about a national ID card?
Conroy: Back in the 80s I was a big fan of the ID card. I actually thought it would deliver a lot of benefits to government.

But over the last 20 years, a lot of the underpinnings of the ID card debate, the data matching, has actually happened in government.

So the sort of cost benefits that you were able to look at back in the 1980s have actually happened now under a whole heap of other individual legislation that allows the government to do data matching.

So if the government wants an ID card, they should set out the case for it. If it's about national security, well OK, it's a debate about national security. And would an ID card stop the London bombers? They're home grown. The answer is no. It would help to identify the bodies faster. That's it.

If it's about government savings and government efficiency, make the case. Even the Australian Chamber of Commerce and Industry (ACCI) have come out and said in actual fact it's a complete waste of money. They do not believe it would deliver any savings whatsoever to the government or the country. Labor will be in any practical measure that actually improves national security.

But if it's about the sort of issues that were around in the 1980s on cost efficiencies and rationalisations, most of it's happened.