Senate Estimates Committee

27 May 2002

Committee name: ENVIRONMENT, COMMUNICATION, INFORMATION TECHNOLOGY AND THE ARTS LEGISLATION

Department: COMMUNICATIONS, INFORMATION TECHNOLOGY AND THE ARTS PORTFOLIO

Program: Telstra

Senator LUNDY —I would like to ask some follow-up questions about the issue of Telstra's use of pair gain technology. In doing so I would like in the first instance to refer to answers to questions on notice from the last round of additional supplementary estimates. In answer to question No. 184 you said that around nine per cent of Telstra's PSTN services are connected to a pair gain system. I was wanting Telstra to give me an idea of how many actual connections that represented—how many numbers of customers that represented.

Mr Granville —In round terms there is somewhere around 11 million lines, rather than customers. Some customers have more than one line. Nine per cent of around 11 million would give you an approximate answer; it would actually be quite close to the actual number. While I have been talking I have found some figures I was looking for. In total we are talking about 1.2 million lines, as opposed to customers.

Senator LUNDY —And can you give me an approximation of how many customers would be affected, looking at the average of how many customers have two lines?

Mr Granville —This is again in round terms. If you took approximately 80 per cent of that you would be down to the number of customers.

Senator LUNDY —Could you say that again?

Mr Granville —In round terms again, it is something of the order of 80 per cent. So one million lines would represent around 800,000 customers.

Senator LUNDY —So about a million people are potentially directly affected by a pair gain connection?

Mr Granville —Connected by pair gain.

Senator LUNDY —I refer to the answer you provided to question 186. You then go on to talk about 84 per cent of customers being connected to exchanges that are ADSL enabled. Is that 84 per cent of that total 11 million lines that you spoke about?

Mr Granville —That is correct.

Senator LUNDY —I will come back to that. Out of that one million or so people, can you tell me the different types of pair gain technology Telstra actually uses? I know there are many different types, but could you give a general description of the different types you have used in your network?

Mr Granville —The most common one would be the so-called RIM technology, which is a large pair gain which is in effect an outposted exchange. The total lines on RIM—I am just trying to add up a few numbers—are about 854,000. The RIM in most cases improves the dial-up data rate for the customer because it brings the exchange closer to the customer, so the copper lengths are very short. It also provides ISDN. It has been a mainstay of development for a number of years, which is why the numbers are larger.

Senator LUNDY —Perhaps I will just pursue that for a few minutes. The RIM configuration is remote integrated multiplexer?

Mr Granville —That is correct.

Senator LUNDY —That is a type of pair gain?

Mr Granville —Yes, it is.

Senator LUNDY —You say that it takes the exchange closer to customers. Can you describe that? Can you say whether that is actually a fibre linked to a sort of neighbourhood hub? I am looking for a general description of how that RIM network configuration works.

Mr Granville —Basically we have a telephone exchange, which traditionally has copper cable connecting customers. Some years ago the price of copper was increasing and technology became available to in effect take a small part of the exchange and extend it, usually by optical fibre but in some remote areas it can be a radio system that extends it. It then is usually mounted on a footpath, in a big green box. It can be mounted inside a building, for example a shopping centre or a small hut. That then in effect takes the exchange equipment and outposts it at that point. That means that, instead of copper runs of five, 10 or 15 kilometres, there is only the copper run into that integrated box equipment. As I mentioned earlier, it is able also to provide ISDN, so various cards can be put in it to provide different services. Generally, most would have optical fibre connection back to the exchange.

Senator LUNDY —What is the size of that optical fibre connection?

Mr Granville —The data rate?

Senator LUNDY —Yes.

Mr Granville —It is normally 34 megabits per second connection, which is sized for the number of customers that are capable of being supported by the RIM.

Senator LUNDY —So the RIM could have any number of customers on it?

Mr Granville —It is up to a maximum of 480.

Senator LUNDY —And you would make the fibre going to that RIM commensurate with the number of customers on it?

Mr Granville &;mdash;Basically you only need the one fibre, because that data rate would easily be supportable by one fibre.

Senator LUNDY —For those customers on a RIM, what capability do they have to access Telstra's ADSL service?

Mr Granville —At this point in time they are not able to access ADSL because of the fact that there is often no copper to that area directly from the exchange.

Senator LUNDY —In terms of the use of RIM, what are the kinds of areas where this type of network has actually been rolled out in?

Mr Granville —Generally it is where the copper is reaching capacity and the development requirement is some distance from the exchange, generally more than a few kilometres from the exchange. So typically you have new housing estates; it could be an industrial area, it could be a shopping centre or development of that nature. But most commonly it would be whatever development was causing growth some distance from the existing exchange.

Senator LUNDY —So using a RIM saves Telstra from having to build a new exchange?

Mr Granville —It was the equivalent of building the exchange at the time we deployed it. It was a more economic solution, but it also provided extra services. Because the copper lengths are much shorter, it meant that we were able to provide higher dial-up, and ISDN, to a greater number of customers.

Senator LUNDY —But not ADSL?

Mr Granville —At the time they were originally deployed we did not have an ADSL product. In fact, it probably was not on the drawing board because it was around 10 years ago when we started to use them.

Senator LUNDY —Are you still using the RIM configuration in new installations?

Mr Granville —We are at the moment. It is being phased out over the next short period. We hope later this year to have a new generation of equipment available, which is basically the same equipment we are using for ADSL provision. So it is a new technology introduction.

Senator LUNDY —But at the moment you are still putting in place RIM type networks?

Mr Granville —That is correct. It is basically the only infrastructure we have for those sorts of developments.

Senator LUNDY —When you advertise Telstra's new ADSL service, do you notify consumers and customers on those ads that some 854,000 of them are unlikely to be able to access that service because they are on a RIM network?

Mr Granville —There is wording to the effect that certain network configurations mean that not all customers can access the service.

Senator LUNDY —Not on the television ads there is not.

Mr Granville —I would have to defer to—

Senator LUNDY —Can I ask the question this way: why doesn't Telstra provide customers with the knowledge that many of them, certainly some one million of them, are actually unable to physically access the ADSL service you are advertising at the moment? Why has Telstra decided to take what I can only describe as a rather deceptive approach?

Mr Paterson —In terms of the information we have put out on our web site on ADSL, we make it clear that there are circumstances where ADSL will not be available.

Senator LUNDY —Excuse me, but I am actually asking specifically about the television ads that are widely promoting the ADSL service.

Mr Paterson —I am sorry, I do not know the details of those ads.

Senator LUNDY —Can anyone tell me why Telstra has made a decision not to make those exclusions on the provision of this service available on the television ads?

Mr Stanhope —They are generic ads. It is not until a customer applies that we know whether or not we can provide the service. It depends where they are in Australia. That is why the ads are of a general nature. At the front of house we would not know necessarily whether that customer is able to be provided with an ADSL service or not. We recognise that perhaps we are not giving the customer sufficient information. We are looking at our own internal processes as to whether we can get information to the front of house that today is not available with the front of house. That requires some system modifications and so on, but we are in the early days of actually putting that sort of thing in place.

Senator LUNDY —I would like to come to those questions about how you actually get information about your own network and provide that to customers, but this question is very much, as you say, not even at front of house point. It is Telstra's public face to consumers in this country and you have a million or so out there who cannot access this service, yet your ads say, `Please apply.' You need to understand that I hear about these complaints. I am asking you now: why don't you just put some sort of condition on those television ads so consumers can beware and not have their expectations raised beyond what Telstra is able to actually provide?

Mr Paterson —I have some more information from my colleague on the ads. I am informed that the ads are for broadband without mentioning any specific technology. Broadband can be provided certainly through ADSL and also through cable modem and satellite technology, so there is a range of technologies that it can apply to any particular customer, and the ads are in terms of general broadband availability.

Senator LUNDY —Do they mention ADSL?

Mr Paterson —I believe not.

Senator LUNDY —You do not believe they mention ADSL?

Mr Paterson —That is my advice.

Senator LUNDY —Okay. We will leave it at that. I think the point is well made that there is plenty that Telstra could do to not raise the expectations of its customer base unreasonably, given we now know that there are some one million customers out there who cannot access what is obviously a very desirable service.

Mr Granville, can you continue about the different types of pair gain. We have talked about RIM, which affects outer metropolitan areas, new housing estates and so forth. When customers take up an account with Telstra and use a Telstra service, does Telstra in any way advise them of the type of network that they are on or the network configuration with a view to advising them on what sort of Internet connection speeds they can actually achieve?

Mr Granville —That is not done at this stage.

Senator LUNDY —Is Telstra thinking about informing its customers in that helpful way?

Mr Paterson —We certainly are investigating that issue and thinking what information is useful to put out there, and have a number of initiatives in train in that regard. One of the initiatives is to put on our web site information on the different data arrangements and technologies that are available and the implications of those. When customers ring up for a second line and indicate that they are going to use it either for Internet dial-up service or maybe planning to use it for ADSL in the future, we will be providing some information on that and will in fact refer them to the net web site. If they are not on the Internet, we will post out the details of that. In some cases as well when customers ring up for a second line we actively inquire whether they are interested in ADSL or interested in ISDN. For example, if they are interested in ADSL it may be that they do not need a second line because they can do ADSL over their existing line, and in those cases we would again provide information. The information on ADSL would be along the lines that we cannot guarantee that a service is available now or in the future, one of the reasons being pair gains but other reasons as well, including the distance of the customer from the exchange, so the length of copper, and whether the customer's local exchange has been ADSL enabled.

Senator LUNDY —Yes, I was going to come to some questions about that. Before I do, can we go back to the different types of pair gain. What other types are there, Mr Granville?

Mr Granville —In general terms, we talk about large pair gain, which include RIMs and other devices that are similar smaller versions used in rural areas.

Senator LUNDY —What are they called?

Mr Granville —There is one called SCADS, and please do not ask me what it stands for because I cannot remember.

Senator LUNDY —Could you take it on notice?

Mr Granville —Yes.

Senator LUNDY —I am interested in a general description of how that technology or configuration actually works and certainly how it affects the customers connected by that configuration.

Mr Granville —The SCADS is a smaller device that was introduced to service rural and remote areas, and suitable for smaller groups of customers generally much further away from the exchange. It actually offered a big improvement to the services that we could offer to customers, because it also supports ISDN and brings the exchange point closer to the customer. So you find that, even in remote parts of the Northern Territory, for example, it is serving small communities.

Senator LUNDY —Can you tell me what impacts SCADS has on Internet connection speed through a dial-up connection?

Mr Granville —In absolute terms, it would be around 26 kilobits per second.

Senator LUNDY —Is that a maximum?

Mr Granville —Yes, because basically, the way the technology is configured, it is unable to get 28.8. In general terms, because of where they are located, it would offer for most customers an increase from other methods of provision, because generally they are quite remote customers in rural areas. There are a number of other large pair gain systems of older technologies. There are three or four different types that we have operating in smaller numbers.

Senator LUNDY —What are they called?

Mr Granville —In the jargon, one is called the DCS20, which we introduced, again, for small remote communities some years ago. It is similar to the SCADS in what it can support.

Senator LUNDY —And does that have a similar impact on Internet connection speed?

Mr Granville —That is correct, yes. We have another one called RCM, which is a remote custom multiplexer, which is an older technology—very similar again. Most of these are similar in what they can support in terms of dial-up data rates. They are the main ones in the large category and they make up, altogether, about 7.6 per cent of the total customer lines.

Senator LUNDY —Right. So out of those 11 million services, you provide about seven point—

Mr Granville —About 800,000 lines out of the one million.

Senator LUNDY —800,000.

Mr Granville —Yes.

Senator LUNDY —So that includes the RIM.

Mr Granville —The RIM is the largest one.

Senator LUNDY —Right.

Mr Granville —We have medium pair gain, of which there are around 95,000 lines. They are generally transparent in terms of the impact on dial-up data rate, because they are like a little switch that switches the copper straight through. Unfortunately that means, however, that you cannot associate exchange equipment with a particular customer. So they are unable to support ISDN or ADSL.

Senator LUNDY —Right.

Mr Granville —However, in terms of dial-up data rate, they have no impact.

Senator LUNDY —Right. So you can still get in the high 40s.

Mr Granville —It would depend on the length of the copper. So you would get the equivalent to what you would get if it was not there.

Senator LUNDY —What was that one called?

Mr Granville —There are a number of medium pair gain systems.

Senator LUNDY —Medium?

Mr Granville —Yes; because the number of customers is in the intermediate range—generally 16 customers, 15 or 16 lines.

Senator LUNDY —On each pair gain?

Mr Granville —That is correct.

Senator LUNDY —Where are they typically used?

Mr Granville —Commonly in rural networks.

Senator LUNDY —In rural networks. What about in the suburbs?

Mr Granville —That particular range of technology would be very rarely used in urban areas.

Senator LUNDY —So people on medium pair gain could arguably still get reasonable Internet connections speeds but are unable to get ADSL or ISDN?

Mr Granville —That is correct. Generally, they would be beyond the cable distance of ADSL in any event, because they are generally in long rural cable lengths.

Senator LUNDY —The next one?

Mr Granville —The last one is a small pair gain, which is in the range of two to eight lines. There are around 120,000-odd lines on small pair gain.

Senator LUNDY —And what is the impact of those on Internet connection speed?

Mr Granville —There are a number of different types. One is called the rural access multiplexer—or RAM—which generally limits it to 28.8 kilobits per second dial-up.

Senator LUNDY —Maximum?

Mr Granville —Yes. In the latest ones, all customers can get 28.8. There is a four digital pair gain system, which can be down around the 9.6 kilobits per second.

Senator LUNDY —9.6? Is that for all customers connected by that one?

Mr Granville —That is correct.

Senator LUNDY —And what was that one called?

Mr Granville —The four digital pair gain system—`four' meaning four lines. Not quite finally, there is a two channel digital pair gain system, which is close to 28, at around the 26 kilobits.

Senator LUNDY —And is that the one that is off one proper pair and turns it into two?

Mr Granville —All of those small pair gain work off one copper pair. There are different technologies to get different numbers of lines to connect to them.

Senator LUNDY —And with that last one, again, was it a maximum speed of 28.8?

Mr Granville —A bit under; it would be about 26—24 to 26.

Senator LUNDY —Okay. We have discussed a few strategies already about advertising. What is Telstra prepared to do for these customers in the circumstance where they may have had an adequate service but, because Telstra is installing more lines, say, to their neighbour or down the street, they find themselves having a loss of Internet connection speed because of something that Telstra is doing to the network to service people completely unrelated to them? I have had a number of Telstra customers complain about this specifically and I would like to know if you have a remedy for those customers who have effectively had a diminution in the quality of service.

Mr Granville —We are certainly looking at our processes surrounding the planning rules and deployment. A lot of it gets down to the forecasting—the ability to forecast and the accuracy of that to be able to, for example, reserve some copper lines to install the pair gain on free copper lines. Whilst we do that wherever we can, in some cases it has not been possible. So I would have to say that at the moment we are reviewing our planning processes and rules and the implications of those, to try to remove the sorts of incidences that you have mentioned, because we are well aware of them. Again, we handle those inquiries not every day, but regularly.

Mr Stirzaker —Perhaps I can just add to Mr Granville's answer, because I am responsible for all the front-of-house call centres and I assume that you are going to ask some questions about that shortly.

Senator LUNDY —Absolutely.

Mr Stirzaker —Maybe I can pre-empt some of them. It depends on the nature of the service, but here are some of the things that we are doing—because our interest is selling more Big Pond, ADSL, ISDN, whatever. A tool is being developed at the moment to enable our front-of-house people to be able to prequalify the line and understand the nature of the condition of the line at front of house, because at the moment we are unable to see that. So we actually take orders in good faith—and I will come to broadband in a minute—and rely upon the provisioning processes to then do the best that they possibly can.

Senator LUNDY —So your technical staff actually need to go out and have a look before you can give a customer an answer? Is that what you are saying?

Mr Stirzaker —No. There are some technical staff in what we refer to internally as `back of house' who are able to undertake testing and look at the plans and all of that sort of thing, to determine exactly what is there. What we want to do is bring that capability up to front of house. The broadband is a good example, particularly ADSL, but all of broadband—when it first started, the predominant application process for customers was through the Internet. Therefore, the maturity and/or development of front-of-house systems just was not there. That is how customers did that. Therefore, the advice and warnings to customers, about the nature of the network and the advice that it may not be available, were handled through that process. As the demand and the knowledge about broadband grew—again, we are keen to sell as much as possible—a lot of the selling activity then moved into front of house. It became quite obvious relatively quickly that we were a bit blind in terms of the visibility of the impediments within the network. So again, there is this prequalification capability that we want to get to our front-of-house people.

We are also working with our colleagues in TCW and infrastructure services to get the processes and business rules lined up so that we can minimise the implication on customers of non-availability—maximise spare capacity wherever possible—and minimise the effect of speed. Quite often, we will simply aim to sell either ISDN Home or ADSL wherever possible when customers ring in and inquire about, say, a second line. So they are the sorts of things that are a work of progress—probably a few months away yet—and quite frankly, allow us to sell more, which I think has a corresponding benefit back to customers in terms of how our processes will work.

Senator LUNDY —The complaints that I have received from many Telstra customers include what they certainly perceive as not only an unwillingness by Telstra to talk about pair gains but direct obfuscation about the presence of pair gains—that is, every other opportunity is explored with the customer before the issue of pair gains is raised. Is that still Telstra's policy?

Mr Stirzaker —I will defer in a minute to Mr Granville. I just reiterate that at the time an order is placed, say, for a second line there is no additional service at all. We will not know right now how that line will be provisioned. So it then flows through to the provisioning processes that have been used for years and years since pair gain has been around—20 or 30 years actually. I am sure you are aware that when the order is placed the people who actually provide the service in the field and through the designing processes will use whatever appropriate means possible to connect that service as quickly as possible, always.

Senator LUNDY —That was not actually my question. Is it still your policy not to be up-front with customers about the presence or otherwise of a pair gain, when they complain to you about slow Internet connection speeds?

Mr Stirzaker —In terms of placing orders, we do not know. So the answer is yes.

Senator LUNDY —No, I am not talking about placing orders; I am talking about complaints.

Mr Stirzaker —Like?

Senator LUNDY —`I have got a slow Internet connection speed and I can't explain it. Can you help me?'

Mr Rix —Could I come back to that? I will get that checked. I think that, as Darian Stirzaker has alluded to, we are changing our policy, obviously, to suit the needs of the customer as we move these new products forward. The Internet Assistance Program that has been put in place would possibly be the area at the moment in which that information would be gathered, where customers come in to Telstra—

Senator LUNDY —Sorry to interrupt. Could I go back a step? I have just heard that the back of house at Telstra can ascertain whether or not a pair gain is present. Is that the case?

Mr Stirzaker —When providing a service.

Senator LUNDY —When providing a service?

Mr Stirzaker —In providing the service, if there is no infrastructure there, they may make a decision to use a pair gain system as part of that provision.

Senator LUNDY —Yes. But if someone were to ring up with a complaint about slow Internet connection speeds and gave you their phone number, would you be able to ascertain through your back-of-house services whether or not that person was on a pair gain?

Mr Stirzaker —Yes.

Mr Granville —It would show exactly how the service is provided.

Senator LUNDY —So you have got that on record?

Mr Granville —That is correct.

Senator LUNDY —You have? This is a really important point because the next stage of the question is: how willing are you to share that information with customers? What I am hearing is that you are quite unwilling to share that information and that customers are quite often set on a path of checking with their ISP, getting a tech in to look at their computer and their modem—all of which I know can affect Internet connection speeds; but if it is a difference between 48 kilobits per second and 26, chances are they are on a pair gain. Yet I think even on your own internal brief you had it listed as No. 3 or No. 5 of issues to tout up to customers as the potential cause. My question is: is it still your policy to make pair gains the last reason issued, or are you now going to be more up-front with customers about the presence and use of a pair gain as being the cause of their slow Internet connection speeds? I do have some questions about the Internet Assistance Program which I would like to come to.

Mr Rix —That is right. I used the Internet Assistance Program. In the example that you are using, the majority of people now would go through that group with a working service.

Senator LUNDY —But that does not tell them whether or not they have got a pair gain. The IAP self-help site does not tell people if they have got a pair gain. It tells them if they have got more than 19.2 kilobits per second or less. That is it. It did not even have any information about pair gain, the last time I looked. Perhaps you could tell me now if it has information about pair gain on it?

Mr Rix —The Internet Assistance Program is where we have established that back-of-house function for areas where people have a working service. If I understand the question, it is: do we then tell customers when they ring in that they are on a pair gain system, at that time? And will we be doing that in the future if we are not?

Senator LUNDY —Yes.

Mr Rix —I am just having that checked to see what the script now says. If I could just take that on notice for now, I will come back to you with an answer.

Senator LUNDY —If you could. It is less of a question about the site, which I would like to go into more detail on, and more of a question of your policy and what you provide in your internal briefs to your front-of-house people when they contact you with complaints. I want to restate the fact that very clearly what I am hearing is that when people do try to find out information about this it is made incredibly difficult by Telstra. For what it is worth, there at least looks like there is room for very considerable improvement in just that straight-up provision of information to customers, let alone in the issue of actually resolving their complaint. Perhaps if I could just move to that point—

Senator MACKAY —Do people know about the pair gain or not?

Mr Rix —No. In the provision of service it is our policy to provide the service; certainly not the technology.

Senator MACKAY —How do people know? If people suspect they are on a pair gain and they ring up Telstra, does Telstra tell them?

Mr Rix —I am getting that checked out from a scripting perspective now and I have taken that on notice.

Senator MACKAY —No, but this is just in terms of phones generally, irrespective of any—

Mr Rix —No. Certainly, Telstra does not provide information around the type of technology.

Senator MACKAY —Why not? Why do people not have a right to know whether they are on a pair gain system or not?

Mr Rix —It has been Telstra's policy certainly to provide that service and to provide a working service. How we provide the service—

Senator MACKAY —Is what? Your business, is it?

Mr Rix —In the past and in the future we may need to—and we always do—look at improving our experience with the customer in making sure that we do that. How we do it—

Senator MACKAY —If I rang up and said, `Am I on a pair gain system?' would you tell me?

Senator Kemp —Mr Chairman, I think if a question is being asked the individual at the table should have the chance to respond to it fully without being talked over.

Senator MACKAY —Admonition accepted. Go ahead.

CHAIR —That is a reasonable point. When it is answered, it is answered.

Senator MACKAY —If you could get to an answer that would also be handy. Thank you.

Mr Rix —Following on from Senator Lundy's question—and we are having that checked now and have taken it on notice—with regard to somebody ringing in and asking, ` Am I on a pair gain system?' and whether we give that information at the first point, I am having that checked out and am taking it on notice.

Senator MACKAY —Why would you not provide that information? Why would people not have the right to know whether they are on a pair gain system or not, just in terms of basic telephony? Is that not a consumer rights issue?

Mr Stanhope —I do not know that it is a consumer rights issue as such. As I alluded to when this line of questioning began, we are looking at all of the processes of providing services. Ideally you would like to be able to tell a customer at the front of house, because what is happening today at the front of house is that the customer asks for a particular service and we say, `Yes, we can provide it.' We do not know today how that is going to be provided until it gets to the back of the house. The service is provided. The back of the house does not know what the customer has said and so on. Our end to end process of providing services to the customer needs to be improved. We note that. We understand that. We recognise that you have had complaints about that. We have, too. We have got to do something about it. That is what we are looking at. Ideally you would like to say to a customer at the front of the house, `What is it you are after? Are you after a high-speed Internet service, a dial-up or whatever? Where do you live? This is the only way we can provide it, and speeds will be reduced.' That is the ideal customer relationship. Until we actually get all of our customer relationship management, or CRM, in train, it is difficult to do right now. But that is where we want to go.

Senator MACKAY —I know. I am not asking Senator Lundy's questions. I am asking, as a customer whose phone is potentially on a pair gain, why would you not tell the customer if they ring up—

Mr Stanhope —And ask that question?

Senator MACKAY —Yes. Why wouldn't you?

Mr Stanhope —I am not sure—and we are just trying to find that out—whether we do or do not. Personally, I think that is a reasonable question and it should be answered. Whether we script that way or not, we need to actually get the facts for you.

Senator MACKAY —It ought not be taken on notice, I think. I think that it should be answered today if we can get the answer.

Mr Stanhope —That is what I was trying to do.

Mr Rix —We will be answering it today.

Senator LUNDY —Just for the record, having asked a similar question at the additional supplementary estimates in February, too, Telstra did provide the advice to this committee that, in fact, it was their policy not to disclose that information. But I cannot remember if I worded it quite so succinctly, as it was a response to a specific request about the presence of pair gain. So it might be worth while having a look at that as well.

Mr Stirzaker —Just before you go on, probably I can handle one part of it. Coming back to my original answer, at the moment we will not, at the point of providing additional service, be able to say whether they are or are not on a pair gain system. That is something that we are working to fix. There will be situations where someone is unable to get, say, ADSL service—the thing that you are very specifically focused on—and they are unable to get it because of the existence of a pair gain system, because they go through this behind-the-scenes qualification process. I am quite confident that we actually do tell them that.

Senator LUNDY —Right.

Mr Stirzaker —But has it been normal? No.

Senator LUNDY —If someone does find out that they are on a pair gain and they specifically do not want one because of the impact on their Internet connection speed, or indeed because they are particularly keen on the ADSL service, for whatever reason, is it possible for Telstra to accede to that request and install a type of connection that would allow them to bypass, for want of a better word, a pair gain?

Mr Stirzaker —There are really two parts to the answer. The first one is that, as I was saying before, that is exactly the sort of business rule change that we are looking to institute and build in across the entire end-to-end process. That is being worked on—it is work in progress—across all parts of the company. If it is specifically for ADSL, we currently need to do that, but Mr Granville might be able to help you with some changes to the RIM technology at some stage in the future, which will help militate against that. For customers looking for normal narrow band speed, there are actually a number of pair gain systems—and again Mr Granville might be able to assist me—which actually provide very good throughput speed. We have to develop the front of house processes to be able to inform customers a lot better than we obviously are, because of the rapid take-up. Our broadband sales have grown very significantly and we want to keep growing them as hard as we possibly can. I will just keep saying that there are things that we actually want to do at front of house to fix this so that we can actually sell more, including ISDN as well.

Senator LUNDY —That still does not answer my question. If people request a copper pair that enables both ADSL and, say, ISDN—that is, they want a straight copper pair—

Mr Stirzaker —And they are on an existing pair gain system?

Senator LUNDY —Yes.

Mr Stirzaker —That is what I was just saying.

Senator LUNDY —Yes.

Mr Stirzaker —The business rules are being worked at the moment to try to adjust. If they want ADSL, and if there is an issue with the supply of ISDN Home, for example, we are working across the company at the moment to adjust the business rules of provisioning to try to find a way, as you say, around that.

Senator LUNDY —Right. So at the moment the answer is no.

Mr Stirzaker —The answer is no.

Senator LUNDY —That is what I wanted to clarify. But you are working on it?

Mr Stirzaker —Yes.

Senator LUNDY —Okay. With respect to the IAP—your Internet assistance program—I have got here a press release from the minister announcing a $50 million Internet assistance program. It is cited as:

... a joint initiative with Telstra to ensure Internet users across the country can achieve data speeds equivalent to at least 19.2 kilobits per second.

Can you tell me what is Telstra's contribution to this $50 million Internet assistance program, given that it is a joint initiative?

Mr Stanhope —Mr Granville, do you have that information? We have with us our broadband expert, Omar Khalifa.

Mr Khalifa —As far as I can tell you—the details are coming out by the end of June as to how it will all work—the preview seems to be that the fund will comprise $10 million in cash, $20 million in bandwidth and approximately another $15 million or so—I think that it is $15 million or $20 million—in matching contributions. I am sorry, this is the matching fund. Is that not what we are talking about?

Senator LUNDY —You are talking about the broadband fund?

Mr Khalifa —I am. I am sorry. I volunteered myself to answer the wrong question.

Senator LUNDY —I was going to say that that is a very interesting configuration for trying to achieve 19.2 kilobits.

Mr Khalifa —My apologies. I was thinking about the fund for the broadband.

Senator LUNDY —I know Senator Conroy and I do have questions for that later, so keep the information close. But I am actually asking about the Internet assistance program.

Mr Khalifa —For the IAP.

Mr Granville —The split was a $12 million government contribution—

Senator LUNDY —Sorry, how much?

Mr Granville —It was $12 million, and $38 million from the Telstra side. The $12 million from the government was supporting the online help service—the front of the process.

Senator LUNDY —So the web page?

Mr Granville —The web page development and the help desk up front; the Telstra commitment is the processes beyond then and work required to achieve the aims.

Senator LUNDY —Okay. And who developed the web page? I am just looking at it. For the benefit of the committee, it is at www.iapselfhelp.com. This is the web site that has been funded by taxpayers.

Mr Granville —From my recollection, we actually had a contractor involved.

Senator LUNDY —Who was the contractor?

Mr Granville —Sorry, I do not know. I cannot really recall that.

Senator LUNDY —Can you take it on notice, and the value of the contract?

Mr Granville —Yes.

Senator LUNDY —Thank you. So this web site is funded by the government and it has a help desk facility. What information is provided to Telstra from this web site, from this front end?

Mr Granville —We can see the number of hits on the web site and the results of the testing. But really, it is there as a self-help thing for customers to see whether they are eligible for the program or not so they can then proceed to the next stage.

Senator LUNDY —Right. So this web site tells you whether or not you have achieved a 19.2 kilobits per second connectivity speed.

Mr Granville —That is correct.

Senator LUNDY —Internet connection speed. If you achieve it, it just says `congratulations', see you later.

Mr Granville —Yes. The program is set up to bring the minimum equivalent throughput to 19.2, which was why it is done that way.

Senator LUNDY —Right. So only if you are getting less than 19.2 kilobits per second will you go to the next stage.

Mr Granville —That is correct.

Senator LUNDY —You can tell that I get more than 19.2 because I have never seen that part of the web site. What is the next stage for customers who are not achieving 19.2 kilobits?

Mr Granville —There is a lot of information about the appropriate set-up for modems and strings. Actually, the help desk function is to talk people through that, because it can be quite complex.

Senator LUNDY —Is there anything on this web site about pair gains?

Mr Granville —I do not believe so.

Senator LUNDY —No? Why not?

Mr Granville —I guess that it is a complex situation where there can be a large range of contributing factors.

Senator LUNDY —Just hold it right there, because we have just heard from you earlier that there were specific types of pair gain which could, in fact, take Internet connectivity speeds—connection speeds—right down to the non-double figures, for example, to 9.6.

Mr Granville —There are two aims to that.

Senator LUNDY —This is a really important point, because here you have a government taxpayer funded front end of a web site designed specifically to help people with low Internet connection speeds and yet none of the information contained on what is quite an extensive site in the first instance is about the presence or otherwise, or impact, of pair gain. Why is that the case?

Mr Granville —At the front, once people are into the process and we are trying to get them up to that 19.2, I do not know whether my colleagues have the information, but I do not believe that we actually hold back any information. But there are two aims, really. One is to maximise what people can get once they are in the system, and that is why we go through all the modem set-up information, just to maximise what they have got.

Senator LUNDY —Does that not give the implication that the reason is the modem?

Mr Granville —Often it can be a combination of a number of things.

Senator LUNDY —But it could be a combination of a pair gain, too.

Mr Granville —That is correct. So that is where we go through this staged process, first of all, to maximise the capability of what equipment the customer has in the first place and then to take action. If it is a pain gain, for example, not able to make 19.2, we go to the next stage of the process. I guess we want to do two things. We want to get them above 19.2 but, seeing we are helping them, we want to actually maximise what we do get once they are in the program. So it is necessary to go through modem set-ups and other software issues that could be there.

Senator LUNDY —It does not make sense to me that you do not mention the pair gain. I will read it out:

The Internet Assistance Program Self Help Website will allow you to test your connection to the Internet against the Program's benchmark of 19.2kbps.

If your current Internet access achieves an effective data speed of 19.2kpbs or less this website will also provide the following helpful tips that may improve your access:

•Configure your modem with the correct Initialisation String

•Unplug other equipment connected to your telephone line

•Turn off Call Waiting

•House wiring and extension leads

•Electric fence interference

•More detailed technical information

•Download our handy Modem Help Pack

Why is the presence of a pair gain not mentioned in those dot points, up front?

Mr Granville —I was not involved with the writing of it. I cannot see any reason why it would not be there.

Senator LUNDY —Who do I best direct my questions to about the accuracy and the detail of the content on this web site? Is it a contract to Telstra or to the government?

Mr Granville —There was a team. I think the government was involved. Telstra was involved in terms of specifying, and the contractor was involved in setting it up to actually work, but the information was put together by Telstra and the government.

Senator LUNDY —I think it is a further example of Telstra hiding information about pair gain, not being up front. That is giving Telstra the benefit of the doubt.

Mr Paterson —Perhaps some statistics are useful here in terms of the assistance given through the IAP. On our recording, very close to 98 per cent of customers' concerns are met by the various things you have listed—that is, things that in the end do not relate to Telstra's network but relate to modem, ISP, other equipment on the system, et cetera. So the vast majority of customers can be met in that way, leaving network issues for just a few customers out of that process.

Senator LUNDY —All right. I think I have made my point with respect to the site. Let us go to the issue of what happens if you spend a heap of money getting a tech in to look at all those issues you suggest—get your modem checked out, perhaps change ISPs or whatever to resolve the problem—and you happen to be on a pair gain. What is Telstra prepared to do for those customers on a pair gain or on a network configuration that means they get less than 19.2?

Mr Granville —The next stage of the process is the use of modem compression techniques. We have investigated, chosen and purchased a licence for usage for Telstra use on BigPond. We have also made it available to other ISPs. It enables compression of files on the fly to give the equivalent of the 19.2 throughput.

Senator LUNDY —So it is specifically 19.2 throughput?

Mr Granville —It roughly doubles the effectiveness so that any pair gain system that gets at least 9.6 will get up to the 19.2 equivalent throughput.

Senator LUNDY —Is that why the 19.2 kilobits per second benchmark was identified by the government—because it matched what you were technically able to achieve?

Mr Granville —No, we actually came up with the modem technology. We were hoping to get a higher compression ratio. That was following the decision on the 19.2, which in fact gets back to the Besley report on what were thought to be minimum acceptable standards for basic email and web surfing. So we started with Besley and went on from there.

Senator LUNDY —I do not think we should get too carried away about how great an Internet connection speed it is anyway; 19.2 is not very impressive. But it is better than 9.6. There is a bit of a chicken and egg thing here. Which came first? Was it the identification of 19.2 as an appropriate minimum speed in relation to the performance of, say, the World Wide Web and email, or did Telstra identify that through this new technology you have licensed you could achieve that if you were to apply the appropriate resources and then that was subsequently reflected in Besley and the government's public statements and policy?

Mr Granville —Besley came up with the 19.2 and then we were looking for ways to achieve it. We knew that the technology was available and we believed we could get sufficient performance from that technology to reap 19.2. Then we went out to try to test how well we could get it and we ended up with the software we have got. So really, we were trying to achieve the Besley objective through the whole program.

Senator LUNDY —And in terms of people who find that they have less than 19.2, can you outline what their subsequent experience with Telstra is, once you know that they have a problem?

Mr Granville —Passing through the—

Senator LUNDY —Do you send a technician out to see them? Do you send them on a modem education course? What is your action after you find they have got a bad connection?

Mr Granville —We have gone through that whole process. Many are fixed by setting up the modem in those early stages. We can offer the modem accelerator and they are able to test whether they pass the threshold test after then.

Senator LUNDY —But you do not actually remove the pair gain?

Mr Granville —No.

Senator LUNDY —It is not part of the solution at all?

Mr Granville —No.

Senator LUNDY —Is Telstra looking at replacing pair gains that have this restrictive effect on dial-up Internet connections?

Mr Granville —Pair gain systems have been used for many, many years. There are technologies we have used which have now been completely removed. In a large telecommunications network investments are very high and new technologies take some years to introduce. We are always out there looking for the next technology and rolling over. It is not the sort of thing that is able to be changed quickly.

We are looking at improving the dial-up rates of some of the technologies in use through some retrofitting, whether that is possible. We are looking at new generation. We have the new generation replacement for the RIM coming along, for example. It is a continuous process of looking ahead—at how we can meet the changing world and do it in an achievable way.

Senator LUNDY —Given that more people use their phone lines for Internet connection, you could probably take a reasonable punt that most second line requests these days relate to an Internet connection or people wanting to have a data line. What strategies does Telstra have, if any, to start looking at their existing network and upgrading it to optimise those Internet connection speeds? The point to make is that for most people a broadband Internet connection may well be out of reach financially, so the best they can hope for is a reasonable dial-up connection.

Mr Granville —You mentioned people ordering second lines for Internet. In fact, if you look at the cost of a second line, the cost of an ISP and the cost of local calls, you see that they are virtually the same price or even more than an ADSL connection. We would contend that ADSL becomes more and more cost-effective for a greater proportion of Internet users.

Senator LUNDY —But they cannot get it if they have got a pair gain. If you have got a pair gain, you are still paying an ISP, phone line rental and dial-up charges. Not only can you not get a broadband speed; you get half what you should be able to get on that dial-up connection. So you are almost at a double disadvantage, wouldn't you agree?

Mr Granville —I did mention earlier the processes we are looking at—the rules for deployment of pair gain, the rules for the point at which we use a pair gain,—to try to use free copper to establish it and the ability to look for free copper where it actually might exist because of changes over time. We are looking at a whole range of angles to try to improve upon the outcomes for the customer, recognising the points that you make.

Senator LUNDY —The issue of cost and affordability is obviously at the forefront of many people's minds. You mentioned that there is almost similarity between the dial-up connection costs and your ADSL product. How do ISDN and the satellite broadband services rate on affordability, quality of service and bandwidth size?

Mr Granville —With the ISDN Home product, in January there were changes made. It is now the same cost to convert from a single service to ISDN as it is to get a second line connected. It is $190 for connection to ISDN Home and a monthly charge of $37.40, which is equivalent to the rental of two lines. So we have virtually made it equivalent in price. Once you have the ISDN you can use a 56-kilobit modem which operates very close to its achievable rate because it is digital from the home or you can pay a 30c an hour fee to work at 64 kilobits or use two together for a 128-kilobit connection.

Senator LUNDY —What does that cost on using them together?

Mr Granville —That would be two times 30c, so 60c an hour extra. Basically on affordability, it has been brought into the same level of a second line. It offers a lot more.

Senator LUNDY —What about satellite? How does that compare?

Mr Granville —We have two products—the one-way satellite and the two-way satellite. The one-way satellite uses dial up terrestrially and downloads information which is suitable for web surfing. There are a number of packages. Again, it starts at around $44 a month, which gives you 64 kilobits operation, 250 megabits per month, and goes up to a maximum of around $77, which basically gives you three gigabits download and 400 kilobits download. Then there is the two-way satellite, which actually has connection both ways. Again, there are a range of products varying from 64 kilobits each way, which is $120 a month with 300 megabits, up to 128 kilobits up and 412 down. There are a couple of variants depending on the download limits, but it is around $240 a month or that sort of figure.

Senator LUNDY —And that is the service that is subsidised in the extended zones?

Mr Granville —That is correct.

Senator LUNDY —What do you charge ISP retailers for ISDN?

Mr Granville —I do not have those figures.

Senator LUNDY —All right. I think I can come back to the rest of my questions later when we talk more broadly about ADSL and your other broadband services.

Senator MACKAY —Just before we move on, is there an answer for the question about the pair gain. If somebody rings up and asks if they are on a pair gain, will Telstra tell them? Do you have an answer for that yet?

Mr Rix —Probably, Senator. If somebody was to ring up our back of house alluding to the fact that Darian mentioned before, at the first point of contact or at the front of house we do not necessarily have that information available. If they do ring up and they have less than 19.2 as a speed and they are on a pair gain, we will let them know and we do tell them proactively that they are on a pair gain system through the Internet assistance program.

Senator MACKAY —What if you are a punter with a phone and you ring up and you say, `I want to know if I'm on a pair gain system'? Will you get told?

Mr Rix —I am actually getting that checked out as well, but there is no reason why we would not tell people that they are on a pair gain system. It is not something at the moment that we are hiding. It is something that we do not have available at the first point at the front of house and it does need to be a back of house process for us to identify that. That was why I attempted before to use the Internet assistance program as an example of the back of house.

Senator MACKAY —Are there any circumstances where somebody on a pair gain is actually disadvantaged in terms of equality of service? This is a person with a phone.

Mr Rix —Not that I am aware of, but Mr Granville may want to answer that.

Mr Granville —We actually have a number of programs under way to ensure that that is not the case.

Senator MACKAY —Are there any circumstances where there is a diminution of service because somebody is on a pair gain?

Mr Granville —If the pair gain is working the way it should be, and that is what I was talking about—

Senator MACKAY —No, that is not what I am asking. There is this thing called 6x16; is that right?

Mr Granville —Yes, 6x16.

Senator MACKAY —You have 16 people and six lines; is that right?

Mr Granville —That is correct, yes.

Senator MACKAY —If all those six lines are in use, what happens to the other people?

Mr Granville —They would not be able to make a call. We monitor the level—

Senator MACKAY —That is right. So you have 16 people accessing six lines. If six of those people ring up and use those six lines, then 10 people cannot use the phone. Is that correct?

Mr Granville —That would be correct.

Senator MACKAY —Wouldn't you regard that as a diminution of service?

Senator LUNDY —Is it covered by the customer service guarantee?

Mr Granville —The whole communications networks are designed on a statistical basis. There is a percentage chance that any call will not get through.

Senator MACKAY —But this is an actual situation where you have 6x16. You have six people using six lines with 10 people being unable to use their phones. They are unable to actually ring out. Don't you think that is something people should be advised of?

Mr Granville —The design we go to gets back to the standard telephone service definition, which requires availability 99 per cent of the time over a long-term average. What we do is monitor the level of traffic and relieve that situation if it got to the point where the percentage chance of that—

Senator MACKAY —Wouldn't you like to know if you were on a 6x16? Wouldn't you like to know that as a consumer if there was an emergency in your house? Wouldn't the Boulding family might have liked to have known if they were on a pair gain system?

Senator CONROY —I would like to know.

Senator MACKAY —If you were on a 6x16, wouldn't you like to know that there are some points where you might not be able to ring out?

Senator LUNDY —Can I ask this: for those families which are identified as being at risk, are they allowed to be, as far as your network configuration policies go, on a 6x16 configuration?

Mr Rix —With regard to the service inquiry, it was identified that customers that were on pair gain systems were not informed, as you have pointed out today. For priority customers in the future we need to make sure there is an awareness program put in place for those customers and that if they are on any system—that is, a pair gain system—they will need to be informed that they are on a pair gain system for a priority customer service.

Senator MACKAY —We have a million people on a pair gain system—on some form of pair gain—haven't we, or so we heard earlier? There are a million people on some form of pair gain.

Mr Rix —That is correct.

Senator MACKAY &;dash;So are you going to tell all these people?

Senator CONROY —False and misleading advertising.

Mr Rix —Are we specifically talking there about the priority customers?

Senator LUNDY —So it is your plan to notify priority customers who are on a pair gain?

Mr Rix —That is correct.

Senator LUNDY —Why don't you get them off a pair gain if they are priority customers?

Mr Rix —At this stage if somebody is on a pair gain system—by the way, I think Paul has touched on this—the majority of the pair gain systems work very well. It is proven over probably 10 to 20 years that they are an adequate way of providing telecommunications. In going forward, it certainly was the advice given by both the ACA inquiry and the PWC inquiry that for priority customers we need to make sure that they are informed.

Senator MACKAY —Were the Boulding family on a pair gain?

Mr Rix —The Boulding family were on a pair gain system.

Senator MACKAY —The Boulding family were on a pair gain system. Don't you think they would have liked to have known they were on a pair gain system?

Senator LUNDY —I would like to know why the outcome of those reports is just to advise of the presence of a pair gain rather than to get priority families off a pair gain and on to a more reliable service.

Mr Rix —If there is a more reliable service as such, if we believe that the service is not a reliable service, it would be our intention to put them on a service that was reliable.

Senator LUNDY —But I guess it comes back to this 16x6 network configuration example. Just by sheer luck six people could be on those phone lines and the priority customer could be one of the 10 who could not get a line out. Surely in those scenarios you would get the priority customer off that configuration even if it meant providing them with a subsidised satellite connection or something different that meant that they were never going to be faced with the short-odds scenario of not being able to access a line.

Mr Rix —Certainly, at the moment any customer who is registered as a priority customer with Telstra comes into a dedicated area within Telstra. We have up to 40 staff 24 hours a day seven days a week. Each of those is treated on an individual basis. If we believed at any time that any of them were at any risk, we would change the configuration. We would provide them with means for interim phones, diversions. We would look at their total package of telecommunication needs within their house. All of those points would be looked at on an individual case basis.

Senator MACKAY —How do you get to be a priority customer?

Mr Rix —With regard to the priority service, there is an eligibility. At the moment, in relation to that eligibility, we are working with the department of health, with the AMA, with the College of General Practitioners and with a number of medical bodies to establish criteria. At the moment Telstra is taking all customers on good faith.

Senator MACKAY —So at the moment there is no such thing as a priority customer until such time as you determine these variables?

Mr Rix —Telstra certainly does not see itself as part of the medical fraternity, but we do see ourselves working in closely with them to help us establish what may be deemed as a life threatening medical situation.

Senator MACKAY —How do you determine them?

Mr Stanhope —There are priority customers.

Senator MACKAY —That is a relief.

Mr Stanhope —We are not waiting for—

Senator MACKAY —How many are there and how do you determine them?

Mr Rix —At the moment, it is all on good faith and via the customer.

Senator MACKAY —Such as ringing up—you become a priority customer.

Mr Stirzaker —If I can just jump in, a couple of weeks ago, we instituted changes as a part of the communication process for priority customers, scripting at front of house for both our provisioning processes and our port processes where we ask them the questions. We are not a medical provider, as Anthony has quite correctly said, but we do ask customers if they believe they are subject to a life threatening medical condition.

Senator MACKAY —Do you ring them up?

Mr Stirzaker —As they call in.

Senator MACKAY —They ring you up and they say, `Look, I've had problem with my phone', and then you go through this process that you are outlining.

Mr Stirzaker —Both provisioning and repair.

Senator MACKAY —How many people are currently priority customers?

Mr Rix —At the moment, tagged and in the system, it is in excess of 9,000.

Senator MACKAY —This is based on self-selection? These are people who do not know, for example, that they are on a pair gain: they just know they have got a problem with their phone?

Mr Stirzaker —They may not be on a pair gain, yes.

Senator MACKAY —But they do not know, do they, whether they are or not?

Mr Stirzaker —If they become a priority customer—

Senator MACKAY —Shall we tell a million people to ring up Telstra, find out whether they are on a pair gain system and see if there is a potential problem with their phone? That's a bit silly, isn't it?

Mr Stirzaker —Well, not every pair gain system means that there is a problem with their phone.

Senator MACKAY —I know that, but the 6x16 we were talking about earlier is definitely a problem, isn't it?

Mr Granville —It shouldn't be if it is relieved properly.

Senator MACKAY —What, if you get more than six people on a line?

Mr Granville —I was mentioning the statistics earlier, and the probability of that is very low.

Senator MACKAY —It does not matter where the problem is. People want to know if they are on a 6x16. I do not see why this is a problem. Anyway, this is not my line of questioning; this is Senator Lundy's line of questioning.

Senator LUNDY —Can I just go back to one issue about the tragic accident and issues relating to Sam Boulding. Can you tell me if the Boulding family are still on pair gain, given that two of the three faults identified in the PWC report were related to pair gain issues?

Mr Rix —The Boulding family are no longer on a pair gain system.

Senator LUNDY —We have got a few more questions about that, so we will come back to that. I will defer to my colleague, Senator Conroy.

Senator CONROY —Can Telstra provide current details on which service its current broadband customers are using in regard to cable, ADSL, satellite, et cetera, with both the total numbers and percentage breakdowns?

Mr Stanhope —I can give you the breakdown of our broadband customers. BigPond ADSL, 53,275 customers; cable modem broadband customers, 69,250; satellite broadband customers, 6,413; BigPond Direct, 20,500. So there is a total of nearly 150,000 customers on broadband.

Senator CONROY —I am happy for you to take this on notice, but can you give us a comparative cost to consumers of using broadband through those various delivery mechanisms.

Mr Stanhope —We can certainly do that.

Senator CONROY —I am happy for you to take it on notice.

Mr Khalifa —It is quite an extensive price range, as you know. It is a starting point on ADSL of $59.95 and for cable it is $54.95 for preselected customers. It is all on the web site and we have all the prices for that.

Mr Stanhope —There is a series of plans.

Senator CONROY —Apologies if Senator Lundy and Senator Mackay have dealt with this, but do you think that the furore that is developing over pair gain is impeding the confidence in the take-up of broadband?

Mr Khalifa —No.

Senator CONROY —Do you think it has the potential to?

Mr Khalifa —Certainly, as a retail provider of broadband services we would like to provide broadband to as many Australians as possible. We understand we may have to use various technologies to reach all of them. It is trying to get the equitable solution for all concerned that is really paramount in what we are trying to do. We do not price differentially between customers in urban areas and in rural areas. We are trying to make sure that everybody has reasonable access to broadband at the best rate possible and with the best technology available. We understand that it might take some time to get all that done. As we roll out more exchanges and find more technologies, we will answer those challenges. We do have satellite, which is a solution that we all recognise is a bit more of an expensive solution. That is why we want to continue to work on bringing the price down.

Senator CONROY —You do not think that the issues around pair gain starting to get more public notoriety are going to impact on people's confidence?

Mr Khalifa —I have to say that of all the issues that we get as to blocks to people taking on broadband or radio cell services, pair gain has not become one of the biggest ones that we have. We are still in the growth phase; it is in the rolling out phase. But there are issues of getting people to understand what broadband is all about. We are still in the fairly early stage of take-up overall in the population.

Senator CONROY —Excluding the $50 million broadband stimulus package announced in February, what is Telstra doing to enhance the capacity of its network to deliver broadband services? What else is happening?

Mr Stirzaker —With broadband overall?

Senator CONROY —Yes.

Mr Khalifa —The roll-out of the exchange, as you heard about, is the major point—us moving it out to more places. Certainly, we are trying to ensure that we have got services available in all of our exchanges of ports. As we go to each exchange we are also putting in available ports, so over 150,000 ports are now available. We are at the stage of just trying to make sure the awareness is up and people understand what they can get out of broadband. I think the initial information back from our customers is that they are taking up this message. The growth rate we have seen recently tells us that it has been very effective and people understand what it is about.

Senator CONROY —Of the $50 million in the broadband stimulus package, how much has been used to improve infrastructure as opposed to spending on content and advertising?

Mr Khalifa —I can use the same answer I gave before. You were out of the room; I gave the right answer to the wrong question. None of us are really going after infrastructure specifically, although we are providing money for people to be able to get broadband services if they need it in order to develop their capabilities. It is really targeting the applications phase and the contents phase. We would like to get more creativity so that we provide more reasons for people to see the value of broadband.

Senator CONROY —So it is really just advertising, raising the awareness?

Mr Khalifa —It is raising the awareness but through the development of applications. It is not just window dressing. This is really trying to find those opportunities out in the marketplace where people can see how to answer the needs of customers.

Senator CONROY —Nothing on actual infrastructure?

Mr Khalifa —This is nothing on actual infrastructure. Correct me if I am wrong, anyone, but I think all the money that was spent, the closest it gets is actually providing those broadband services to those people wanting to develop it.

Senator CONROY —Thanks. In the Besley report, Telstra was reported as stating that ADSL services would be available to around 81 per cent of the population by 2002. Have ADSL availability levels reached that stage yet?

Mr Khalifa —The best numbers I have been shown look like we have reached that. I think the range was between 75 and 85 per cent of the numbers that I am seeing today. That is, of course, excluding satellite. Satellite certainly can fill in, but again we all have to see that it has its own inherent issues as far as pricing, but it certainly makes it available to just about anyone, literally, in Australia.

Senator CONROY —Telstra's ADSL services have an interesting history in terms of service performance. To what extent are problems in the copper access network responsible for the problems with Telstra's ADSL service?

Mr Khalifa —I am not sure if you are aware that at the end of last week we actually became a world first in announcing a customer service level guarantee for our ADSL customers, where we are putting our money where our mouths are in saying that we will provide a minimum of 99 per cent availability for ADSL customers, and if we fail to meet the 99 per cent we will in fact begin crediting them on their bill. We believe that this is our indication to customers of not only the faith we have in the network but also the fact that we have faith in the fact that we want to develop a network that all customers will feel comfortable about. The fact is that if they do not receive that level of service we will automatically credit them. This is something that happens whether or not they are even using the service. So if the network goes down when they are not even using it and it exceeds that 99 per cent threshold, we are automatically crediting them. This is a very positive move on our part to try to ensure that people have the confidence, and if we fail to meet what we believe is a reasonable standard of service we should then credit them for that service.

Senator LUNDY —How much have you budgeted for that initiative?

Mr Khalifa —There is not a specific number budgeted; there is certainly a range of dollars that have been discussed, depending on the performance, but we obviously have high and low expectations of what that might be.

Senator LUNDY —Can you give us a ballpark figure?

Mr Khalifa —It is commercial-in-confidence.

Senator LUNDY —It is really just an acknowledgment of a service that is not doing too well, isn't it?

Mr Khalifa —No, it is actually acknowledgment that we really care about our customers, that we are actually doing something that nobody else in the world is willing to do, that we are stepping up to the mark and saying that we actually think that if we do not provide this then Telstra should take a hit on it. It provides us also the impetus that is linked directly to our customers and service levels.

Senator CONROY —Coming back to my question, I asked you about the problems that you had previously experienced. You told me about your new service guarantee, and I thank you for that information, but I asked you about the problems that you were having. Was the copper access network partially responsible for those problems? That was actually what I was trying to get to, appreciating your filling me in on your latest announcement.

Mr Khalifa —I think they were somewhat related. Certainly most of the issues in the network have had to do with the elements put in for the ADSL network. So the elements we have talked about are all to do with the fairly complex nature of the authentication capabilities and so forth that are put into the network in order to provide the ADSL services across all of our regions where we have it. So I would say that it is not specifically the copper network at all; in fact, it is the ADSL service we see as within the bounds of a copper network, and it really talks about the infrastructure that supports it specifically.

Mr Stanhope —Senator Lundy, to perhaps answer your question, if I understood it correctly: in this fiscal year that we are in, 2001-02, we will probably spend around $100 million on broadband ADSL preparation on the network.

Senator LUNDY —That was not my question. I was asking what you had budgeted in terms of how much money you are going to have to pay back customers for not providing them a service that they had purchased.

Mr Stanhope —The rebate, okay.

Senator LUNDY —But thanks anyway.

Senator CONROY —In reference to your—and I think you just mentioned it a moment ago—customer service level guarantee, why aren't the failings of the copper access network included in that guarantee?

Mr Khalifa —Certainly with the service level guarantee for ADSL customers we are recognising the part of the network that is specific to them, and that would be different from any other elements. There are already other guarantees that we offer on other parts of the network, including the CAN. But we have to draw the bounds somewhere of any network, otherwise it can go right down to someone's computer and whether it is working properly, as we talked about before, and then the line to the street and then from there to the exchange. The ADSL network really starts at the exchange, and that is where the service level guarantee kicks in. All of the network elements specific to the ADSL are from there. We believe the coverage is otherwise covered in other ways.

Senator CONROY —Can you provide us any current data on broadband availability in Australia on both an aggregate and a regional basis?

Mr Khalifa —The number of customers on an aggregate basis I think we have already provided you as approximately 150,000.

Senator CONROY —Regional?

Mr Khalifa —I am not sure if I have the number specifically by region. I would have to take it on advice as to whether or not this is commercial-in-confidence information for Telstra.

Mr Stanhope —That 150,000 is about two per cent of households.

Senator LUNDY —How many customers are able to access broadband? Could you break that down to those with ADSL? Satellite, theoretically, is able to be accessed by anyone if they can afford it, so I will exclude that from the question. Are there any restrictions on the accessibility of ISDN services through your copper network?

Mr Granville —For ISDN there is a feed directly from the exchange. We also have an extender technology. The two together take us up to around 98 to 99 per cent of our customers being able to be reached, except for the pair gain blockage issue. So in terms of the cable distance, the pair gain issue costs us a lot lower impact for ISDN because most of the large pair gain supports ISDN. But in terms of copper, with the extender technology it is very persuasive.

Senator LUNDY —So can you tell me what percentage of Telstra customers are able to access ADSL by state and territory, as a percentage and as numbers, and by postcode or any other suitable measurement that you might have in your back of house database.

Mr Khalifa —I might need to see whether or not that is commercial-in-confidence as well as what information we can tell you about what the availability is as we grow the network.

Senator LUNDY —I know you are able to give me the aggregated figures because I got them back on questions on notice last time around. It is a combination of what exchanges are ADSL enabled and then the percentages of customers who are prevented from accessing it by their distance from the exchange.

Senator CONROY —If you give us the availability that would probably go most of the way to keeping us happy.

Mr Granville —There would be an element of estimation in that because, without doing a full service qualification, the cable details can impact. It would have to be an estimate in terms of the copper reach.

Senator CONROY —To clarify: we do not necessarily need, if it is commercial-in-confidence, the actual number you have got but just the number that are potentially able to access.

Mr Stanhope —Availability.

Senator CONROY —Availability. That would be fine if the other issue is commercial-in-confidence.

Mr Khalifa —We will certainly try to give you what we can. We also have our wholesale partners, as you know, who are coming on the network, who also may or may not feel that sort of information should be available to others who are not on our network, since we have network competitors. Can we just come back to you on whether or not that is a reasonable undertaking?

Senator CONROY —Yes. Can you provide any current data on the comparative cost of broadband within Australia on a regional basis?

Mr Khalifa —The comparative costs of broadband just generally? Certainly the ADSL network, wherever it is available, is at the same price. Again, what Telstra has done from a retail side is to take on a pricing structure that says that we will always price it equally to anywhere it is offered. That, of course, sets us apart from some of our competitors who have only concentrated on what might be considered lucrative parts of the network and price it perhaps aggressively in one area but might not be able to offer it everywhere. I guess my answer is that it is available at the same price anywhere that it is available.

Senator CONROY —I am just concerned that there seems to be information—and I am wondering if you would concede this—that Australia's broadband uptake has fallen below the OECD average and that broadband costs are estimated to be around 30 per cent higher in Australia than in the UK and the US. I appreciate they are different markets, and those sorts of things, but that sounds like we are failing on both fronts, or maybe, combined, they are the reason.

Mr Khalifa —We have researched this extensively, as you might imagine. We do not believe we are falling behind. Even in pricing, we have done our homework and looked at pricing here, nationally, and internationally. For the most part, we can compete with the best of them. You would have to pick out different price points, and every market has different prices where it actually starts to concentrate on. Some countries also provide large subsidies through government in order to provide that ability to get people's prices down. I should remark that the news from Canada and the US recently has been that people are raising their prices. In fact, some of those countries are now following what we were standing out to be different from, and that is they are following a tier-pricing regime quite like ours.

I believe what is happening everywhere is that people are recognising that the volume based pricing scenarios that we are using here are in fact the only way to now manage broadband networks. We will see in fact quite a balancing of pricing across the world as people begin to ensure that their businesses are sustainable in the broadband market.

Mr Stirzaker —I have to speak from a sales perspective—I cannot help myself. In recent times with the different style of educational advertising we have been doing, plus the things we have been doing at front of house, our sales have in fact been accelerating quite a deal. I am not going to tell you what it is. The amount of interest in broadband is increasing quite significantly and I have just a simple message: we want to sell a lot more of it.

Senator LUNDY —At the world congress on IT I distinctly remember Ziggy Switkowski saying that Australians did not really want broadband. Is that still Telstra's view?

Mr Stirzaker —I will just say what I said a minute ago: we are finding a significant uptake in the sales of broadband. We have been expanding our sales capability, and the thing that we really worked on to understand is how you communicate to a customer what it actually is. I have put a lot of effort into simplifying those messages and customers have been responding. The recent price changes that were made have also helped. It is evident by the amount of activity we are seeing at front of house.

Mr Stanhope —Senator Lundy, I think Ziggy went on to say that it was not just a high speed access medium that attracted people, and that it is applications and content that will drive broadband take-up, and hence the announcement at the congress of the fund initiatives. I am just trying to put it into context.

Senator LUNDY —Thank you.

Senator CONROY —Does Telstra have a view as to whether meter charging or per megabyte charging for broadband is impeding broadband take-up.

Mr Khalifa —This alludes back to the question you asked before. Rogers in Canada, Cox, AT&T, Comsat, Time Warner and Charter are now going through a tiered process in pricing in the US and Canada. We may have been early in doing that and coming to the conclusion that the others are coming to as well. They are making the same notes that we were, that a small fraction of their users were using an inordinate amount of the data on the network, and that supporting the few users by the many was throwing out their ability to service those markets in a sustainable fashion. We believe we understood that was happening here. We may have even mentioned at a Senate estimates hearing last time that this is in fact what we were seeing—five per cent of our users using 50 per cent of data, and that is an unsustainable proposition.

Senator CONROY —From that answer I guess you have no plans to offer an unmetered broadband service.

Mr Khalifa —I also note that Optus changed just last week.

Senator LUNDY —Aren't you glad?

Mr Khalifa —If they were sustainable wouldn't they have stayed with it? They were certainly bringing people across. They were advertising early on that they were completely unmetered and now they have completely reversed course. Once they understood the same mathematics that was obvious to us they changed. I am not sure we are glad; we certainly thought that that was the rational proposition. That they have come to the same conclusion does not surprise us.

Senator LUNDY —I have one final question on ADSL and exchanges. Is there a finite limit to the number of ADSL services that are given exchange support?

Mr Khalifa —I will leave it to some of my network colleagues to tell me otherwise. I believe it is probably not that there are abilities to add more and more ports. There may be some physical limitations that force you around that, and there may be some additional capacity that might have to be deployed. I would say in general that I believe the answer is that there should not be but I will leave it to my colleagues to say otherwise.

Senator LUNDY —I also asked the question in relation to connections back to the exchange through the pillar or any other interim piece of infrastructure.

Mr Granville —Certainly, in the copper network, there are situations which can limit the distance. I am not sure; I would have to defer to our research labs people in terms of the ultimate fill of a cable you can have with ADSL. There may be a limit when you get up to very high—

Senator LUNDY —Perhaps if I explain to you the scenario that has been described, you can take it on notice. There is a bundle of copper pairs from, say, a pillar to an exchange, and there is a maximum ratio or proportion of which those copper pairs can actually carry ADSL because of some electromagnetic thing—excuse my technical terminology!—and that actually puts another constraint on the proportion of customers that could access ADSL through that exchange, even in the most optimum circumstances; that is, all within a 3.5-kilometre radius—all straight copper, et cetera.

Mr Granville —I should imagine there would be a limit, but as for whether it is 50 per cent or 80 per cent or whatever, we would need to talk to our research labs people. The other thing is that ADSL is just a step on the way. It is very likely that in a number of years it will be inadequate. We will move to another technology—another form of pair gain—which moves the ADSL equipment closer to the customer, such as HVGSL. So it is part of the point of the whole constant evolution.

Senator LUNDY —Could you get the answer to that? Thank you.

Senator CONROY —How are you progressing with the government's direction that Telstra take immediate action to improve its services to priority customers in light of the death of Sam Boulding?

Mr Rix —On 14 March, a cross-company working party was formed from all relevant parts of the organisation. That working party consisted of 57 people. It was from every relevant part of the organisation and was broken up into four segments. The first segment was policy; the second was customer awareness programs; the third was process and systems; and the fourth was infrastructure and technology. These four segments covered all of the recommendations of both the PricewaterhouseCoopers and the ACA reports. From that time, those people were dedicated full time and will continue until licence conditions are met.

I will briefly go through the focus of each of those four groups. Under the policy, it will be the development and implementation of the policy for priority assistance customers for individual customers. An agreed set of eligibility criteria will be established for each of those priority customers. We will revise our standard marketing plan to meet the new licence conditions. Telstra policies will be revised to include the obligation for priority customer services during mass service disruptions. So we will not be seeking exemptions during a mass service disruption for priority customers. We will work with those in that situation to still meet the time frames under the licensed conditions. Those time frames will be within 24 hours for a new service connection and for a fault in an urban area and a minor rural area, and within 48 hours for all other areas of the country—predominantly, remote areas. If we cannot meet the full restoration of those services or that new connection in those time frames, we will provide an interim service within those time frames.

Moving on to the customer awareness program, a communications strategy to achieve the customer awareness program is being developed and will be fully rolled out as an education program by 31 July. We have already commenced some of that with the setting up of the priority customer service group, both in the front-of-house sales and in the fault and restoration area of the business. I alluded before to the fact that we have approximately 40 people, 24 hours a day, seven days a week, in that particular priority group. In all of our front-of-house scripting now, we let people know that this particular service exists within Telstra. That is in the scripting right now. All of those customers, as mentioned before, are taken in good faith.

Under the process and systems component, we are looking at the registration identification of priority customers—how we do that, how we capture that information in systems and how we can pass that between systems.

Mr Stirzaker —The licence condition was quite clear as to the extent of our communications requirements. The customers will certainly find that we go beyond the licence conditions. In fact, we communicate more than is being requested of us.

Mr Rix —The other issue with respect to communications was much clearer communications around the use of emergency service access; in particular, the use of the service 112 for mobile coverage.

Moving back to the process and systems, there is the delivery of priority service to priority customers. So processes have to be in place, with procedures in place, to make it possible to deliver those time frames as laid out under the licence condition. There will be a lot of work going on inside the organisation to meet those time frames.

With respect to service reliability for priority customers, we will check the reliability of the service for each of those customers. We will review their fault history. We will check the technical specifications of that particular cable—I have spoken about this earlier today—to make sure that there is a reliable service for each of those priority customers.

With respect to the management of the priority customers during MSDs and LSDs, those processes are being developed and put in place. That management in those situations will often be through the use of an interim fix initially, until we can get a permanent fix. With respect to other things like credit management for priority customers, policies and processes are being put in place, along with the improvement and integration of our systems.

With respect to infrastructure and technology, the rural customer access network and CAN rehabilitation programs, we will look at the areas and that will become one of the factors based on priority customers—where they are located and where we spend our money with regard to rehabilitation. I mentioned before the pair gain system performance improvement—looking at the reliability of pair gains for the use of priority customers.

For these tasks, we will meet the guidelines and deadlines as set by the licence condition. Each of these will be reviewed on an ongoing basis by the ACA and will be reported back to the government department on our progress in going forward. The draft document for the licence condition is now in place and we are working with the government to implement that by 31 July.

Senator CONROY —Does Telstra concede that the Boulding case, where the Boulding family phone was basically out of order for most of the 12 days preceding his death, shows that Telstra still has some fundamental problems in providing adequate services to regional Australians, or do you think the measures you are taking now can solve them?

Mr Rix —The Boulding case demonstrated at the time there were three individual faults, from 26 January through to 6 February. On three occasions we attended a fault, until 7 February. It certainly showed there were some network issues there. I think the reports by both PricewaterhouseCoopers and the ACA identified that there were issues that we had to look at, and there were areas of our business that we had to improve. I believe that the reports adequately covered these, we accepted those reports, and it is our endeavour to implement all those recommendations.

Senator CONROY —You mentioned measurements; what measurements does Telstra have in place to monitor any improvement of regional services in view of the government's policy not to sell Telstra before regional services improve? And that is other than Ron Boswell making the announcement that everything is hunky-dory now.

Mr Rix —I would be happy to talk about the current measurements that are in place. I think it has been recognised that over the last five or six years there has been continual improvement in regional Australia. The December results for new service connections and faults both demonstrate that.

Perhaps I could quote some of the December results as published by the ACA. In minor rural Australia, we met 96 per cent of all our new service connections, under the CSG guidelines; in minor rural without infrastructure, we met 97 per cent; and in remote we met 98 per cent of all new service connections. On the fault side of the business, in urban areas we met 89 per cent in December; in rural Australia it was 94 per cent, which was a three per cent improvement; and in remote areas it was up to 94 per cent—which, year on year, is the way that we measure those, and from the December quarter of the previous year, there was a 12 per cent increase. It is difficult to look quarter by quarter, but it is significant that the two main categories in which people rely on Telstra are for a connection of a service and for a restoration of a service, and the guidelines are not laid down by the ACA. I think that those numbers are reflective of the improvements that we have had in place. I am not sure whether you wanted further measures beyond that.

Senator CONROY —No. That is okay. How does Telstra react to the statement by regional MP Sophie Panopoulos, whose electorate includes the Boulding family, that Telstra's priorities `do not include providing acceptable infrastructure and services to families in my electorate'?

Mr Rix —I am not in a position here to comment on the comment that has been made within that particular electorate; but I do believe that on the individual case with the service inquiry there were areas across Telstra that we will look at improving, but I did not believe that the Kergunyah exchange was anything different from those in most of our other regional parts of Australia.

Mr Stanhope —And I would refer to my answer this morning, where we recognise that there are still some areas for improvement—and it is not just in that electorate; it is in other electorates as well—and we are committed to improving that service and we are making an investment to do so.

Proceedings suspended from 4.02 p.m. to 4.20 p.m.

Senator LUNDY —I wanted to follow up a question with respect to the Boulding case. I want to clarify whether or not the Bouldings' phone line was on the 6x16 pair gain configuration.

Mr Rix —No, it was not.

Senator LUNDY —I am just looking now at the executive summary of the PWC report. The three faults identified are described as `pair gain system reset required', `fault on cable' and `pair gain system failure (exchange unit)'. I was wondering whether you could describe for the committee what you mean by `pair gain system reset required' and whether that is something that has to happen on a regular basis. Secondly, in relation to `pair gain system failure (exchange unit)', given that we have had some quite technical detail about pair gains, could you describe the nature of that fault in more detail.

Mr Rix —I will ask Paul Granville to describe that from a technical aspect. I am more than happy to talk about the nature of the fault as I know it, but from a technical aspect it might be better if Paul explains it.

Mr Granville —To explain the term, we are talking about a two-channel pair gain system. There is a piece of equipment in the exchange, which is the exchange unit, which communicates with the remote unit. The fault in the exchange unit would be referring to a problem in the exchange end equipment of the two-channel pair gain.

Senator LUNDY —Thank you.

Mr Rix —In regard to the fault, it is not common that the pair gain system in the exchange would fall over. We were not certain why that happened in that case, and we did a thorough investigation. There were lightning strikes in the area at the time, and perhaps that had an impact. There was a restart for one of those faults. That was for the first fault. The second fault was down in the pair gain unit itself and was also related to the repeater, I think, from my knowledge, within the pair gain unit. And at the same time there were some cable issues in which the continuity of the copper network was not up to the standard. So there was work done both in the pair gain unit and across the copper network during the repair of the second fault. Unfortunately, a third fault recurred, and they went out and restored that on the 7th.

Senator LUNDY —Going back to the 6x16 configuration, where does that fit into your earlier descriptions of the different types of pair gain?

Mr Granville —Medium. It is based on the number of customers, and it can support 16, which is an intermediate number. So it is termed a medium pair gain—medium sized.

Senator MACKAY —So when people are talking about customers who are on pair gain, what proportion are on, say, 6x16?

Mr Granville —I would have to check whether I have got that exact detail. One of the points I was going to make earlier with that particular type of pair gain is that the usage is monitored so that trends in usage can be detected and the system relieved in time to avoid any problems. With that sort of ratio of usage, very commonly the customer would not be aware at all in terms of the fact that they were sharing the line. The usage is calculated mathematically in terms of—

Senator MACKAY —I understand that, but in the days of the Internet, especially in the regions, a lot of people go on the Internet at night.

Mr Granville —Which is why we are monitoring the usage.

Senator MACKAY —So are you monitoring , say, every single 6x16?

Mr Granville —Yes, that data is available.

Senator MACKAY —Individually?

Mr Granville —For each system, the data is available for us to go through and monitor in terms of the usage.

Senator MACKAY —How many?

Mr Granville —We have about 4,600 systems, with around 54,000 services working on them.

Senator MACKAY —So you have 4,000—

Mr Granville —About 4,600.

Senator MACKAY —You have 4,600 lines.

Mr Granville —There are 4,600 systems, with around 54,000. So you can see the average usage there is a bit over 10 or 11 customers, on average, out of the 16.

Senator MACKAY —That is true, but there would be high levels of traffic, presumably. There would be peaks and troughs, if you like.

Mr Granville —There would be peaks and troughs, yes.

Senator MACKAY —Say there is a 6x16. What you are talking about is that, in terms of the 4,000 and 54,000, that is a 6x16, is it?

Mr Granville —Yes.

Senator MACKAY —What about the other million or the other 950,000 customers who are on pair gain? What sort of pair gains are they on?

Mr Granville —There were the ones that we went through earlier.

Senator MACKAY —You gave us acronyms. I did not understand it. That is probably my fault, but what does it actually mean in terms of sharing lines?

Mr Granville —They all use different techniques and different methods. Some have dedicated channels; others have a sharing technique, which is a matter of ensuring that there is a sufficient number—that the loading is not excessive.

Senator MACKAY —Of the million, how many share lines are there?

Mr Granville —The 6x16 is one of the biggest groups.

Senator MACKAY —One of the biggest groups?

Mr Granville —One of the larger ones, yes.

Senator MACKAY —What proportion of the million are 6x16? You are saying it is one of the biggest groups.

Mr Granville —That is 54,000 out of that million.

Senator MACKAY —So it is one of the biggest groups?

Mr Granville —Of ones that share capacity.

Senator MACKAY —What proportion of the million share?

Mr Granville —I would have to sit down and go through the totals I have and check.

Senator MACKAY —Can you ballpark it now for us?

Mr Granville —There is some detail about the RIMs that work in different ways. There are different generations of RIM.

Senator MACKAY —Just ballpark it. How many people are sharing lines in Australia?

Mr Granville —With the medium pair gain type ones, we are talking about a bit under 80,000 lines. That is the main group.

Senator MACKAY —Of the million customers who are on a pair gain, how many are sharing a line?

Mr Granville —To get the full detail, I would need to check some technical detail on some of the types.

Senator MACKAY —Is it more than half?

Mr Granville —No, it would be less—far less. The bulk are with RIMs. I would really have to check that for you and come back to you with that.

Senator MACKAY —Okay. There are other sorts of pair gain, and you could perhaps illuminate for me what they are, but are the bulk of the 6x16 in the regions?

Mr Granville —They are commonly used in rural networks.

Senator LUNDY —Out of the 6x16, how many are in rural and regional areas?

Mr Granville —Again, I would have to check that, but it would be the large majority of them, if not all.

Senator MACKAY —So we have a 6x16 configuration. What other sorts of pair gains are there in terms of the six, in simple language that I can understand?

Mr Granville —There is one two-channel one, which basically uses one pair of wires to provide two services.

Senator MACKAY —That is one-two.

Mr Granville —Yes.

Senator MACKAY —What proportion are one-two?

Mr Granville —We have about 30,000 services on those.

Senator MACKAY —We have one-two. What is the next category?

Mr Granville —There is a four-channel, which provides four services.

Senator MACKAY —So that is one-four.

Mr Granville —The first one is called a two-channel digital pair gain.

Senator MACKAY —Yes, whatever.

Mr Granville —It is a dedicated channel for each line. It is not sharing.

Senator LUNDY —That halves the connection speed?

Senator MACKAY —That halves the capacity. We will forget that; I am actually on about phones here.

Mr Granville —It doubles the capacity.

Senator MACKAY —In relation to this 6x16, my understanding is that one of those lines—the five—is actually used to power it up. My understanding is that it is actually 5x16.

Mr Granville —I am not sure of that. I would have to check.

Senator MACKAY —So you have got one to two?

Mr Granville —No, the first one is a different approach. It is taking the copper line and providing two voice services, so it is two dedicated voice services so there is no sharing at all.

Senator MACKAY —Okay. Let's get to sharing. What is the next sort?

Mr Granville —The next one is similar to that first one but it is four channels.

Senator LUNDY —How many were on that one?

Mr Granville —About 32,000 services in operation.

Senator MACKAY —So you have got one to four as a proportion?

Senator LUNDY —Are they dedicated channels?

Mr Granville —Yes.

Senator MACKAY —So what other sorts have you got?

Mr Granville —The one I mentioned earlier, the RAM, which is a rural access multiplexer.

Senator MACKAY —What is that in terms of sharing?

Mr Granville —That is basically eight customers sharing a pair of wires. It actually uses similar technology to ADSL to multiplex.

Senator LUNDY —How many are on that one?

Mr Granville —We have got a total of about 58,000 services.

Senator MACKAY —What is the next category?

Mr Granville —Then we are into the ones we were talking about earlier, the medium pair gains such as the 6x16.

Senator MACKAY —Are there any other configurations other than 6x16 in that medium?

Mr Granville —Yes, we have got 6x15 and—

Senator LUNDY —How many are on that one?

Mr Granville —Around 17,800. There is a different form of 6x16—it is about another 4½ thousand that we should add into that 54,000 I mentioned earlier. It is a slightly different version.

Senator MACKAY —The majority, if not all, of those 54,000 are in regional Australia?

Mr Granville —That is correct.

Senator MACKAY —And they do not know they are on pair gain systems? They do not know they are on a 6x16 or whatever?

Mr Granville —No. In general terms, there is no way to know because that particular technology switches through the copper so that the dial-up data rates, for example, are unaffected by its operation.

Senator MACKAY —I am not interested in that; that is Senator Lundy's area. I am registered in the phones. Let's say I am in regional Australia. You have got the 6x16 configuration and there are six people—or, as I understand it, five people—on the line, all on the Internet, say, or all using the phone line for whatever purpose. When I pick up the phone, what do I get? What does it tell me?

Mr Granville —You would be unable to get dial tone. That is why we are monitoring.

Senator MACKAY —It is a dial tone?

Mr Granville —You would not get a dial tone.

Senator MACKAY —You would not get a dial tone?

Mr Granville —No.

Senator MACKAY —What would you get?

Mr Granville —Busy. And that is the reason why we are monitoring the levels of traffic.

Senator MACKAY —What would you get? Nothing? A blank?

Mr Stanhope —A busy tone.

Mr Granville —I will have to check but I think that would be the case.

Senator MACKAY —Do you get: `Sorry the line is congested. Please try again later'?

Mr Granville —No, it would be unable to have that sort of message injected at the pair gain system.

Senator MACKAY —So it would just be a straight engaged signal?

Mr Granville —Yes. I would have to check the exact customer indication.

Senator MACKAY —So when people in regional Australia pick up the phone and the phone line is engaged, potentially they could be on a pair gain?

Mr Granville —We are monitoring the traffic on those systems to ensure we do not get that.

Senator LUNDY —Going back to the 17,800 that you said were on a 6x15 configuration—was that it?

Mr Granville —Yes.

Senator LUNDY —Is that a shared system in the same way that the 6x16 is?

Mr Granville —Yes. Those last ones I mentioned are shared ones. I should mention that this is a common technique used throughout telephone networks. The lines out of an exchange are shared; the lines between exchanges, the lines to other countries, are all a shared resource. Take the extreme example: we cannot provide 10 million lines out of Australia to every other country.

Senator LUNDY —But I put to you that that made sense when everyone was making short phone calls, remembering that a lot of these people are faced with STD charges if they are in rural and regional Australia. That is a very different situation to the Internet, where people go online for long periods of time. So you are applying a network statistical optimisation technique for times past.

Mr Granville —That is why we are monitoring the usage—

Senator MACKAY —You are monitoring it but—

Mr Granville —and when we need to we replace—

Senator LUNDY —How do you justify applying those same statistical techniques in the age of the Internet, when people go online for long periods of time, potentially excluding the sort of customers Senator Mackay is talking about for really long periods of time?

Senator Kemp —Mr Chairman, could I just make a point. I am sure this was not Senator Lundy' intention but an objective observer may feel there is a bit of an attempt to hector the witnesses here. Senator Lundy can ask her question, but when the question has been asked I am very keen that the officers at the table get the chance to reply. If we could wait till the reply is given before there is the next question, I think that would help the deliberations of the committee.

CHAIR —It is very important not only for the officers but also for Hansard and the general decorum of the committee.

Mr Granville —Basically, an increase in Internet usage would show up in the usage patterns and the availability which is monitored. It then would, at a considerable point, trigger action to relieve it and it would be necessary to install some other pair gain or copper or whatever was decided was the outcome. So the whole network management process seeks to avoid a situation where the service is not at an acceptable level.

Senator MACKAY —Yes, but you have circumstances where this is real time and it is happening now. I understand what you are doing. I guess, to answer the minister, what we are asking is: why on earth? How can you say that services in regional Australia are up to scratch when you have an archaic pair gain network system, where people are actually in danger and do not know?

Mr Granville —But pair gain—

Senator MACKAY —You cannot say that services are up to scratch in those circumstances.

Mr Granville —Inherently—

Senator LUNDY —Whilst there are pair gains, you cannot say that services will be up to scratch in rural and regional Australia. Isn't that the bottom line?

Senator Kemp —Senator Lundy, the witness was about to answer the point that was made by Senator Mackay and then you chose to talk over him. I wonder whether we could now deal with the matter that was raised by Senator Mackay and then, Senator Lundy, you may ask your question. I do want to get some order into this so that we can have the evidence properly laid out.

CHAIR —I must endorse the minister's comments. Witnesses must be given an opportunity to answer the questions for the record. Please proceed.

Senator MACKAY —You would be very interested in these answers, Mr Chair, wouldn't you?

CHAIR —Absolutely.

Mr Granville —In many ways pair gain systems offer us the opportunity to provide a better service than copper systems do, because there are a large number of reports and alarms available which can actually predict problems before they occur. We have a centralised centre that monitors pair gain systems, looks at the alarms coming from them and allows them to proactively send staff to the field. To say that these systems are inherently an inferior level of voice service, I would argue, is not in fact correct.

Senator MACKAY —With your indulgence, Minister, I would like to talk about monitoring. You have a monitoring system. Does it report in aggregate or does it report individually?

Mr Granville —On individual systems.

Senator MACKAY —When?

Mr Granville —Each one has a different form of management system, but it can detect some problem in its operation or the operation of the bearer it is on. For example, if the bearer is starting to have problems for some reason, if it were a straight copper service, unless you went out there and specifically tested the copper service, you would not know until you had a customer complaint.

Senator MACKAY —That is right.

Mr Granville —We do that proactive testing for copper as well. With the pair gain, if it is detecting a deterioration, for example, in the copper performance, it can send a message to the centre. Someone in the centre can see that something is happening and send someone to do something about it before the problem is seen by the customer. So in that manner it can provide a better voice service than a straight copper service.

Senator MACKAY —But that is not necessarily the case. With respect, I just do not see how you can assert that. Going back to the 6x16—which we have now discovered is also 6x15, 1x4, 1x2 et cetera—how can you assert that it is a better service when you have 16 customers to access six phone lines?

Mr Granville —On average, as we see from the figures, there are fewer than 16 for a start. As I mentioned earlier, we can monitor the occasions on which there are not any free circuits available; in other words, you can see the performance as seen by the customer.

Senator MACKAY —I understand. Let us say right now, somewhere in regional Australia, that there is a 6x16. There are, I think, five or six customers. What happens? They are all online now; it is a 6x16. They are all on the phone. What is happening now?

Mr Granville —On that system?

Senator MACKAY —Yes.

Mr Granville —In terms of what the customer would see?

Senator MACKAY —Right now. Somewhere in regional Australia there is a 6x16 with six people on the phone. What happens?

Mr Granville —First of all, they may not be.

Senator MACKAY —No, but let's say they are.

Mr Granville —Because most of them would not get to that point.

Senator MACKAY —No, but let's say they are. What happens?

Mr Granville —To the customer?

Senator MACKAY —You said you have a monitoring system. Right now, real time, how do six people—

Mr Stanhope —It would show high congestion levels, I guess.

Senator MACKAY —On that one 6x16?

Mr Stanhope —That is correct. To go to Senator Lundy's point, the lines will be held up a lot longer if they are on the Internet or whatever. What that will tell us is that that pair gain system will need to be replaced earlier than perhaps would otherwise be the case.

Senator MACKAY —I see.

Mr Stanhope —So we monitor the performance—

Senator MACKAY —So it is not a matter of saying, `Oh my goodness, we've got six people on a phone line of 16; let's send a technician in to sort it out now'?

Mr Granville —It is a statical analysis.

Senator MACKAY —Correct: it is a statistical analysis. So let us not dress it up. And I appreciate that, but I don't think we should dress it up as anything else but that.

Mr Granville —Our whole network is based on the same principles, as I mentioned.

Senator MACKAY —I know.

Mr Granville —I might add that every communications network in the world is based on the same principles.

Senator MACKAY —Maybe so.

Senator LUNDY —If a customer is denied service in the way that Senator Mackay has described, does that mean that customer is eligible for a consumer service guarantee rebate?

Mr Granville —As I mentioned earlier, there is a standard telephone service definition of availability. If the availability dropped below, that could be a possibility.

Senator LUNDY —So the inability to access that service would have to drop below a certain percentage before they became eligible.

Mr Granville —I might defer to my regulatory colleague, who is more aware of those matters.

Mr Paterson —The customer service guarantees refer to service provision—how quickly we put on a service that has been ordered—and fault rectification. There is, of course, recompense—

Senator LUNDY —So you are telling me that a customer denied service in the way that Senator Mackay described is not eligible for a consumer service guarantee rebate for failure to get that service?

Mr Paterson —That is right. It is not part of the customer service guarantee. It comes in under the USO.

Senator LUNDY —So it does not help anyone affected by pair gain.

Senator MACKAY —Also, they do not know that they are actually—

Senator LUNDY —They do not know whether that is the cause. Can we follow up a few issues there. The 854,000 people connected through a remote integrated multiplex type of pair gain: would you describe that as a shared system?

Mr Granville —Yes, it is equivalent to an exchange and it is shared in the same way that an exchange is shared. So it is equivalent to a small exchange outpost. A normal telephone exchange has shared lines connecting it back, in the same way that a RIM would have shared lines connecting back as well. Some early forms of the RIM actually had dedicated lines.

Senator LUNDY —Can you tell me whether anyone connected via a RIM would ever find themselves in a position of not being able to get dial tone because of congestion on that particular RIM?

Mr Granville —I would say it would be extremely unlikely because of the large number of circuits.

Senator LUNDY —Can you tell me whether people connecting to the Internet via a RIM would experience a degradation of their Internet connection speed and perhaps a slower speed the more people who are actually connected through that RIM at any one point in time?

Mr Granville —No, every customer connected to a RIM has a full 64-kilobyte per second channel, the same as in the rest of our network. In fact, the dial-up data rates would be very good because the copper lengths are very short. So the actual usage does not impact on the dial-up data speed.

Senator LUNDY —So on that RIM, everyone could be connected to the Internet and they would all have optimised Internet connectivity speeds—that is, they would all get their 48 kilobytes per second, or 52?

Mr Granville —The usage does not affect the dial-up rate.

Senator LUNDY —Are you sure about that?

Mr Granville —Again, it would eventually get back to the numbers of customers. We can provide quite large numbers of circuits off a RIM. It is a similar situation: we monitor the usage. Generally, the capacity is such that it would not be impacted. Other forms of RIM, earlier versions, actually have dedicated channels.

Senator LUNDY —Would they have a reduced Internet connection speed through those dedicated channels or are they all the full—

Mr Granville —There are a couple of different types of those.

Senator LUNDY —Could you provide details for the committee about the technical capabilities of different types of RIM and the extent to which each type is used?

Mr Granville —Okay.

Senator LUNDY —I know the answer to this question but I think it is worthwhile asking it, just to clarify the matter: it does not matter whether or not you are on a pair gain; if you get dial tone, you pay for a full line service—you pay for that dial tone and there is no differentiation on rent, is there?

Mr Granville —Well, we are providing a basic access service, which has certain definitions in terms of what it provides; and all of our methods of provision meet that level of performance that a basic access service is composed of.

Senator LUNDY —You do not differentiate between the different types of line?

Mr Granville —No. The only exception is in remote areas and in areas where there is some high cost infrastructure required—which is all set out in our standard form of agreement.

Senator LUNDY —I want to ask a couple of questions about the Launceston broadband project. What status does that project currently have?

Mr Stanhope —The project is winding down, but we are in the middle of a survey that will be finished in June in respect of customer reactions and all sorts of other questions in the survey, to get a conclusion about the various elements of the project.

Senator LUNDY —Will that mean that there is an ongoing broadband service in Launceston?

Mr Stanhope —There is a broadband equipped infrastructure there, so yes.

Senator LUNDY —What role will Telstra be playing in providing ongoing services through that broadband network?

Mr Stanhope —Unless somebody at the table can correct me, I think it will be a normal commercial service.

Senator LUNDY —What sort of charging or pricing regime will you put upon that particular broadband service?

Mr Stanhope —We will charge the normal commercial rates, but I am informed that there are still a couple of years to go in the Launceston project. It will take on a new complexion, but there are still a couple of years to go.

Senator LUNDY —Two years to go. What type of services are currently being provided?

Mr Stanhope —I cannot answer that question. Unless someone at the table can, I will have to take that on notice, Senator.

Senator LUNDY —You say that it is going to change the flavour or the `complexion' of it; what do you mean by that?

Mr Stanhope —That is why we are doing the survey: to see if we can change people's behaviours by finding out some of the issues that customers have. Some of the things that have emerged from it are, for example, that it is not so much a pricing issue as an applications and content issue. I have mentioned some of these things before. It is not so much about speed of access as about what is on the servers. It is those sorts of things that we will continue to trial, and we will modify the trial along those lines. It is about what we can actually do in terms of applications and content to try to increase take-up. It gets back to my point before about the IT congress. Some of the information we had was fed back from the trial, and it is more about applications and content.

Senator LUNDY —This trial was used by your CEO as evidence for the lack of interest in broadband, but isn't it true that there was no significant effort or investment put into marketing the trial in Launceston?

Mr Stanhope —We would certainly argue against that. We think that there were quite a number of various marketing aspects around the trials. We had over 500 inquiries and we think it was well publicised. We used various sorts of groups, and between $30 million and $50 million was put into the project, some of which was used in marketing the trial. So I would not agree with the premise that we did not market it well.

Senator LUNDY —That is certainly the feedback that I get from people who were involved in observing the implementation of the project. They expressed a lot of disappointment in the fact that it did not seem to be marketed well, and I want to see if you were prepared to give an assurance today that in the future you will actually dedicate resources and funding to marketing that project with the appropriate level of profile, to at least give the project a chance of success.

Mr Stanhope —Yes, we will, but I am happy to provide to you all the avenues of marketing that we used during the trial, and they are quite substantial.

Mr Rix —I could touch on some of those now. Telstra embarked on two different press advertising campaigns as well as a two-week radio campaign on radio 7LA. We received editorial coverage in the Tasmanian Parent magazine, with a circulation of 22,000 people, and that went predominantly to Tasmanian schools. We had strong support from the local media, with more than 20 positive media reports for the project to date. Telstra conducted a webcast on radio Triple J. Apart from utilising media outlets for promotional opportunities, we also relied on other mechanisms, such as mail drops and project newsletters to all metropolitan Launceston households. We have launched the ADSL multimedia kiosk. We did a mail drop to local businesses. We now have 16 multimedia information kiosks in operation throughout Launceston. We set up a stall at the Launceston innovation expo as part of their open day, in conjunction with the national innovation festival.

Senator LUNDY —The only other question I have, which I would like you to take on notice, is to provide me with details and a description of Telstra's relationship with the company Teledesic.