1 BROADBAND TO WHERE? KEY CONCEPTS AND ISSUES

2 BROADBAND TO WHERE WHO CAN INSTALL TELCO INFRASTRUCTURE (THE NBN) - KEY CONCEPTS Communications carriage Carriers Carriage Service Providers Access/competition rules AN NBN - THREE MODELS OPERATIONAL/STRUCTURAL SEPARATION THE ISSUES

3 TELECOMMUNICATIONS: KEY CONCEPTS Carriage - the use of electromagnetic energy to deliver communications at a distance Regulation of carriage: Telecommunications Act S The Act has effect subject to the Radiocommunications Act 1992 (but the fact that a person is authorised to do something under the RA does not mean they are authorised under TA) Radiocommunications Act Part essentially a prohibition on the operation of an unlicensed radiocommunications device except in exceptional circumstances. NB: If a person has been allocated a broadcasting service band licence under the BSA, they must be allocated a transmitter licence (apparatus licence) under the RA

4 TELELCOMMUNICATIONS: KEY CONCEPTS Carriers - What are they owner(s) of network units used to supply carriage services to the public must obtain a carrier licence (s. 42) network Units - link links connecting distinct places over a statutory distance (500 metres) carriage services - services for carrying communications by means of guided and/or unguided electromagnetic energy supply to the public - if unit used for carriage of communications between two end users where at least one end user is outside immediate circle of owner of network unit NB: Under Schedule 3, TA, carriers are given powers and immunities to install infrastructure

5 TELELCOMMUNICATIONS: KEY CONCEPTS SERVICE PROVIDERS (S. 86) Includes Carriage and Content Service Providers Carriage Service Providers (s. 87) If person supplies a listed carriage service to the public using network units. Listed carriage service (s. 16) Carriage service between point in Aust and another point in Aust or point outside Aust Supply to the public (s as before) Content Service Providers (s. 97(2) If person uses/proposes to use listed carriage service to supply a content service to the public - is a listed content provider. Content service (s. 15) is B’casting service, on- line information or entertainment service, any other on-line service by Min. Determination

6 TELELCOMMUNICATIONS: KEY CONCEPTS Competition in Infrastructure Provision Schedule 1, TA: Carriers must give other carriers: Access to facilities (Towers, Ducts etc) (by agreement or ACCC arbitration) Access to Network Information

7 TELELCOMMUNICATIONS: KEY CONCEPTS Competition in Service Provision Government Policy - s. 3 Objects of TA Framework that promotes the LTIE, and Efficiency and international competitiveness of the telecommunications industry TPA - Part XIB/XIC Part XIB - Anti-competitive conduct The Competition Rule/Competition Notice Information Provision - RKRs Operational Separation on Telstra Part XIC - The Access Regime

8 Part XIC: The Access Regime Definitions Access - to listed carriage services Access Seekers - requested access to a declared listed carriage service Access Providers Carriage services Declared services/active declared services Declaration of Service Deemed to be declared On the recommendation of the TAF After a public inquiry - initiated by the ACCC or an individual

9 Part XIC: The Access Regime (cont’d) Service Declaration What can be declared: Listed carriage service, or a service that facilitates the supply of a listed carriage service (concept of unbundling) Once a Service is declared: Service is subject to Standard Access Obligations, with recourse to the ACCC if agreement cannot be reached expiry date must be specified (must occur within 5 years, but can be extended) must be public enquiry on service declaration within 12 months of expiry date

10 Part XIC: The Access Regime (cont’d) Standard Access Obligations Must supply service Must provide interconnection Must supply service on equivalent terms and conditions to what provided to self - technical, operational quality, fault detection, handling & rectification Provision of billing, including timing and content Access to conditional access customer equipment Telstra v The C’wealth [2008] HCA 7 Declaration of ULLS and LSS do not amount to acquisition of property by the C’wealth without just compensation (When Telstra acquired from C’wealth, it did so subject to competition rules)

11 EXISTING INTERCONNECTION ARRANGMENTS home pillar LEX Telstra Competitors Customer Access Network (CAN) - broadband service delivered through the digital subscriber line access multiplexors (DSLAMs) in the LEX. The CAN - the ‘twisted cooper pair’ - LEX to home - owned (almost totally) by Telstra as the ‘bottleneck’ facility PSTN DECLARED SERVICES - ULLS OR LSS

12 FANOC/TERRIA (?) PROPOSAL (Fibre Access Network Ownership Corp) Home Node DSLAMS PillarLEX - Local Access Point Telstra and Competitors CAN Service Aggregation Network (SAN) Proposed network FANOC ROUTER

13 FANOC Proposal Elements Roll out of broadband - initially at ADSL2+ speeds transitioning up Investment in FANOC open to access seekers - wholesale purchasers of the BAS Operation and management of the network (SAN) by SpeedReach (BAS Manager) Requirement of pillar migration New class of licence for construction of HFTP network Extended term for its special access undertaking - 15 years Amendements so can acquire 100% access to CAN

14 TELSTRA PROPOSAL?? Telstra LEX HomePillarNode Telstra Competitors Customer Access Network

15 Government Policies on Broadband FTTN to 98% of population, using $4.7 billion public funding Other 2% of population to receive higher speed?? Competitive assessment of private sector proposals, including regulatory reforms Proposals to address: Equivalence of access charges; Full scope for access seekers to differentiate their product offerings by allowing the customisation of access speeds, quality of services and contention ratios. Regulated access prices would be set at a level that ensures a commercial return can be made on such an investment.

16 OPERATIONAL/STRUCTURAL SEPARATION Operational Separation retaining the corporate structure, but removing the incentive for the wholesale/infrastructure arms of a company favouring the retail area of the company over retail rivals. The aims of operational separation are for the wholesale/infrastructure area to provide equivalence in price, product, quality, terms and conditions, and it usually involves separation of the infrastructure/wholesale areas physically and corporately (up to Board level) using different staff, separate data bases, different KPIs for staff, etc. Structural Separation The separation of the retail operations from the wholesale/ infrastructure areas into separate legal entities.

17 OPERATIONAL SEPARATION A History 1993: Hilmer Report - GBE Reform including structural separation inquiry before privatisation of Government owned monopolies 2000: Regulatory Accounting Framework 2002: Accounting Separation 2005: Operational Separation - into Retail, wholesale and infrastructure entities Equivalence principle Monitoring and reporting regime

18 ISSUES Establishment of a monopoly provider (whether Telstra or FANOC/Terria) - FANOC/Terria proposes allocation for licences to construct the hybrid fibre/twisted pair network (HFTP) or AXIA model - wholesale provider only Reliance by FANOC/Terria on Telstra cooperation and use of the (smaller) CAN - query what AXIA will do Stranded investment? Operation and management of the network (SAN) by SpeedReach (BAS Manager) or equivalent Requirement of pillar migration Will the CAN still a bottleneck Will there need to be a stronger operational/separation regime on Telstra How much bandwidth is needed - and is the public prepared to pay the price?

19 THANK YOU