1. BROADBAND TO WHERE? KEY CONCEPTS Holly Raiche

2. Government Policies on Broadband Narrowband to all 1975 - Aust. Telecommunications Commission 1989 - Community Service Obligations 1991 - Universal Service Obligation - to include prescribed carriage services - a possibility? Broadband to all (?) 1991 - Digital Data Service Obligation - ISDN BSEG, HiBIS, ISG, etc etc 2007 - Broadband Guarantee 2007 - ALP Election - $4.7 billion, 12 Mb/s, FTTN, to 98% of the population - over 5 yrs April 2009 - wholesale access only FTTP fibre with speeds to 100Mb/s up to 93% of Pop. investing $43bil with private sector

3. What Is Broadband Dial Up Modem - 56 Kb/s ISDN - 64 Kb/s ADSL - 512/128 Kb/s ADSL 2, ADSL2+ VDSL - 100 Mb/s - symmetric speeds OECD (2006) Download speed 256 Kb/s FCC (2009) - 768 Kb/s ITU-T 1.5 - 2Mb/s (MPEG2 video uses 6 Mb/s) Data on Internet take up was monitored by the ACCC but is now surveyed bi-annually by the ABS

4. TELECOMMUNICATIONS: REGULATION LEGISLATION Telecommunications Act 1997 Radiocommunications Act 1992 Trade Practices Act 1974 (particularly Parts XIB &XIC) REGULATORS Australian Communications and Media Authority (ACMA) Australian Competition and Consumer Commission (ACCC)

5. TELECOMMUNICATIONS: KEY CONCEPTS Carriage - the use of electromagnetic energy to deliver communications at a distance Regulation of carriage: Telecommunications Act S. 12 - 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 1992 - Part 3.1 - essentially a prohibition on the operation of an unlicensed radiocommunications device except in exceptional circumstances.

6. 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 (50 kms) carriage services - Service 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

7. 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. 88 - 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

8. TELELCOMMUNICATIONS: KEY CONCEPTS Competition in Carriage In Telecommunications - competition almost always involves access to a competitor’s infrastructure/ services. So necessarily is about cooperation in a competitive environment. TA Schedule 1 - Access to Facilities TPA - Part XIB/XIC Part XIB - Anti-competitive conduct Part XIC - The Access Regime

9. TELELCOMMUNICATIONS: Competition Rules PART XIB Competition Rule - Must not engage in anti- competitive conduct Competition Notices Record Keeping Rules

10. 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

11. Part XIC: The Access Regime (cont’d) Objects of Part XIC Promotion of LTIE Promotion of competition in markets Achieving any-to-any connectivity Encouraging economically efficient use and investment in infrastructure 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

12. 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

13. The ACCESS REGIME Terms and Conditions of Supply: Ordinary Undertakings Model Terms and Conditions Special Access Undertakings Telstra v The Commonwealth [2008] HCA7 Was declaring a service beyond power of the ACCC because it was an acquisition of property – must be on just terms. A ‘synthetic argument’ and ‘unreal’ Rights acquired when Telstra was privatised were always subject to a competition regime.

14. TELECOMUNICATIONS BILL Proposed changes to competition regime: Changes to Part XIC End of Undertakings Access determinations and binding rules of conduct Fixed principles Separation of Telstra: Functional or structural

15. Telecommunications Bill Separation Regimes: A Chronicle of Failure Concept of removing incentive from integrated provider from favouring self over competitors. Hilmer Report COAG Principles Record Keeping Rules Special Telstra RKR Regulatory Accounting Framework Parliamentary Inquiry into Telstra Structure ACCC Report Accounting Separation Operational Separation

16. Telecommunications Bill Functional Separation Principles Equivalence Retail/wholesale business units at arms length Ministerial Determination of Functional Separation Requirements (90 days after Act comes into effect) Telstra’s draft functional separation to Minister (90 days later) Comply with principles Establish Oversight and Equivalence Board Released for Public Comment ACCC annual monitor and report on undertaking

17. Telecommunications Bill Structural Separation: The Carrot (or stick) The concept - the network wholesale is a structurally separate entity to the retail entity Telstra to provide three voluntary undertakings Telstra will not supply fixed line carriage services to its retail customers using a telco network over which it is in a position to exercise control - and visa versa Not be in a position to exercise control over an HFC network Not be in a position to exercise control of a subscription television broadcasting licence (FOXTEL) Can be accepted by ACCC (on criteria inter alia, determined by the Minister)

18. Telecommunications Bill Structural Separation: The Carrot (or stick) (cont’d) The Stick: ACMA must not allocate a spectrum licence to Telstra if the licence relates to a designated part of the Spectrum BUT Does not apply if a Structural Separation undertaking is in force and one or other of the undertakings are in force. The Minister also has the power to exempt Telstra from undertakings on the HFC/FOXTEL if satisfied that the structural separation is ‘sufficient to address concerns about the degree of Telstra’s power in telecommunications markets’.