BROADBAND TO WHERE? A New Definition and Regulatory Framework for the NBN Holly Raiche

Session Outline What is Broadband What is the NBN Regulatory Framework for Delivering Broadband Legislation/Regulators Basic Concepts Competition Regulation A National Broadband Network The policy The Regulatory Framework New competition rules A progress report

What Is Broadband Peak speed (noting distance as a factor) Dial Up Modem - 56 Kb/s ISDN - 64 Kb/s ADSL - 512/128 Kb/s VDSL Mb/s - symmetric speeds WiMax – 10 Mb/s Satellite – 1 Mb/s – 50 Mb/s 3G – 100 Kb/s – 3 Mb/s Fibre – 100 Mb/s – to Gb/s OECD (2006) Download speed 256 Kb/s FCC (2009) Kb/s ITU-T Mb/s (MPEG2 video uses 6 Mb/s)

Government Policies on Broadband Narrowband to all Aust. Telecommunications Commission Community Service Obligations Universal Service Obligation - to include prescribed carriage services - a possibility? Broadband to all (?) Digital Data Service Obligation - ISDN BSEG, HiBIS, BSG, etc etc Broadband Guarantee ALP Election - $4.7 billion, 12 Mb/s, FTTN, to 98% of the population - over 5 yrs April 2009 – The NBN – FTTP delivering speeds of up to 100Mb/s to 90% of the population, at a cost of $43 billion

THE NBN WHAT IS THE NATIONAL BROADBAND NETWORK? (NBN) Delivery of Broadband to 100% of Australian Premise (FTTP/FTTH) (up to 100 Mb/s) Fibre optical cable to 93% of premises (up to 12 Mb/s_ Fixed mobile to approximately 3% of premises Satellite to approximately 3% of premises (Up to 12 Mb/s) Delivered by wholesale only open access provider By company (NBN Co) Government owned (until at least 8 years ofter network up and running)

Policy Objectives: Competition and Broadband Improved competition For fixed line access network - functional or structural separation by Telstra Government owned NBN Co to provide the local access network (plus…) backhaul in non-competitive areas which is open access, wholesale only at a uniform wholesale access price Ubiquitous Higher Speed Broadband 93% of premises – fibre 7% of premises - wireless (fixed wireless/satellite)

TELELCOMMUNICATIONS: The NBN

TELECOMMUNICATIONS: REGULATION LEGISLATION Telecommunications Act 1997 Telecommunications (Consumer Protection and Service Standards) Act 1999 Radiocommunications Act 1992 Competition and consumer Act 2010(particularly Parts XIB & XIC) REGULATORS Australian Communications and Media Authority (ACMA) Australian Competition and Consumer Commission (ACCC)

TELELCOMMUNICATIONS: KEY CONCEPTS PSTN LEX Gateway CAN Local Loop Access Network CAN Local Loop Access Network Backhau l LEX ISP BGR ISP BGR

KEY CONCEPTS Carriage - the use of electromagnetic energy to deliver communications at a distance Telecommunications network (s. 7 TA) A system or series of systems that carries or is capable of carrying communications by means of guided and/or unguided electromagnetic energy Radiocommunications (s.6 RA) A radio emission (any emission of electromagnetic energy of frequencies less than 420 terahertz without artificial guide, whether or not any person intended the emission to occur) or reception or radio emission for the purpose of communicating information between persons and persons, persons and things or things and things

KEY CONCEPTS Regulation of radiocommunications 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.

RADIOCOMMUNICATIONS Prohibitions Operate a radcom device unless authorised by licence Unlawful possession of radcom device Cause a radio emission from non-standard transmitter Have in possession a non-standard transmitter Supply a non-standard device Sell/supply a device without required label affixed Operate or supply a prohibited device

RADIOCOMMUNICATIONS - OVERVIEW Radiocommunications Act Spectrum Planning Radcom licences Apparatus Spectrum Class Technical Regulation Enforcement

RADIOCOMMUNICATIONS - OVERVIEW Radiocommunications Act Spectrum Planning Radcom licences Apparatus Spectrum Class Technical Regulation Enforcement

RADIOCOMMUNICATIONS Spectrum Plan

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 line link(s)s connecting distinct places over a statutory distance Designated radiocommunications facilities 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

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

TELELCOMMUNICATIONS: KEY CONCEPTS A Wider Definition of Service Provider? The Attorney-General’s Dept has proposed a wider definition of CSP for the purposes of the Copyright Act – safe harbour scheme: Service Provider – to go beyond providers of access to public networks supplied to the public Could include Online search engine Bulletin boards ISPs providing P2P Providers of messaging services, chat etc

Competition in Carriage In Telecommunications - competition almost always involves access to a competitor’s infrastructure/ services. So necessarily it is about cooperation in a competitive environment. TA Schedule 1 - Access to Facilities (towers, ducts, pipes etc) CCA Part XIB - Anti-competitive conduct Part XIC - The Access Regime

ACCESS TO FACILITIES Carrier requirement to give another carrier access to 1 st carrier’s infrastructure (for sole purpose of supplying competing infrastructure/services (given reasonable request and reasonable notice) (Schedule 1, Part 3 TA) Access to facilities ( infrastructure of a telecoms network, or a line, ducts etc for use in connection with a network - def. s. 7) On agreed terms or arbitrated by ACCC (Cl 18) Minister can make pricing determination (Cl 19) Access to network Information Access to info on likely changes to network facilities Access to service quality information NB: Under NBN legislation, now covers access to facilities by carriers AND carriage service providers.

Competition Rules PART XIB Competition Rule - Must not engage in anti- competitive conduct Breach of basic trade practice rules (Pt IV) If have substantial degree of market power, take advantage of that power with the effect of substantially lessening competition in that or other Telco markets Competition Notices Record Keeping Rules

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 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

Part XIC: The Access Regime (cont’d) Declaration of Service After a public inquiry - initiated by the ACCC or an individual Access to declared service through commercial negotiation or arbitration 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

The Access Regime Service Declaration – New Process Explanatory Memorandum: CCS Act ‘Since it is clear that the ‘negotiate-arbitrate’ model is not producing effective outcomes for industry or consumers … the Bill reforms the regime to allow the regulator to set up front prices and non-price terms for declared services. This will create a benchmark which access seekers can fall back on, while still allowing parties to negotiate different terms.’

27 THE ACCESS REGIME Declaration – Objects of Part XIC: LTIE Standard Access Obligations (SAO) Exemptions Negotiate/arbitrate model replaced with Access undertakings Binding rules of conduct Access determinations

TELECOMMUNICATIONS: Declarations ACCC can still declare services – LTIE criteria For services not supplied by NBN companies: Current declarations remain in force Service supplied by CSP under Special Access Undertakings (SAU) in operation (s. 152CBA ) CSP proposing to supply eligible service gives SAU to ACCC – undertaking to be bound by obligations in 152AR – SAOs - as applicable and terms in SAU) Expiry Was 5 years New - expiry should occur in 3 – 5 years, unless the ACCC considers otherwise

TELELCOMMUNICATIONS: ACCESS OBLIGATIONS –Hierarchy (s. 152 AY) C/CSP required to comply with any/all SAOs that apply to them – then comply with (in order): Access Agreement Ministerial Pricing Determinations SAU Final Migration Plan Binding Rules of Conduct (BRU) Access Determination

30 ACCESS DETERMINATIONS ACCESS AGREEMENTS Special Access Undertakings Final Migration Plan Ministerial Pricing Determinations Binding Rules of Conduct Key: Prevails over How it all fits together

ACCESS AGREEMENT (152BE-BED) Agreement must be In writing Legally enforceable Relate to access to a declared service Parties are an access seeker and provider of the service Can embody any/all terms and conditions on which service provided, including SAO, BRA, AD Must be lodged with ACCC within 28 days If agreement terminated, ACCC must be notified Compliance both a carrier licence condition and a service provider rule.

MINISTERIAL PRICING DETERMINATION s. 152CH The Minister may make a written determination setting out principles dealing with price-related terms and conditions relating to SAOs. (overrides SAUs, special access undertakings, access undertakings, binding rules of conduct, access determinations) Is a disallowable instrument

SPECIAL ACCESS UNDERTAKING Special Access Undertakings (ss. 152CBA ff) Carrier/CSP who is/expects to supply a listed carriage service or service that facilitates the supply of a listed carriage service May give a Special access Undertaking (SAU) to ACCC – stating (apart from service/T&C of supply of service) That it agrees to be bound by SAOS as applicable and Undertakes to comply with T&C in the SAU Must be consistent with relevant SAOs and Ministerial Pricing Determinations Can be accepted or rejected by the ACCC ACCC must maintain a register of SAUs (NB: No more ordinary Access undertakings – the same effect is achieved with the Access Determinations)

BINDING RULES OF CONDUCT Can be made by the ACCC (152BD-BDN) About: T&C on which C/CSP complies with applicable SAOs, Extend/enhance capability of facility Require compliance etc (with limitations on the power) May be of general application, or limited to specific class of C/CSP or specific C/CS Duration – no more than 12 months Can be overridden by access agreements Compliance a carrier licence condition and service provider rule

ACCESS DETERMINATIONS ACCC can make AD (152BC-BCW) that Specify any or all terms and conditions for compliance with SAOs Specify any other terms and conditions of an AS’s access to the declared service Provide that any or all SAOs are not applicable to a C/CSP Deal with any other matter relating to access to the declared service may make different provision with respect to different C/CSP or AS Cannot override Access Agreements Can include Fixed Principles (152BCD) Can make Interim Access Determinations Cannot be made until after public inquiry Compliance: carrier licence condition or service provider rule Must be register of ADs

Functional/Structural Separation Under CCS Act, Telstra could: Functionally Separate Separation of Telstra’s wholesale/retail units Undertaking to divest interest in HFC Cable/FOXTEL (each/both can be exempted by Minister) Minister can limit allocation of spectrum licence OR Structurally Separate Undertaking will not supply fixed line carriage service/control of company that supplies fixed line services to retail customers using telecommunications network by 1 July 2018.

Telecommunications The Alternative: Structural Separation (s. 577A TA) Telstra will not supply fixed line carriage services (or in a position to control) company that supplies) using a telecommunications network over which Telstra is in a position to exercise control. Taking into account: Matter relating to transparency and equivalence in relation to the supply by Telstra of regulated services to Telstra wholesale customers and Telstra retail business units

STRUCTURAL SEPARATION Definitive Agreement 23 June 2011 NBN Co – with Telstra and Optus NBN Co access to infrastructure (pipes, ducts) Reuse of infrastructure by NBN Co Telstra/Optus to progressively decommission copper local access network and HFC network Government funding provided Dependent on Shareholder approval; and ACCC approval of Telstra’s Structural Separation Undertaking BY 20 December 2011

PROGRESS ON NBN ACCC to declare the NBN Layer 2 bitstream service – once done will not have expiry date So…. ACCC Discussion paper on service level description for declaration – by April 2012 NBN to submit a Standard Access Undertaking for its service – including terms and conditions of service and a wholesale Broadband agreement (in essence an access agreement) (now on version 4 – modified so it is an interim document lasting only a year (one of main issues – service level rebates)

STRUCTURAL SEPARATION Structural Separation documents to contain Telstra (and Optus) commitment to cease to supply specified services by designated day Equivalence and transparency measures leading up to designated day Migration plan – movement of fixed line services to NBN Co ACCC concerns No compliance plan No clear commitment to equivalence of outcomes Agreements between NBN Co and Telstra (and Optus) access agreements (no ACCC scrutiny) A broad variation mechanism

Telecommunications