Issue: 28/08

National Broadband Network Developments

July 23, 2008

On 18 July, the Minister released draft instruments setting out the network information that carriers are to provide for the National Broadband Network project, and the rules to safeguard the information.

For ATUG this is an important step - all proponents must have access to the information they need to prepare competitive proposals. This is the first example of the “equivalence” that will be needed in the NBN environment.

More information regarding the National Broadband Network project, including copies of the two draft instruments is available at: www.dbcde.gov.au/nationalbroadbandnetwork

The Government will consult with carriers on the draft instruments and make a decision about final instruments “expeditiously”. Once network information is provided to proponents, they will have 12 weeks to finalise their proposals. This will mean proposals will now be received towards the end of 2008.

ATUG is not concerned by this delay – if more time is needed to secure a competitive NBN, then that is time well spent. The decisions the Government takes over the next few months will set the course for Australia’s communications environment for coming decades.

ATUG welcomes the Government’s restatement of its commitment to “a genuinely competitive process for the NBN”. An NBN without a competitive market framework will lead to higher prices for end users, slower service roll-out and less innovation.

ATUG’s goals for the NBN are:

• Policy objectives for the NBN regulatory framework which include being in the Long-term Interests of End Users and the development of an effectively competitive services market place.

• Affordability - regulation must support the cost effective building of the NBN, recognising that effective competition is the strongest tool for delivering affordable prices.

• Choice – network topology is central to competition and choice. Only designs that promote competition should be accepted. When infrastructure competition is not possible, services competition based on open access and service equivalence at a wholesale level must be ensured.

• Equivalence in wholesale services together with effective services competition can only be assured by establishing clear separation - between wholesale and retail units. ATUG wants to see a new pro active and independent body, NBN Australia, to facilitate and implement Open Access and the Equivalence Framework

Customer Experience in the NBN environment must be carefully managed to ensure successful end user outcomes. The initial provision of comparable information to customers, service selection, connection, operational and repair experiences as well as changing from one provider to another, all must be of the highest quality. Service quality and security standards must be established at a high level to reflect the key role of the NBN in the lives of all Australians.

• Ubiquity – all Australians must be connected to the NBN. Ubiquity is not only about network availability but also about affordability and accessibility. When all Australians are connected to the NBN, the real potential of this capability for productivity, growth and innovation will be open to end users in all parts of the economy and community, and in all regions of Australia.

Achieving ATUG’s goals of Affordability and Ubiquity will require a cost effective build of the NBN.

This in turn will mean a coherent approach to the use of existing infrastructure, which may not be owned by carriers but by other organisations such as electricity and rail authorities, local council and other government research and education agencies. All relevant infrastructure needs to be considered in planning a cost-effective NBN for Australia. This may be a task that requires COAG support.

ATUG member forums want the Federal funding of $4.7 billion for the NBN to be applied to under-served areas first and used to extend coverage to as many premises as possible, as soon as possible.

Last week the ACCC published details of the take up of broadband access services on Telstra's copper network. For ATUG, this data confirms the importance of competition in creating a strong market for broadband services and the reality of competition in Australia – that it is based in large measure on one fixed network.

Preserving this market structure will be a key task in the NBN environment.

The initial data provides a snapshot of the copper network as at 30 September 2007. ULLS and LSS take-up has since increased from the 640,000 (ULLS and LSS) services reported in the initial data.

Further details are at:
• Telstra CAN RKR - http://www.accc.gov.au/content/index.phtml/itemId/797549
• Infrastructure audit - http://www.accc.gov.au/content/index.phtml/itemId/783617

The geographic areas (ULLS bands) are:

• Band 1 - central business districts
• Band 2 – metro areas (more than 108.4 SIOs per square km)
• Band 3 - regional and rural areas (more than 6.54 SIOs per sq km)
• Band 4 - remote areas (less than 6.55 SIOs per sq km).

Telstra has since reported that there were 768,000 ULLS and LSS in operation as at 31 December 2007.
Snapshot of Telstra's customer access network as at 30 September 2007

	Total Voice only SIOs [1]	Total Voice and DSL SIOs [2]	Total DSL only SIOs [3]	ULLS Access Seeker [4]	LSS Access Seeker [5]
Band 1	217,606	39,042	4,254	20,911	17,133
Band 2	4,581,434	2,081,764	31,954	282,251	314,327
Band 3	1,237,340	780,551	9,708	3,013	6,099
Band 4	792,053	225,339	5,253	73	641

The ACCC says,

The data provides, for the first time, details of the take up of broadband access services between metropolitan, regional and rural areas. The data shows three quarters of these services – and the bulk of unconditioned local loop services (ULLS) and line sharing services (LSS) – are located in metropolitan areas.

The number of ULLS and LSS taken up in regional Australia are at a similar level which suggests that take up of these services in regional areas is being affected by factors other than the structure of access prices, such as population density, length of copper lines, and the availability and pricing of backhaul services.

ATUG says,

These issues will remain in the NBN world.

Getting the settings right to deliver affordable, advanced broadband services to all Australians is the key task in the communications portfolio in the next 12 months. A few weeks or months now to get this right is time well spent.