In-depth: Summary of NBN regulatory submissions

The federal government published this week submissions it had invited from industry players, public interest groups and concerned individuals on regulatory issues associated with the National Broadband Network process.

The government received no less than 80 submissions from a broad range of participants including major telco providers, ISPs, disability access groups, telecommunications consumer and industry groups, telco experts, academics and individuals.

Computerworld explored each submission and here we provide you with the key points outlined in each proposal from the major players. In most cases, the views are lifted verbatim from the submission.

Telstra

"Some argue that the NBN provides an opportunity to impose yet more regulation, such as separation. However, it is inconceivable that such a large, risky project as the NBN could be successfully undertaken facing even more regulation than applies to today's fixed network, which was rolled out long before regulation came along.

We need new thinking focused on the fundamental issue: how do we create an environment that enables the NBN operator to earn a rate of return on its investment commensurate with the risk of the project while also ensuring open access and while meeting the social equity goals for the NBN?"

Telstra claims the ACCC has comprehensively failed to make any adjustment to its thinking to reflect the profound changes that come with a NBN. "Its blueprint for next generation network regulation, set out in the G9 SAU Draft Decision, looks more like a 'drag'n'drop' from the legacy PSTN world, including positions OfCom has rejected as outmoded for a next generation world.

"The ACCC treats the transition to FTTN as its chance to achieve the 'fixes' it has been advocating for problems it perceives with competition in the current legacy world. If the ACCC had taken a more forward looking, open minded approach, it would have seen (as Ofcom did) that many of the perceived problems will either be resolved or irrelevant in a next generation world, and that a whole set of new challenges will instead demand regulatory attention."

AAPT

AAPT put its submission to the Minister as an access seeker to the NBN, calling the current regulatory framework one of "significant anti-competitive conduct, gaming and uncertainty." AAPT said Telstra's refusal to accept arbitral outcomes regarding wholesale price of ULLS and LSS has lead to greater costs to access seekers and in turn higher costs for consumers.

Primarily AAPT is calling for a level flaying field in which the NBN owner will provide products and services on a truly equivalent basis so that access seekers are receiving the same wholesale products, at the same time, at the same prices, and using the same processes to acquire these products and services. This means maximizing traffic on the network in order to recover investment costs and reduce prices for consumers.

AAPT also cast doubt over the ACCC's ability to enforce a level playing field. It called for more resources and power for the watchdog, whose chairman Graeme Samuel admitted before a Senate hearing that the current operational separation of Telstra and arbitral processes were not conducive to effective competition.

Ultimately, AAPT is calling for the structural separation of Telstra, as "regulation alone of what will continue to be a monopolistic market structure is not sufficient and structural remedies are required".

Optus

"The focus of this submission is deliberately directed at the reforms that would need to be made to the regulatory framework should Telstra be chosen to construct and operate the NBN. That is, it consciously contemplates the "worst case scenario" for competition. Optus makes no apologies for this approach. It reflects our overriding concern that the new regulatory regime must be robust enough to withstand the serious threat to competition posed by an NBN operator which is also the dominant provider of retail voice and broadband services to consumers. It also reflects our belief that fundamental reform to the regulation of fixed line services is required regardless of whether the NBN proceeds - a position which is consistent with the emerging trend in many other jurisdictions.

"The experience of the last eleven years has demonstrated that a vertically integrated, non-separated Telstra, simply has too much market power and it will always use this to undermine competition. In an NBN environment with limited opportunities for facilities based competition that market power is likely to be significantly enhanced. The existing provisions under Part XIB of the Act have failed to constrain Telstra to date and they are thoroughly ill-suited to an NBN environment. Government must, therefore, deal with the issue of market power at its source. This requires structural separation."

Page Break

Alcatel-Lucent

Alcatel-Lucent's submission examines the different degrees of separation that have occurred in the national telecommunications networks of various European countries, concluding that there is no one clearly proven or preferable model of separation. Unlike many of Telstra's Australian competitors, Alcatel-Lucent does not explicitly call for any form of separation of Telstra, stating that "the most advanced implementation of separation, that of the UK, provides no evidence that separation has accelerated or facilitated investment in Next Generation Access". However, it contends that the design and implementation of a future proof, resilient and reliable NBN will be impeded by the distraction surrounding unresolved separation speculation.

Australian Telecommunications Users Group (ATUG)

ATUG's submission on regulatory issues is based on Member Forums, conference discussions and on its assessment of global developments and trends. Like Alcatel-Lucent, ATUG is calling for clear policy objectives for the NBN regulatory framework that must include the long-term interests of end users. Affordability and accessibility to all Australians is of paramount importance. Regulation must support cost effective building of the NBN, and to promote effective competition which is the "strongest tool for delivering affordable prices... Only designs that promote competition should be accepted".

ATUG calls for clear separation between wholesale and retail units, and the creation of "a new pro active facilitating and oversighting independent body, NBN Australia, with the task of implementing the Open Access and Equivalence Frameworks for Australia's NBN as well as establishing appropriate consumer safeguards".

Communications Alliance (CA)

Australia's peak telecommunications industry body said Australia should be "striving for the realisation of a time when broadband is as common and easy as turning on the light switch at home. A time where download and upload speeds are irrelevant - it just works. A time where broadband infrastructure is as essential and integrated in the home as electricity, water and gas."

CA called for an open access network with a regulatory framework that promotes competition for consumers and access seekers alike. "Consumer protections and safeguards are important. There is significant scope to reform consumer policy framework in Australia. Communications Alliance supports the development of a national generic consumer law and a review of industry specific consumer regulation that would consider harmonisation where appropriate... The National Broadband Network should not impose overly burdensome compliance costs on industry. We consider that there is considerable scope to reduce red tape and streamline regulatory compliance while still implementing and effective and efficient regulatory regime. The National Broadband Network presents an opportunity to review unnecessary and outdated regulation."

Terria

"Structural separation is the only way to remove incentives for the proponent (Terria) to engage in anti-competitive discrimination or cross-subsidisation in downstream markets. Structural separation ensures that the proponent has an appropriate incentive to make a reasonable return on its investment in the NBN as a standalone investment by maximising utilisation of the NBN rather than inhibiting, preventing or deterring competition by those who compete with its downstream interests. It also provides an appropriate incentive for the NBN owner to respond to access seeker demand for products and allow them to innovate and compete. Operational separation and/or ring fencing rules and imputation tests can assist in reducing these incentives, but experience has shown that they cannot effectively remove them."

iiNet

The summary objectives of the NBN regulatory environment must include structural separation between any access provider and all access seekers, as it is unreasonable to expect a listed corporate entity to put the interests of its competitors, the broader industry or government policy ahead of its fiduciary obligations to its shareholders. The independent owner/operator of the NBN must have its own corporate structure responsible for building maintaining and repairing the NBN, with a CEO who reports solely to and directly to the Board of the NBN. A NBN Access Guarantee Board should be established to monitor report and advise on the delivery of the genuinely open access network with a specific focus on the provision of equivalency of access.

iiNet also called for streamlined and strengthened dispute resolution, as the existing regulatory regime has a number of shortcomings which are easily identified by parties wishing to 'game' the regime. This has resulted in, for example nine years of dispute over the cost of the regulated ULL service, with no conclusion in sight for even the most basic commercial term - the price. All parties must have incentives to conclude negotiations quickly and reasonably priced. Transitional arrangements are essential and should be aimed at meeting public policy objectives rather than shoring up anti-competitive structures. Migration to an NBN should not be enforced prior to five years from the commencement of NBN services in a given location.

Page Break

BT Australia

BT submitted that Telstra's position as the dominant provider of services over the local copper loop and its presence in the downstream market is one that gives the incumbent the opportunity and incentive to discriminate against its competitors. BT stated that "the combination of upstream dominance and vertical integration has the potential to restrict the growth of competition in the Australian market".

BT believes that "the creation of a genuinely competitive communications market is dependent on the opening up of bottleneck assets through the establishment of equivalence of input for appropriate products for operators with significant market power. Indeed, the success of the NBN may be dependent on the establishment of appropriate separation remedies for the Australian market as a whole and not just the new NBN... Imposing a form of operational or functional separation which adequately addresses the incentive of operators to discriminate should be an essential part of the new regulatory regime in Australia. "

Competitive Carriers Coalition

The Competitive Carriers' Coalition is an industry association representing the interests of non-dominant carriers in telecommunications markets in Australia. CCC has been one of the most vocal opponents of Telstra and is a supporter of structural separation of the NBN owner/operator, believing that if Telstra were to build and operate the NBN it would result in discrimination against access providers, less competition and ultimately higher costs for consumers

"The CCC notes that in recent days there have been a number of comments by Telstra that the CCC interprets as representing Telstra's position with regard to appropriate regulatory arrangements for an NBN. The CCC understands the main points of this position to be claims that Telstra requires: