5. Infrastructure and facilities

5.1 Governing principles
5.2 Capacity-building and investment
5.3 Use of land and facilities by communications providers
5.4 Transitional and restructuring regulation
5.5 Communications carrier licensing, if any

Note on what this heading covers. This heading is about every means of electronic delivery of communication. There are many policy issues affecting the cost and efficiency of building the facilities for communications, such as land access and town planning permissions. The heading also deals with access arrangements, including access and interconnection between telecommunications networks. Another area of great significance is frequency and spectrum management, currently based on the Radiocommunications Act.

5.1 Governing principles

For example: what priority, if any, for communications build-out against other considerations, such as visual amenity; what level of encouragement, if any, for investment; what degree of encouragement for sharing ducts, towers and other facilities among communications players, or with gas, water, electricity and other utilities.

• Access regulation changes to facilitate national fibre network
Source: ALP
In March 2007, the Australian Labor Party announced that, if elected, the Rudd government would conduct a ‘competitive assessment of private sector proposals to construct a genuinely open access national fibre to the node network, and put in place regulatory reforms necessary to facilitate such an investment.’ The incentives for providers of a national network included ‘a public equity investment of up to $4.7 billion’: The policy announced ‘a competitive assessment of private sector proposals to construct a genuinely open access national fibre to the node network, and put in place regulatory reforms necessary to facilitate such an investment.’ It said that the private sector would be required to indicate:

- the scale of their investment,
- the technical specifications of their proposal;
- proposals to enhance services provided to the 2 per cent of Australians in regional and remote areas not covered by the fibre to the node network.

A pre-requisite for all proposals made under this process is that they submit to providing genuine open access to bottleneck fibre to the node infrastructure. Genuine open access would require:

- Equivalence of access charges; and
- 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.

Whilst implementation of this election policy started in 2008, the policy appeared to embody long-term changes of direction, to attract capital to infrastructure investment. They would also require revision of the priorities and telecommunications access regimes in the current law.

[Ref: ALP, 2007, New Directions for Communications: a broadband future for Australia – Building a national broadband network, viewed 24 July 2008, http://www.alp.org.au/download/now/070321_dp_new_directions_for_communications___a_broadband_future_for_australia___building_a_nationial_broadband_network.pdf]

5.2 Capacity-building and investment

5.2.1 Cabled and wired networks

• More priority for investment in network access pricing
Source: KPMG and Alcatel
A KMPG/Alcatel report recommended changes to rules and guidelines governing access decisions, it said, among other things:

The ACCC [current holder of the power] could revise the tools and guidelines used to set access prices to provide certainty that such prices allow for a fair return on investment for the network owner, for example:
the weighted average cost of capital could be adjusted to take account of the risk and uncertainty the network owner faces with this investment;
adequate consideration of sunk costs, and/or
options pricing could be factored into reflect the opportunity cost of the investment.
A moratorium on unbundling for a certain period of time could be considered for new services or where fibre reaches within a very close distance of the premises.
A moratorium could be considered for access services that exceed certain upstream and downstream throughputs (speed).
The market could be redefined according to geographic areas of mature competition (e.g. competitive Central Business Districts) where several competing networks exist, urban areas with alternative access providers and non-urban areas without alternative access. In non-urban areas, policy driven special incentives and/or sharing options could be considered to promote investment.’

The report, produced in 2006 titled Fostering investment in broadband infrastructure – the need for regulatory certainty, suggested that insufficient regulatory certainty acted as a disincentive to large-scale investment in Next Generation Broadband.

[Ref: KPMG, 2006, Fostering investment in broadband infrastructure – the need for regulatory certainty]

• Utility funding via broadband property levy and FTTH levy
Source: TransACT
A 2008 TransACT submission called ‘A blueprint for the 5th Utility’ deals with the issues to apply once the national broadband network (NBN) is progressing. TransACT says that a fresh look is required for the rollout of converged industries. It suggests that the NBN be treated the same as other utilities. For example ‘If a pass-by levy is good for water, why not for the bit pipe?’ Two specific utility funding proposals are:

Property Levy
If the NBN is considered as a utility, some novel funding options become important to consider. The NBN will add value to all the houses it passes. Like the water supply in the ACT, it is proposed that a charge be levied by the NBN wholesaler on each property which is passed by the NBN even if it does not take the service. The reflects the improved property value and partially offsets the cost of building the NBN.

FTTH levy
It is proposed that Government(s) should mandate that all new estates are wired for the NBN with developers continuing to pay a fixed contribution for each new property developed with FTTH [fibre to the home] infrastructure. The charge might be different where developers choose to develop estates with unique challenges which require negotiation. The provision of the NBN using FTTH for developers should be exclusive to the NBN builder.

[Ref: TransACT, A blueprint for the 5th Utility, June 2008, viewed 31 July 2008, http://www.dbcde.gov.au/communications_for_business/funding_programs__and__support/request_for_submissions_on_regulatory_issues/submissions/TransACT.pdf]

5.3 Use of land and facilities by communications providers

5.3.1    Use of land and facilities generally

5.3.1.1    land and facilities access

•    Access by carriers and others to power poles
Source: Productivity Commission
The Productivity Commission flagged, in cautious terms, a possible change in the law to ensure carriers had access to poles for overhead cables. This would include the relatively ubiquitous poles of power utilities. This was in response to participants in its 2001 Telecommunications Competition Regulation Inquiry report highlighting problems getting access to poles owned by non-telecommunications utilities at reasonable rates.
The Commission recommended that first the ACCC monitor whether inefficient access pricing by power utilities to their poles was frustrating the rollout of new broadband networks. It identified major issues and obstacles facing communications providers as:

very high fixed costs associated with the construction of such poles
obstacles created by planning laws
the high cost of trench facilities compared to the incremental cost of adding a cable to existing poles
power utilities are not always independent of the provision of telecommunications services, so that they may have weakened incentives to provide access
compared with access to conduits and towers, which are covered by the facilities access regime under the Telecommunications Act, the underlying entry barriers appear to be greater.

The report recommended that if there appeared to be a continuing obstacle to the efficient roll out of new networks, after inquiry by the ACCC, there may be grounds for widening the scope of the facilities access regime to such poles, including those owned by non-carriers.’

[Ref: Productivity Commission, 2001, Telecommunications Competition Regulation Inquiry Report, viewed 24 July 2008, http://www.pc.gov.au/inquiry/telecommunications/docs/finalreport]

5.3.1.2 town planning laws

• Local, State and Territory planning for consistent broadband extension
Source: Australian Local Government Association
The Australian Local Government Association (ALGA) has formulated a broadband action plan which includes a positive attitude to broadband development, much higher levels of consistency nationwide, demand aggregation, arrangements for PPPs, clearer information for infrastructure providers and other initiatives. Policy options in that plan include:

The ALGA and state and territory associations should develop strategies to provide information to local government on broadband demand aggregation and funding opportunities, thereby assisting in the development of proposals to infrastructure developers and government agencies for the provision of broadband services.

State and territory local government associations should develop strategies to aggregate local government demand for broadband applications and services, supporting more favourable broadband pricing and product licensing regions across the sector.

State and territory associations should develop specific strategies to facilitate broadband connectivity for individual local governments that, due to physical location or population density, are unlikely to attract commercial services providers to the area.

State and territory associations should develop a model business structure and contractual guidelines for use by local governments entering into public/private partnerships and other collaborative arrangements with commercial infrastructure providers for the delivery of broadband in their area.

Establishing policy and strategy guidelines for the coordinated development of broadband infrastructure. State and territory associations, in conjunction with their respective state and territory governments should develop relevant planning regulations and operational guidelines to provide consistency to infrastructure providers.’

The ALGA says that ‘as the primary public service provider and infrastructure manager to local communities, local government is in a key position to facilitate the growth of broadband through the delivery of online services to local communities and the development of policies and programs that encourage the provision of affordable broadband services at the local level.’

[Ref: Australian Local Government Association, 2006, Australian local Government’s broadband action plan, viewed 24 July, 2008, http://www.alga.asn.au/policy/infotech/broadbandActionPlan.php]

• A ceiling on levies imposed by local government on communications infrastructure
Source: Productivity Commission
In 2001 the Productivity Commission in its report on telecommunications competition recommended maximum limits on the amounts local councils could charge telcos for their infrastructure. The options included direct setting of limits by the Federal Government:

councils could reach a joint agreement on a common practice when setting levies that constrain what each council might do if it were to act independently;

councils could be relieved of their powers to set such levies, with higher levels of government undertaking this role, while consulting with councils about the environmental impacts of new telecommunications facilities; and

the Federal Government could set a ceiling on the magnitude of levies imposed on telecommunications infrastructure. This would be similar to the limits previously established by the State Government for increases in local council rates in NSW.’

[Ref: Productivity Commission 2001, Telecommunications Competition Regulation Inquiry Report, viewed 24 July 2008, http://www.pc.gov.au/inquiry/telecommunications/docs/finalreport Productivity Commission Telecommunications Competition Regulation Inquiry Report, 20 September 2001, p 436]

• Co-ordination of civil works and planning to make infrastructure builds cheaper
Source: KPMG and Alcatel Lucent
A monograph by KPMG and Alcatel Lucent in 2006 proposed, among other suggestions, better co-ordination of civil works and local planning to remove obstacles to competitive and new communications infrastructure. Whilst they did not propose specific legislative change, it appears that their proposals would be accelerated by better statutory requirements for co-ordination. They said that:

Regulation could also be used beneficially to target bottlenecks in the infrastructure supply chain. Specifically, examining how local planning laws, simplifying and reducing the cost of rights of way, co-ordination of civil works with that of utility owners, access to existing ducts, premises, trenches, overhead delivery mechanisms and connectively to dispersed population centres, would provide significant encouragement to competitive infrastructure deployment.

[Ref: KPMG, 2006, Fostering investment in broadband infrastructure – the need for regulatory certainty]

• Broadband planning and environment guidelines by local councils
Source: Australian Telecommunications User Group
The Australian Telecommunications User Group (ATUG) proposed a significant role for local government in planning future broadband, and ensuring availablilty of broadband. ATUG said:

Co-ordination through Local Government and with property developers will be needed to ensure new estates are connected to the NBN with affordable services available for end users. Uniform planning and environment guidelines should be developed to be applied by Local Councils.

NBN should support State Government and regional community initiatives to develop local BB Networks which would then connect to the national NBN.

[Ref: ATUG, A submission to established an NBN Regulatory Framework, 25 June 2008, viewed 6 August 2008, http://www.atug.org.au/submissions/NBNJun08.pdf]

5.3.2 Special rules for comms players to use each others’ facilities and land

5.4 Transitional and restructuring regulation

Note on what this heading covers. Some policies are proposed as transitional measures to create the conditions for long-term policies likely to be in a Communications Act, such as better facilities access or increased investment to operate. Examples are various proposals to structurally separate or divest businesses within the Telstra group, such as separating Telstra from FOXTEL, or Telstra wholesale from Telstra retail.