Issue: 21/08

ATUG NBN Forums

June 04, 2008

ATUG’s NBN Forum – have your say!

This week’s Opinion is an invitation for members to join ATUG at your monthly member state meeting to discuss ATUG’s submission on the National Broadband Network regulatory issues. We welcome your feedback and input to lauren.mcginley@atug.org.au State Event details are available here.

Dates
19 June Sydney – City Tattersalls Club, 198 - 204 Pitt Street
17 June Melbourne – Naval and Military Club, 27 Little Collins St
19 June Brisbane – DLA Phillips Fox, 1 Eagle Street
17 June Adelaide – TBA
Perth – TBA

Background
The Minister for Broadband, Communications and the Digital Economy, the Hon Stephen Conroy has invited industry and public interest groups to provide submissions on regulatory issues associated with the National Broadband Network.

ATUG would like to take the opportunity to have an open and transparent discussion with our members covering ATUG’s submission on National Broadband Network regulatory issues – at present due 25 June.

ATUG’s submission will reflect end user market experience and perspectives developed from ATUG’s 27 years of working for a competitive telecommunications marketplace. We will include input from our varied member meetings, our experiences in regional centres and our international experience and representation.

All regulatory submissions will be made available to National Broadband Network proponents, to assist in the development of proposals.

In addition, the Panel of Experts, who will be assessing the proposals, will also be able to consider these submissions before making its recommendation to Government.

ATUG agrees with the Government comments in announcing the Regulatory Issues process on the “critical importance of future telecommunications regulatory settings, including ongoing consumer safeguards, to ensure the best outcomes for all Australians and the competitiveness of the economy.”

The end user voice is one of the most important view points to be heard in the NBN process, particularly if there is to be any change made to the regulatory or policy framework surrounding telecommunications in Australia. Any such changes must be made after an open and transparent discussion and not in a behind closed doors trade-off process.

Below are included a number of thought starters to our member meetings:

Background on the NBN RFP
1.3 Commonwealth’s objectives for the NBN

1.1.1. The evaluation criteria in clause 10.3 include the extent to which the Proposal meets the Commonwealth’s objectives for the NBN project. The Commonwealth’s objectives for the NBN project are to establish a national broadband network that:

1. covers 98 per cent of Australian homes and businesses;

2. is able to offer broadband services with a minimum 12 Mbps dedicated downlink transmission speed over each connection provided to a premises;

3. supports symmetric applications such as high-definition video-conferencing;

4. is able to support high quality voice, data and video services;

5. uses fibre-to-the-node or fibre-to-the-premises network architecture;

6. enables uniform retail prices on a national basis;

7. is rolled out and made operational progressively over five years from the date of execution of a contract between the Commonwealth and successful Proponent;

8. continues to promote the long-term interests of end-users;

9. has sufficient capacity to meet current and foreseeable demand and has a specified upgrade path within clear timeframes, consistent with international trends;

10. facilitates competition through open access arrangements that ensure equivalence of price and non-price terms and conditions, and provide scope for access seekers to differentiate their product offerings;

11. enables low access prices that reflect underlying costs while allowing Proponents to earn a rate of return on their investment commensurate with the risk of the project;

12. provides benefits to consumers by providing choice to run applications, use services and connect devices at affordable prices;

13. provides the Commonwealth with a return on its investment of up to $4.7 billion;

14. is compatible with the Government’s related Fibre Connections to Schools initiative;

15. meets Government requirements for the protection of Australia’s critical infrastructure;

16. is consistent with national security, e-security and e-safety policy objectives including compliance with laws relating to law enforcement assistance and emergency call services;

17. is consistent with Australia’s international obligations; and

18. facilitates opportunities for Australian and New Zealand small and medium enterprises (SMEs) to provide goods and services to the project.

1.4 Evaluation criteria
1.4.1 The evaluation process is outlined at section 10 of this RFP. Within the framework of an overarching value-for-money assessment, the evaluation criteria against which Proposals will be assessed are:

1. the extent to which the Proposal meets the Commonwealth’s objectives for the NBN project (as set out in clause 1.3);

2. the capacity of the Proponent to roll-out, maintain, upgrade and operate the network;

3. the nature, scope and impact of any legislative and/or regulatory changes that are necessary to facilitate the Proposal;

4. the cost to the Commonwealth of the Proposal;

5. the acceptability to the Commonwealth of the contract terms and conditions proposed by the Proponent and the extent to which the Proposal departs from the Commonwealth’s notified commercial terms (if any); and

6. the extent of the Proponent’s compliance with the RFP.

Discussion from ATUG 2007/2008 Future Forum Series

The Demand Forum
o Highlighted the need for a range of broadband speeds and pricing plans “fit for purpose”.

o Many end users are on a journey with broadband, building their understanding of value.

o They do not want to be presented with very high speed but unaffordable broadband services, which have more bang than their wallets have bucks.

o Just as important for end users right now are proper plans where what you see in the ad is actually what you get;

o A market where switching broadband providers is as seamless as switching mobile providers.

o And for business users, a market where broadband availability is ubiquitous and quality is consistent.

o End user confidence emerged as a key issue as the economy in all sectors looks to transform just about all transactions and processes based on the new connectivity.

o Any to any connectivity and always on are shared visions BUT the need for speed and the ability to pay is specific to each user.

The Technology Forum
o Came to the conclusion that fibre to the home/farm/business is the future for the fixed network.

o BUT to meet market demands for affordable, ubiquitous, high and (sometimes low speed) broadband for telemetry and tags, and to deal with the distance/density issues in Australia, wireless services have an important role to play.

o AND over time, just as voice services have become mobile, so will broadband services – for that segment of the market which is happy to pay the mobile premium for convenience.

o The geography of Australia will mean satellites will also be an important part of the future technology landscape.

o End users are really not interested in the technical specification of the underlying platforms and don’t approach this debate with any ideological predisposition to one platform or another.

o The “Internet of Things” is an important part of the real and not too distant future for end users.

o The need for IPv6 and the migration issues associated with such a huge change were highlighted.

o The role of the SMART GRID rather than just the Smart Meter may provide the basis for infrastructure competition, but will require co-operation at unprecedented levels between Federal and State Governments through COAG and such processes and with the private sector.

o And the Forum felt access to competitive backhaul capacity within Australia and internationally will become more urgent in the next few years as content becomes richer and information flows symmetrical.

The Investment Forum
o At this point in the cycle of Forums, Australia had just had an election where broadband was an important issue – ATUG thinks this is another world first for Australia!

o The forum discussion focused on the rise and rise of social networking, better online content, smarter personal devices and the thinking by business and government about forms of Enterprise 2.0 or Agency 2.0 based on Web 2.0 technologies.

o Businesses are seeing the move to digital business “net” based working as critical to mission and hence on the investment radar.

o ATUG itself is exploring Web 2.0 working as a way of meeting members’ needs for information including direct international updates from experts.

o Telco land is exploring new models of investment – including public/private partnerships and how these can be effectively structured to achieve the multiple objectives that underpin them.

o PPPs are about risk management – an issue exercising the minds of many in Canberra no doubt.

o New business models in the construction, operation end of the market are being matched with new business models in the content, applications end of the market.

o And all this innovation is taking place in a privately funded market where shareholder expectations are an important consideration – albeit not the only consideration as the High Court has reminded us.

o Broadband has to be affordable as well as available for end users and Australia as a whole to reap the benefits of this new economic and community infrastructure.

The Policy and Regulation Forum
o This forum was more focused on FTTH developments and supporting regulatory frameworks.

o Around the world two sets of issues are emerging –
- where incumbents build the FTTH networks, the issues are access to the switching network and fibre plant unbundling and pricing;
- where competitors build the FTTH networks, the issues crystallize around over-build.

o The characteristics of countries that are successfully deploying fibre include
- Government regulatory commitment;
- strong user demand and
- a competitive broadband market.

o A number of countries are exploring “functional separation” as a way of dealing more efficiently and effectively with bottleneck infrastructure meaning effectively competitive sectors can be left to market forces.

o Beyond the “fibre build” debate, there remain some big policy questions arising from:
- the merging of the telephony and internet worlds;
- the development of behavioral economics as a way of understanding the role of consumers as effective market participants;
- the need to reduce unnecessary regulation on economic activity;
- scarce resources becoming more abundant because of technology developments;
- the need to re-think Universal Service from an Obligation on industry to a Safety Net Guarantee from Government.