Queensland Government Submission to the Australian Government on

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					Queensland Government Submission
                 to
    the Australian Government
                 on
      NBN Regulatory Reform
  for the 21st Century Broadband




             June 2009
     Queensland Government Submission to the Australian Government on NBN: Regulatory reform for 21st Century Broadband




                                                       Contents


1      Background ...................................................................................................... 3
2      Discussion on the Industry Structure ............................................................ 3
3   Telecommunications competition framework ............................................... 3
3.1  Part XIC access arrangements ........................................................................ 3
3.2  Anti-competitive conduct provisions ................................................................. 5
3.3  Facilities access regime ................................................................................... 6
3.4  Spectrum allocation ......................................................................................... 6
4   Telecommunications consumer safeguard framework ................................ 8
4.1  Communications Service Standard.................................................................. 8
4.2  Funding .......................................................................................................... 10
4.3  Customer Service Guarantee......................................................................... 10
4.4  Network Reliability Framework....................................................................... 11
4.5  Retail Price Controls ...................................................................................... 12
4.6  Community safeguards .................................................................................. 13
5   Service standards required ........................................................................... 17
5.1  Broadband ..................................................................................................... 17
5.2  Mobile services .............................................................................................. 18
5.3  Voice Services ............................................................................................... 19
5.4  Payphones ..................................................................................................... 20




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1     Background
The Queensland Government is supportive of the NBN announcement by the Prime Minister
and looks forward to further involvement and cooperation on the implementation of the NBN.

This submission builds on earlier submissions by the Queensland Government. These can
be accessed on the following website
       http://www.qgcio.qld.gov.au/qgcio/resources/publicat/Pages/index.aspx

2     Discussion on the Industry Structure
It is the Queensland Government’s preference to provide a set of principles which define the
operations of any dominant provider. These principles include:
     • Emergency Call Person and Integrated Phone Number Data Base Manager must be
         provided in a way that ensures continuity of service
     • directory services, including IP addressing, enhanced white and yellow pages,
         number data bases, email addresses and web services should be provided in a way
         that does not favour any one provider
     • telecommunications carriers participating in the NBN should be structurally separated
         into distinct wholesale and retail entities
     • sunset clauses should be placed on the use of infrastructure such as copper based
         and coaxial cable based networks.

The benefit of adopting these principles is:
   • increased certainty for the NBN business case
   • better allocation of scarce national funds and resources
   • reduced regulatory requirements as separated companies will have appropriate
      business motivations that are not evidenced under other measures
   • reduced regulatory complexity as older technologies platforms are decommissioned
   • increased collaboration with other infrastructure providers will create more efficient
      markets.

The risk of not adopting these principles is that:
   • the NBN company will be undermined by dominant vertically and horizontally
       integrated providers who are not completely supportive of the objectives of the NBN
   • the objectives of the NBN will never be achieved or will be achieved at a substantial
       additional expense.

3      Telecommunications competition framework
3.1          Part XIC access arrangements
Facilities based competition has not developed in the manner envisaged when the market
was first opened to competition in 1997. As a result, access to infrastructure is essential for
the maintenance and further development of competition in the market. The Queensland
Government believes that no opportunities should be foregone to effect competitive access
to facilities defined within the Telecommunications Act (1997).


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Continuing disputes over effective access to the Customer Access Network are undermining
Australia’s position in the Digital Economy. Improvements to the current access regime
would result in substantial benefits for value added telecommunications service providers
and customers.

A past example is the duplication of the television cable network with estimated service
losses of $4.2 billion1. Unnecessary duplication has large costs and the regulation moving
forward should aim to rectify this.

     3.1.1 How can the processes and procedures under Part XIC be improved?
The lack of effective access is, in part, evidenced by new carriers installing networks. The
difficulty in gaining timely access, under competitive terms to existing networks has led to
some facilities based competition and the opening of selected markets and geographic
locations to greater competition.

The ‘negotiate-arbitrate’ model has clearly failed to create sufficient incentive for true open
access by Australia's significant infrastructure owner – Telstra. The model is encumbered by
appeals, litigation and judicial arbitration cycles that limit investment, innovation services
deployment and user choice frustrating the regulatory intent of Part XIC.

At this stage, it is considered there should be no lessening of requirements in access
arrangements under Part XIC of the Trade Practices Act (1974).

           What are the relative merits of the options outlined or any alternative you
       3.1.2
           favour?
Access to the services provided by the NBN facility should continue to be determined by
commercial negotiations wherever possible. The current arrangements are less onerous
than a streamlined deterministic process run by the Australian Competition and Consumer
Commission (ACCC), and have the advantage that some scope remains for market
mechanisms to play a role in providing effective access.

Recent amendments made to the National Access Regime in part IIIA of the Trade Practices
Act (1974) saw the introduction of measures to expedite the regulatory process. This
included time limits for regulatory bodies to reach decisions and the adoption of an objects
clause to guide regulatory decision making. In this regard the Queensland Government
would support the consideration of any measures aimed at improving the effective
functioning of access arrangements under Part XIC.

Ultimately the effective working of the access arrangements will be largely influenced by the
ownership structure of the NBN. Many of the failures of Part XIC have occurred in the
context of a vertically integrated service provider owning network infrastructure services and
competing for retail services. This model should not be replicated for the NBN as
improvements will not be seen.


1
    Paul Budde Communications, “Australia – Pay TV – Industry Developments 1996 -2000”, June 2000.


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    3.1.3 Are there elements of the different options which could be combined?
Economic regulation is fundamentally an evolutionary process, depending largely on the
maturity of the regulated business. In this regard there is some merit in using a certain
process initially to establish a regulatory baseline, as a method of providing regulatory
certainty for the NBN. This baseline would establish the key regulatory parameters including
value of the regulatory asset base, weighted average cost of capital to apply and estimates
of efficient operating costs. The model could then revert to the ‘negotiate-arbitrate’ model for
future regulatory assessments.

There is also scope to formally introduce this model into the regulatory framework as an
alternative in the event an access provider is not acting consistent with the objectives of open
access. The inclusion of this model as a credible threat of more heavy-handed access
arrangements could serve as a powerful incentive for service providers to negotiate in good
faith with access seekers.

3.2           Anti-competitive conduct provisions
The Queensland Government supports retention of telecommunications-specific anti-
competitive conduct provisions.

The anti-competitive conduct rule has proved to be the most effective tool in preventing
dominant providers from misusing their market power. While the provision was intended to
be transitional in nature, the market is not yet sufficiently competitive to justify its removal.

Dominant providers have proven they have both the ability and incentive to engage in anti-
competitive conduct. The market has developed with limited facilities based competition, as
a result dominant providers are able to influence competitors’ prices (through access
charges) and vertical price squeeze. Such conduct has made it harder for competitors to
enter new markets with sustainable margins.

Part XIB of the Trade Practices Act (1974) has several advantages over Part IV of the Act,
which is applied to all markets. Not only does this provision have a lower threshold test
(effect or likely effect) than Part IV of the Trade Practices Act (1974) which is applied to all
markets, it also reverses the onus of proof. As a consequence, the ACCC is able to issue a
competition notice, with responsibility falling on the party concerned to provide evidence it
was not engaging in anti-competitive conduct. Therefore, under the telecommunications
specific provision there is a greater chance that the conduct will be stopped as there is a
greater burden placed on the party engaging in the anti-competitive conduct, as opposed to
the ACCC.

It is recommended:
     • the telecommunications-specific anti-competitive conduct regime (Part XIB of the
         Trade Practices Act (1974)) be retained
     • there should be no lessening of the requirements of part XIB.




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   3.2.1 Are Part XIB procedures too complex? If so, how could they be streamlined?
The procedures could be streamlined by allowing the ACCC to use the following measures:
   • the competition notice could include a summary of the anti-competitive behaviour and
       give guidance for the removal of the competitive notice
   • impose a timetable of activity to provide a level of certainty for business planning
   • impose binding rules of conduct to simplify procedural matters
   • ability to set remedies.

3.3     Facilities access regime
The telecommunications services and new infrastructure should be provided through
cooperation and collaboration between major telecommunications carriers, Government
Owned Corporations and other providers on a commercial basis where economic efficiencies
exist.

Appreciating the sheer size of the capital works program announced by the Australian
Government, better NBN infrastructure outcomes could be achieved if measures were
mandated for enabling civil works in non-telco capital investments (eg. new tunnels, bridges,
road works, rail spurs and upgrades and major water and sewerage infrastructure works).

Given the timeframe for the roll out of the NBN, the NBN company should also take
advantage of infrastructure projects that are committed for implementation during the roll out
period.

          Would making the facilities access regime consistent with Part XIC
      3.3.1
          (Telecommunications Access Regime) improve its operation?
Regulatory arrangements need to be established to provide a timely and simple process for
commercially accessing all pre-existing facilities, regardless of ownership.

The current, as well as NBN related telecommunications access regime, should ideally be
documented in one place and managed in a consistent way. The Queensland Government
supports incorporation into Part XIC as it should remove complexity and promote efficient
use and investment in infrastructure.


3.4           Spectrum allocation
      3.4.1 Given the changes to the telecommunications industry resulting from the roll
            out of the NBN, are competition restrictions necessary to limit access to
            valuable spectrum?
Spectrum needs to be managed in a way which ensures that it will not be an impediment to
the provision of broadband services. This is particularly relevant where the service is only
available through wireless means.

The Australian Government should retain spectrum in the non-Fibre to the Node areas for
the NBN company’s use. The revenue forgone through an auction process could be
recouped through NBN wholesale access charges as the NBN provider would be required to
provide a wireless interface in the premises.


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In areas where the NBN will provide Fibre to the Node service, spectrum should be
auctioned. However, there should be a limitation of the length of time it can be held without
use. This position has been taken to ensure spectrum is not banked to reduce competition by
major operators. It is suggested a policy of ‘use it or lose it’ should be adopted.

   3.4.2    How can the Government encourage competition between different
            technology platforms?
It is suggested the Australian Government could:
     • give grants or taxation incentives to encourage the take-up of a particular platform
     • provide competition relief for a set period through the access arrangements
     • establish measures to assess the affordability of different platforms and whether
         these infrastructures were being used to their full capabilities.

It is suggested, the technology platform may be less important if there is choice of services
and suppliers.




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4     Telecommunications consumer safeguard framework
4.1     Communications Service Standard
          Would the Communications Service Standard approach proposed in the
      4.1.1
          Glasson Report provide an effective and useful framework for safeguarding
          consumer outcomes into the future, including the NBN environment?
From a consumer perspective, telecommunications rights, roles and responsibilities are very
complicated. The approach outlined in the Glasson Report seeks to simplify this complexity.

It is considered that the Australian Government has an opportunity to simplify arrangements
by taking advantage of convergence and by documenting consumers’ rights in a consistent
way through a new Universal Service Obligation.

Like the Glasson Report recommendations, the Queensland Government suggests that the
new Universal Service Obligation needs to combine a wider range of services including
voice, data, mobile and television.

      4.1.2How can reliability, connection and repair time standards for these services
           be established and enforced?
The Australian Government, in consultation with service recipients, should define the quality
of services and measures that will be required. Section 5 of this submission defines the
service levels that the Queensland Government considers necessary.

The Customer Service Guarantee and Network Reliability Framework should be extended to
cover all services provided by the NBN company.

Past experience indicates the absence of appropriate performance criteria will result in less
than optimal outcomes.
A specific example of this is where achievement of the Standard Telephone Service
performance measures resulted in the timely implementation of telephone services using
pair-gain technologies, but resulted in isolating households from access to ADSL services.
This is still a major issue in Queensland, particularly in new estates.

      4.1.3 In the context of the Government’s announcement to establish an open
            access, wholesale - only NBN, should anyone be required to provide
            universal access to broadband services? If so, who? Should the role be
            contestable?
Given that the NBN Company will be responsible for the establishment and maintenance of a
wholesale service to all Australian premises, there probably does not need to be a universal
retail service provider for broadband services. However, there may need to be a retail
supplier of last resort where customers do not provide adequate returns to be attractive.




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   4.1.4    Given the roll out of the NBN and that the Australian Broadband Guarantee
           already provides a safety net, is it necessary to include broadband in a
           regulatory framework for universal access?
The Australian Broadband Guarantee is an Australian Government program which is funded
on a periodic basis. The May 2009 Australian Government budget decreased the funding for
this program and as such does not provide the level of certainty and the service outlined in
the Regional Telecommunications Independent Review Committee Report 2008.

Currently, the benchmark for this service is well below business and community expectations
and is not benchmarked often enough.

It is necessary to document the right to a broadband service by including it in a new
Universal Service Obligation and in particular the role of the NBN company as the universal
wholesale provider and a supplier of last resort.

From the perspective of the proportion of Australians which will not benefit from a Fibre to the
Premises service, their service levels need to be benchmarked in an appropriate way to
ensure parity of service is maintained.

   4.1.5   Given that the Satellite Phone Subsidy Scheme already provides a safety net,
           is it necessary to include mobile services in a regulatory framework for
           universal access?
Mobile services are a preferred communications mechanism for Australians as the number of
mobile services vastly exceeds fixed phone services.

Mobility applications are increasingly being used by business to improve service delivery and
business productivity. However, the mobile services footprint in, and between, populated
areas needs further development.

A large proportion of Australians now consider wireless services to be as important as fixed
services and would expect them to be part of a Universal Service Obligation.
Satellite phone services are used in remote parts of Australia where there is no terrestrial
mobile coverage. The Satellite Phone Subsidy, while welcomed, is only available to a small
proportion of the population and makes the handset more affordable, but suffers from very
high usage charges. The Regional Telecommunications Independent Review Committee
(RTIRC) recommendation that Satellite usage costs (voice and data) should be on par with
terrestrial mobile costs is supported and it is suggested this model could be accommodated
on the new NBN satellites announced by the Australian Government.

Further more, the Satellite Subsidy is an Australian Government program which is funded on
a periodic basis and as such does not provide the level of certainty and the service outlined
in the Regional Telecommunications Independent Review Commission Report.




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          What mechanisms should be in place to address and resolve access,
      4.1.6
          reliability and other service issues faced by consumers and small
          businesses? What role should industry play?
See discussion on the Network Reliability Framework in Section 4.4.


4.2     Funding
      4.2.1    How should the universal access regime be funded?
The Universal Service Obligation seeks to provide a consistent telecommunications service
across Australia. Currently, this is achieved by selecting a single provider that is funded by
other carriers to deliver this service.

As the NBN Implementation Plan is unknown at this time, cost models for servicing differing
population densities are not understood. Each access seeker should pay the same
wholesale price thereby creating a level market for retailers to value add. A common
wholesale price structure suggests a level of subsidy between metropolitan and lower
populated areas lessening the quantum of additional funds required to stimulate delivery of a
basket of common services to low or negative margin regions. While this will limit the overall
cost of the universal access regime, it may still necessitate a supplier of last resort that is
subsidised due to unsustainable returns.

The approach to funding a Universal Service Obligation, through the collection of carrier
contributions, is a form of indirect taxation on individuals and businesses, with the carriers
acting as tax collectors.

As telecommunications underpins Australia’s economic and social development, it is
suggested that contributions should be collected over a wider base using the standard tax
system rather than the approach that is currently used. The funds collected in this way could
then be dispersed by the Australian Government in a more converged way without impacting
on the profitability of carriers.


4.3     Customer Service Guarantee
      4.3.1  Does the Customer Service Guarantee need strengthening? If so, what
             changes should be made?
Yes. The Customer Service Guarantee should be made more enforceable. It is suggested
the following principles be adopted:
    • service delivery targets should be determined by the Australian Government in
         consultation with the impacted parties
    • targets reflect the expectations of Australian businesses and consumers
    • targets should provide certainty to consumers
    • reporting arrangements established for the NBN company should be completely
         transparent and at a sufficiently disaggregated level
    • no averaging across a service portfolio




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      •    independent audits should be used to ensure service levels and promised NBN
           coverage are achieved. An example of this is the Australian Government’s approach
           to the validation of Telstra’s NextG service before CDMA could be closed
      •    reliance on carriers to report their own performance involves a high level of risk
      •    failure by providers to meet required levels of service needs to result in appropriate
           penalties and compensation
      •    broad failures to satisfy individual services should be subject to a larger range and
           scale of penalties
      •    penalties should be set at a level that will induce the appropriate behaviours.

There should also be a guarantee of access to triple zero (‘000’) irrespective of
telecommunications provider and technology platform.

    4.3.2 Should working days be replaced with calendar days in repair timeframes?
Yes. Society is increasingly reliant on telecommunications for business and social
interaction and the concept of Monday to Friday being representative of the business week is
increasingly at odds with normal practices.

      4.3.3Should the service disruption criteria be tightened? If so, what mechanism
           should be put in place?
The Queensland Government would support the Australian Communications and Media
Authority (ACMA) declaration of unusual contributing influences based on specific events, for
example flood, fire, natural disasters rather than carriers nominating the disruptive event.

      4.3.4     Customer Service Guarantee reporting

4.3.4.1       Should the ACMA’s informal monitoring benchmarks for carrier performance against
              the Customer Service Guarantee and priority assistance be made enforceable
              requirements subject to civil penalties?
Yes. See Section 4.1.2 and 4.3.1.


4.3.4.2       Should the level of penalties be increased?
Yes. See Section 4.1.2 and 4.3.1.


4.4       Network Reliability Framework
      4.4.1Does the Network Reliability Framework need strengthening? If so, what
           changes should be made?
The Network Reliability Framework currently only applies to Telstra. It needs to also cover
the NBN company and other carriers and needs to be extended beyond telephony based
services to cover broadband and mobiles services as well.

While the NBN is rolled out, there is likely to be a disincentive for the maintenance of legacy
based copper infrastructure. This could require a stronger focus on existing carriers to
ensure service levels are maintained.


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4.5     Retail Price Controls
      4.5.1Should the Government continue to regulate Telstra’s retail prices for voice
           telephony services in the transition to the NBN?
These regulatory measures need to be maintained until it is certain a competitive
telecommunications market is operating and is providing services at prices that are less than
the current price caps.

With the establishment of the NBN, the complexity and extent of regulation and price controls
are meant to diminish. If appropriate behaviours cannot be established without these, the
investment in the NBN and the efforts to change the industry structure will have been for
nothing.

Nevertheless, in the interim, price caps will be critical as they will ensure individuals do not
receive excessive bills for their usage.

    4.5.2 If price controls should be continued, which services should be included?
Due to the extended nature of the NBN roll out, it would be appropriate to consider a range of
price controls including a basic broadband and mobile service.

The Australian Government could consider an approach similar to the Australian Broadband
Guarantee service which sets a service benchmark. The market recognises this benchmark
as being well below normal community expectations. Nevertheless, it documents a basic
service. It is suggested any price control benchmark would need to be reviewed on a regular
basis to ensure it still satisfies its purpose.

      4.5.3Should retail price controls be used in conjunction with the wholesale access
           regime (eg. to regulate fixed-to-mobile prices)?
If other checks and balances are working well, there will be little need for price controls.
However, it is expected that price controls may be needed for some time where there is
limited competition.

      4.5.4    In the longer term NBN environment, will retail price controls be required? If
               so, what form should they take? What services should they cover?

Key measures of success for the NBN will be:
   • the extent to which regulation and intervention is minimised
   • the ongoing affordability of services
   • relativity to global benchmarks.

Retail price controls will be crucial in any arrangement where there is a monopoly provider to
drive effective operations and market efficiency. This might be a requirement in retail
markets with limited returns.

The NBN company’s product offerings have not been released.                                   There will need to be
controls over these offerings.


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4.6     Community safeguards
      4.6.1     Priority assistance

4.6.1.1       Are priority assistance arrangements effective?
Current arrangements are effective, but should be extended to Internet access and mobiles
as this could have substantial tele-health benefits in the future.

4.6.1.2       Does the voluntary industry code provide a sufficient safeguard for consumers?
A voluntary code is not sufficient as it does not cover all standard telephone service
providers. Also voluntary reporting has proven to be inadequate as it is not completely
reported by those who have currently volunteered to provide a service.

4.6.1.3       Should provision of priority assistance be mandatory on all fixed line voice providers
              during the transition to the NBN environment?
Yes. See above.

4.6.1.4       Should the Government extend the scope of the priority assistance criteria to include
              people with a disability?
Yes. The criteria should be extended for new services and repairs where the recipient of the
service is unable, for a variety of reasons, to communicate through any other means.

    4.6.2 Emergency call service
Stronger regulation is required to ensure the Emergency Call Person functions and the
Integrated Public Number Database manager role are administered well, irrespective of who
currently does the work.

It is considered the ACMA needs more authority to ensure existing arrangements work and
issues are resolved quickly. As an example, ACMA has been of limited assistance to
Emergency Service Organisations in obtaining Mobile Origin Location Information from the
Emergency Call Person and other carriers.


4.6.2.1       Who should be required to provide the emergency call service?                              When can any
              transition begin?
Emergency Call Services are currently answered by Telstra and then passed to the relevant
authorities in a timely and appropriate way. A number of companies have the expertise in
call centre service provision. The service could be provided through a national contract
between a single company and the Australian Government, supported by contractual or
license arrangements with other providers.

However, these services should ideally be provided by an Australian Government statutory
authority with all the necessary checks and balances. These checks and balances would
need to include a very strong regulatory framework with proper controls over both the
Emergency Call Person and other Carriers.




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It is suggested both the operation of the Australian Government Statutory Authority for triple
zero, and network relevant needs of Emergency Service Organisations should be costed into
the NBN framework.

Consideration also needs to be given to the use of the Internet and other mechanisms as an
originating source for emergency calls.

4.6.2.2   If responsibility were ultimately transferred to the NBN company, what obligations
          should apply to the company as a wholesaler and to retail service providers?
The provision of location data is a must for any new national system. The data provided to
Emergency Service Organisations has to include location (latitude and longitude) and be
provided in such a way that it is compatible with Emergency Service Organisations
requirements.

This will necessitate service standards for the NBN company and retailers.

Specific obligations on the NBN company would include:
   • seamless and reliable hand over between the Emergency Call Person and the
        Emergency Service Organisations
   • the need to provide the actual location (address, latitude and longitude) rather than
        the billing address or other address
   • provision of the location of an emergency service call, irrespective of whether the call
        came from a ‘fixed line’, VOIP service or a mobile service
   • prompting Emergency Service Organisations call takers when location information is
        not available or is uncertain
   • requirement to power appropriate handsets that can make emergency calls when
        mains power supply is unavailable.

Specific obligations on retail service providers:
   • to provide guarantees to support the successful origination of emergency calls from
        fixed, mobile and Internet based telephony providers.

4.6.2.3   What are the merits of the options identified? Are there operational disadvantages
          with the emergency call service person being separate from a telecommunications
          service provider?
The operational disadvantages are mainly around the potential disconnect between the
Emergency Call Person, currently Telstra, and carriers, especially in terms of what could
become divergent or uncoordinated upgrade paths, policy and procedures.

4.6.2.4   If Telstra is not the emergency call person and Integrated Public Number Database
          manager, how and when should these responsibilities be transferred to the new
          provider?
Refer to 4.6.2.1




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    4.6.3 Legacy services and the NBN
Permitted Attachment Private Lines are used by state and local government entities in
Queensland to manage fire alarms, Emergency Vehicle pre-emption capability (station roll
out) and traffic lights. Telstra has indicated that the transition needs to be completed by
December 2009 and has provided industry with adequate notice.

It is understood that relevant state and local government agencies are in the process of
transitioning from this type of facility and are installing mobile services and fibre optic based
services as replacements.

It is of concern that Telstra recently refused to provide any copper infrastructure that would
support powered telephone services to new hospitals being built it Queensland. Telstra
asserted it would only provide fibre services, necessitating delays, additional customer
expense, redesign of communications facilities and upgrades to uninterruptible power
supplies.

4.6.3.1      Will the NBN raise issues for legacy services on Telstra’s network? Why? If, so how
             should they be dealt with?
The Queensland Government considers that there are likely to be a large number of issues
with Telstra’s legacy services. These will be many and varied, and could include access to
exchanges and ducts.

     4.6.4     Opportunities for red tape removal

4.6.4.1      Are there any broader implications from the proposals raised by Telstra, in its
             submission to the Productivity Commission
Telstra is seeking to remove a number of its carrier licence conditions2 as it considers them
to be ‘Red Tape’. The Queensland Government’s view on each of these changes is outlined
in the table below.

Clause        Clause Heading                Queensland Government response
5             Industry Development Plan     Industry plans should be required from all carriers who operate in more than one
                                            State.
13 & 14       Local Number Portability      This functionality needs to be maintained albeit the operational details associated
                                            with the establishment of Local Number Portability could be removed. With the
                                            ongoing provision of Local Number Portability, it will be necessary to maintain
                                            location based information with the number. This should be longitude and latitude.
9             Removal of the obligation     The White Pages obligations should not be removed until a directory is established
              to deliver the White Pages.   which includes all contact details (ie. fixed phone number, mobile phone number,
                                            email address, fixed IP address) from an alternative provider.

              Telstra suggests that the     Consideration could be given to reducing the distribution requirement to every two
              physical delivery             years so long as the online directory is always current and the directory provider is
              requirement be abolished      required to stop charging for not publishing a service at a customer’s request.
              or at the very least
              changed to a bi-annual
              obligation,
11            Telstra to differentiate      Telstra should continue to differentiate between the charges for handsets and


2
 http://www.comlaw.gov.au/ComLaw/Legislation/LegislativeInstrumentCompilation1.nsf/0/2C86CC199E9D1F4DCA25755A0001BA
8A/$file/CarrLicConditions.doc


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             between the charges for       phone rental.
             handsets and line rental
22           Exemptions from the           There should be no additional exemptions to the Customer Service Guarantee.
             Customer Service
             Guarantee


4.6.4.2    Should the proposals raised by Telstra in its submission to the Productivity
           Commission proceed?
See response above.

4.6.4.3    Will directory assistance services, including printed directories, be required in an
           increasingly online world and, if so, how would necessary services be best provided?
Directory assistance services will need to continue as a proportion of the population do not
have ready access to online services through either mobile of fixed means. Also directory
assistance and printed directories provide access to contact details when online services fail.




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5       Service standards required
It will be critical to define the service boundaries between the NBN wholesale service and
retailers.

To date NBN wholesale services have been defined at a high-level and low levels of latency
and appropriate contention are assumed. Nevertheless, the needs of consumers differ from
business and there will be opportunities to differentiate retailers and their services on a wide
range of measures (including the priority particular services are given and extent to which
symmetrical services are provided).

The sections that follow document the Queensland Government's service expectations for
the range of fundamental services that can be supported by the NBN company's
infrastructure.


5.1       Broadband
The Queensland Government has the following requirements of the NBN and its Fibre to the
Premises coverage. The NBN needs to service:
   • population centres in Western Queensland, not just those centres within a few
      hundred kilometres of the coast
   • all bounded localities and hub towns3
   • every school, health, public safety facility (ie. police, ambulance, SES and fire
      services) and tertiary education campus in Queensland
   • all state and local government libraries
   • council administration buildings.

A key issue for Queensland is the location of the 10% of Australian homes and businesses
that will not receive access to Fibre to the Premises through the NBN. The Queensland
Government’s preference in those towns which do not benefit from Fibre to the Premises is
that they be connected to the NBN network via fibre optic backhaul and not be
disadvantaged by lower quality microwave or alternate technologies, likely to limit their
participation in future broadband services.

The Australian Government has not provided details on the determination of the 10% of the
population to miss out on Fibre to the Premises reticulation. Public information states that
settlements with populations of around 1000 people will receive Fibre to the Premises
connections. It is understood substantially smaller towns are being proposed for services in
Tasmania4.



3
  A hub township is a small rural township offering both residents (and businesses) of the township and outlying areas access to core services.
These core services include one or any combination of; a police presence, school, library, shopping and light industry, post office or agency, fuel
depot, significant tourist attraction or major road intersection. Their function is convenience, social amenity and service level and as such its
importance is beyond the simple consideration of the resident township population. Examples of these types of towns are Carnavon Gorge,
Rolleston and Rubyvale.
4
    http://www.minister.dbcde.gov.au/media/speeches/2009/019
    http://www.pm.gov.au/media/Interview/2009/interview_0907.cfm


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The Australian Government must collaborate with the states to agree on the location of
homes and businesses that will benefit from the NBN.

As a general principle, broadband services need to be functionality based, rather than
determined by the technology platform. There should be no substantial difference in the
availability and service quality received by consumers of NBN services irrespective of the
platform. Should the NBN Fibre to the Premises infrastructure offer improved services over
time, this should be reflected in the services available to the non-Fibre to the Premises
customers.

Affordability and demand are closely associated. It is the Queensland Government’s position
that rural and remote consumers should not pay more for their broadband service than that
paid by consumers for NBN broadband services. The mechanism to achieve this balance is
a national wholesale price to access seekers (in both backhaul and the Customer Access
Network) that does not differentiate between fibre connected customers and wireless or
satellite connected customers.

The Queensland Government suggested in its submission called ‘Queensland Government
Submission to the Australian Government on Regulatory Reforms to be implemented with
the NBN’, June 2008, that the NBN needs to be regularly benchmarked to maintain parity
with the best 25% of Organisation for Economic Co-operation Development countries in
terms of performance and affordability.


5.2        Mobile services
It is considered that mobile services will approach adequacy when all bounded localities5,
national highways and state strategic roads have mobile coverage, with the same
functionality available throughout the network.

If an outcome of this discussion process was to use mobile or wireless services for the
Standard Telephone Service, it would be necessary to rethink the charging arrangements
associated with local-call and free-call services. It is not equitable that mobile users should
be charged timed rates for services that are provided at a low fixed cost or no-cost to fixed
phone service users.

With the dominant voice communication tool being the mobile phone, it would also be timely
and appropriate to apply the same customer service guarantees and other standards to this
form of service.




5
    Population centres of 200 people


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5.3     Voice Services
The Queensland Government considers Standard Telephone Service functionality should be
retained and supported by the NBN. Table 1 defines the measures that the Queensland
Government considers should be retained in the Standard Telephone Service, regardless of
the technology used to provide the service.

                         Table 1 – Standard Telephone Service functionality to be retained




                                                                                                                                 Retain
    Functionality                                                      Comment

 Existing Standard
 Telephone Service
 Calling line            A telephone service that transmits the caller's telephone number to the called party's telephone        Y
 identification          equipment. This service enables a customer to identify from what number an incoming call is
                         being made. It is available to customers with suitable equipment. For appropriate authorities, this
                         should include Longitude and Latitude information.
 Directory assistance    Standard Telephone Service providers must provide a directory assistance service that                   Y
 services                customers may contact to find the number of another customer’s Standard Telephone Service.
                         This information may be provided by means of an automated voice response system.
 Operator assisted       Standard Telephone Service providers must provide an operator service that customers may                Y
 services                contact for assistance with faults and service difficulties in connection with that service.
 Free emergency          Standard Telephone Service providers must provide, free of charge, the emergency call service to        Y
 services access         people requiring urgent help from police, fire or ambulance services in a life threatening or time
                         critical situation. It is accessed by dialling ‘000’, the free 24 hour emergency services number.
 Itemised billing        Standard Telephone Service providers must provide an itemised billing for each of their                 Y
                         customers. The bill must show basic details such as the:
                         • date on which the call was made
                         • number to which the call was made
                         • duration of the call
                         • charge applicable to the call.

                         On request, these details must also be provided for local calls.
 The option of           Telstra was the selected tenderer in a $150 million tender to provide untimed local calls in the        Y
                                          6
 untimed local calls     'extended zones' in rural and remote areas of Australia.

                         As a result of Telstra successfully winning a $150 million Australian Government tender,
                         extended zone customers will have access to untimed calls at the local call rate of 22 cents per
                             7
                         call . This applies to calls:
                         • within your extended zone and to adjoining extended zones
                         • between your extended zone and its community service town and to the community service
                            towns of adjoining extended zones.
 Pre-selection           The ability of customers to select their telecommunications services provider. It allows a              Y
 capability              customer to use more than one provider of services. For example, a customer may receive their
                         standard telephone service through Telstra but select Optus to provide their long distance
                         national and international calling services.
 Number portability      Enables phone customers to change their residential address or telecommunications service               Y
                         provider but retain the same telephone number. This allows consumers to choose between
                         competing providers based on price, quality, type of service and (for mobile phone users)
                         coverage without the inconvenience and expense of having to take a new number when moving
                         between providers. With the ongoing provision of Number Portability, it will be necessary to
                         maintain location based information with the number. This should be longitude and latitude
                         which will be used to support emergency services as well as the National Alerting System.
 Suitable equipment      Enables people who have vision, hearing or speech impairments to communicate with other                 Y
 for customers with      people over the telephone network via operator-assisted text and voice telephony.
             8
 disabilities


6
  In general terms, extended zones are areas that fall outside Telstra's standard local call charging zones. They are defined by
telephone number ranges and are not always linked directly to a geographic boundary. They also generally exclude town centres and
higher population density areas. There are 102 extended zones, of which 98 are active, ranging in size from 8,400 to 304,000 square
kilometres. They are located in the most sparsely populated areas of Australia. Within these zones, which cover close to 80% of
Australia's land area, there are about 40,000 services.
 http://www.acma.gov.au/WEB/STANDARD/pc=PC_1785
7
  http://internet.aca.gov.au/WEB/STANDARD/pc=PC_1699
8
  http://www.acma.gov.au/WEB/STANDARD/pc=PC_1738


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                                                                                                                                    Retain
       Functionality                                                     Comment

    Network Reliability    Monitors and improves the reliability of phone services at both the network and the individual           Y
              9
    Framework              service level. Network Reliability Framework applies to all Customer Service Guarantee services
                           (ie. customers with up to five lines) provided by the Universal Service Obligation provider
                           (currently Telstra).
    Additional             Telstra has a licence condition requiring it to offer a Priority Assistance service to residential       Y
    Requirements on        customers who have been diagnosed with a life-threatening medical condition with a high risk of
    Telstra                rapid, life-threatening deterioration. The Priority Assistance service provides for connection and
                           repair of the services of priority customers within 24 hours in urban and rural areas and 48 hours in
                           remote areas.
                           Retail price regulations require Telstra to put downward pressure on its telephone call prices and,      Y
                           indirectly, those of its competitors. The current regulation which applies until 30 June 2009 when
                           it will be reviewed:
                           • maintains the 22 cents cap on untimed local calls
                           • promotes pricing parity between metropolitan and regional areas for local calls and line rentals
                           • ensures that increases in the cost of phone connections are linked to inflation
                           • protects consumers from major line rental increases by only allowing basic line rental products
                               to increase to match inflation
                           • caps local calls from Telstra payphones at 50 cents.
                                                                                                      10
                           As the universal service provider, Telstra must offer an interim service or the choice between an        Y
                                                    11
                           interim and alternative service to its customers when it is unable to connect an Standard
                           Telephone Service within timeframes specified in its Standard Marketing Plan. Interim or
                                                                                                  12
                           alternative services are offered under the following circumstances :
                           1. inability to connect a service within 30 working days
                           2. extended service faults
                           3. recurrent service faults
                           4. service faults occurring after restoration
                           5. inability to connect or repair a service as required by Telstra's priority assistance policy.
                                                                                      13
    Customer Service       An industry standard required by the current legislation . The Customer Service Guarantee                Y
    Guarantee (CSG)        requires telephone companies to pay financial compensation to customers where minimum
                           performance requirements are not met.



5.4        Payphones
The Queensland Government’s views from earlier submission processes have been
reiterated for completeness; however, it is uncertain how this relates to the NBN.

           Should universal service payphones be provided under a competitive
       5.4.1
           process, such as under a competitive subsidy?
Competing for a minimum subsidy in a loss making area is a difficult business model for the
private sector to engage with, especially where the service offering is limited to a standard
phone service. The provision of a wider range of services through a converged infrastructure
could increase the attractiveness, reduce the cost and make ventures more profitable.

The Australian Government could fund the provision of payphone services in a similar
manner to that documented for the Indigenous payphones program. This will allow the real
costs of provision to be identified.



9
  http://www.acma.gov.au/WEB/STANDARD/1001/pc=PC_1736
10
   a voice telephone service (or an equivalent form of communication where voice telephony is impractical for customers with a
disability) that uses mainly mobile or satellite technology and is charged at standard telephone service rates.
http://www.acma.gov.au/WEB/STANDARD/1001/pc=PC_1717
11
   provides customers with access to a telephone service and can be supplied in a variety of ways, such as through call diversion to a
customer’s mobile or a second fixed line service. Telstra is not required to charge STS telephone rates for outgoing calls from this
service, but no charge is made for setting up the diversion, or for the diversion component of received calls.
12
   http://www.acma.gov.au/WEB/STANDARD/1001/pc=PC_1717
13
   http://www.acma.gov.au/WEB/STANDARD/pc=PC_1712


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   5.4.2 How should payphones be distributed around Australia?
Communications can be an emotive issue for communities and therefore the standards
associated with the provision of payphones need to be appropriate for community needs.

Payphone services provide a safety net communications service to citizens who cannot
afford other communications services, and travelers who are outside mobile coverage.
Public payphones are used by people who, amongst other things:
    • cannot access a fixed line or mobile service due to associated costs
    • are travelers from overseas or who have no-fixed abode
    • are temporarily unable to use their own mobile service due to lack of phone charge
       credit, battery power or mobile phone signal
    • just wish to maintain their privacy.

Payphones are a universal service obligation. The standards associated with the provision
need to be set by the Australian Government for the benefit of the community, not by the
Universal Service Provider.

The tables below are an extract from Telstra’s Universal Service Obligation Standard
Marketing Plan14.

The standards located in the shaded cells are considered to be unreasonable. The
distances associated with payphones standards need to be reduced considerably. For
example, it is unreasonable to expect that the nearest payphone would be:
    • 40 km away from a small town, where costs are covered; or
    • 250 km away, if the small service centre is located in an unprofitable area.

                                          Criteria for the Provision of Telstra Operated Payphones
         Location                                                 Profitable         Covers costs                    Not profitable
                                                                  Telstra will       Telstra will provide one or     Telstra will provide one or
                                                                  provide one or     more payphone facilities        more payphone facilities
                                                                  more payphone      where it is not commercially    where it is not commercially
                                                                  facilities where   viable however where it Is      viable and where it is
                                                                  provision and      assessed that the projected     assessed that projected
                                                                  maintenance of     revenues will at least cover    revenues will not cover the
                                                                  the facility is    the depreciation and            depreciation and
                                                                  considered         maintenance costs of            maintenance costs of
                                                                  commercially       providing and maintaining the   providing and maintaining the
                                                                  viable.            facility and there is no        facility and there is no
                                                                                     payphone within                 payphone within
                                                                                     approximately                   approximately

         Retail Centres                                           Yes                1 km                            No
         Entertainment venues                                     Yes                1 km                            No
         Transport hubs                                           Yes                1 km                            No
         Health and Community facilities                          Yes                1 km                            No
         Residential communities in cities and towns with         Yes                2 km                            No
         average or high level of home telephone connection
         Residential communities (incl. caravan parks and         Yes                1 km                            1 km
         holiday units) in cities and towns with low home
         phone connection
         Industrial or commercial areas                           Yes                2 km                            No




14
     http://www.dcita.gov.au/__data/assets/pdf_file/72273/Attachment_H_-_Telstras_Policy_Statement.pdf


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                                          Criteria for the Provision of Telstra Operated Payphones
          Location                                                 Profitable         Covers costs                    Not profitable
                                                                   Telstra will       Telstra will provide one or     Telstra will provide one or
                                                                   provide one or     more payphone facilities        more payphone facilities
                                                                   more payphone      where it is not commercially    where it is not commercially
                                                                   facilities where   viable however where it Is      viable and where it is
                                                                   provision and      assessed that the projected     assessed that projected
                                                                   maintenance of     revenues will at least cover    revenues will not cover the
                                                                   the facility is    the depreciation and            depreciation and
                                                                   considered         maintenance costs of            maintenance costs of
                                                                   commercially       providing and maintaining the   providing and maintaining the
                                                                   viable.            facility and there is no        facility and there is no
                                                                                      payphone within                 payphone within
                                                                                      approximately                   approximately

          Small villages and towns (incl. holiday areas)           Yes                40 km                           40 km
          Within state or national parks, where there are          Yes                40 km                           100 km
          permanent facilities and regular park staff visits,
          Small service centres on highways and major roads        Yes                100km                           250km
          in rural and remote areas where there is adequate
          mobile service
          Small service centres on highways and major roads        Yes                100 km                          200 km
          in rural and remote areas where there is inadequate
          mobile service
          Small remote communities, incl. Indigenous               Yes                Yes, with a                     Yes, with a
          outstations                                                                 permanent population            permanent population
                                                                                      of more than 20 adult           of more than 20 adult
                                                                                      residents, or 50                residents, or 50
                                                                                      people in total.                people in total.


Similarly, it is unreasonable to wait for six months in Minor Rural areas and nine months in
Remote Areas for a public phone service.

                                            Installation Times for a Telstra Operated Phone Box
                                                                Without readily accessible infrastructure
          Readily accessible                   15               16                       17              18
                                         Urban and Major Rural          Minor Rural Area         Remote Area
          infrastructure
                                         Area
          3 months                       3 months                       6 months                 9 months


          What controls should be placed on the provision, including location, and
        5.4.3
          removal of payphones? Should there be a stronger role for local councils?
The Australian Government needs to set standards for payphones in a way that ensures all
persons in Australia who cannot access telecommunications services any other way, have
reasonable and equitable access to a basic level of telecommunications services.

        5.4.4Should the ACMA be given powers to set a minimum number of Universal
             Service Obligation payphones, and require Telstra to identify those
             payphones?
Under the Universal Service Obligation, communities or members of the public can apply for
installation of a Telstra-operated payphone in a public place. During 2005–2006, there were
322 applications for installation of a new Telstra-operated payphones – only 31% were
accepted19. It is uncertain why the 69% were rejected.

15 Equal to or more than 10,000 people
16 Between 2,500 and 10,000 people
17 Up to 2,500 people
18 <200 people
19
     http://www.acma.gov.au/webwr/_assets/main/lib101030/cr%2005_06_ch%205.pdf


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The Queensland Government has the following concerns related to the tables in Section
5.4.2:
    • how is profitability or otherwise determined and audited?
    • how are the rows in the table determined and negotiated?
    • where is performance reported?

The availability (or up-time) of payphone services also needs to be improved.

Over the past year, in Queensland payphones have had an average down time of 6%20. This
6% equates to each payphone being down for approx 21.9 business days per year. On
average, in Queensland, it takes 17 business hours to clear a fault. What this means is that,
at best, a phone is unavailable for 3021 hours and, at worst, 9122 hours over the weekend.

March 2007 National figures23 show a bleaker picture indicating only 84% of faults were
cleared in rural areas within two business days. In remote areas only 66% of faults were
resolved in three business days. The trend in the latest ACMA report indicates this
performance is declining.

It is recommended that the location of payphones be listed in the phone book covering the
local area. While there is an 1800 number listed in the White Pages to obtain information on
payphone locations, this is not of much use if the reason a payphone is required is the
inability to utilise existing fixed or mobile services.

     5.4.5  Should the ACMA be allowed to set stronger rules regarding the provision,
            relocation and removal of payphones, especially in rural and remote areas?
Where it can be assured that mobile services are available in the area, local penetration of
mobile phones is very high, call costs are affordable, the distance to an alternative payphone
is not too far then the provision of a payphone at a particular location could be reviewed.
Earlier research indicates, there are 58,230 public payphones in Australia. 30,091 are
operated by Telstra and 28,139 are operated by other providers24.

It is difficult to determine where these payphones are distributed across Australia as there
are gaps in the published data provided in the latest ACMA report. The following table
summarises the known distribution.




20
   http://www.acma.gov.au/webwr/_assets/main/lib310208/mar_2007_tcomms_performance_data.pdf
21
   Full 24 hours (including one eleven hour business day) plus an additional six business hours.
22
    If a failure occurs after business hours at the start of a weekend (say 6:00pm on Friday). On average Telstra would
take 17 hours to fix the failure. This could mean the failure would be fixed as early as 1pm on the following Tuesday
with the payphone being unavailable for 91 hours.
              Saturday(24hrs to 6pm) +Sunday(24 hrs to 6pm) +Monday (24hrs to 6pm - only first business day of eleven
              business hours)+ Tuesday (13hrs to 7am start of second business day) +Tuesday (6hrs to 1:00pm - hopefully
              fixed).
23
   http://www.acma.gov.au/webwr/_assets/main/lib310208/mar_2007_tcomms_performance_data.pdf
24
   http://www.acma.gov.au/webwr/_assets/main/lib101030/cr%2005_06_ch%205.pdf


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                                             Number of Telstra Public payphone boxes
                                                 Urban          Rural             Remote         Remote
                                                                                                 indigenous
                      Queensland                                         1432           182
                      New South Wales                                    2077
                      Northern Territory                                                330
                      Victoria                                           1399
                      Western Australia                                                 260
                      Other (1)                                          1946
                      Other (2)                                                           81
                      Australia                    22384                 6854           853                   415
                      Australian per             74.39%             22.78%          2.83%                 1.38%
                      centage
                                             Number of privately operated payphones
                      Australia                  21556         6026               557            51
                      Australian per             76.61%        21.42%             1.98%          0.18%
                      centage


On 21 February 2006, Telstra announced that it intended to remove 5,000 payphones over
the following 12 months that were loss making and not required to fulfil the Universal Service
Obligation.25 This equates to almost 17% of the Telstra payphones overall, but could equate
to up to 65% of rural and remote payphones.

It is difficult to understand how the Universal Service Provider could initiate this range of
closures without the Australian Government being provided with a detailed understanding of
the impact.




25
     http://www.acma.gov.au/webwr/_assets/main/lib310120/chapter_3.pdf


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