[Chapter-delegates] Structural separation in Australia

Thu Jun 2 16:43:58 PDT 2011

Hi Everyone

First, thanks to Paul and Tony for shedding light on what the Government's policy on a national broadband network is and means in Australia.  Please note, ISOC-AU received a Community Grant from ISOC to look at the NBN policy, including the technical and regulatory aspects of the policy and what it means for users.  The resulting paper, that more fully explains all, is on our website, with references for those interested in further information (along with the many submissions we have made on a national broadband network).

Tony is right about our concerns for Layer 3.  In our submission to NBN Company in February 2010, we called not only for Layer 2, but also for NBN Co  to provide aggregated Layer 2 and Layer 3 services.

And on structural separation issues, the first thing to be said is that what is happening is NOT structural separation.  Structural separation in the context of utilities, has always meant the actual corporate separation of one corporate entity into two distinct corporate entities - the supplier of the actual infrastructure and the supplier of services.  That is NOT what is happening here.

What the recently formed Government owned NBN Co will do is provide the local access network and, where there is no competitive backhaul, provide that. As Tony said, that access network will be fibre to 93% of the population, and for the remaining 7%, either fixed wireless or satellite. Under the yet to be finalised agreement between Telstra (the existing vertically integrated incumbent) and NBN Co that Paul referred to, NBN Co will use Telstra's pits, ducts etc to install the local access network. Telstra will retain ownership of that infrastructure, and its other infrastructure that delivers mobile services. So Telstra will still be the both the owner of infrastructure and the provider of services using (in part) that infrastructure.  It simply will no longer be the owner of the local access network - now at law to be provided on an open access wholesale only basis - by NBN Co. (if any other infrastructure provider wants to install a high speed local access network as well, it also must be provided on an open access wholesale only basis)

The reality is that, although the Government is calling for more 'structural separation' of Telstra, it is really calling for a more stringent functional separation regime, (there is a functional separation obligation on Telstra now - which has been largely ineffective).  This is part of significant changes to the competition regime for telecommunications that will give our competition regulator more power to determine the prices, terms and conditions on which service providers can access transmission services of others.  

We are all hoping that these very significant changes to our telecommunications environment will result in the Government's stated policy aims: high speed broadband, that is affordable and accessible to all Australians, in a more genuinely competitive environment that provides genuine user choice of both services and service providers. Watch this space.

Kind regards

Holly Raiche
Executive Director,
Internet Society of Australia (ISOC-AU)
ed at isoc-au.org.au
Mob: 0412 688 544
Ph: (02) 9436 2149

The Internet is For Everyone

On 03/06/2011, at 8:45 AM, Tony Hill wrote:

> Paul has been very helpful in responding with this information about the Australian NBN project.  But there is a small challenge with terminology that is currently affecting the debate in Australia and people can get confused.  We need to recognise that there are two concepts that are different here but sometimes called by the same name.  They are NBN and NBNCo.
> 
> NBN stands for the national broadband network.  This is the high speed broadband network that government is seeking to have built.  It will serve 100% of the Australian population, but in different ways.  For at least 93% of Australia's population there will be new fibre links to each premises.  For the other 7% there will be either fixed wireless or satellite solutions depending on how remote the location is.  The whole of the NBN currently is being designed to deliver services by layer 2.
> 
> NBNCo stands for the government owned company that is charged with building the NBN. In general terms, it is limited to providing ONLY wholesale services into the telecommunications market.  NBNCo will provide its services to other companies, which it calls retail service providers (RSPs).  In general terms, those RSPs have the responsibility for designing and delivering any services delivered over the NBN, including what protocols or layer 3 services will be involved.
> 
> In my view, government policy has not dealt properly with the layer 3 issues.  I think there is a general assumption that the competitive market will deal with those issues.  But at the moment, there is no policy guarantee that layer 3 services will be delivered by the Internet Protocol or any version of the Internet Protocol, eg IPv6.  Also, there is no policy guarantee of the nature of services that will be provided, eg will the service be delivered by an open access Internet as we currently know it, or will the services be delivered by some sort of walled garden architecture (maybe still by IP).
> 
> The latest announcement by the Australian Government about the rules for structural separation of our major telecommunications company, are a step in the right direction for achieving a competitive market, but only one step.  Australia has been wrestling with issues around the competitive market since policy moved in that direction in the early 1990s.  We still have to see how all this will play out.
> 
> regards, Tony Hill
> 
> 
> 
> 
> On 02/06/2011, at 4:07 PM, Paul Brooks wrote:
> 
>> On 2/06/2011 10:25 AM, Joly MacFie wrote:
>>> Thanks. Interesting.
>>> 
>>> I'm sorry. I'm always getting my models mixed up, I meant levels 2 and 3 as in
>>> http://www.isoc-au.org.au/Submissions/NBNCo_Feb2010FINAL.pdf
>>> 
>> 
>> Ah - layer-2 (Ethernet) vs Layer-3 (IP) as the preference for NBN wholesale tail circuits.
>> 
>> Yes, that has been resolved - the NBN is purely Ethernet (layer-2), providing Ethernet
>> VLAN bitstream links between end-user premises and the interconnect with service
>> providers. All IP processing, IP address assignment, routing etc is done by the
>> service provider outside the NBN.
>> 
>> 
>> Paul.
>> 
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