Thursday, March 05, 2009

Cutting the Fibre

As a final contribution on the Senate NBN committee I want to talk about the the issue of Telstra advising some of its customers of a decision to relocate a sub-exchange in Canberra and the need for the wholesale customers to make other arrangements.

This event was interpretted by the Telstra wholesale customers as "cabinetisation by stealth" and that was the way it was picked up in questioning by the Senate committee. In evidence Telstra explained that the current location of the remote exchange was rented premises and that the new premises would not have space to accomodate the wholesale customer racks. This explanation seems perfectly rational, though does explain why owning premises might be beneficial as Telecom Australia discovered when they had to relocate York Exchange (now the Grace Hotel) to the new Kent Exchange.

But let's unpick some facts here. Issues around "network modernisation" were known from the very start of the provision of the declared unbundled local loop service. The specific issue was the prospect of moving from a deployment at the exchange to a deployment at the pillar - referred to as State A to State B. There were two stumbling blocks - the first was under what circumstances could the network owner decide they needed to move to State B, the second was what timing was required.

There were attempts in 2000 through both the Australian Communications Industry Forum and the then Telecommunications Access Forum to resolve this issue. Unfortunately access seekers mostly focussed on trying to prohibit the activity rather than engage in constructive discussion on what might be appropriate. This allowed Telstra to rely upon the fact that there might be a need to take the action at relatively short notice and hence to insist upon a fifteen week notice period, which they argued was sufficient time for an access seeker to make their own network re-arrangements.

The failure of the parties to engage on rules and processes meant there was no further work. Meanwhile the ACCC pointed out that it has the power to draft a Network Modernisation Code to cover these circumstances and, effectively, told the industry not to bother further resolving the matter as they would deal with it in the Code.

That Code has never been written by the ACCC.

Meanwhile Telstra continued to insert its unilateral fifteen week notice provision in its ULL contracts. The ACCC's draft report rejected the undertaking, and noted that it had not made a definitive view on the network modernisation provisions but hinted that it would not accept them (section 6.2.1 of the report).

In its model non-price terms and conditions for the "core services" the ACCC proposed;

The access provider may re-locate a Facility:
(a) by giving the access seeker an equivalent period of notice (in writing) to that
which it provides itself (and in any event not less than 120 Business Days’ written
notice) before any such re-location is scheduled to take effect;
(b) provided that the access provider shall consult with the access seeker and
negotiate in good faith in relation to any reasonable concerns of the access seeker,
in relation to the proposed re-location; and
(c) provided that the access provider may re-locate a Facility only where it is
reasonably necessary to do so.

These do appear to be reasonable provisions that it looks like Telstra has failed to pursue in this circumstance. Part (a) requires the earliest possible notice to be given and certainly a bit more than Telstra's fifteen weeks. However it together with part (b) would have created the possibility for the access seekers to convince Telstra to lease more space. However, Telstra's real concern would be that acting on (a) could result in regulatory processes to frustrate the move.

The reality is that despite a number of ULL terms and conditions disputes the ACCC has never finally arbitrated on these provisions. By the time they do, the sub-exchange will be relocated. The arbitration process doesn't include the ability to seek compensation for damages.

It could all have been so different. SPAN attempted to introduce some better negotiation skills in the industry later in the decade, through resolution@span. But by then issues like the network modernisation one had been consigned to the too hard basket. Most parties in the industry decided that they would put the ACCC at the centre of the process.

That is the element that has failed, and that is the element that has been the concious choice of all the industry participants. If the telecommunications industry can only progress based on relying on decisions by a Government appointed regulator it has not advanced at all from being a single Government operated network provider.

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