Review of access to Telstra Exchange Facilities

Record Keeping and Reporting Rules

Consultation Paper

May 2014


© Commonwealth of Australia 2014

This work is copyright. Apart from any use permitted by the Copyright Act 1968, no part may be reproduced without permission of the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publishing, Australian Competition and Consumer Commission, 23, Marcus Clarke Street, Canberra, Australian Capital Territory 2601.

1Introduction

1.1Purpose

The purpose of this consultation paper is to seek submissions on the Australian Competition and Consumer Commission’s (ACCC) review of the operation of the current Access to Telstra Exchange Facilities Record Keeping and Reporting Rules (TEF RKR). The current TEF RKR is due to expire on 14 July 2014.

1.2Reasons for review

The TEF RKR was first made in July 2008 pursuant to section 151BU of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010(CCA)). The TEF RKR was extended on 14July 2011 and is due to expire on 14 July 2014. Clause 2 of the RKR notes that the ACCC will conduct a review of the rules.

1.3Submission process

Submissions should be provided by 5.00pm on Friday 6 June 2014.

Submission of commercial-in-confidence material

All submissions will be considered by the ACCC as public submissions and will be posted on the ACCC website. If interested parties wish to submit commercial-in-confidence material to the ACCC they should submit both a public version and commercial-in-confidence version of their submission. The ACCC has issued a guideline setting out the process parties should follow when submitting confidential information to communications inquiries commenced by the ACCC. The guideline is available on the ACCC website at:

Contact officer and submission lodgement details

Inquiries in the first instance should be directed to David Hinitt at (02) 9230 9148.

Please email submissions to:

Mr David HinittMr Grahame O’Leary

Senior Project OfficerDirector

Australian Competition & ConsumerAustralian Competition & Consumer

CommissionCommission

(02) 9230 9148(02) 9230 3832

2The Access to Telstra Exchange Facilities RKR

2.1Regulatory framework

In accordance with Part XIC of the CCA, the ACCC must exercise its telecommunications regulatory functions to promote the long-term interests of endusers (LTIE). In determining the LTIE the ACCC must have regard to the objectives of:

  • promoting competition
  • achieving any-to-any connectivity in relation to carriage services that involve communication between end-users, and
  • encouraging the economically efficient use of and investment in infrastructure supplying telecommunication services.

The ACCC’s statutory functions under Part XIC include declaration of listed carriage services, conducting inquiries for access determinations containing price and non-price terms of access for declared services, and assessment of special access undertakings and anticipatory exemption applications. The ACCC also has ancillary enforcement functions under Part XIC including ensuring access providers comply with the standard access obligations (SAOs) set out in section 152AR of the CCA.

Under section 151BU of the CCA, the ACCC can make record keeping rules (RKRs). RKRs may require one or more specified carriers to keep and retain records and give reports to the ACCC consisting of information contained in those records. The records must contain information relevant to the ACCC’s statutory functions. That is, the ACCC must not make RKRs that require the keeping or retention of records unless the records contain, or will contain, information that is relevant to:

  • determining compliance with the competition rule (section 151AK of the CCA); or
  • determining compliance with tariff filing directions; or
  • the operation of Part XIB of the CCA (other than Division 6); or
  • the operation of Part XIC of the CCA; or
  • the operation of the National Broadband Network Companies Act 2011, or regulations under that Act;
  • the operation of Part 9 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 which deals with regulation of Telstra’s charges; or
  • the operation of Division 3, Part 20 of the Telecommunications Act 1997 which deals with the Rules of Conduct relating to dealings with international telecommunications operations.

Sections 151BUA, 151BUB and 151BUC of the CCA give the ACCC the power to disclose, or to require carriers or carriage service providers to disclose, reportsor extracts of reports prepared in accordance with an RKR.

The current TEF RKR is atAttachment A.

2.2Background and purpose of the TEF RKR

As the owner and operator of exchange buildings, Telstra determines how access seekers gain access for the purposes of installing equipment or using regulated services. Telstra also determines whether there is sufficient space and capacity at an exchange before it allows an access seeker to access an exchange building.

Access to Telstra exchange facilities is necessary for access seekers to connect with and/or use both regulated and unregulated telecommunications services.[1] For example, access seekers install their own equipment (such as Digital Subscriber Line Access Multiplexers (DSLAMs)) in Telstra’s exchange buildings and use these services to provide voice/data services (e.g. ADSL2+ services).

For this purpose access seekers require Telstra Equipment Building Access (TEBA), which is space set aside in an exchange specifically for access seekers. It generally contains ‘racks’ or floor space where DSLAMs and other equipment can be installed. Space within the Telstra exchange building is also used for Telstra DSLAMs, Telstra PSTN switches (providing voice services), mobile telephony equipment and other types of equipment.

Generally, access seekers can request exchange access via the TEBA Ordering Process, which involves the following steps:

  1. Preliminary Study Request (PSR) – the access seeker submits a request to Telstra detailing the amount of floor space and main distribution frame (MDF) blocks required in a particular exchange. Telstra must provide a response within 10 business days of receiving a request.
  2. Design and Construction Proposal (D&CP) – following Telstra’s acceptance of a PSR, the access seeker must submit a D&CP within 20 business days for work to be undertaken in the exchange.
  3. TEBA D&CP Assessment – Telstra assesses the D&CP in accordance with its technical standards and PSR allocations within 15 business days after receipt of the proposal.
  4. TEBA Construction – the access seeker has 30 business days to complete the construction activities as described in the approved D&CP. The access seeker may request an extension of time within the first 15 business days.
  5. Joint Completion Inspection (JCI) – a JCI needs to be undertaken by both parties within 15 business days of a JCI request.

Once an access seeker submits a request, it is placed in a queue at that exchange. Where access seekers can carry out works concurrently, multiple access seekers are all assigned position one in the queue. Where work is not able to be concurrently carried out, a queue with multiple access seekers is sequential.

If an exchange runs out of equipment space, such as rack space, access seekers are unable to deploy new equipment until further space is added or redundant space is recovered. An exchange that has no available rack space is known as “Racks Capped” and an exchange that has no available rack space, but there is potential for rack space to be addressed by building works is known as “Potentially Racks Capped”.

In addition to rack space, access seekers require access to the MDF which is located within each exchange. The MDF connects access seeker telecommunications equipment to the copper wires that connect to Telstra’s customer access network (CAN). If the MDF runs out of space, access seekers will be unable to connect their equipment to new customers connected to the CAN. This is known as “MDF Capped”. A capped MDF that can be modified to provide more space is known as “Potentially MDF Capped”.

The ACCC was aware that access seekers often encountered difficulties in getting access to Telstra’s exchange facilities and in July 2008 it issued the TEF RKR in response to concerns raised by access seekers. These concerns included:

  • the delays associated with Telstra’s exchange access queuing system, and
  • the lack of independent oversight of Telstra’s exchange capping processes.

The ACCC considered the TEF RKR would provide independent oversight of the exchange capping and queuing processes, increase transparency and enhance accountability. In addition, it was considered that the RKR would assist the ACCC in assessing Telstra’s compliance with its SAOs set out in section 152AR given the ACCC had received a large number of access seekers complaints.[2]

The RKR was reviewed and extended in July 2011 for a further three years with minor amendments.

2.3Information provided under the TEF RKR

Information provided in accordance with the TEF RKR informs the ACCC of exchanges in which delays are occurring, reasons for delays and the lengths of such delays and provides transparency around Telstra’s internal process for determining if an exchange is ‘rack capped’, ‘MDF capped’, and/or potentially capped.

In summary, the RKR requires that Telstra provide information (on an exchange service area (ESA) basis) on:

  • the number of queued access seekers
  • details around preliminary study requests and joint completion inspections (allowing some transparency of queue developments)
  • MDF capped, racks capped and potentially capped exchanges (including, the number of MDF blocks or amount of floor space reserved & number of racks needed for Telstra to meet its anticipated requirements)
  • scale floor plans for racks capped and potentially racks capped exchanges
  • details of construction works required to be undertaken by access seekers in potentially capped exchanges
  • details in relation to potentially capped exchanges regarding preliminary study requests and design and construction proposals (in relation to construction works), and
  • details of potentially capped exchanges where access seekers have started construction works.

The RKR requires Telstra to submit its monthly report to the ACCC within 15 business days after the reporting date.

2.4Disclosure Direction

The ACCC, pursuant to subsection 151BUC(2) of the CCA, issued a Disclosure Direction on 11 July 2011, requiring Telstra to provide, as an annexure to its report, a summary of the following:

  • number of joint completion inspections completed during the period
  • number of exchanges (at the end of reporting period) which are:
  • racks & MDF capped, racks capped, MDF capped, potential racks capped, potential MDF capped, potential racks and MDF capped
  • name of each exchange with status ‘potential’ and the construction work required, and
  • name of each exchange with queued access seekers, the name of each access seeker in the specified exchange and the queue order of each named access seeker.

The ACCC makes this summary available on its website on a monthly basis and Telstra publishes the monthly summary on the Telstra Wholesale website. The ACCC proposes to issue another Disclosure Direction if the RKR is extended. The existing Disclosure Direction is at Attachment B.

2.5Use of information received under the TEF RKR

The ACCC varied and extended the TEF RKR for a further three years in 2011 in order to provide independent oversight of the exchange capping and queuing processes, increase transparency and enhance accountability.

The information obtained under this RKR is also directly relevant to the ACCC’s functions under Part XIC of the CCA. The ACCC uses the TEF RKR to:

  • monitor delays at exchanges and capped exchanges, including in relation to NBN POIs located in Telstra exchanges
  • consider potential issues involving access to facilities to access regulated services
  • monitor Telstra’s compliance with its SAOsunder section 152AR of the CCA, and
  • assist it to perform its functions under Part XIB and XIC of the CCA .

Information obtained under the TEF RKR has allowed the ACCC to monitor the exchange buildingswhere delays are occurring, the stage at which the delay is occurring and length of such delays. Information obtained also provides insight into Telstra’s internal process of determining if an exchange is capped.

The ACCC is also aware that the publicly available information is used by access seekers to assist in business planning for future investment and to assess needs for access to declared services.

In the last review of the TEF RKR Optus noted that:

‘…the TEF RKR has improved the transparency associated with access to Telstra’s exchange facilities…the TEF RKR provides an independent oversight of the exchange capping process since the problem of information asymmetry puts access seekers in a vulnerable position when compared to Telstra retail.’[3]

In its recent decision to extend the declaration of the Domestic Transmission Capacity Service (DTCS), the ACCC noted that access to Telstra exchanges was necessary to enable service providers to be able to offer competitive transmission services. In considering concerns raised by access seekers regarding the transparency of access, the ACCC noted that it continued to use information disclosed by Telstra under the TEF RKR to assess whether there are any barriers to competition arising from delays in accessing Telstra exchange buildings.

3Facilities Access

The ACCC notes that in recent regulatory processes such as the DTCS and Fixed Services declaration inquiries, issues relating to facilities access have been raised. The ACCC is currently considering the most appropriate regulatory response to the concerns raised by stakeholders. The ACCC is also interested in submissions on whether the TEF RKR requires any amendment or expansion in relation to monitoring of facilities access.

4Matters for consultation

The ACCC is seeking submissions from interested parties on the following matters.

4.1Continued operation of the TEF RKR

The TEF RKR is due to expire on 14 July 2014. The ACCC is seeking views on whether the TEF RKR should be extended, varied or allowed to expire.

The ACCC considers that access to Telstra’s exchange facilities by access seekers is necessary to promote competition and encourage efficient use of and investment in infrastructure in the telecommunications industry. Access seekers need access to Telstra’s exchanges to install their equipment to access regulated services and to interconnect with NBN Co’s wholesale services in order to provide telecommunications services in downstream markets. The ACCC and the Australian Competition Tribunal have previously identified access to facilities as a potential non-price barrier to entry.[4]

The ACCC considers that the TEF RKR has improved transparency about access to Telstra’s exchanges, in particular, where problems about gaining access or long queuing problems have emerged. In this consultation, the ACCC is seeking views regarding whether the TEF RKR remains necessary. In particular, the ACCC is seeking views on whether:

  • access to Telstra exchanges continues to be a potential barrier to entry for competing in downstream markets, and
  • maintaining transparency and oversight around exchange access is necessary.

4.2Length of the RKR

In 2011 the ACCC extended the RKR for a further 3 year period until July 2014. The ACCC seeks submissions from industry on the length of extension of the RKR should the ACCC decide to extend the RKR.

4.3NBN Co Points of Interconnection in Telstra exchanges

In the 2011 RKR consultation stakeholders submitted that reporting requirements should be included in relation to NBN Co’s and Telstra’s own space requirements in those Telstra exchanges where NBN Co points of interconnection were to be located.

At the time the ACCC noted that access to Telstra exchanges were likely to be considered as part of any interim and equivalence arrangements of any structural separation undertaking (SSU) submitted by Telstra. The ACCC notes that Telstra’s SSU was accepted in February 2012. The SSU contains clauses dealing with TEBA requests and future anticipated requirements and TEBA queue management for Telstra wholesale customers.

Submissions are sought from stakeholders as to whether any additional reporting requirements need to be imposed in relation to the TEBA space requirements for both Telstra and NBN Co.

4.4Any other matters

The ACCC seeks comments from interested parties whether any other amendments are required to the TEF RKR, including any other facilities access reporting requirements.

4.5Disclosure Direction

The ACCC understands that access seekers have used the publicly available information in the Disclosure Direction.

The ACCC seeks comment on whether the Disclosure Direction is effective and whether it should be reissued if the RKR is extended.

The current Disclosure Direction is at Attachment B.

5Conclusion

The RKR was last reviewed and extended in July 2011 for a further three years with some minor amendments. At that time the ACCC considered the TEF RKR would provide independent oversight of access to Telstra exchange facilities and would assist the ACCC in assessing Telstra’s compliance with its SAOs.

The ACCC considers that access to exchanges remains a potential barrier to entry for access seekers to compete in providing voice and broadband services in downstream markets and in obtaining interconnection with NBN Co points of interconnect in Telstra exchanges.

As required under Clause 2 of the TEF RKR the ACCC is reviewing the rules. The ACCC seeks views from stakeholders on whether the TEF RKR should be extended, or extended and varied and if so, the length of the extension and whether another Disclosure Direction should be reissued.

Questions on which the ACCC seeks views:

1. Has the TEF RKR been effective and transparent in addressing stakeholder concerns?

2. Should the ACCC extend the operation of the Access to Telstra Exchange Facilities Record Keeping and Reporting Rules?If so, how long should the ACCC extend the Rules for?

3. What are the costs (both quantifiable and unquantifiable) of the TEF RKR?

4. What are the benefits (both quantifiable and unquantifiable) arising from the TEF RKR?

5. Is reporting on exchange capping still required?

6. Should the ACCC reissue the Disclosure Direction to Telstra if the Rules are extended?

7. If the ACCC does reissue the Disclosure Direction is there any other information that should be included in the direction?

8. Are any additional reporting requirements necessary in the context of NBN Co use of TEBA space?