Copyright Ken Fletcher 2004 Australian Computer Security Pty Ltd Printed 20-Oct-15 17:15 1 Prepared for: Monash University Subj: CSE5806 Telecommunications

Copyright Ken Fletcher 2004 Australian Computer Security Pty Ltd

Printed Apr 21, 2023 06:29

1 Prepared for: Monash University Subj: CSE5806 Telecommunications Management

Lecture 1

Development of Telecommunication Policy

in Australia

CSE5806

Telecommunications ManagementLecturer: Ken Fletcher

2Copyright Ken Fletcher 2004 Australian Computer Security Pty LtdPrinted Apr 21, 2023 06:29

Prepared for: Monash University Subj: CSE5806 Telecommunications Management

References DCITA web site (Department of Communications, Information /Technology and the Arts)

– http://www.dcita.gov.au – Especially review their pages on:

– Telecommunicationshttp://www.dcita.gov.au/Subject_Entry_Page/0,,0_1-2_3,00.html

– Telecommunications Legislation

http://www.dcita.gov.au/Article/0,,0_1-2_3-3_213-4_13008,00.html

– DCITA Publications:

• General publications pagehttp://www.dcita.gov.au/Collection/CollectionPage/0,,0_1-2_3-3_143,00.html

• Specific items: “Liberalisation of the telecommunications sector - Australia's experience”http://www.dcita.gov.au/Article/0,,0_1-2_3-3_143-4_15179,00.html#ac

“Australia’s Strategy for Telecommunications” (2002)http://www.dcita.gov.au/download/0,6183,4_112190,00.pdf

Australian Communications Authority http://www.aca.gov.au

Australian Broadcasting Authority http://www.aba.gov.au



Roles of Telecommunications Manager The Telecommunications Manager has two roles:

• Staff Role - Provide Advice and Guidance to Corporate Mgt– eg Technology: Opportunities, Threats;– Regulatory Situation, Policies; etc

• Line Role - Plans, Organises, Leads and Controls (POLC) all aspects of Corporate Telecommunications Facilities, including:

– Telecommunications Strategic Plan– Contingency Planning/Business Continuity Planning– Disaster/Disruption Recovery Planning– Specification & Selection of facilities, equipment, software– Installation and Implementation of equipment, systems, networks– Operations and day to day support of users– Maintenance and Modification– Other areas may be included - eg Security



Introduction ‘Telecommunications’ is much more than simply technology.

• Must consider social, political, and business environment

– The ‘Need’ issues• Why is it wanted? Is it really needed?

• Who needs it, and what for?

– The ‘Implementation’ issues• Is it affordable? Are there alternatives? How long will it take to

implement? What are the ongoing costs?

• Is it cost-effective?

– Political Decisions• What laws, regulations, policies etc. are required?

• What can be deferred to enable implementation?

• These points apply at national level, as well as commercial activity



Political Influences Political influences in Australia telecommunications include:

– Total government ownership of national internal telecommunications (and overseas links from 1946 onwards) until 1990s.

– Subsidies to ‘the bush’ - rural, remote and outback areas • metropolitan services subsidise costs of providing

telecommunications services to remote and rural areas.

– Emphasis on local manufacture and skills• especially in the early days

– Influence over locations• eg. locations of service hubs (exchanges, switching centres) and

major support centres to ensure ‘job creation’ in areas of higher unemployment etc

Parallels and differences with other countries are clear and important



CoA Legislative Powers Australian Constitution (adopted 1901):

• Sect 51: “The Parliament shall have power to make laws …regarding … (v) postal, telegraphic, telephonic and other like services”

Contrast with other federal countries:• USA: central power only for posts, canals, etc.

• Canada: federal power over communications between Provinces (emphasis added)

Authority for regulating international telecommunications into Australia?

• Constitution sect 51 (v) ‘posts and telecommunications’ and (xxix) ‘external affairs’



External Telecommunications

Originally international communications were very limited,

being only Morse code telegraphic services via submarine

cables installed initially in the 1910-1920 period– ‘Cable & Wireless’ - a British company with a monopoly on

telegraphic services for the British Empire - ran the Australian

overseas cable links. Morse relay centres operated at Jakarta,

Christmas Island, Mauritius etc

By 1946 the services had extended to include limited voice

circuits, using submarine and HF radio bearers.

In 1946 the Australian government nationalized the local part

of Cables & Wireless and formed the Overseas

Telecommunications Commission (OTC)



Internal Aust. Telecommunications Initially telecommunications (and post) was a state (colony)

matter until federation in 1901:– different systems in each state– telegraph stations on the borders

Post-Master General's Department (PMG) was quickly created following federation

– Established to develop and control national systems of postal and telecommunications services.

– Took over 20 years to bring telecommunications under unified control.

– PMG (later Telecom) still had state-by-state differences until the 1980s.

In telecommunications matters, PMG was ‘the authority’ & the ‘service provider’ - effectively “judge, jury & executioner”



PMG’s Department Politically, for many years the PMG was seen primarily as a

delivery system for rural support:– usually a Country Party minister

(Country Party was very strong rural based party)– lower rental costs in the country (although installations cost more) – major rural employer.

Rural network became much better than equivalent networks in the US or Canada.

Telecommunications in metro areas were not ignored - just not seen as important politically - but still better than many parts of USA for most of the time

– eg late 1950s film ‘Pillowtalk’ based on a story about telephone “party lines” (multi-drop lines) in NY City was not fully credible in Australia - party lines had not been used in major cities for years.



1960s By the 1960s there was discontent with the

structure/operations of the PMG:• largest employer in Australia (approx. 100,000)

- about half the federal public service workforce – about 80,000 telecommunications, 18,000 postal, 2,000 other

• tensions between the postal and telecommunications operations over investment, staffing levels, profitability, shared premises etc.

• concern over the inappropriateness of PMG funding:– no capacity to retain profits for investment

(all was returned to "consolidated revenue”)– large proportion of capital investment had to come from

government borrowings– all purchases above a very low value needed ministerial approval



1970s Early 1970s Increasing use of computers for data

communications led to severe tensions between Telco’s and customers worldwide

1973 - Government enquiry into operation of posts and telecommunications (“Vernon Committee”.)

1974 - Vernon committee recommended split of postal and telecommunications operations into separate "statutory authorities”, with:

– Boards of Directors with a certain degree of independence– More financial independence from public service style– Re-evaluation of assets to establish proper financial base– Tighter cost accounting

• Also recommended incorporation of the OTC into the telecommunications authority



1975 - Telecom Established July 1975 - Statutory authorities established:

– “Australian Postal Commission” (APC) trading as "Australia Post"– “Australian Telecommunications Commission” (ATC),

trading as "Telecom Australia"• (Legislation was amended in the Senate to keep OTC apart).

– Considerable freedom of financial & investment decision-making:• Profits were retained for investment

• At least 50% of investment had to be generated internally, i.e. profits, depreciation, reduction of working capital, etc.

• Ministerial approval only needed for contracts over $0.5M.

– Still subject to most government bureaucratic rules, staffing practices, etc.

– From 1976 the statutory authorities had to raise their own loans (within the Loan Council).



1977 - 1982 1977-1982 saw growing tension between the government

and Telecom:– Disagreements over industrial policies and disputes– Levels of ministerial involvement

• (eg contracts, PABX market, etc.)

– Complaints from business about monopolistic practices and cross-subsidies between services and locations.

1981 - enquiry established with specific role investigating potential for greater privatisation and competition in the industry. • Report (late 1982) recommended greater use of resale

and competition in cabling, etc. • The report was largely ignored by government



1982 - 1987 Two major communications activities went on outside

Telecom:• Beginning of satellite services leading to the setting up of

AUSSAT.• Moves to set up a cable TV industry.

Few other changes until 1987, when a general new policy on micro-economic reform focussed attention on the Government Business Enterprises (GBE).



1987 Statements of Reform for GBEs GBE = Government Business Enterprises

1987 - Minister for Communications (Evans) announced major changes would be legislated for Aust. Post, Telecom, Aussat and OTC.

These had all had difficulties in working as ‘statutory authorities’ under the traditional public service management styles.

As part of a package for micro-economic reform, the government set new management styles and directions.



1987 GBEs Reform - Longer Term:

The reforms included:

• More Industrial Relations independence

• More freedom regarding executive remuneration

• GBE’s to run their own superannuation schemes

• GBE’s to own their capital base (25% loan to equity

conversion)

• Paying dividends

• Paying payroll & state, local taxes from 88/89

• Paying income tax from 90/91

Summary - To put GBEs on a commercial basis



1987 GBEs Reform - Shorter Term:

• No Ministerial approvals needed for normal business

activity

• No Treasury scrutiny of loans (but still via Loan Council)

• GBEs to run their own bank accounts

• GBEs free to establish subsidiaries

• Authority to buy & sell land & property

• Authority to carry out own works & building

• Exemption from government administrative policies



1987 Telecommunications Framework

The 1987 reform package also changed the framework within which telecommunications GBEs operated

• Three Carriers: Telecom, OTC, Aussat

• Basic Network defined; still the role of the three carriers

• Community Service Obligations (CSOs) detailed

• Value-Added Services - to be fully opened to competition

• ‘Customer Premises Equipment’ policy changes



Customer Premises Equipment Customer Premises Equipment

– Cables & equipment on customer premises, regardless of ownership• Before mid 1970s, Telecom maintained extremely tight control over

what equipment could be used (Telecom supplied equp’t only) and who could install cables or equipment (Telecom).

• From mid 1970s to late 1980s, control was relaxed a little, but not enough to satisfy the community.

– Pre-1987 policies stifled competition and innovation

1987 Policy changes:– Telecom’s "first phone" monopoly to phase out in 3 years– PABX maintenance to be opened to private industry– No restriction on use of second & subsequent phones– Deregulation of customer cabling (Telecom’s boundary defined as

the connection point of the exchange line)



Regulatory Role to Austel:

Regulatory changes introduced in 1987 included Telecom losing its traditional regulatory role• it had become inappropriate with Telecom as a GBE and

one of three entities in the communications arena, • Austel was to be established as the new regulatory body,

covering:– technical regulation– monitoring of the monopolies' boundaries– protection of competitors (from the carriers)– protection of consumers (from the carriers)– promotion of efficiency



1987 Reforms led to 1989 Act

The Statements of Reform made in 1987 were generally finally encompassed in legislation in 1989

Many thought the radical changes of the 1989 Act would be enough, but reform continued in 1990 with a report on Microeconomic reform progress in telecommunications, followed by further major legislative changes in 1991.



The 1990/1991 Changes Creation of a carrier "duopoly” for fixed telecommunications:

– Telecom plus OTC as one carrier (known as AOTC), and– a second carrier (who would absorb a debt-free Aussat)

• Both carriers able to offer a full range of services;• Each carrier awarded a cellular mobile licence

A third mobile-only licence to be offered (ie no ‘fixed’ lines) Full resale of local and international services permitted Service provider licences for private networks and value-

added services A "Universal Service Obligation" element to be paid by all

carriers to provide USOs in non-economic areas. Limit of the duopoly to July 1997, then full deregulation. Increased powers to Austel



1990s - Competition These changes set the pattern of Telecommunications

administration for the rest of the 1990s.

The Optus consortium won the 2nd carrier licence, and Vodaphone the 3rd (mobile) licence.

– Both had guaranteed interconnect with Telecom facilities.– Optus initially operated using Telecom (now Telstra) facilities

provided in bulk at a discount.

In the mid 1990s, political attention returned to Pay TV, which had been banned in 1984. • Debates over satellite vs microwave vs cable delivery. • Government refused to require cable-sharing, which led

to the dual roll-out of HFC systems by Telstra and Optus.



Late 1990s General continuation with policy directions set in 1991 and

1996 (see “1995 policy statement” in the ‘Resources’ web page).

The 1997 Telecommunications Act:– opens up the Telecommunication market to more carriers and

service providers;– attempts to make the industry more self-regulating via

• the Australian Communications Industry Forum, and

• the Telecommunications Access Forum, etc.)

– combined the regulatory aspects of Austel and the Spectrum Management Authority (SMA) to form the Australian Communications Authority (ACA)

– placed the market surveillance activity with the Australian competition watchdog - the ACCC.

The 49% sale of Telstra (approx 1998) to the public really did not change any policies. Government retains 51% control.

Copyright Ken Fletcher 2004 Australian Computer Security Pty Ltd

Printed Apr 21, 2023 06:29

25 Prepared for: Monash University Subj: CSE5806 Telecommunications Management

Results

What are the results of all this?



Basic Telephone Services (2002) Australian law requires that a standard telephone service: • be readily available everywhere; • is subject to price controls; • meets set standards of reliability;• be connected and repaired within reasonable timeframes;

and• caters for those with special needs and who need access

to emergency services. • (Source “Users Guide to Australian Telecommunications 2002”

Available from DCITA website)

Mobile phone coverage (GSM and CDMA) now cover 98% of population (but only about 4% of land area)

Satellite mobile phone systems cover 100% of the land area



Internet and Data 2002 8.4 Million use the Internet All Australians now can dial up at least one ISP at untimed

local call rates Digital Data Service Obligation guarantees availability of at

least 64 Kbps ISDN or equivalent to all Australians (for a price)

Broadband is provided over a variety of platforms, including:• cable;• satellite;• wireless systems; and• copper wires



Cost and Price Reductions Dramatic reduction in costs incurred by the carriers

– cheaper, more reliable equipment etc– significantly reduced staffing levels (“Lean and Mean” approach)

• eg Telstra only about 50% previous staff numbers

• (Consider how this impacts longer term service and support levels)

Significant price reductions to the end consumer due to competition, lower costs and more flexible pricing packages• Since 1997 prices have reduced as follows:

– Local calls by 8.27% per year– National long distance calls 8.4% per year– International calls 21% per year

• (reference: ACA website - “User’s Guide to Australian Telecommunications 2002”)



Unexpected Results “A unique feature of competition in the telecommunications

industry is that competitors have no option but to use each other's networks. Telephone, facsimile, internet and other services require 'any-to-any connectivity’”• From

“Liberalisation of the Telecommunications Sector - Australia's experience” (August 2002 - available on DCITA website)

Technological advances and unbridled competition has produced massive oversupply of bandwidth in some areas - eg between capital cities on east coast.



World Wide Scene

The Australian scene generally parallels world wide

developments

• Worldwide, there is progressively less involvement by

governments in technological service provision

– although recent days have seen some attempts to return to this

• Telecommunications industry and marketplace much

larger & more complex than foreseen as recently as 10

years ago, and rapidly becoming even more so

• A myriad of lawyers now working in telecommunications

Documents

Copyright Ken Fletcher 2004 Australian Computer Security Pty Ltd Printed 20-Oct-15 17:15 1 Prepared for: Monash University Subj: CSE5806 Telecommunications