Australia - Telecoms Services - Wholesale and Competitive Access

Synopsis

Australia’s NBN, and in particular the structural separation between infrastructure and services, is changing the telecoms industry beyond recognition. A new industry structure is needed based on collaboration and cooperation, rather than on the adversarial principles of the past.

While the open market is being established, Telstra remains the dominant player. Flush with revenue derived from the deal struck with the government over NBN Co’s access to the NBN infrastructure, the company has deep pockets to invest in new opportunities. It must be questioned whether the design of the NBN will lead to true wholesale competition, or will restrict competition to a handful of players which can afford to build their presence in the 121 points of interconnect. The deal with Telstra could well prove to be a critical strategic mistake. A range of other considerations also apply to Telstra’s legacy position as the monopoly provider of fixed-line telecom services. Recently the company launched its Telstra Air service, mainly based on home Wi-Fi sharing but also making use of the network of payphones which Telstra is paid to maintain as part of its renewed USO. About 8,000 of these are being deployed as public hotspots, but their use as an asset for Telstra does not sit well with other telcos which do not have the advantage of ready access to such powered and linked-up sites located in prime locations across the country.

Industry collaboration is needed in a dynamic environment, where speed in delivering the benefits from the NBN is important for economic growth. Some new suggested processes are emerging: in October 2015 the telecoms independent review committee recommended that NBN be allowed to create a separate wholesale business to develop products including data backhaul connections, and so improve broadband services and mobile coverage in regional areas.

In addition, in late 2015 the ACCC proposed the creation of a Superfast Broadband Access Service (SBAS) to improve competition between telcos in securing wholesale connections. Under the draft decision, the SBAS will not apply to services supplied by NBN Co, or on HFC networks transferred to NBN Co, or which are regulated under the ACCC’s Local Bitstream Access Service regime. Instead, SBAS would apply to services provided on select FttP, FttB, VDSL and HFC networks operated by a range of major players.

Key developments:

Regional Telecommunications Review encourages creation of separate wholesale division for NBN; creation of a Superfast Broadband Access Service (SBAS) to improve competition in wholesale connections; CVC rates remain high; PoI (point of interconnect), CVC (Connectivity Virtual Circuit), wholesale, RSPs, pricing, Inabox signs deal with Total Telecom Group to migrate customers’ PSTN services.

Companies mentioned in this report:

Internode, M2, NBN, Nextgen, OPEL, Optus, Telstra, Inabox.

Table of Contents

  • 1. Synopsis
  • 2. Analysis of the wholesale market
  • 3. Wholesale reforms
    • 3.1 Introduction of regulatory instruments
    • 3.2 Regulatory instruments – analysis
    • 3.3 Final access determinations for fixed line telecommunications
    • 3.4 Layer 2 bitstream on non-NBN Co networks
    • 3.5 Difference between peering and interconnection
    • 3.6 The thriving wholesale aggregation market
      • 3.6.1 Inabox
  • 4. Analyses
    • 4.1 Flawed NBN structure undermines competition
    • 4.2 Telstra dominance set to remain
    • 4.3 NBN retail competition at lower margins
    • 4.4 Government is forcing the telco industry to fight Telstra dominance
    • 4.5 Government regulations should not stop Australia from getting better broadband
    • 4.6 Open up the metropolitan NBN market to competition
    • 4.7 Competition in the telecoms industry is dwindling
  • 5. Case study - TPG highlights the fragile NBN environment
    • 5.1 TPG exposes weaknesses in NBN retail models
    • 5.2 Market-led vs. Government intervention
    • 5.3 You cannot unravel the NBN
    • 5.4 The fragility of the wholesale-only model
    • 5.5 NBN is a finely balanced exercise
  • 6. Regional Telecommunications Review Report - 2015
  • 7. Wholesale Product Overview
    • 7.1 NBN for business
    • 7.2 1Gbps wholesale service
    • 7.3 The FttN service
    • 7.4 Access seekers gateways
  • 8. NBN Co’s multicast service
    • 8.1 Overview of the service
    • 8.2 Wholesale Pricing
    • 8.3 The effect of streaming video on the NBN
    • 8.4 iiNet
    • 8.5 4K TV
  • 9. Pricing Strategies
    • 9.1 Wholesale Broadband Agreement
    • 9.2 NBN Co special access undertaking (SAU)
    • 9.3 Wholesale prices
  • 10. Key wholesale services (copper based network)
    • 10.1 Unconditioned Local Loop Services (ULLS)
    • 10.2 Line sharing or spectrum sharing
    • 10.3 Local Carriage Service (LCS)
    • 10.4 Unbundled Bitstream (UBS)
    • 10.5 UBS versus ULL
    • 10.6 Naked DSL
  • 11. NBN Utility Management service – The Retail Clause
  • 12. The NBN CVC and PoI debate
    • 12.1 Wholesale dominance
    • 12.2 Backhaul competition
    • 12.3 The business opportunities of the POIs
    • 12.4 Connectivity Virtual Circuit (CVC)
  • 13. National Broadband Network – Policies and Regulations (see separate report)
  • 14. Other reports
  • Table 1 – The wholesale market in Australia - key players - 2015
  • Table 2 – NBN pricing schedule for access virtual circuits
  • Table 3 – NBN pricing schedule for PoI connections
  • Exhibit 1 - Ultra-HDTV 4K ‘standard’ for satellite TV

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Strategies & Analyses (Industry & Markets)

Number of pages 32

Status Archived

Last updated 22 Aug 2016
Update History

Analyst: Paul Budde

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