TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) (CHARACTERISTICS FOR STANDARD TELEPHONE SERVICE) REGULATION 2012 (SLI NO 99 OF 2012) EXPLANATORY STATEMENT

TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) (CHARACTERISTICS FOR STANDARD TELEPHONE SERVICE) REGULATION 2012 (SLI NO 99 OF 2012)

Telecommunications (Consumer Protection and Service Standards) Act 1999

Telecommunications (Consumer Protection and Service Standards)

(Characteristics for Standard Telephone Service) Regulation 2012

Subsection 160(1) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted to be prescribed by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

In simple terms, paragraph 6(1)(a) of the Act defines a 'standard telephone service' (STS) as a carriage service for the purpose of voice telephony communication between end-users supplied with the same service, whether or not the end-users are connected to the same telecommunications network. Paragraph 6(1)(e) of the Act provides that the term STS (in respect of voice telephony) has, for the purposes of a particular provision, the characteristics declared by the regulations.

Paragraph 6(1)(b) of the Act defines an STS as another form of communication equivalent to voice telephony (such as a Teletypewriter (TTY) that enables text based communication) that would be required to supply an end-user with a disability to comply with the Disability Discrimination Act 1992 (the DDA). Paragraph 6(1)(f) of the Act provides that the term STS (in respect of equivalent forms of communication for an end-user with a disability) has, for the purposes of a particular provision, the characteristics declared by the regulations.

The purpose of the Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012 (the Regulation) is to remove the obligation to provide pre-selection in five separate circumstances. This is achieved by declaring designated characteristics for an STS which are to apply when considering the requirement to provide pre-selection functionality under section 349 of the Telecommunications Act 1997 (Tel Act). In these circumstances, where an STS does not have the designated characteristic then the obligation to supply pre-selection is removed (see Table 1 below).

Section 5 provides a designated characteristic for a carriage service provided for the purpose of voice telephony or equivalent forms of communication for an end-user with a disability, in four types of prescribed building units. The characteristic is that the service is supplied using a line connected by physical contact. By specifying that the line must be connected by physical contact in these situations, the section has the effect of removing the obligation for pre-selection functionality on an STS when supplied in the circumstances specified by wireless platforms that do not involve physical contact.

The first circumstance relates to the use of interim wireless infrastructure to provide an STS in specified new developments, where the carrier or carriage service provider reasonably believes that the rollout of a copper-based or optical fibre-based telecommunications network will commence within 12 months after the end-user's request. In such new developments, the obligation to provide pre-selection functionality does not apply. Under this circumstance, Telstra Corporation Limited (Telstra), as the primary universal service provider, and other service providers, may supply wireless-based STSs without pre-selection on an interim basis.

The second circumstance also relates to the removal of pre-selection obligations where interim wireless services are provided to specified new developments, but is restricted to situations where a carrier or carriage service provider reasonably believes a fibre-based network will commence to be available to service the end-user's building unit within 12 months after the end-user's request. Similarly, this circumstance will allow Telstra and other service providers to supply wireless-based STSs without pre-selection to end-users in new developments where the national broadband network (the NBN) or other fibre-based telecommunications network will be rolled out in the area.

The third circumstance relates to the removal of pre-selection obligations where wireless services are provided to specified new developments, but is restricted to situations where there is no specified fixed-line passive infrastructure (particularly pit and pipe) installed in sufficient proximity to enable a carrier or carriage service provider to service the end-user's building unit with a fixed-line network. This circumstance is provided to enable Telstra, as the primary universal service provider, and other carriage service providers to supply a wireless STS without pre-selection functionality if there is no necessary passive infrastructure available.

The fourth circumstance relates to the removal of pre-selection obligations where wireless services are provided to any premises where there is an alternative open access fixed-line network owned by a carrier other than an NBN corporation or Telstra, and such a network is used by a provider other than Telstra to offer to supply retail STSs.

Section 7 provides a designated characteristic where a carriage service is supplied using certain optical fibre telecommunications networks.

The fifth circumstance relates to the removal of pre-selection obligations where an STS is provided over a wholesale-only fibre-based network. The limitation of this exemption for three years will provide time for the government to review

pre-selection arrangements in an NBN environment, and if necessary for providers to implement pre-selection functionality when an STS is supplied over fibre networks.

Importantly the Regulation does not and is not intended to affect the operation of retail pre-selection obligations on Telstra's fixed-line copper network or affect the supply of wholesale services on that network or more generally.

Table 1 provides some general guidance on the limited circumstances where the obligation to provide pre-selection functionality with an STS will no longer be required under the Regulation. Table 1 is not intended as a substitute for the text of the provisions of the Regulation. A carrier or carriage service provider should have regard to the text of the Regulation.

Pre-selection is a legislated requirement under section 349 of the Tel Act which allows any consumer with an STS to choose a service provider (telephone company), other than the provider that supplies the phone line and local calls, to supply national long-distance calls, international calls and calls to mobile phones.

At present, pre-selection functionality is required to be supplied with all STSs, regardless of where the premises are located and regardless of which technology platform is used to supply the STS. Under subsection 349(5) of the Tel Act, a reference to pre-selection, however, does not include an STS supplied by means of a public mobile telecommunications service, but fixed-wireless services are not considered mobile services.

Under Part 17 of the Tel Act, an end-user may pre-select (or choose) an alternative fixed-line service provider either by ongoing declaration or through the use of dialling codes (for example, 'dial 1 for Optus'). As noted above, mobile services are exempted from pre-selection; however, fixed or point-to-point wireless services are not exempt.

Section 349 of the Tel Act provides for the Australian Communications and Media Authority (ACMA) to make a written determination requiring each carrier and carriage service provider that supplies an STS to provide pre-selection. A list of

Pre-selection was introduced in the early 1990s to foster the development of telecommunications competition, and is available on the public switched telephone network, the traditional copper-based fixed-line infrastructure. It was once a relatively popular option for consumers; however, its use has declined considerably in recent times as fixed-line competition has evolved and the ability to bundle line access, local call and other services has developed. Today, consumers more commonly take bundled plans and are able to switch providers more easily. However, pre-selection has also been used in conjunction with some wholesale services to facilitate competition and this also needs to be considered.

As the primary universal service provider, Telstra is required to provide STSs in fulfilment of the universal service obligation (USO), subject to limited exceptions.

On 9 December 2010, the Minister for Broadband, Communications and the Digital Economy (the Minister) announced, as a complement to the NBN, arrangements for the installation of optical fibre in new developments, with obligations on NBN Co Limited (NBN Co) and Telstra from 1 January 2011 as infrastructure providers of last resort.

Under the government's Fibre in New Developments Policy, as updated on 22 June 2011, NBN Co is the infrastructure provider of last resort for larger developments, for any development in areas where it has rolled out fibre, and in areas that NBN Co has identified as a rollout region. NBN Co can also roll out fibre networks in smaller developments where practical. Telstra is the infrastructure provider of last resort in developments of up to 100 lots/units pending NBN Co deploying fibre. Under this policy, it is expected that developers will supply and meet the cost of fibre-ready pit and pipe. This is backed up by Part 20A of the Tel Act which requires constitutional corporations, such as developers that are constitutional corporations, to install fibre-ready facilities (such as pit and pipe), prior to the sale or lease of specified new developments (subject to limited exemptions).

As noted above, during the transition to the NBN there may be circumstances where Telstra, as the primary universal service provider, needs to provide an STS on an interim basis and it may be more cost-effective for it to do so using wireless infrastructure, such as its Next G Wireless Local Loop technology. However, this technology, which is based on a mobile telephony platform, does not support

pre-selection and all indications are it would not be cost-effective to develop this capability for what is an interim delivery platform. (Telstra currently provides such wireless services for up to six months as 'interim services' under its USO Standard Marketing Plan, but it is constrained in providing them for longer because of

pre-selection requirements.) Therefore, the Regulation has the effect of not requiring pre-selection on such services. If Telstra chooses to supply an STS using an interim copper solution, pending the deployment of NBN Co fibre or another fibre network, Telstra must provide pre-selection to an end-user upon request. While the Regulation may have particular significance to Telstra as the primary universal service provider and an infrastructure provider of last resort, the Regulation applies to any carrier or carriage service provider supplying an STS.

As noted in the Fibre in New Developments Policy, Telstra will generally provide copper infrastructure. However, Telstra can choose to provide fibre and in some limited circumstances--for example, because of the short timeframe between construction of the building units in a development and deployment of fibre to the building units--Telstra may provide high quality wireless services as an interim solution. Telstra will also be responsible, in accordance with its USO responsibilities under the Act, for ensuring that STSs are supplied on request to end-users in new real estate developments. Given these scenarios the Regulation will, in effect, allow Telstra (and other service providers) to supply wireless STSs on an interim basis, in specific circumstances.

There may also be circumstances where established communities and new developments may be serviced by alternative carriers and retail service providers and have ready access to an STS. In these circumstances Telstra's legal obligation to provide an STS in fulfilment of the USO would continue to apply (subject to existing limited exceptions). However, given fixed-line STSs are otherwise available to consumers, the government considers Telstra should be able to use a wireless platform (without pre-selection) to fulfil the USO if needed.

In the case of fibre infrastructure, whether supplied by NBN Co or another carrier or carriage service provider, providing the STS with pre-selection may also require significant investment. However, as the use of pre-selection has fallen since its introduction and its utility is limited on an open access fibre platform that supports the ready transfer of customers between service providers, the benefit of this investment is not clear. As such, section 7 of Regulation will have the effect of removing

pre-selection from STSs provided over certain fibre networks for a three year period, during which a review of pre-selection will be undertaken by the government.

The Act specifies no conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Regulation commences on the day after it is registered on the Federal Register of Legislative Instruments.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA) (see paragraph 6(a) of the LIA).

On 24 November 2011, the Department of Broadband, Communications and the Digital Economy (the Department) published a consultation paper on its website on a draft Regulation relating to pre-selection on wireless platforms in new developments and on fibre. Submissions closed on 8 December 2011. The Department also contacted key industry players and members of the Fibre in New Developments Stakeholder Reference Group. Two submissions were received. The Department also discussed the amendments with the Australian Competition and Consumer Commission (the ACCC), the ACMA, the Communications Alliance and NBN Co.

No objections were raised in relation to the removal of pre-selection requirements from STSs provided using wireless technology. In respect of pre-selection over fibre networks, one submission raised concerns that removal of the obligations in such circumstances may have unintended competition consequences at the wholesale level. In light of feedback received, this circumstance now effectively provides that

pre-selection will only be removed when an STS is provided over an optical fibre network, and where the network is owned by a carrier (or another company that the carrier is in a position to exercise control) that does not supply retail services using that network (i.e. it is wholesale only). Consistent with the consultation draft, this measure will apply for three years pending review by the government.

In light of further policy consideration in relation to new developments, two additional circumstances to those provided in the consultation draft paper of November 2011 were also included in the development of the Regulation - relating to the removal of pre-selection obligations where:

Following inclusion of these additional measures, the Department released a revised draft Regulation for public comment on 21 March 2012. Three submissions were received.

The first submission raised no concerns with the proposed text of the Regulation.

The second submission noted the value of existing pre-selection arrangements when large corporate customers change providers, and has called for policy settings that provide for pro-competitive transfer between providers on fibre networks.

In response to the second submission, it is proposed that industry participants look at this issue, for example through the Communications Alliance, with the support of government and industry regulators.

The third submission argued that pre-selection is an important tool for competition in the market, that its removal from fibre would benefit Telstra (particularly given other exemptions from the level playing field rules[2]) and queried the costs of pre-selection. These comments were similar to a submission received during the first phase of public consultation in November-December 2011.

In response to the third submission and concerns that the Regulation may harm competition, the following points are worth noting. The Regulation:

More generally, in parallel with the review of pre-selection arrangements, it is proposed that industry participants, for example through the Communications Alliance, also give priority to formalising arrangements for customer transfers in the NBN environment, with the support of government and industry regulators.

The focus of the Regulation is to provide some flexibility to carriers, particularly in providing interim wireless services and retail services on open access or wholesale-only fibre networks, in the context of the significant structural changes taking place in the industry. Issues relating to fostering competition and supporting the transfer of customers between carriers is considered best dealt with through industry led arrangements. Should any unintended consequences nevertheless emerge in this regard, the government would be open to considering this as part of the review of the Regulation.

The amendments in the Regulation for equivalent forms of communication services for an end-user with a disability were included following the phases of consultation described above. Therefore on 1 May 2012 the Department sought further feedback from the Australian Communications Consumer Action Network (ACCAN). Membership of ACCAN includes numerous bodies that represent persons with a disability. ACCAN responded that they had no objections to the measures. The Minister for Families, Community Services and Indigenous Affairs was also consulted.

Nothing in the Regulation would result in an end-user with a disability not having access to an equivalent form of communication to voice telephony. Telstra and other carriers will still be subject to existing obligations to provide an STS (i.e. an equivalent service to voice telephony) to enable an end-user with a disability to communicate.

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012

This Regulation is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Pre-selection refers to the ability of a telephone customer to nominate their preferred provider of telecommunications services. Pre-selection was introduced in the early 1990s to support the introduction of long-distance competition. Since that time, as competition has developed, pre-selection has been of declining importance and its use is now at a low level. Competition today is based on access services being bundled with call services, and this is readily supported by the wholesale products in the marketplace on Telstra's existing copper network and those which will be available on the national broadband network (NBN).

The Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012 (the Regulation) removes pre-selection obligations for carriers or carriage service providers in five separate circumstances. The Regulation effectively redefines a standard telephone service (STS) under paragraphs 6(1)(e) and (f) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act) for the purposes of section 349 of the Telecommunications Act 1997 (the Tel Act). Section 349 of the Tel Act provides for the Australian Communications and Media Authority to make a written determination requiring each carrier and carriage service provider that supplies an STS to provide pre-selection.

The fourth circumstance relates to the removal of pre-selection obligations where wireless services are provided to any premises where there is an alternative open access fixed-line network owned by a carrier other than an NBN corporation or Telstra Corporation Limited (Telstra), and such a network is used by a provider other than Telstra to offer to supply retail STSs.

The fifth circumstance relates to the removal of pre-selection obligations where an STS is provided over a wholesale-only fibre-based network. The limitation of this measure for 3 years will provide time for the government to review pre-selection arrangements in an NBN environment.

No human rights issues were raised during consultation on the draft Regulation. The removal of the pre-selection requirements does not raise any human rights issues.

This Regulation does not engage any of the applicable rights or freedoms. As the Regulation specifies designated characteristics for both voice telephony and equivalent communication services for persons with a disability, the Regulation has the effect of treating all potential end-users equally - (i.e. persons with a disability are not treated less favourably than persons without a disability). Nothing in the Regulation would result in an end-user with a disability not having access to an equivalent form of communication to voice telephony. Telstra and other carriers will still be subject to existing obligations to provide an STS (i.e. an equivalent service to voice telephony) to enable end-users with a disability to communicate.

Consultation on the measures for persons with a disability took place with the Australian Communications Consumer Action Network (ACCAN). The ACCAN's membership includes various representative groups for persons with a disability. ACCAN advised that there was no objection to the Regulation being made, including for equivalent communication services for persons with a disability. The Minister for Families, Community Services and Indigenous Affairs was also consulted

This Regulation is compatible with human rights as it does not raise any human rights issues.

Details of the Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012

Section 1 provides for the Regulation to be referred to as the Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012.

Section 2 provides for the Regulation to commence on the day after it is registered on the Federal Register of Legislative Instruments.

The term 'Act' refers to the Telecommunications (Consumer Protection and Service Standards) Act 1999.

The term 'install', in relation to a facility, is intended to have the same meaning given by section 372X of the Telecommunications Act 1997 (the Tel Act).

Subsection 3(2) provides that a facility for use in connection with a line (i.e. a

fixed-line facility like a pit or a pipe) is installed in 'proximity' to a building unit only if the facility enables the line to be readily connected to the building unit. This definition closely resembles the definition provided for in section 372Y of the Tel Act, in respect of a fibre-ready facility installed in proximity to specified developments.

Many terms used in the Regulation, such as 'building unit', 'carriage service' and 'carrier', have the same meaning as under the Act or the Tel Act (see subsection 13(1) of the Legislative Instruments Act 2003) (LIA).

Of particular note, 'building unit' is defined in section 372S of the Tel Act to cover three situations. A building unit is:

(1) the whole of a building which is, or is to be, for single occupation or use. For example, a detached house for single occupation or use is a building unit.

(2) the whole or a part of a building which is, or is to be, held as a unit under a strata title system (or a similar system), established under a law of a State or Territory. This is to ensure that strata title developments are captured.

(3) part of a building if that part of a building is, or is to be, for separate lease.

Section 4 - Designated characteristic for purposes of section 349 of Telecommunications Act 1997

Subsection 349(1) of the Tel Act provides that the Australian Communications and Media Authority (the ACMA) must require each carrier or carriage service provider who supplies a carriage service to provide pre-selection in favour of a specified carriage service provider, in relation to calls made using a standard telephone service (STS).

Section 4 provides that Part 2 of the Regulation declares designated characteristics for paragraph 6(1)(e) and (f) of the Act for the purposes of a reference to an STS in section 349 of the Tel Act (i.e. pre-selection). These characteristics are defined in section 5. Section 4 also makes it clear that the characteristics being designated for the STS only apply to the STS for voice telephony (paragraph 6(1)(e) of the Act) and equivalent forms of communication for an end-user with a disability (paragraph 6(1)(f) of the Act) for the purposes of section 349 of the Tel Act

(i.e. pre-selection), not the numerous other provisions in the Act and the Tel Act that refer to the STS.

A note in section 4 reminds readers that section 7 of the Tel Act provides that the term 'standard telephone service' in the Tel Act has the meaning given by section 6 of the Act.

Section 5 provides a designated characteristic for a carriage service provided for the purpose of voice telephony or equivalent forms of communication for an end-user with a disability in four types of prescribed building units. The characteristic is that the service is supplied using a line connected by physical contact. By specifying that the line must be connected by physical contact in these situations, the section has the effect of removing the obligation for pre-selection functionality on an STS when supplied (in the circumstances specified) by non-fixed-line platforms, such as wireless which does not involve physical contact. In this context, 'physical contact' is intended to mean a fixed network.

Key to the operation of this section is the principle that the characteristic applies to a class of carriage services provided to a type of 'prescribed building unit'. The specification by class is provided for under subsection 13(3) of the LIA. The definition of 'prescribed building unit' is therefore pivotal in the operation of section 5 of the Regulation.

Subsection 5(1) is the operative part of the section and sets out the general principle of the first designated characteristic which is that the service is supplied using a line connected by physical contact to the building unit. By virtue of section 4, this is a designated characteristic of an STS for the purposes of section 349 of the Tel Act in the circumstances defined.

Subsection 5(2) provides that for the purposes of subsection 5(1), a building unit is a 'prescribed building unit' if it meets the attributes set out in subsections 5(3), (4), (5) or (7).

Subsection 5(3) provides a first definition of 'prescribed building unit' for the purposes of subsection 5(2); that is, the prescribed building units to which the 'line connected by physical contact' characteristic applies.

In this context, a 'prescribed building unit' is defined as a unit which satisfies each of the attributes below:

In assessing the availability of copper or fibre infrastructure for the purposes of paragraph 5(3)(c) it is not intended that availability of infrastructure outside the premises simply be considered, but the availability of infrastructure that is in ready proximity and that could reasonably be brought into service. If such infrastructure were available, the expectation is it would be used and would (subject to any other exemptions e.g. under section 7) have pre-selection functionality and the effective pre-selection exemption would therefore not operate.

By operation of subsections 5(1), (2) and (3), the supply of STSs using a non-fixed line technology platform (e.g. wireless) to this class of building units will not need to have pre-selection.

Subsection 5(4) provides a second definition of 'prescribed building unit' for the purposes of subsection 5(2). In this context, the concept is similar to that provided in subsection 5(3), but with some material differences:

* Paragraph 5(4)(a) requires that construction of the building unit was completed on or after 1 January 2011 (as compared with subsection 5(3) which, in effect, can apply to building units constructed before 1 January 2011 but not occupied until on or after 1 January 2011). Again, this provides a start date for the new arrangements which aligns with the commencement of the Fibre in New Developments Policy.

* Paragraphs 5(4)(b) and 5(4)(c) mirror paragraphs 5(3)(a) and 5(3)(b) respectively.

* Paragraphs 5(4)(d) and (e) are similar to paragraphs 5(3)(c) and (d) respectively, except that they relate to the long-term solution being a fibre-based telecommunications network, rather than either a copper or a fibre network. This criterion is included in the second circumstance but not the first circumstance because fibre may be the only telecommunications solution offered in new developments constructed after 1 January 2011, for example, developments for which NBN Co is responsible as infrastructure provider of last resort. This requirement also appears in the third situation (see subsection 5(5) below). This reflects the policy position that from 1 January 2011, fibre should generally be installed in new developments. Under this scenario, fibre is the ultimate fixed-line solution for the premises.

The removal of pre-selection obligations under subsections 5(3) and (4) will apply only in a limited number of situations where an interim wireless solution is employed. If a carrier or carriage service provider cannot form a reasonable belief that the rollout of a copper-based or fibre-based network (as the case may be) will commence within 12 months after the end-user's request, subsections 5(3) or (4) will not apply. The carrier or carriage service provider would need to offer pre-selection functionality when supplying the STS to the building unit even if a wireless solution was used, unless subsection 5(5) applied below.

Subject to other exemptions below, in other situations, a carrier or carriage service provider must provide pre-selection functionality with an STS regardless of the technology platform provided. If the carrier or carriage service provider chooses to supply an STS using an interim copper solution to the end-user's premises, pending the deployment of fibre to that building unit, pre-selection must continue to be provided upon request.

Subsection 5(5) provides a third definition of 'prescribed building unit' for the purposes of subsection 5(2). The combined effect of subsection 5(1), (2) and (5) of the Regulation is to enable providers (such as Telstra) to supply wireless based STSs in new developments where there is no fixed-line network or passive infrastructure (e.g. underground pit and pipe) installed at the time of the request.

Paragraph 5(5)(a) mirrors paragraph (5)(4)(a). Paragraph 5(5)(b) mirrors both paragraphs 5(3)(a) and 5(4)(b) respectively. The purpose of these paragraphs is to set a start date aligned with commencement of the Fibre in New Developments Policy.

Paragraph 5(5)(c) mirrors both paragraphs 5(3)(b) and 5(4)(c) respectively. However, this circumstance differs from the first two circumstances in two material ways:

* Firstly, there is the default attribute that an underground fixed-line facility (typically pit and pipe) has not be installed in sufficient proximity, where it is reasonably practical, technically feasible and permitted by law to do so.

* Secondly, under subsection 5(5), there is no requirement for there to be a reasonable belief that a copper-based or fibre-based network (as the case may be) will commence to be rolled out within 12 months. The reason for this difference is because in a situation where there is no fixed-line facility (e.g. pit and pipe) of the type specified installed in proximity, at the time of the request for an STS, the carrier or carriage service provider may not be able to form a reasonable belief that rollout of a copper or fibre network would commence within 12 months.

For the sake of clarity, it should be noted that subsection 5(5) may apply in circumstances whereby subsection 5(3) or (4) may not apply and vice versa.

Paragraph 5(5)(d) mirrors paragraph 5(3)(c) - where there is no copper or fibre network readily available to service the end-user.

Paragraph 5(5)(e) provides the default scenario and covers the circumstance where there is no underground fixed-line facility (e.g. pit and pipe) installed in sufficient proximity to the building unit that is suitable to enable a ready connection to a copper or fibre line to the unit. By virtue of subsection 5(6), this circumstance applies where at any time from commencement of civil works to immediately prior to the request by the end-user for an STS, it is reasonably practical, technically feasible and permitted by law to install underground facilities in sufficient proximity to the building unit. It is intended that the types of fixed-line facilities which would need to be installed would include pits, pipes and ancillary facilities.

While in the majority of instances it is expected that fixed-line facilities would be installed during the civil works stage of a project, it is recognised that facilities may be installed after completion of civil works. Therefore the circumstance covers this time period wherein an infrastructure provider may install suitable fixed-line infrastructure. If the requisite fixed-line facilities (e.g. pit and pipe) are in place at the time of the request under paragraph 5(5)(e) - or under paragraph 5(5)(f) if applicable (see below) - then a provider could not rely on subsection 5(5) to offer a wireless solution without pre-selection.

The reason the default scenario is the underground deployment of facilities is that passive infrastructure is typically installed underground and the government expects this will generally be the case; however, this is largely a matter for local government planning.

Paragraph 5(5)(f) provides the operative attribute in a case where it is not reasonably practical, technically feasible or permitted by law to install an underground facility (i.e. the circumstance described in subsection 5(6) does not apply). The attribute is that no above ground fixed-line facility has been installed in sufficient proximity to the building unit for ready connection to a network. This recognises that in some circumstances underground passive infrastructure like pit and pipe may not be a practical option (e.g. due to local geography) and overhead deployment (e.g. by poles) may be the only practical solution and one which is consistent with local planning requirements.

The effect of paragraph 5(5)(f) to particular types of building units is demonstrated below:

'Fixed-line facility' is defined in section 372V of the Tel Act to mean a facility (other than a line) used, or for use, in connection with a line, where the line: (a) is not on the customer side of the boundary of a telecommunications network; and (b) is used, or for use, to supply a carriage service to the public. Pits, ducts, conduit and plinths are examples of fixed-line facilities that are used in the underground deployment of copper, hybrid fibre-coaxial (HFC) or fibre lines. This definition explicitly excludes, for example, coverage of facilities that are located within a customer's premises, such as internal ducting that could be used for customer cabling linking customer equipment to the telecommunications network at the network boundary point.

Subsection 5(5) may have particular significance to Telstra in fulfilling its responsibilities as a provider of last resort under the Fibre in New Developments Policy; and as the primary universal service provider. Under the Fibre in New Developments Policy, the person responsible for a development should install pit and pipe for use with a fibre or copper network at their expense. This is complemented by Division 3 of Part 20A of the Tel Act, which provides that, subject to limited exemptions, where fixed-line facilities are installed those facilities must be fibre-ready facilities.

Part 20A of the Tel Act is intended to maximise the rollout of fibre infrastructure, particularly underground infrastructure. However, it is recognised that in the transition to the NBN and for developments where Telstra is the infrastructure provider of last resort and the primary universal service provider, facilities for use for only copper networks may be required to provide ready access to services.

In considering whether or not it is reasonable to install underground facilities, regard is to be had to the nature and composition of the land in the project area, the cost associated with such an installation and applicable Commonwealth, State and Territory laws (such as planning laws). For example, if the land in the project area is situated on a bed of exceptionally hard rock which would render underground installation cost prohibitive, this may constitute a case where it is "not reasonably practical" to install underground facilities.

Subsection 5(7) provides a fourth definition of 'prescribed building unit' for the purposes of subsection 5(2).

In this context, a 'prescribed building unit' is defined as a unit where there is a fixed-line telecommunications network either actually physically connected to the building unit, or practically available to physically connect to the building unit. This scenario applies to a fixed-line network because of the designated characteristic in subsection 5(1) being 'a line connected by physical contact' and therefore excludes a fixed-wireless network. The scenario applies to any fixed line network which satisfies the criteria, regardless of the actual technology (i.e. whether it is copper-based, HFC or fibre).

This definition is further restricted, in that a building unit must satisfy each of the following attributes:

Where Telstra's copper network could be readily connected to a building unit, it is expected that the STS would generally be delivered using the copper line. This would be required to support pre-selection functionality. If Telstra chose to supply a wireless solution in such a case, the wireless STS would be required to support pre-selection functionality upon request. However, in the case where there was an open access fixed-line network already physically connected to a building unit which was not owned by Telstra, and the network was used by a carrier other than Telstra to supply retail carriage services, it would be permissible for Telstra to supply a wireless STS (without pre-selection) to an end-user in the prescribed building unit (as per subsection (5)). This approach recognises that it would be inefficient and costly for Telstra to be required to duplicate fixed-line infrastructure available, in order for an STS with pre-selection functionality to be supplied, particularly where an STS is available from alternate providers.

Unlike subsections 5(3), (4) and (5), this scenario is not restricted to specified new developments. This is because alternative fixed-line infrastructure is available in some established locations; and Telstra's current role as the primary universal service provider and expected equivalent role under the USO reforms following commencement of the Telecommunications Universal Service Management Agency Act 2012. Telstra's obligation to fulfil the USO, subject to limited exemptions, extends beyond the limited class of specified new developments.

While this scenario is expected to have particular significance to Telstra in its role as the primary universal service provider, any carrier or carriage service provider could rely on an effective removal of pre-selection obligations from an STS provided by wireless infrastructure in the limited circumstances provided for in subsection 5(7).

See the commentary to section 7 below, for the consequences that flow if a carrier or carriage service provider chose to supply an STS over a fibre-based network connected to a building unit to which this subsection 5(7) applies.

This fourth type of prescribed building unit would only "redefine an STS" for the purposes of section 349 of the Tel Act, rather than the numerous references to an STS under the Act and the Tel Act. To clarify, this subsection 5(7) does not modify Telstra's obligations as the primary universal service provider for providing a device such as a Teletypewriter (TTY) for an end-user with a disability upon request. In other words, nothing in this subsection 5(7) (or indeed any provision of the Regulation) would result in an end-user with a disability not having access to an equivalent form of communication to voice telephony. If the alternative network available for the purposes of this subsection 5(7) did not support TTY (for example), Telstra would be required to provide an STS to enable the end-user with a disability to communicate.

Subsection 6(1) provides, for the purposes of paragraphs 5(3)(d) and 5(4)(e), two instances where a carrier or carriage service provider is deemed to hold a reasonable belief that rollout of a particular type of infrastructure (fibre or copper, as the case may be) will commence within 12 months of the request.

Paragraph 6(1)(a) provides an instance whereby the area is identified in information published by any carrier or carriage service provider as an area in which the rollout of fibre, or copper as the case may be, will begin to be rolled out within the following 12 months. The paragraph intentionally refers to published information by 'any' carrier or carriage service provider. NBN Co is expected to publish such information as an infrastructure provider of last resort in rolling out the NBN. On 29 March 2012, the Prime Minister and the Minister announced that NBN Co had released an indicative three year rollout plan. The plan that is published on NBN Co's website indicates indicative commencement of rollout areas within one year and three years.

It is open, however, to any carrier or carriage service provider to publish information, such as on their website, regarding their deployment (and the timing of such a deployment) of fibre or copper (as the case may be) to a particular area within the next 12 months, as a commercial decision.

Paragraph 6(1)(b) provides another instance whereby any carrier or carriage service provider will be taken to have a reasonable belief about when the rollout of the particular network will commence. This is when a carrier or carriage service provider has entered into a legally enforceable agreement to install fibre or copper (as the case may be) to a particular area and such a rollout would commence within the following 12 months.

For example, if Telstra has entered into an agreement to install copper lines within 12 months in a smaller development for which it is responsible as provider of last resort it logically follows that Telstra could reasonably believe that the rollout of such infrastructure will commence within the next 12 months. That would allow Telstra to provide an interim wireless service pending the deployment of the copper infrastructure to service that particular building unit, if required. The carrier or carriage service provider would need to be able to demonstrate if required that it had knowledge of the agreement, for example, because it was a party to it or it had been publicly announced.

Subsection 6(2) clarifies, that the two examples mentioned in subsection 6(1) are not exhaustive (i.e. they are not the only ways a carrier or carriage service provider could form a 'reasonable belief' about when a particular type of telecommunications network will commence rollout.

Section 7 provides a designated characteristic where a carriage service is supplied using an optical fibre telecommunications network. The characteristic is that the network is owned by a carrier that:

The purpose of subsection 7(1) is to remove the requirement to supply STSs with pre-selection when using the NBN or a comparable wholesale-only network. This exemption is limited to three years, providing time for the government to review pre-selection arrangements in an NBN environment. As noted above, there are costs involved in providing pre-selection and it is not clear that those costs are warranted given the low and declining use of pre-selection and the ready ability to move between providers on an open access wholesale-only fibre network (e.g. like the NBN). STSs supplied using fibre networks other than the NBN or a comparable wholesale-only fibre network will continue to be required to have pre-selection functionality. By way of clarification, for example this will include Velocity fibre networks operated by Telstra that are not wholesale-only, and operated under an exemption from the level playing field arrangements under the Telecommunications (Network Exemption--Telstra Specified Velocity Networks) Instrument 2012.

Section 7 (or any of the other provisions of this Regulation) is not intended to alter the operation of the Domestic Public Switched Telephone Network Originating Access service, which is a 'declared service' within the meaning of subsection 152AL(3) of the Competition and Consumer Act 2010. This declared service may include pre-selection when considered in a wholesale sense.

NBN corporations are permitted to supply carriage services over the NBN to certain utilities for particular limited purposes (permitted by sections 10-16 of the National Broadband Networks Companies Act 2011, which represent exceptions to the general prohibition on supply to persons other than carriers and service providers under section 9). Accordingly, to ensure that such services are not treated as services supplied to retail customers, paragraph 7(2)(a) has been included. For example, paragraph 7(2)(a) provides that where an NBN corporation supplies voice telephony services to an electricity supply body for the permitted specified purpose, it is deemed that such services are not retail services.

Paragraph 7(2)(b) mirrors the effect of paragraph 7(2)(a), except that it relates to the services supplied by operators of NBN-comparable wholesale-only networks (i.e. those subject to the wholesale-only level playing field rules under new Part 8 of the Tel Act). Sections 144 to 151 of the Tel Act provide for limited exemptions to the general retail supply prohibition under section 143. This means that services supplied to specified utility-type entities for the specified purpose will not be treated as services supplied to retail customers.

Subsection 7(3) sets out ownership and control rules, designed to prevent potential avoidance of the rule through corporate restructures.

Subsection 7(3) provides that a person (such as a carrier) is in a position to exercise control of a company if the person satisfies the relevant requirements in Schedule 1 to the Broadcasting Services Act 1992 (the BSA). The holding of company interests is not the only way to be in a position to exercise control. Consideration of agreements and arrangements between people (i.e. associates) and accustomed courses of conduct is also relevant. Subsection 7(4) provides a modified definition of 'associate' for the purposes of paragraph 7(1)(b); the definition in subsection 152(1) of the Tel Act is to apply, rather than that under subsection 6(1) of the BSA.

Section 152 of the Tel Act defines an 'associate' of a person in relation to control of a telecommunications network or a company as being a range of persons, including a partner, a person (whether a company or not) who acts, or is accustomed to act in accordance with the directions, instructions or wishes of the controller.

The effect of subsection 7(4) is that neither the ACMA nor the Australian Competition and Consumer Commission (ACCC) will have the power to determine whether persons are associates. The modified definition will be self-executing. This is because neither section 160 nor paragraph 6(1)(e) of the Act expressly provide that a Regulation may confer functions or powers on the ACMA or the ACCC.

Subsection 7(5) provides that the rule in subsection 7(1) ceases to have effect three years after the commencement of the Regulation. The purpose of this subsection is to make clear that the removal of pre-selection for premises supplied with carriage services by wholesale-only fibre is time-limited pending a review of the appropriateness of pre-selection over fibre networks. This will provide the government with time to review the appropriateness of applying pre-selection to fibre-based networks in the transition to the NBN (and pre-selection more generally) and to take any appropriate follow-up action.

The designated characteristic of an STS under subsection 7(1) is, for services using an optical fibre network, that the network is of the particular type of wholesale-only network, whereas, under each of the four circumstances covered by section 5, the designated characteristic of the STS is that the service is being supplied using a line connected by physical contact to each particular kind of 'building unit'. For example, where a copper or optical fibre-based network is not practically available for ready connection, it is possible that one or more of subsections 5(3), (4) or (5) may apply. If, following the supply of an interim wireless or interim copper solution, the building unit is later connected to a fibre-based network, it is possible that section 7 may have application, subject to the criteria described above.

Similarly, it is possible that a building unit may satisfy the requirements of subsection 5(7) (see above), so that a wireless STS could be provided without

pre-selection. If, however, a carriage service provider chose to supply an STS over a fibre-based network, on a wholesale-only open access basis, pre-selection would also not be required upon request, because of section 7. In the absence of section 7, the building unit would satisfy the requirements of subsection 5(7) because of the designated characteristic prescribed in subsection 5(1). Therefore in the absence of section 7 pre-selection would continue to be required for the STS provided over the fibre network.

The cumulative effect of subsection 5(1) and section 7, however, means that the premises (i.e. the building unit) is subject to two designated characteristics:

* A non-wholesale only optical fibre line used to connect to the building unit/premises.

In other words, if a building unit satisfied the requirements of subsection 5(7), because there was actually an optical fibre-based network connected, it would be necessary to consider whether the attributes specified in section 7 were satisfied.

For example, where a carrier (other than an NBN corporation or Telstra) operates a wholesale-only, open access network using an optical fibre line to connect to the premises of end-users, and a carriage service provider other than Telstra offers carriage services for the purposes of voice telephony (i.e. a retail STS) - subsection 5(7) would apply and pre-selection would need to be offered with STSs on that network. But when section 7 is considered, because the carrier is wholesale-only, the service would not have the designated characteristics of an STS specified in section 7, for the purposes of section 349 of the Tel Act. In such circumstances, pre-selection functionality would not be required with an STS provided by retail service providers on that fibre network.

[1] In this scenario, construction of the building unit may have occurred before 1 January 2011.

[2] This is a reference to exemptions given under the Telecommunications (Network Exemption--Telstra Specified Velocity Networks) Instrument 2012.

Scenario	Is pre-selection obligation removed?	Provision
Interim Wireless - Developments occupied after 1 January 2011 where fibre or copper anticipated within 12 months[1]	Yes	Subsection 5(3) and section 6
Interim Wireless - Developments constructed and occupied after 1 January 2011 where fibre anticipated within 12 months	Yes	Subsection 5(4) and section 6
Wireless - Developments constructed and occupied after 1 January 2011 where there are no underground facilities for the connection of a copper or fibre telecommunications network or if underground facilities were not reasonably practicable to have been installed and there are no above ground facilities	Yes	Subsections 5(5) and 5(6)
Wireless - Where open access networks exist not owned by Telstra or an NBN corporation, and retail services offered by a provider other than Telstra	Yes	Subsection 5(7)
Fibre - open access fibre network where the network owner does not provide retail services	Yes (for three years pending government review)	Section 7 and subsection 5(7) where applicable
Copper	No	N/A
Wireless (except as provided above)	No	N/A
Fibre (except as provided above)	No	N/A

Commonwealth Numbered Regulations - Explanatory Statements

Telecommunications (Consumer Protection and Service Standards) Act 1999

Telecommunications (Consumer Protection and Service Standards)

(Characteristics for Standard Telephone Service) Regulation 2012

Details of the Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012

Section 1 provides for the Regulation to be referred to as the Telecommunications (Consumer Protection and Service Standards) (Characteristics for Standard Telephone Service) Regulation 2012.