CSE5806
Telecommunications Management
Lecturer: Ken Fletcher
Lecture 1
Development of
Telecommunication Policy
in Australia
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
1
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:
– Telecommunications
http://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 page
http://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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
2
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
3
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
4
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
5
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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’
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
6
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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)
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
7
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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”
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
8
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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.
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
9
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
10
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
1970s


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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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
11
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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).
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
12
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
13
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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).
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
14
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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.
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
15
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
16
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
17
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
18
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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)
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
19
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
20
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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.
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
21
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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 valueadded 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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
22
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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.
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
23
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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 23-Mar-16 15:27
24
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
Results
What are the results of all this?
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
25
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
26
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
27
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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”)
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
28
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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.
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
29
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management
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
Copyright Ken Fletcher 2004
Australian Computer Security Pty Ltd
Printed 23-Mar-16 15:27
30
Prepared for: Monash University
Subj: CSE5806 Telecommunications Management