Innovative Bandwith Arrangements - Appendix 6: Relevant Australian Case Studies

ICON

The Intergovernment Communications Network or ICON is a classic-style condominium dark fibre private network extending for over 150 route km throughout the Australian Capital Territory.  Now connecting some 140 sites in a huge mesh-like architecture that is totally passive, it began in 1996/97 as an initiative to save telecommunication service costs for the federal government.  All cables are installed in conduits and to date there have been no instances of service interruption due to physical damage to the cables.  The main backbone cables employ 144 and 288 fibre pairs.

User government departments and agencies finance ICON in two ways:

• Once-off capital contribution to finance construction of particular network segments,[1] and
• Annual payment of $10,000 for overall network and project management.

The National Office of the Information Economy is the facilitator of ICON.  A recent independently conducted audit determined that, on comparison with commercially provided services, the network has a payback period significantly less than 12 months.

AARNET

AARNet Pty Ltd is a not-for-profit company that operates the AARNet2 network, the second generation of the Australian Academic and Research network, providing high-capacity Internet services between eight state- and territory-based regional Points of Presence (PoPs) for 37 universities plus research institutions, including CSIRO Australia, the Defence Science and Technology Organisation, the Australian Nuclear Science and Technology Organisation and the Australian Institute of Marine Science.  AARNet shareholders comprise most Australian universities and the CSIRO.[2]    

The Telecommunications Act 1997 (‘the Act’) presented a number of difficulties for the operation of affordable data and telecommunications services for the Australian tertiary education and research sector.  Responding to submissions for assistance, the Minister made two Determinations in favour of the AVCC in January 1998 that largely exempted universities from obligations under the Act, however those exemptions would lapse on 30 June 2001.  Thereafter, AARNet decided it would be best to become a licenced carrier.

On 27 November 2000, AARNet received carrier licence number 61 and is understood to be the only one with a non-profit charter, or at least the only one espousing an educational and research ethos and operating high speed networks.  The carrier licence now allows AARNet to act as the nominated carrier on behalf of those of its shareholding members that have network units subject to carrier obligations of the Act.  Given this recent development, AARNet has developed and updated its Access Policy that is of particular relevance to the provision of network access to non-shareholding entities.[3]  Although on current reading this policy appears not to allow access to government K-12 schools and other educational institutions, circumstances may change in the future.  For example, there may be opportunities for cooperation through the regime of Nominated Carrier Declarations and restrictions relating to the AARNet agreement with Optus may be removed.

Vistel

Vistel Ltd was established in 1987 by the state government of Victoria with three original aims:

• Provide a range of cost-effective and competitive telecommunications services to the Victorian public sector and consequently increase public sector productivity, improve quality of service to the public through maximising the utility of telecommunications and reduce recurrent expenditures;

• Provide a range of cost-effective and competitive telecommunications services, where profitable and permitted by legislation, to users other than the Victorian public sector; and

• Foster and encourage the development of an export oriented telecommunications industry.

It was owned by the then State Trust Corporation (two-thirds) and the then State Electricity Commission of Victoria (one-third).

Optical fibre transmission capacity interconnecting seven sites within the Melbourne central business district and 16 regional centres on the five corridors radiating from Melbourne was obtained from Telecom Australia (now Telstra) under an IRU arrangement at an upfront cost of $12M plus an annual maintenance fee of $500,000.  The network carried voice, data and digital video services plus dedicated services for a number of public sector organisations.  Data and full colour 2 Mb/s compressed video services were specifically provided to facilitate distance-education for rural schools and TAFE colleges.  The video services were both broadcast and bi-directional in nature.

Unlike other public authorities at the time, Vistel’s charter was to operate as a break-even company.  By continuing to offer discounted tariffs, it paid a ‘dividend’ to the government in the form of direct cost savings to departments and agencies on their telecommunications expenditure.  Based on the market rates of Telecom Australia, Vistel demonstrated a real return on assets ranging from 14.2 to 21.8 per cent per annum between 1991/92 and 1994/95.  It was on track to fully repay all government monies by 1995/96.  Thereafter, the virtually unlimited capacity of optical fibre would have led to an ever-diminishing marginal cost of new service provision.

Notwithstanding such clear financial success and foregone future benefits, in light of the Australia-wide trend towards a more competitive and deregulated telecommunications industry the state government resolved to wind down the business operations of Vistel Ltd which were eventually sold back to Telstra Corporation in 1995/96.[4]    

TransAct

TransAct Communications, 20 per cent owned by the Australian Capital Territory government, is deploying a truly broadband access network to businesses, residences and institutions throughout the Australian Capital Territory.  TransAct uses fibre-to-the-curb plus VDSL technology with the potential to deliver up to 52 Mb/s bandwidth to each subscriber.  Cables are substantially strung aerially on the poles of the territory electricity distributor ACTEW that in turn is 50 per cent owned by the government.

On 30 April 2001, TransAct and the territory department of education announced a $300,000 deal by which some 109 government schools will receive a broadband connection for fee of $3,000 each.[5]  Subject to agreement, non-government schools and the six university campuses may also receive a similar deal.

Each connection to TransACT has a bandwidth capability of up to 155 Mb/s, although specific Internet bandwidths will be chargeable by the chosen ISP under a regime that has yet to settled.  Initial bandwidths are expected in the region of 2 to 5 Mb/s.  Apart from Internet service, the schools will gain free access to a Canberra-wide Intranet for e-mail and file transfer with other entities similarly connected.  A charge will be incurred for videoconferencing over the Intranet.

Expected new applications possible include:

• High-quality video-conferencing, enabling schools to view lectures and speeches by visiting and eminent people;
• Interactive classes using scarce specialists to deliver teaching to students at multiple locations;
• The ability to use Application Service Providers to provide better and cheaper services to teachers and students; and
• The ability for educators to provide access to education facilities for parents wanting to teach their children at home or students who are unable to attend classes due to illness or other reasons.

Of particular relevance to the last point, the TransACT service is being progressively rolled-out to almost all residents in Canberra, which means that both schools and students at home (if they also connect) have the potential to gain equivalent network connectivity.

TransGrid (NSW)

The Minister for Information, Kim Yeadon, announced on 8 May 2001 that the NSW government’s forthcoming Telecommunications Strategy included plans to use TransGrid powerlines to bring high speed broadband access to NSW towns, especially in regional, rural and remote areas.  TransGrid, the government-owned power transmission company, is rolling out some 1,300km of optical fibre statewide as part of the earth wire on top of the stanchions that carry the electricity wires.[6]  It is not known whether the government intends to also leverage dark fibre capacity or otherwise prescribe heavily discounted high bandwidth services specifically for educational institutions in NSW.[7] 

Western Power (WA)

The state-owned electricity distributor in Western Australia has been retrospectively undergrounding its power lines over the last three years or so.[8]  Whilst each trench is open, it is now also laying conduit to accommodate new telecommunications cables and is reported to be considering implementing a network similar to that of TransAct.

Queensland and the Northern Territory

In addition to Western Australia, Tasmania, the Australian Capital Territory and New South Wales, Queensland and the Northern Territory still retain partial or complete ownership of the rural and metropolitan electricity distribution networks.  In common with many instances in North America and as exemplified now in Australia by TransACT, these two states retain the potential to exploit rights-of-way on power poles for the creation of new telecommunications networks that could, if so desired, provide affordable high bandwidth services to schools.

Gas Distribution (Tasmania)

In conjunction with a natural gas pipeline being laid by Duke Energy International across the Bass Strait and then as a trunk network throughout Tasmania, gas reticulation companies will be constructing and managing smaller pipelines into towns and cities for the retailing of natural gas to the public.[9]  Roll-out is expected to occur from 2002 to 2006.  There is a strong chance that telecommunication cables will also be laid during the trenching for this gas reticulation,[10] although it is not known whether the state government will act sufficiently early to purchase or otherwise reserve capacity for the provision of new high-bandwidth services to the public sector, and educational institutions in particular.

Regional Fast Rail Project (Victoria)

On 31 May 2001, a call was made for expressions of interest from the private sector for the development and delivery of infrastructure upgrades necessary for the deployment of fast rail links between Melbourne and the regional corridors of Geelong, Ballarat, Bendigo and the Latrobe Valley.[11]  In conjunction with this development, a wholly-owned state government enterprise known as the Victorian Rail Track Corporation or Victrack is planning to roll-out a new optical fibre network alongside the fast rail lines from Melbourne to these five regional centres and intermediate places.  Victrack received carrier licence number 52 on 20 September 2000.

National Power Services

A wholly owned subsidiary of United Energy, National Power Services commenced business some five years ago as a contractor specializing in installing both power and telecommunications cables.  On 25 January 2001, National Power Services received carrier licence number 69.  The Managing Director, Tony Zuiderwyk was recently quoted as saying, “We just like to build the infrastructure and hand it over to someone to leverage off that to supply their customers.  Telstra and Optus don’t like us very much because we’re selling huge chunks of potential bandwidth to competitors.  Fact of the matter, it is being done overseas.  We may have been the first to do it but we certainly won’t be the last”.[12]  National Power Services was quoted as not having any plans to move into delivering services.

[12] ‘No longer just a bunch of cable guys’, The Australian newspaper, IT1, p.4, 19 June 2001.

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