From: brendan@otc.otca.oz (Brendan Jones)
Newsgroups: aus.general
Subject: Optus v AOTC.  The Facts. (was Re: Cream-Skimming)
Date: 12 Dec 92 06:05:28 GMT
Distribution: aus

in article <summer.723859035@murillo>, summer@mullian.ee.mu.OZ.AU (Mark Summerfield) says:
> This whole discussion raises a few interesting questions.  I don't have the
> answers, so does anyone know:

I'll do my best!

> 1) Is Optus under any obligation to provide a directory assistance service?

In short, no.  However, Optus are required to contribute towards the cost of
providing this service, in proportion to its market penetration.

> Also, is any Australian carrier under any obligation to provide such
> a service INCLUDING numbers for services operated by other carriers?

At the moment, there will only ever be one directory assistance service,
providing information for all telephone numbers, and any new carrier from
1997 will be required to contribute towards the cost of this service.

> 2) Can people choose Optus (by dialling '1') from a Telecom Payphone?

No.

> If Optus wants payphone customers, they should have to install their own
> payphones.

They probably will.  In the UK, when Mercury came along, the effect of
competition was to eventually make the public payphone business profitable,
and as far as I could see, without slashing the service.

BT responded to Mercury by greatly improving the reliability of their
payphones, improving the design of the phone booths, and by introducing the
Phonecard system, similar to what we now have.

In the UK now you can find both BT and Mercury payphones, although Mercury
only has a small percentage of the payphone market (ie Mercury payphones
aren't very common).

Australia probably now has the most advanced public payphone network in the
world, with a good mix of coin, coin/card, card and credit card phones. The
X.25 based credit card phones we have are unique to Australia and one of the
most damn useful inventions ever.

In comparison, credit card phones in the UK are *extremely* rare (I never
managed to find one), and in the US, your credit card details are transferred
by DTMF rather than by the much more secure X.400/X.25.

Now, to canvass some other issues that people have raise, I hope I can clear
the fog.

* With respect to Telecom's Community Service Obligations, or CSO's (eg,
connecting a phone to remote areas), Telecom was asked by Austel in 1991,
before Optus came along, to actually price these CSO's.  Telecom came up with
a figure of around $800 million per year.  Industry observers and Austel thought
this figure was ridiculous and told Telecom to go back and work it out again.

They did this, and I understand a figure about half that size was returned.
Telecom had a lot of trouble actually costing CSO's because it had never
been required to explicitly find out what they were in the past.  They simply
didn't have the cross-divisional accounting practices in place to enable it
to be calculated.

This cost now forms the basis by which Optus are required to contribute
towards the cost of Telecom's CSO's.  In other words, Optus pays Telecom a fee
every year to partly cover the cost of putting payphones in Mataranka or
connecting a phone to Curtin Springs.

BTW, Telecom's Rural and Remote Areas Program (RRAP) was completed this year.
This program involved the installation of Digital Radio Concentrator Systems
(DRCS) in remote areas, and a small solar powered radio terminal at each remote
homestead or location where someone wanted a phone.

As a result, every person in Australia now has access to a fully automatic
telephone service, and the last manually operated exchange in Australia was
closed in February.  A magnificent achievement in such a sparsely populated
country.

* Interconnect price.  The interconnect price between Optus and Telecom was
fixed by Government regulation as part of an interconnect agreement.  This
price was arrived at after much table thumping an lobbying by all sides,
including industry lobbyists such as ATUG.

This price is currently set below cost, ie Telecom is required to connect
Optus to it's facilities at a price below the actual cost of providing that
facility.  This one of the main reasons that Optus can undercut Telecom in
some of its long distance rates.

However, the interconnect pricing arrangement will expire once Optus reaches
a 30% market penetration, and from then on, Optus will have to negotiate a
commercial interconnect price.  This is designed to give Optus a reasonable
chance of surviving aganist a very large and powerful incumbent.

To ensure its long term survival, Optus of course needs to install its own
network.  Believe it or not, Optus have already laid their own fibre link from
Sydney to Melbourne, and have installed five digital telephone exchanges in
Sydney and Melbourne.  The first, in Rosebury in Sydney, was recently
commissioned.

Their longer term plans include fibre links covering the golden arc from
Brisbane to at least Adelaide and possibly Perth.

Optus are also beginning installation of their own digital cellular phone
network, using the European GSM standard (as are Telecom).

Reselling is also now allowed, so organisations which have large communications
networks of their own (eg AAP) may sell spare capacity to others.  They are
not allowed to provide infrastructure, however, designed to directly or
indirectly provide services for others to use.  This prevents AAP from becoming
a carrier by stealth.

Come 1997, the duopoly will cease, and there will be no limit to the number of
new telecommunications service providers, in which case companies like AAP will
then be able to extend their own networks explicitly for connecting customers.

The Government has seriously attempted to set up a pro-competetive regulatory
environment that will both foster competition and protect the provision of non
profitable services to prevent the debacles of the US, or the other extreme in
the UK (where Mercury, after 10 years of operation, had only a 10% market
share).

I think it has succeeded, and even though I work for Optus' opposition, I
think we can all look forward to a much more responsive, technologically
advanced, and innovative telephone system.  One I think that will easily be
the best in the world, if it's not already.

-- 
Brendan Jones  | ACSnet:  brendan@otc.otca.oz.au               | This space
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