Compliance With NBN Laws For New Developments

By Michael Sparksman, Managing Director of OPENetworks. 

Urban developers as well as developers in rural Australia, need to understand how the laws to implement the government’s National Broadband Network Policy (NBN) will affect new developments.

Obligations on Developers

At the core of the new laws are the obligations on developers of new building lots or units to:
(a) trench, supply and install the pits and pipes for the project: and then
(b) engage either NBN Co or a private operator, like OPENetworks, Red Train Networks, LBN Co or Opticomm to supply and install optical fibre cables to each lot or unit and then operate that network on a wholesale only, open access, non-discriminatory basis.

Part 20A of the Telecommunications Act

was created by the Telecommunications Legislation Amendment (Fibre Deployment) Act 2011 (Fibre Deployment Act)

. It affects ALL new real estate developments, so that¹, unless the Minister grants an exemption for a development (which is very unlikely):
• developers must not install a line in the project area unless it is an optical fibre line

;²

• developers must not install a fixed‑line facility³ in the project area for a real estate development project unless:
o the facility is a fibre‑ready facility; or
o if NBN Co states that it has installed, is installing, or proposes to install, optical fibre lines in the project area;
• developers must not sell or lease a building lot or building unit unless:
o a fibre‑ready facility is installed in proximity to the lot or unit or
o if NBN Co states that it has installed, is installing, or proposes to install, optical fibre lines in the project area;
• A third party access regime applies to fixed–line facilities owned or operated by a person other than a carrier. This enables the private, non NBN Co carriers to access, install and operate their optical fibre networks in the fibre ready facility (i.e. pits, pipes and cable trays).

A fixed‑line facility (such as pits, pipes and cable trays) is for use in connection with a line or cable supplying carriage services to the public, but is not a line or cable within the home or unit. These facilities are usually in common property of apartment buildings or road reserves of broad acre developments.

Development Approval Conditions

Modern Development Approvals (DA) for new developments mandate conditions that require the developer to run dedicated lines for broadband and voice services from the main distribution frame or point for the development (through road reserves or common property) to each lot or unit before occupancy will be permitted. Developers can only use optical fibre telecommunications lines to do so under such DAs. Some developers still think that a copper line will suffice, but that is not the law, and any sale or lease of lots or units without optical fibre lines, would be unlawful. Buyers might one day rely on the Developer’s provision of copper lines, instead of fibre lines to their lots or units, to get out of sale contacts.

There are some DAs issued by Councils that do not require a dedicated line for broadband telecommunications to each apartment or lot and that the developer must either get a licenced carrier to reach agreement to provide telecommunications to the development or arrange for telecommunications be provided to the site of the development by a carrier that complies with the Laws of the Commonwealth of Australia. Whilst those DAs would appear to leave it up to the developer to decide whether they will provide an optical fibre connection to each apartment or lot for telecommunications, this is yet to be tested by both the market and the Courts. It is likely that buyers who discover that they have purchased without any telecommunications connection, much less a dedicated optical fibre telecommunication line to their apartment or lot, may terminate their sale contracts or sue for damages against the developer and, potentially, the Council. It is highly likely that specialist plaintiff litigation lawyers looking for work and opportunity will discover those developments with such DAs and start class actions against the responsible developers and Councils. Reputable developers and prudent banks and financiers will not want to test that issue in the market or the Courts, even if the Council DA is so inadequate and leave telecommunications connections to each apartment or lot up to the developer.

New Level Playing Field Arrangements

The Telecommunications Legislation Amendment (National Broadband Network—Access Arrangements) Act 2011 (“NBN Access Act

”) added new Parts 7 and 8 to the Telecommunications Act 1997 and the Competition and Consumer Act 2011 to provide for new level playing field arrangements.

As a result, it is unlawful for an operator of a superfast network (providing broadband with download transmission speeds normally more than 25 megabits per second) to residential or small business users to build a network if the operator is not wholesale only and supplying a Layer 2 bitstream service on an open-access and non-discriminatory basis. Operators that breach the law can face criminal prosecution and fines up to $2m.

Developers of new developments as well as newly established bodies corporate should carefully consider whether a proposed operator complies with the new laws and are wholesale only, network operators that supply a Layer 2 bitstream services on an open-access and non-discriminatory basis.

Before these laws, a developer of a mixed use development such a retirement village with some additional residential apartments or homes or a hotel with residential apartments may think that they could engage a retail operator to build, maintain and operate their network without having to be an “open access”, “wholesale only” operator. Indeed, a problem may not surface until sometime after the developer has started selling or sold lots or units, but remedying the problem, terminating the retail operator and getting a complying operator to take on a network that they did not build or maintain, could be very difficult and expensive.

The effect of the arrangements is that the 'superfast networks' to which the arrangements apply must be wholesale-only4 , and the operator of such networks must supply a Layer 2 bitstream service5 on an open-access and non-discriminatory basis⁶. If the operator has a related internet service provider on the network then they are not “wholesale only” operators. NBN Co, OPENetworks, Red Train Networks and Opticomm are wholesale only operators that supply Lawyer 2 bitstream services on an open access and non-discriminatory basis.

Recently the government realized that before the NBN Access Act commenced, the TPG superfast network could be extended by up to 1 km to residential premises without breaching that Act. So the Minister for Communications made a Determination⁷ to impose a new licence condition on all carriers of networks capable of supplying superfast carriage services (ie 25 Mbps or faster) to residential and small business premises. It requires them to provide wholesale access to those networks on an open access, non-discriminatory basis and for carriers that have related retail internet providers on those networks, to functionally separate the wholesale and retail businesses.

There are a few statutory exemptions to the level playing field arrangements set NBN Access Act. These exemptions cover:• extensions to existing superfast networks within current real estate developments;
• extensions to existing network footprints no more than 1 Km from a point on the infrastructure of the existing network, as the network stood immediately before 1 January 2011; and
• connections to premises in close proximity to existing network footprints.

Exemptions may relate to specified networks, specified local access lines or network owners. To date, the Minister has only granted exemptions for Telstra Velocity Networks and the TransACT/iiNet network.

About the Author

Michael Sparksman, is the Managing Director of OPENetworks, a wholesale only, open access, licenced telecommunications carrier. He is also a qualified solicitor with over 30 years of practice in major commercial law firms. He specialises in the laws relating to telecommunications, property and infrastructure developments.

 _________________________________________1 Section 372A of the Telecommunications Act 19972 Section 372B(2) of the Telecommunications Act 19973 Section 372V of the Telecommunications Act 19974 See Section 143 of the Telecommunications Act and especially Subsections (2) and (3)(2) A person who is in a position to exercise control [See Sections 153 to 155] of the network, or a person who is an associate [See Section 152] of such a person, must not use the local access line, either alone or jointly with one or more other persons, to supply an eligible service unless the service is supplied to:
(a) a carrier; or
(b) a service provider.
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person engages in conduct; and
(c) the person’s conduct breaches the requirement.
Penalty: 20,000 penalty units.

5 Section 85 of the NBN Access Act inserted into Section 7 of the Telecommunications Act the definition:
“Layer 2 bitstream service means a carriage service that is:
(a) either:
(i) a Layer 2 Ethernet bitstream service; or
(ii) a Layer 2 bitstream service specified in a legislative instrument made by the ACMA for the purposes of this subparagraph; and
(b) a listed carriage service; and
(c) supplied using a line to premises occupied or used by an end user.
For this purpose, Layer 2 has the same meaning as in the Open System Interconnection (OSI) Reference Model for data exchange.”

6 Sections 140 and 152ARA of the Telecommunications Act 19977 Carrier Licence Conditions (Networks supplying Superfast Carriage Services to Residential Customers) Declaration 2014