TELSTRA CORPORATION LIMITED

Submission to the Australian Communications Authority In response to the ACAs Discussion Paper: Implementation Date for Premium Rate Number Portability

28 May 2004

1. Background Telstra welcomes this opportunity to respond to the Australian Communication Authoritys (ACA) Discussion Paper on an Implementation Date for Premium Rate Number Portability (the Discussion Paper). The ACA is aware of Telstras view that mandating premium rate number portability is not necessary in the current environment. Telstra refers to previous submissions to the Australian Competition and Consumer Commission of September 2001 and 29 August 2002. However, Telstra acknowledges that the ACA has been directed to set an implementation date for premium rate number portability. In Telstras response we have focused on the ACAs main objective of setting the implementation date for premium number portability. While it is important to address technical solutions, it is appropriate to first identify the level of interest of other carrier(s) intending/considering entering the market. The solutions that are implemented will be affected by the requirements and capabilities of each carrier. Telstra is prepared to work with the ACA and other carriers in putting in place a realistic and practical implementation for premium number portability and is willing to examine any proposal put forward by the ACA. This submission proposes a strategy for setting the implementation of premium rate number portability and sets out Telstras reasoning in support. In proposing an implementation strategy for premium number portability an important consideration is that Telstra is currently and, for the foreseeable future, the only 190-platform provider. The approach being proposed is one that facilitates another 190 carrier entering the market in a reasonable time frame with minimal cost impact on setting up the porting process. If this is acceptable Telstra is prepared to work through the details with the ACA and any other party that is considering/intends to enter this space.

2. Implementation Date for 190 Ten Digit Numbers The premium rate number market is small relative to the total volume of numbers. The volume of ten digit numbers commencing with 190 in active service is approximately 15,000 Telstra is not aware that any other parties have expressed an interest to enter the market. To that end, there does not appear to be a practical driver for the implementation of a premium rate number portability procedure. Telstra submits that premium rate number portability cannot be effectively introduced until another carrier commits to entering the premium rate services market by devoting significant resources to solving premium rate number portability implementation issues. In the absence of at least one other party willing to actively participate,
additional premium rate number portability measures are meaningless.

Telstra submits that portability between service providers in the premium rate number market already exists. Content providers already benefit from competition at the service bureau level, there are approximately 60 active service providers currently connected to Telstras 190 service. A content provider can choose which service bureau to do business with, taking into account the initial service and costs, as well as ongoing services and costs. Content providers can also switch from service bureau to service bureau if they wish. As the service bureau level is already competitive, the introduction of portability without another carrier entering the market with a 190 platform will have nil impact on competition between service bureaus. Despite this view, Telstra holds that there are a number of factors which require consideration when setting an implementation date for a premium rate number portability procedure. These are: Bilateral Agreements Telstra could not implement portability unilaterally. Full implementation of the premium rate number portability process will require bilateral agreement between parties. Another carrier would need to contribute significant resources to help define and implement donor and recipient systems and processes especially in regard to security and resulting fraud management. If Telstra alone defined a premium rate number portability solution, then the solution could not reflect other carriers needs and therefore would likely be inappropriate for any other carriers wishing to supply premium rate number portability in the future. It is important to allow sufficient time for parties contemplating entering the premium rate number market to develop and prepare such bilateral agreements. Network and IT Development For Telstra, development on the Alcatel Intelligent Network platform and systems is required to determine which carrier provides the 19xx service and therefore to which network the call is to be switched. For example, if a call originates in the Telstra network and the 190 services are provided by AAPT, then the Telstra network would need to first determine (via a premium rate number portability database) that the service associated with the dialled number was provided by AAPT and then switch the call to AAPT via the Interconnect Gateway. Currently this identification and switching is done based on the first 5 digits of the dialled number. This approach would need to be adapted to enable premium rate number portability for individual numbers. IT developments would be needed to support new functions and business processes required for provisioning a new 190 service to cater for determining availability of, and then obtaining new numbers from, a new database created of premium rate number portability numbers. New functions and business 2

processes would also be required to handle porting of services with other 190 providers. Mandating that Telstra develop an interface and process in isolation to the industry is unrealistic and likely to result in inefficient use of its limited resources, including wasted time, effort and money, as: 1) there is no one to port to; 2) there is no one with whom to work through the real detailed level of what the functional requirements would be and billing system interface specifications; and 3) if a competitor did enter the market at a later stage, they are likely to have different requirements that Telstra could not have foreseen, necessitating rework of the interface/processes, all at Telstras expense including longer delays to implement an agreed solution by all parties.

Customer Education If premium number portability is introduced, not only will there be different service provider choices available for consumers, but it is possible that there may also be implications with regard to the costs charged for premium rate services. Telstra believes it is important that consumers are made fully aware of the changes to the premium rate number market. To that end, it is Telstras view that any new entrants to the market should be required to enter into a campaign to inform and educate consumers about these changes. Telstra considers that such a campaign would require a considerable commitment of time and resources in order to be effective. 3. Proposed solution to meet Regulatory requirements of lowering the entry barrier to the Infocall market For the reasons referred to above, Telstra is willing to commit to implementing a manual premium rate number portability process from the time a new entrant enters the market. We estimate this process if agreed by the ACA will take about six months to become operational from the time a new entrant enters the market. This will include putting in place all the necessary agreements and processes by the new entrant. Thus Telstras proposed solution will ensure a relatively quick entry for other parties while at the same time stopping short (deferring) implementation of an expensive IT solution. At some point Telstras preferred porting processing should be IT based and automatic. This will have to occur at some threshold value that can only be estimated and agreed when there is at least another party. Telstra is prepared to develop an agreed IT solution with any interested carriers. Telstra contemplates that a review of the manual process would be conducted within one year of another market entrant and the parties entering a bilateral 3

agreement in relation to premium rate number portability. At the same time it is also contemplated that the telecommunications industry would develop and adopt an industry premium rate number porting process based on agreed threshold churn values before which the more automated/sophisticated process may be uneconomical for all concerned. 4. Six and Eight Digit Numbers Telstra makes the assumption that all 6 or 8 digit numbers are used initially for data/Short Message Service (SMS). The 191, 193 197 & 199 number ranges to be used for SMS operate in an On Net model which means that in this space service bureaus have a contractual arrangement with each mobile carrier for service on any given number. It follows that portability in this space has no meaning (as all mobile CSPs already provide service to each service bureau). Telstra, therefore, submits that there is no need for number portability in the 6 and 8 digit numbers at this time. This view is consistent with the ACAs own statement in the second paragraph of section 6.2 of the Discussion Paper which proposes that portability of 6 and 8 digit premium rate numbers is more likely to occur between service bureaus rather than between carriers.

5. Use of the Industry Number Management Services (INMS) Database Telstra submits that it is not appropriate at this time to utilise the INMS Database to manage the premium rate number portability process. The INMS has been developed to: (i) allocate numbers; (ii) assist in the porting of 1800/1300 numbers; (iii) as a reference database for routing calls to FLRNs; and (iv) as a national database for allocation of 191,3,4,5,6,7,9 numbers to Premium Rate Carriage Service Providers. There is a significant difference between number allocation and portability and it is important to recognise this difference. There is no reason why there should be a move from allocating blocks of numbers to individual numbers for the 190 number ranges.