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Small ISPs to benefit under new telco reforms

Telstra's structural separation overshadows the Federal Government's plans to improve conditions for small telco players with their own infrastructure assets

It may have been upstaged by news of Telstra’s structural separation, but the Federal Government’s flurry of telecommunication regulatory reforms will also improve conditions for small Internet service providers (ISPs) with network assets.

Alongside plans to force Telstra to separate its wholesale and retail operations, the Government’s new legislation will give small telco players a big financial break. Currently, companies have to procure a costly Carrier Licence in order to supply carriage services to the public. The application fee is $2500 with a minimum annual fee of up to $1000. Organisations will also pay an additional sum based on a portion of their eligible revenue a year.

Under the proposed legislation, carriers that make less than $25 million in yearly revenue are exempt from paying an annual Carrier Licence charge. Reporting obligations are also reduced so long as carriers met the newly set benchmarks that ensure customers are provided with an adequate service.

Layer 10 founder and analyst, Paul Brooks, said the changes will motivate small service providers to upgrade and become carriers with their own network.

“There is a lot more incentive for new players in smaller areas to get a Carrier Licence because it is a lot less onerous to get one in order to install their own infrastructure,” he said. “This could introduce extra cost savings for smaller players and gives them a leg up in the industry as they grow.”

The reduced reporting requirements also plays a key role, as the cost of compliance, compounded with annual fees, was a daunting factor for those that sought a licence.

“The reforms mean smaller companies with fewer staff that run a leaner organisation will find obtaining a licence to be much more attractive,” Brooks said.

The Bill will be mulled over in Parliament in the coming weeks.

Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.

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