Proposed adjustment to carrier fee structure

I would love to share my Internet connection with my neighbors as a way to reduce cost and increase speed and I’m pretty sure a lot of companies would love to do the same thing. Nowadays everyone with a wireless router and an ADSL modem can share and even sell their bandwidth. Except for a little pesky inconvenience: a hopelessly outdated Australian telecommunication law.

Legally, sharing your Internet connection and charging for it turns you into a Carrier so you need a license from ACMA (Australian Communications and Media Authority, the agency that will also be responsible for executing government internet censorship if that passes.).

But such a license is prohibitively expensive at the moment, because it’s really only meant for telcos.

Turns out that the A in ACMA doesn’t really stand for Authority, so I quickly got a reply from them telling me I should instead contact the Department of Broadband, Communications and the Digital Economy (DBCDE). I did that about half a year ago and never a got a reply.

Dear sir/madam,

I was investigating what it would take to commercially provide Internet access to a couple of people in my neighborhood and I quickly learned that this requires me to do two two things. The first is to find an ADSL or cable provider that allows me to do such a thing under their terms of service. The second is to obtain a Carrier license. This is what I am writing to you about.

I was very pleased to see that your website provides a wealth of information about this process. Even though I do not have a background in telecommunications, I do believe I understand at least the basics of what you are saying.

What set me back though are the fees.

First there is $2500 dollars to set up.

Then there is the yearly fee, calculated as follows: MFC + (MCA – OTC – MFC * TNC) * ER / TER

MFC (Minimum Fixed Charge) : $295
MCA (Maximum charge amount) : $37 125 681
OTC (Other telecommunications charge) : $157 721
TNC (Total number of carriers) : 170 *
ER (eligible revenue) : $1800 **
TER (Total eligible revenue) : $25 139 383 526

* = There are currently 169 carriers, but if I join there will be 170
** = I am not quite sure how to calculate this “eligible revenue”, but from what I understand about it, it is a bit less than my total revenue. So if I share my connection with 3 neighbors and charge them $50 a month each, my ER would be $1800 per year, at most.

So my yearly fee = $259 + ($37 125 681 – $157 721 – $259 * 170) * $1800 / $25 139 383 526 = $269

The setup fee ($830 per customer) is definitely a show stopper here. The yearly fee ($90 per customer) might just be bearable.

I have also calculated what it would cost to setup a carrier with 10.000 people. In that case the setup fee is about $0.30 per customer and the yearly fee about $0.10.

It seems to me that this fee structure makes it very difficult for private citizens to setup a small business.

Now I understand and appreciate where this fee structure is coming from. The Telecommunications Acts stems from 1997. At that time Internet was just becoming main stream and the network equipment needed to setup a Carrier was very expensive. At that time it would not make any sense for an individual to resell Internet bandwidth to his neighbors.

A lot has changed in the last eleven years though. The equipment that is required to share a broadband connection with your neighbors costs less than $50. There are many ADSL and cable providers to choose from, so it becomes more feasible to find at least one that is willing to let you resell bandwidth (perhaps at a premium price, but nonetheless).

I therefore propose a slight change in your fee structure. I would ask that you reduce the setup fee from $3000 dollars to south of $100 and reduce MFC from $259 to south of $50.

The lower setup fee could be compensated either by slightly higher yearly costs or just by the sheer number of new carriers.

The lower MFC would cost you (259 – 50) * 169 = $35 321 if no new carriers apply, but will yield a healthy profit if more than 700 new carriers sign up. Given the financial incentive for people to become a carrier under such a fee structure, that is a very easy target; just the tech-savy early adopter group will likely be bigger than that.

Of course it is not in any one’s interest if your organization takes an unacceptable financial risk. Therefore I propose that you initialize a pilot project. This pilot would involve a Micro Carrier license. It would be the same a Carrier  license except the owner of such a licence is not allowed to have an Eligible Revenue in excess of $5000. I believe this restriction would justify the lower fees in this category. Since the costs per user of this license will still be higher than for all the 169  current Carriers, this Micro License would not in any way provide an unfair competitive advantage to anyone.

If the program turns out to be a success, which I am very sure it will be, you can safely lower the fees for a standard Carrier license.

I am looking forward to hearing your thoughts about this.

4 replies on “Proposed adjustment to carrier fee structure”

Now that’s the kind of stuff I’m talking about!

But how does Tomizone deal with the Carrier License issue?

Do they have a license? In that case, do they still own the devices?

Do they expect their users to have a license? (Which nobody can afford)

Or do they just hope nobody gets sued?

Just do it. ACMA will be too busy prosecuting all those people who already provide internet access to their neighbours simply by having unsecured WiFi networks.

However, I think you might escape the definition of carrier in a whole host of ways. The premises are less tha 500 metres apart, or that the radio “network” is provided on a “non-commercial basis” – which would be the case if all you want to do is share the cost of the fixed link, not if you intend to “profit” from it.

The Australian carrier licensing regime is one of the most deregulated in the world so don’t complain too much.

Finally, there is a mob but I can’t remember their names who’ve developed a business model for just this kind of WiFi sharing.

The reason I’m bringing this up is that this makes it impossible for small businesses to enter the field. Small and Medium Enterprises (SME) are really important in a healthy economy, they say.

In order to do anything economically with wifi, you either have to do it under the radar as a private citizen or you need at least 10.000 customers to cover your fees. Anything in between is impossible unless you and your investors are willing to take an enormous legal risk.

This is why I believe this policy is highly anti competitive (albeit never intended that way).

I believe you are referring to Fon [0]. Unfortunately, they do not ship to Australia, presumably for legal reasons (the other problem being import restrictions on wifi equipment, adding another 3-6K to the bill)…


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