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15 May 2006

MR 54/2006

ACMA grants local number portability exemption for LocalZone service

The Australian Communications and Media Authority has granted Hutchison Telecommunications Australia
Limited (Hutchison) an exemption from the requirement to provide local number portability in respect of its
LocalZone service. The service operates under the ‘Orange’ brand name.

The Hutchison LocalZone service offering provides for mobile calls within a local geographic zone to be
charged at fixed line rates through a local geographic number. Customers are given a mobile number and a
geographic number. This exemption does not affect the ability of LocalZone customers to port their mobile
number.

‘While portability improves opportunities for competition, there are some circumstances where it may not be
practicable or in the long-term interests of end-users for a carriage service provider to provide portability,’
said Chris Chapman, ACMA Chairman. ‘Hutchison’s LocalZone service is one such case.’

The exemption has been granted until 30 November 2007. To ensure that the impact on customers is
minimised, the exemption was granted subject to the following conditions:

1. Hutchison must not allow any new customer to take-up a LocalZone service.
2. Subject to the customer’s agreement, Hutchison must offer existing LocalZone customers a free
redirection to a local number of their choice for at least twelve months. Hutchison must inform
customers of any impacts the redirection may have on the customer’s service.
3. Hutchison must have arrangements in place to deal with complaints arising as a result of the
exemption from affected customers and must promote awareness of these arrangements.
4. Hutchison must report to ACMA on a 6 monthly basis on the number of complaints received in
respect of portability matters and action taken to resolve the complaints.

Number portability refers to the right of a customer to change the carriage service provider or the carrier
network involved in providing a service, or both, and retain the same number. Number portability has been
implemented on local, freephone, local rate and mobile numbers.

A copy of ACMA’s statement of decision is available from ACMA’s website

Media contact: Donald Robertson, ACMA Media Manager on (02) 9334 7980.

Backgrounder

Local number portability was introduced in May 1998. Under Part 6 of Chapter 11 of the
Telecommunications Numbering Plan 1997 (the Numbering Plan), carriage service providers who may be
unable to meet their obligations to provide number portability for declared services may apply for an
exemption. Exemptions may be sought from obligations under Part 2 (Providing portability), Part 4 (Rules
for routing to portable numbers) and Part 5 (Other portability obligations for carriage service providers).

Section 11.18 of the Numbering Plan allows ACMA to grant exemptions for a carriage service provider or for
classes of carriage service providers. An exemption may apply for a specified period, specified purposes,
specified customers, or be subject to specified conditions.

Section 11.19 requires ACMA, on receiving an application for an exemption, to make a decision within 65

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working days. In deciding the application ACMA must consider:

z the network capacity of a carriage service provider or carrier;

z the support systems available to a carriage service provider or carrier; and
z any other matters ACMA considers relevant.

Additionally, ACMA may consider whether the Australian Competition and Consumer Commission (ACCC)
is satisfied that the exemption is necessary to promote the long-term interests of end-users.

The Numbering Plan requires that if ACMA is satisfied that it is not practicable for an applicant to meet its
porting obligations, then it must approve the exemption application.

Hutchison’s application

Hutchison Telecommunications Australia Limited (Hutchison) applied for an exemption from the
requirements set out in the Numbering Plan in respect of the local number component of its LocalZone
product.

Hutchison has advised that it does not have the infrastructure in place to give it the ability to port large
volumes of numbers. Hutchison considers that the obligation to provide local number portability in respect of
the LocalZone service is commercially unreasonable. Hutchison has advised that it would need to invest
significant resources to build the infrastructure, negotiate bilateral agreements, facilitate interconnect testing
and establish third party porting capability with other carriage service providers. Third party porting refers to
a port that occurs between two providers but, does not involve the party allocated the number.

ACMA is not required to consult on an exemption. However, ACMA considered consultation necessary to
ensure that all relevant issues were considered. Accordingly, ACMA invited comment from industry,
consumer organisations, the general public (via ACMA’s website), the Telecommunications Industry
Ombudsman and the Australian Competition and Consumer Commission.

ACMA’s view

While portability improves opportunities for competition by lowering switching costs, provision is made in the
Numbering Plan for circumstances where it may not be practicable or in the long term interests of end-users
(LTIE) for a CSP to provide portability.

Hutchison’s systems cannot simultaneously port both the local and the mobile number (which are
associated with a single device) to different mobile and local providers. Hutchison would need to implement
a solution that could separate the two numbers in the event that a customer wanted to port their numbers to
different providers. Hutchison’s systems are configured so that if the geographic number is ported first, the
mobile service has to be reconfigured as a mobile only service so that the customer retains rights of use
over the number. If the mobile service is ported first, the geographic number is automatically recovered
resulting in the customer losing their rights of use over that number.

Under the local number portability arrangements, Hutchison would have continuing obligations in relation to
numbers that have been ported for as long as it held those numbers, including after the shut down of its
CDMA service which was recently announced as 9 August 2006.

There are a relatively small number of customers using the LocalZone service and Hutchison has advised
that it is withdrawing the LocalZone service. Requiring Hutchison to build the necessary infrastructure to
support large volumes of ports would impose an undue financial and administrative burden. This burden is
compounded as Hutchison will continue to have routing obligations where it no longer has a CDMA network.

The ACCC advised that it is satisfied that the exemption is necessary to promote the long-term interest of
end-users.

ACMA considered all comments received during the consultation process. Based on the available
information, ACMA is satisfied that it would not be practicable for Hutchison to provide local number
portability and that failing to grant the exemption would impose an undue financial impost on Hutchison.

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ACMA has a strong interest in consumer issues. Accordingly, ACMA considers it necessary to make the
exemption subject to a number of conditions to minimise the impact on customers.

In deciding these conditions, ACMA had regard to the strategies that Hutchison has in place to minimise the
impact on customers following its decision to close the CDMA network.

The conditions in full are available on the ACMA website, or by contacting the Customer Cabling Team on
(03) 9963 6800, email ccat@acma.gov.au or fax (03) 9963 6899.

http://www.acma.gov.au/ACMAINTER:STANDARD::pc=PC_100553 24/05/2006