Open Access (Infrastructure)
Encyclopedia
In the context of infrastructure
, open access involves physical infrastructure such as railways and physical telecommunications network plant being made available to clients other than the owners, for a fee.
For example, private railways within, say, a steel works are private and not available to outsiders. In the hypothetical case of the steelworks having a port or a railway to a distant mine, outsiders might want access to save having to incur a possibly large cost of building their own facility.
was a pioneer of long distance radio communication, which was particularly useful for ships at sea. Marconi was very protective about its costly infrastructure and refused - except for emergencies - to allow other radio companies to share its infrastructure. Even if the message sender was royalty, as in the Deutschland incident of 1902
, they continued to refuse access. Since radio communication was so new, it preceded laws, regulations and licences, which might otherwise imposed conditions to open infrastructure to other players.
, two large mining companies operate their own private railway networks to bring iron ore from mines to the port. In 1999 North Limited made an application to access Rio Tinto
's Pilbara system, but Rio's takeover of North Limited meant that application was never fully tested. In 2004 Fortescue Metals Group
launched a bid to have the Mt Newman line owned by BHP Billiton
"declared" for third party access. The owner of the line claimed that they formed an integral part of the production process, and so should not be subject to completion requirements. When these mines started in the 1960s, state laws required the miners to make their infrastructure available to other players, but no application had been made. In the same region, the Fortescue Metals Group
railway has been set up for open access for a fee.
In June 2008 the Federal Government advisory body, the National Competition Council, recommended that BHP Billiton's Goldsworthy railway and Rio Tinto's Robe River and Hamersley lines should be declared open access. Treasurer Wayne Swan
was given 60 days to make a final decision based on this recommendation. On October 27 the three lines were 'declared' with open access to apply from November 20, 2008. This will apply for 20 years under the National Access Regime within the Trade Practices Act 1974
. The declaration does not give a right of access, but provides a third party with recourse if access terms cannot be negogiated with the infrastructure owner.
that access disputes be resolved in an efficient way, so that for example, profits are maximised and therefore income tax on those profits is also maximised.
The potential for monopoly infrastructure to charge high fees and provide poor service has long been recognised. Monopolies
are often inevitable because of high capital costs, with governments often imposing conditions, in exchange for approval of the project and for the granting of useful powers such as land resumption
. Thus a canal might have its rates regulated, and be forbidden to operate canal boats on its own waters.
from the other railway(s). This can be done by voluntary agreement, or by compulsory order of a regulator. In time of flood and accident which puts a line out of order, compulsory trackage rights may be ordered in the public interest to keep traffic flowing, assuming that alternative routes exist.
railway. (Fortescue has declared itself to be an open access operator).
BC Iron and Fortescue agreed to set up a joint venture to operate both the BCI mine and the railway connection to the port. As the larger player, Fortescue will run the show. The joint venture gives BC Iron inside information as to how much the railway and port will cost, while Fortescue gains inside information about the mine.
. The facility will be open to other users who will pay a toll for such usage.
The Oakajee port and railway network is also to be open access.
as open access to other players.
, duct sharing
, utility pole
sharing, and fiber unbundling, is one proposed solution to the middle mile
problem.
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, open access involves physical infrastructure such as railways and physical telecommunications network plant being made available to clients other than the owners, for a fee.
For example, private railways within, say, a steel works are private and not available to outsiders. In the hypothetical case of the steelworks having a port or a railway to a distant mine, outsiders might want access to save having to incur a possibly large cost of building their own facility.
Marconi and radio communication
MarconiMarconi Company
The Marconi Company Ltd. was founded by Guglielmo Marconi in 1897 as The Wireless Telegraph & Signal Company...
was a pioneer of long distance radio communication, which was particularly useful for ships at sea. Marconi was very protective about its costly infrastructure and refused - except for emergencies - to allow other radio companies to share its infrastructure. Even if the message sender was royalty, as in the Deutschland incident of 1902
Deutschland incident (1902)
The Deutschland incident of 1902 occurred in March of that year with a German passenger steamer from the Hamburg America Line named SS Deutschland...
, they continued to refuse access. Since radio communication was so new, it preceded laws, regulations and licences, which might otherwise imposed conditions to open infrastructure to other players.
Pilbara railways
In the northwest of Western AustraliaWestern Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
, two large mining companies operate their own private railway networks to bring iron ore from mines to the port. In 1999 North Limited made an application to access Rio Tinto
Rio Tinto Group
The Rio Tinto Group is a diversified, British-Australian, multinational mining and resources group with headquarters in London and Melbourne. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto river, in Huelva, Spain from the...
's Pilbara system, but Rio's takeover of North Limited meant that application was never fully tested. In 2004 Fortescue Metals Group
Fortescue Metals Group
Fortescue Metals Group is an Australian iron ore mining company. The company has holdings of more than 87,000 km² in the Pilbara region of Western Australia making it the largest tenement holder in the state. It is listed as FMG on the Australian Securities Exchange .In 2008, the group loaded...
launched a bid to have the Mt Newman line owned by BHP Billiton
BHP Billiton
BHP Billiton is a global mining, oil and gas company headquartered in Melbourne, Australia and with a major management office in London, United Kingdom...
"declared" for third party access. The owner of the line claimed that they formed an integral part of the production process, and so should not be subject to completion requirements. When these mines started in the 1960s, state laws required the miners to make their infrastructure available to other players, but no application had been made. In the same region, the Fortescue Metals Group
Fortescue Metals Group
Fortescue Metals Group is an Australian iron ore mining company. The company has holdings of more than 87,000 km² in the Pilbara region of Western Australia making it the largest tenement holder in the state. It is listed as FMG on the Australian Securities Exchange .In 2008, the group loaded...
railway has been set up for open access for a fee.
In June 2008 the Federal Government advisory body, the National Competition Council, recommended that BHP Billiton's Goldsworthy railway and Rio Tinto's Robe River and Hamersley lines should be declared open access. Treasurer Wayne Swan
Wayne Swan
Wayne Maxwell Swan is the Deputy Prime Minister of Australia and an Australian politician. He has been an Australian Labor Party member of the Australian House of Representatives from 1993 to 1996, and then re elected in 1998 till today , representing the Division of Lilley, QLD...
was given 60 days to make a final decision based on this recommendation. On October 27 the three lines were 'declared' with open access to apply from November 20, 2008. This will apply for 20 years under the National Access Regime within the Trade Practices Act 1974
Trade Practices Act 1974
The Competition and Consumer Act 2010 is an act of the Parliament of Australia. On 1 January 2011 the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010. The act provides for protection of consumers and prevents some restrictive trade practices of companies. It is the key...
. The declaration does not give a right of access, but provides a third party with recourse if access terms cannot be negogiated with the infrastructure owner.
Concerns
A player seeking access to infrastructure would expect to pay several fees of a capital and operating kind. Hopefully the cost of this is less than having to built separate infrastructure. It is in the public interestPublic interest
The public interest refers to the "common well-being" or "general welfare." The public interest is central to policy debates, politics, democracy and the nature of government itself...
that access disputes be resolved in an efficient way, so that for example, profits are maximised and therefore income tax on those profits is also maximised.
The potential for monopoly infrastructure to charge high fees and provide poor service has long been recognised. Monopolies
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
are often inevitable because of high capital costs, with governments often imposing conditions, in exchange for approval of the project and for the granting of useful powers such as land resumption
Eminent domain
Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent...
. Thus a canal might have its rates regulated, and be forbidden to operate canal boats on its own waters.
Trackage rights
Where there are many separate railways and one railway wishes to run trains off their own tracks onto the tracks of another, they may seek trackage rightsTrackage rights
Trackage rights , running rights or running powers is an agreement whereby a railway company has the right to run its trains on tracks owned by another railway company....
from the other railway(s). This can be done by voluntary agreement, or by compulsory order of a regulator. In time of flood and accident which puts a line out of order, compulsory trackage rights may be ordered in the public interest to keep traffic flowing, assuming that alternative routes exist.
Joint Venture
One of the problems faced by Open Access is what is a fair price. Consider the Iron Ore minnow BC Iron which seeks access to the ForstescueFortescue Metals Group
Fortescue Metals Group is an Australian iron ore mining company. The company has holdings of more than 87,000 km² in the Pilbara region of Western Australia making it the largest tenement holder in the state. It is listed as FMG on the Australian Securities Exchange .In 2008, the group loaded...
railway. (Fortescue has declared itself to be an open access operator).
BC Iron and Fortescue agreed to set up a joint venture to operate both the BCI mine and the railway connection to the port. As the larger player, Fortescue will run the show. The joint venture gives BC Iron inside information as to how much the railway and port will cost, while Fortescue gains inside information about the mine.
Geraldton
In 2010, Mt Gibson Mining will be spending $20m to upgrade the ore unloaded at GeraldtonGeraldton, Western Australia
Geraldton is a city and port in Western Australia located north of Perth in the Mid West region. Geraldton has an estimated population at June 2010 of 36,958...
. The facility will be open to other users who will pay a toll for such usage.
The Oakajee port and railway network is also to be open access.
Queensland
In 2011, GVK has offer to make its proposed railway from the Galilee Basin to Abbot PointAbbot Point
Abbot Point is the most northerly deepwater coal port of Australia, situated 25 kilometres north of Bowen, Queensland. It consists of a rail in-loading facility, coal handling and stockpile areas, and a single trestle jetty and conveyor connected to a berth and shiploader, located 2.75km off-shore...
as open access to other players.
Telecommunications
In the telecommunications industry, open access to existing infrastructure, in the form of local loop unbundlingLocal loop unbundling
Local loop unbundling is the regulatory process of allowing multiple telecommunications operators to use connections from the telephone exchange to the customer's premises...
, duct sharing
Common utility duct
A common utility duct, sometimes called a common utility conduit, is any structure – above, on, or below ground – that carries more than two types of public utility lines...
, utility pole
Utility pole
A utility pole is a pole used to support overhead power lines and various other public utilities, such as cable, fibre optic cable, and related equipment such as transformers and street lights. It can be referred to as a telephone pole, power pole, hydro pole, telegraph pole, or telegraph post,...
sharing, and fiber unbundling, is one proposed solution to the middle mile
Middle mile
In the broadband Internet industry, the "middle mile" is the segment of a telecommunications network linking a network operator's core network to the local network plant, typically situated in the incumbent telco's central office, that provides access to the local loop, or in the case of cable...
problem.