16 October 2019
“MG” – a pseudonym
Sent via email:
xxxxxxxxxxxxxxxxxxxxxxxxx@xxxxxxxxxxx.xxx.xx
Our Ref: 1920/24.03
To whom it may concern
nbn FOI request – COAT Program
I am writing in relation to your request under the
Freedom of Information Act 1982 (Cth) (
FOI Act).
My FOI decision is found at
Attachment A.
An FOI decision may be reviewed, subject to sections 53A and 54 of the FOI Act. Please refer to the Office of the
Australian Information Commissioner’s website at the following
link, which provides details about your rights of
review and other avenues of redress under the FOI Act.
If you have any questions or need to discuss your FOI application, please contact the writer via email on
xxxxxxxxxxx@xxxxx.xxx.xx.
David J Mesman
General Counsel
FOI, Privacy & Knowledge Management
ATTACHMENT A
FOI ACCESS DECISION – STATEMENT OF REASONS (FOI1920/24)
Background Information
1. In making this decision, I took into account relevant parts of the
Freedom of Information Act 1982 (Cth)
(
FOI
Act) and related legislation, the Office of the Australian Information Commissioner’s (
OAIC) FOI Guidelines,
relevant case law and other applicable sources.
2.
nbn is treated differently from Commonwealth Government agencies and other entities that are subject to
the FOI Act. P
er section 7(3A) an
d Part II of Schedule 2 of the FOI Act, documents relating to
nbn’s commercial
activities are carved-out from the application of the FOI Act.
3.
nbn has summarised the OAIC’s and the Administrative Appeals Tribunal’s decisions concerning
nbn’s
commercial activities carve-out (
CAC) in a Background Document (
CAC Background Document) found at the
follo
wing link. The CAC Background Document should be considered as an integral part of this FOI decision.
4. In practical terms, the CAC ensures that
nbn is not exposed to disadvantage in the marketplace and similar
commercial environments. The CAC also enables
nbn to function as any other commercial player in Australia’s
highly competitive telecommunications and infrastructure build industries. If
nbn were required to release
commercially-related information under the FOI regime, this would undermine
nbn’s ability to negotiate
competitive contracts, develop and protect its valuable intellectual property, create innovative products and
services or grow market share, among other adverse effects. Disclosure of commercially-related information
would also undermine
nbn’s capacity to generate revenues, while driving up rollout costs. Ultimately,
Australian taxpayers would have to bear those cost increases and other potentially adverse consequences.
Terms of Request & Chronology
5. On 18 September 2019,
nbn’s FOI Team received an email from “MG”, a pseudonym (
Applicant) via the
“Right to Know” (
RTK) website. In that email, the Applicant sought the following:
Documents/information relating to the Change Of Access Technology (COAT) program. Specifically:
1. Criteria used to assess whether a premises (or a number of premises) is eligible for inclusion in
the program (COAT Eligibility Criteria).
2. Flowchart (or other documentation) outlining the COAT process from initial assessment to
completion (either completion to change the technology type or completion to leave the existing
technology type in situ) (COAT Process Flowchart).
6. On 30 September 2019,
nbn’s FOI Team acknowledged the Applicant’s FOI request by email, as required by
section 15 of the FOI Act. Following receipt of the Applicant’s FOI request,
nbn personnel undertook enquiries
and searches for relevant documents. From those searches,
nbn staff identified two Draft COAT Process Trial
Flowchart documents and a third Draft COAT (Customer-Focussed) Process Flowchart (collectively,
Draft
Flowcharts), which fell within the terms of the 2nd part of the Applicant’s FOI request. No other relevant
documents were located.
7. On 16 October 2019, I completed this FOI access decision and subsequently emailed it to the Applicant.
Access Decision – Summary
8. In relation to the 1st point of the Applicant’s FOI request (COAT Eligibility Criteria), relevant details are found
within the COAT Test Agreement, found at th
e following link and are already in the public domain. I refer to
section 24A of the FOI Act and make a finding that
nbn staff have taken all reasonable steps to find additional
COAT Eligibility Criteria and I am satisfied that they do not exist.
9. In relation to the 2nd point of the Applicant’s FOI request (COAT Process Flowchart), I have determined that the
Draft Flowcharts relate to
nbn’s commercial activities, as would similar documents concerning
nbn’s COAT Trial
Processes. As such,
nbn is not required to release those documents pursuant to
section 7(3A) and
Part II of
Schedule 2 of the FOI Act.
10. Given my findings in relation to the Draft Flowcharts, it is unnecessary to consider alternative exemption
grounds under the FOI Act. However, I consider that there are other exemptions potentially available to
nbn
under the FOI Act
concerning those documents – and documents like them. Among other grounds, this includes
the following sections of the FOI Act, being 47 (commercially valuable information), 47C (deliberative matters)
and 47E (operations of agencies). My more detailed statement of reasons are set out below.
Access Decision – Findings of Fact and Reasons 11. I have carefully reviewed the Draft Flowcharts, as well as other relevant documents and materials, including
those referred to below. In particular, I make the following findings of fact in relation to the Draft Flowcharts
and more generally about the COAT Trial Process:
a.
nbn undertook a COAT Process Test, i.e. a COAT trial process, and recently published a COAT Industry
Consultation Paper (
COAT ICP) in August 2019 via
nbn’s Product Development Forum (
PD Forum).
b. The purpose of the COAT ICP was to allow
nbn to consult with and obtain feedback from
nbn’s
wholesale broadband customers, i.e.
nbn’s Retail Service Providers (
RSPs), and other
telecommunications industry specialists about the development of proposed COAT processes.
c.
nbn provided PD Forum participants with the COAT ICP on a confidential basis. In that regard,
nbn has
made recent FOI determinations, refusing access under the FOI Act where documents were provided
via confidential PD Forum processes. In particular,
nbn’s FOI Officer found that a High Speed AVC Pricing
Construct Paper (
Construct Paper) related to
nbn’s commercial activities and was carved-out from the
application of the FOI Act. The Construct Paper FOI decision and its detailed reasons may be found at
the following link on the RTK website. In line with previous FOI decisions,
nbn would most likely not
release the COAT ICP (or similar documents) for the same or substantially similar reasons.
d. As part of the COAT Process Test,
nbn requires RSPs to enter into a COAT Test Agreement, found at the
following link. The COAT Test Agreement makes it clear that
nbn “is currently developing a process
through which it may plan and perform various types of COATs.” (Emphasis added).
e. Among other objectives, the COAT Process Test is seeking to test:
i. the capability of
nbn to implement various types of COATs in respect of premises to which
nbn
currently supplies
nbn™ Ethernet; and
ii.
nbn’s and Test Participant’s systems and processes to plan and perform various types of COATs
in respect of such premises.
f. At clause 4.2, the COAT Test Agreement provides details concerning the “Selection of the Eligible
Premises”. It is my view that this clause responds to the 1st part of the Applicant’s request. Following
discussions with relevant
nbn business stakeholders, I was satisfied that no additional COAT Eligibility
Criteria documentation exists and I refer to
section 24A of the FOI Act. To provide further detail, no
such criteria exists because
nbn’s COAT Process Tests and the broader COAT program are focussed on
enabling changes in technology, rather than determining whether these changes should be made.
g.
nbn has not yet finalised, nor developed formal COAT process flowcharts. However,
nbn has
developed Draft Flowcharts, illustrating
nbn’s proposed process flows as part of developing and
designing COAT processes. Again, the COAT Test and COAT program, generally, are focussed on
enabling changes to
nbn™ network technology. In that regard, it should be noted that the Draft
Flowcharts:
i. are internal
nbn documents that describe trial or proposed business processes so as to enable
changes to
nbn™ network connection technologies;
ii. are labelled “confidential” and make it clear that these documents may not be used without
nbn’s consent;
iii. contain commercial-in-confidence information, such as
nbn’s:
internal commercial ideas, assessments and considerations;
proposed process flows and indicative RACIs, i.e. those individuals or groups who are
responsible, accountable, consulted and informed in the trial processes;
indicative time frames for
nbn’s,
RSPs’ and
nbn’s delivery partners’ process flows;
potential challenges, solutions and other issues relating to the test process flows; and
action points for different parties as part of the development process, along with
other matters and issues.
iv. are part of iterative processes. As flagged above, the Draft Flowcharts are illustrative of test
processes, which are not yet finalised and are still in a development phase. This is made clear
by markings on all three documents, indicating that they are in draft form and “not reflecting
nbn co’s final position on the subject matter… and may change as a consequence of
nbn co
finalising formal technical specifications, or legislative and regulatory developments…”
v. constitute
nbn’s intellectual property, upon which
nbn expended time and resources in
developing. In this regard, I note that the Draft Flowcharts include copyright notices; and
vi. form part of
nbn’s asset base.
Commercial activities carve-out
12. As noted above and p
er section 7(3A) and
Part II of Schedule 2 of the FOI Act,
nbn is exempt from the
operation of the FOI Act “in relation to documents in respect of its commercial activities.” This is known as
nbn’s commercial activities carve-out or CAC.
13. The CAC also applies to
nbn’s current and future commercial activities. There are various factors which may
weigh in favour of an activity being considered as “relating to
nbn’s commercial activities”. Among other
factors, activities may be considered “commercial” for the purposes of the CAC, if those activities:
a. have a commercial goal or purpose; and/or
b. are engaged in or used for commerce; and/or
c. are related to a profit-making motive, generating income or revenue, among other matters.
14. Referring again to the CAC Background Document found at the follo
wing link, the FOI case law has reinforced
that
nbn’s FOI decision-makers must consider “the whole of the circumstances” when determining what
constitutes
nbn’s “commercial activities.” In that context, I note the following points:
a.
Commercial purpose – It is my view that the Draft Flowcharts have a clear commercial purpose. In
particular, they are draft documents, used for internal business purposes with a goal of establishing
parameters and the processes, through which an existing
nbn™ network technology may be changed
to another technology solution. This process has a direct link to
nbn’s connection and migration
processes, which impact upon the company’s revenue streams.
b.
Proposed or untested processes and products – Per the findings of fact, the Draft Flowcharts provide
details of proposed processes and an associated
nbn™ network product, i.e. a technology change. The
Draft Flowcharts (and the thinking behind them) have not been finalised. It follows that the details of
those processes and products are not yet ready (and may never be ready) to be publicly released in
their current form. In addition, the Draft Flowcharts detail wholesale product ideas or concepts, upon
which
nbn is consulting or “testing” with its wholesale, RSP clients before it makes a decision to build
and ultimately launch such products or services. In those efforts to “test the market” and the market
response to
nbn™ network technology changes,
nbn may seek to:
refine the scope of the proposed services or products;
determine whether premises are capable of a technology change;
explore relevant delivery times and quality assurance processes;
determine to progress the service and “go to market”,
determine not to progress or “not to go to market” with given products or services, and
evaluate legal or other risks, among other commercial objectives.
In my view, the above activities are inherently commercial because they relate to
nbn’s strategic
business modelling. In particular, the activities concern
nbn’s efforts to test and enable technologies
that may be allocated to given premises, suburbs or specific areas. Ventilation of this information (and
information like it) in the public domain could leave
nbn open to “cherry picking” by competitors. In
particular, it could reveal opportunities for
nbn’s competitors to overbuild in given areas or identify
areas to introduce competing technologies. This could clearly impact upon
nbn’s customer volumes,
migrations to the
nbn™ network and revenue base.
c.
Inhibiting nbn’s ability to develop innovative products – In addition to providing insights into the ways
that
nbn conducts its current business and commercial activities, the Draft Flowcharts also outline the
way by which
nbn assesses and quality checks potential products and services. If the company were
required to disclose nascent product ideas and related process flows under the FOI regime, there may
be a disincentive for
nbn to explore new products and business models or for
nbn to delay the
marketing of such products. Alternatively, it could prematurely signal
nbn’s strategic objectives to the
market, thereby undermining
nbn’s ability to introduce innovative products, expand its network
connections or grow market share. Disclosure would also run contrary to
nbn’s Shareholder Ministers’
Statement of Expectations, which makes it clear that
nbn should function like any other commercial
player “operating in a market environment and can compete and innovate like other companies in this
environment in accordance with legal and policy parameters.” (Underlined emphasis added)
d.
Template for developing new products – In line with the strategic value of the Draft Flowcharts, these
documents could provide a “roadmap” or template, outlining how
nbn develops and tests new
products or services. This would have commercial value to competitors and other commercial players
in the telecommunications, infrastructure build and related industries. It follows that
nbn would be
unwilling to disclose this type of strategic information, and particularly not before the company has
finalised its COAT business planning processes. It is my view that most, if not all, companies would have
similar concerns about the disclosure of strategic planning documents surrounding the development
of their proposed products or services. As a GBE,
nbn is no different from other telecommunications
providers and has a clear commercial interest in protecting its business development processes, as well
as the format and thinking processes that go into those processes.
e.
Confidential markings and valuable intellectual property – The Draft Flowcharts are also labelled as
confidential. This reinforces
nbn’s clear intention to keep the information contained within these
documents confidential and underscores the commercially sensitive nature of the documents. In
addition, the Draft Flowcharts constitute
nbn’s intellectual property and they have a commercial value
for the company. Beyond
nbn’s investment in developing the Draft Flowcharts, they also serve as a
reference point for
nbn’s staff and business partners in quality assurance and product improvement
processes. Disclosure of the Draft Flowcharts would diminish
nbn’s investment in developing these
types of documents. In effect,
nbn would be providing competitors (or others in related industries) with
a valuable resource, for which they have not paid.
f.
Impact on nbn’s IP base and future privatisation efforts – Disclosure of the Draft Flowcharts could also
establish a precedent, whereby commercial entities and other parties may start to treat
nbn’s valuable
intellectual property and confidential information as part of the “public domain.” Once a document
enters the public domain, it undermines its commercial value. This is an important issue for
nbn,
particularly in light of any future privatisation efforts involving
nbn. In any privatisation, intellectual
property is a key asset, which will figure in the calculation of any future sale price. It follows that if
documents, like the Draft Flowcharts, become part of the “public domain” pursuant to FOI requests,
nbn could potentially undermine the value of its own asset base. For those reasons, there is a clear
commercial value to
nbn in the Draft Flowcharts – and documents like them.
15. Based on the above factors, it is my view that the CAC applies to the Draft Flowcharts. P
er sections 7(3A)(a)
and (b) of the FOI Act, those documents are not subject to the FOI Act.
16. As
nbn has relied upon the CAC, it is unnecessary to consider alternative exemption grounds under the FOI Act.
However and for completeness, I note that there are other exemptions potentially available to
nbn under the
FOI Act
concerning the Draft Flowcharts. This includes exemptions under section 47 (commercially valuable
information) and section 47E (operations of agencies), among other grounds in the FOI Act. In particular, I refer
to section 47C of the FOI Act (deliberative materials). In my opinion, the Draft Flowcharts would almost certainly
fall within the meaning of section 47C. For the reasons outlined above, it is
nbn’s opinion that the public interest
would not favour disclosure of the Draft Flowcharts.
17. For this FOI application,
nbn personnel spent approximately one hour and fifteen minutes searching for and
retrieving relevant documents. That would equate to $18.75 (1.25 hours x $15/hour). In relation to the
drafting of this decision,
nbn’s FOI Team spent approximately eleven hours reviewing and considering the
relevant documents, making enquiries of relevant
nbn personnel and drafting this decision (11 hours x
$20/hour = $220, but equivalent to $120, noting that no fees are payable for the first five hours of decision-
making time). Therefore, the total processing fees would equate to $138.75.
18. In
its Submission to the OAIC Charges Review, nbn outlined its support of fees and charges and their
importance to the Commonwealth FOI scheme. Normally,
nbn would charge applicants for processing fees
incurred in relation to FOI requests. However, I also considered
nbn’s commitment to the objects of the FOI
Act and, in particular, section 3(4) of the FOI Act, which seeks to facilitate and promote public access to
information, promptly and at the lowest reasonable cost.
19. On balance, I have determined to waive the processing fees in relation to this FOI application. This is
permitted by the
Freedom of Information (Charges) Regulations 2019, which provides decision-makers with a
general discretion to impose or not impose FOI charges. In making this determination, I took into the account
the fact that the COAT Test processes are an important business development issue for
nbn and that it was
useful to clarify the commercial nature of the COAT processes as they relate to
nbn’s CAC. I also took into
account the fact that
nbn made a determination not to release the Draft Flowcharts.
20. If you are dissatisfied with this decision, you have certain rights of review and other avenues of redress.
These are outlined in the covering letter, provided with this Statement of Reasons.
****