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1998
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) BILL 1998
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator the Hon. Richard Alston, Minister for Communications, Information Technology and the Arts)
ISBN: 0642 377685
TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) BILL 1998
OUTLINE
The Telecommunications (Consumer Protection and Service Standards) Bill
1998 (the Bill) brings together the consumer protection measures that were
contained in the Telecommunications Act 1997 to provide greater
visibility and clarity. There are, however, new powers in relation to
compliance reflecting the sale of Telstra.
The Bill makes the following
changes while re-enacting the pre-existing consumer protection
measures.
(a) The Minister will have the power to direct Telstra to
ensure that it complies with the Act (clause 159).
(b) The Australian
Communications Authority (ACA) will be given the power (clause 118) to direct a
telephone company to redress systemic problems in relation to the Customer
Service Guarantee (CSG). This will enable the ACA to look proactively into
systemic problems (eg. consistent faults in a particular geographic area) and
direct a carriage service provider about the things it should do to ensure those
problems do not recur.
(c) Subclause 128(3) will make it clear that there
is only one Telecommunications Industry Ombudsman (TIO)
scheme.
(d) Subclause 155(3) will clarify that price control arrangements
can include charges for untimed local calls in regional
areas.
(e) Subclause 155(4) will allow different price control
arrangements to apply to different customers in relation to one type of Telstra
service charge.
(f) Subclause 155(5) will require Telstra to comply with
any determination setting out price control arrangements.
The Bill
imposes obligations on telecommunications carriers and carriage service
providers for the benefit of consumers relating to:
• universal
service;
• the National Relay Service;
• untimed local
calls;
• the customer service guarantee;
• the
Telecommunications Industry Ombudsman scheme;
• protection in the
event of the insolvency of a carriage service provider;
• provision
of emergency call services; and
• price control arrangements
applying to Telstra.
Part 2 of the Bill establishes a regime for
delivering universal service in telecommunications. The Part re-enacts Part 7
of the Telecommunications Act 1997. It imposes a universal service
obligation on carriers to ensure that standard telephone services, payphones and
prescribed carriage services are reasonably accessible to all people in
Australia on an equitable basis, wherever they reside or carry on business. The
provisions in this Part maintain existing requirements in regard to the types of
services and equipment obliged to be supplied under the universal service
obligation.
Part 3 of the Bill deals with the operation of the National
Relay Service (NRS). The NRS is a service that provides people who are deaf or
hearing or speech impaired, with access to a standard telephone service on
terms, and in circumstances, that are comparable to those on which other
Australians have access to a standard telephone service.
Part 3 of the
Bill continues in operation the arrangements that have applied from
1 July
1998 under which the NRS is provided by a person, who may or may not be a
carrier, under a contract with the Commonwealth. The NRS is currently provided
by Australian Communication Exchange Limited. The current NRS contract includes
an NRS Service Plan, outlining the services to be provided from 1 July 1998.
The NRS Service Plan also outlines how the service will adapt and implement new
technology as it becomes available, such as speech to speech for those speech
impaired people who find text communications difficult.
Part 4 of the
Bill continues the operation of a scheme for ensuring that customers in
Australia who have historically had access to untimed local calls will continue
to get such access. It also includes special benefits for rural and regional
customers of carriage service providers.
Part 5 of the Bill continues the
operation of the customer service guarantee arrangements contained in Part 9 of
the Telecommunications Act but also enables the ACA to look proactively into
systemic problems (eg. consistent faults in a particular geographic area) and
direct a carriage service provider about the things it should do to ensure those
problems do not recur.
Part 6 of the Bill continues the operation of the
Telecommunications Industry Ombudsman scheme contained in Part 10 of the
Telecommunications Act. It also makes it clear that there is only one
Telecommunications Industry Ombudsman scheme. Both carriers and carriage
service providers supplying the standard telephone service to residential
customers or supplying public mobile telecommunications services are required to
enter the scheme. In addition, the ACA is empowered to require other classes of
service providers to enter the scheme where appropriate.
Part 7 of the
Bill continues the operation of Part 11 of the Telecommunications Act to give a
measure of protection to residential customers of standard telephone services
against a failure by their carriage service provider to supply those services
when the customer has made a protected payment.
Existing requirements in
regard to emergency service arrangements will be continued under Part 8 of the
Bill. These provisions allow the ACA to determine arrangements for the
provision of direct access by end-users, free of charge, to emergency call
numbers, and ancillary arrangements for emergency call handling.
Part 9
of the Bill re-enacts the price regulation regime currently contained in Part 6
of the Telstra Corporation Act 1991 which is to continue to apply to
Telstra. It also:
• makes it clear that price caps can include
charges for untimed local calls in regional areas;
• allows
different price control arrangements to apply in relation to one type of Telstra
service charge; and
• requires Telstra to comply with any
determination setting out price control arrangements.
Part 10 of the Bill
deals with miscellaneous matters, including giving the Minister a power to
direct Telstra to comply with the Bill.
FINANCIAL IMPACT STATEMENT
Implementation of the protections contained in the Bill will continue to
require considerable effort from the ACA, the ACCC and the Department of
Communications, Information Technology and the Arts. Expenditure by the ACA and
the ACCC will be offset by carrier licence application charges and annual
charges imposed by the Telecommunications (Carrier Licence Charges) Act
1997. The details of the ongoing resource requirements for the ACA and ACCC
will be considered in the 1998-99 and subsequent budget processes.
The
Bill will not alter the current financial impact on carriers since they will
continue to be required to fund the operation of consumer protection and service
standards measures such as the universal service obligation and the NRS under
this Bill and related Acts.
REGULATION IMPACT STATEMENT
The proposed Telecommunications (Consumer Protection and Service
Standards) Act 1998 brings together the consumer protection measures that
were contained in the Telecommunications Act 1997 to provide greater
visibility and clarity. There are however, new powers in relation to compliance
reflecting the sale of Telstra.
(a) The Minister will have the power to
direct Telstra to ensure that it complies with the new Consumer Act.
(b) The Australian Communications Authority (ACA) will be given the
power to direct a telephone company to redress systemic problems in relation to
the Customer Service Guarantee (CSG). This will enable the ACA to look
proactively into systemic problems (eg. consistent faults in a particular
geographic area) and direct a carriage service provider about the things it
should do to ensure those problems do not recur.
(c) Subclause 128(3) of
the Act will make it clear that there is only one Telecommunications Industry
Ombudsman (TIO) scheme.
(d) Subclause 155(3) will clarify that price
control arrangements can include charges for untimed local calls in regional
areas.
(e) Subclause 155(4) will allow different price control
arrangements to apply to different customers in relation to one type of Telstra
service charge.
(f) Subclause 155(5) will require Telstra to comply with
any determination setting out price control arrangements.
PROBLEM
IDENTIFICATION
Ministerial Power of Direction
It
is proposed that under the proposed Telstra (Transition to Full Private
Ownership) Act 1998 the Ministerial power under section 9 of the Telstra
Corporation Act 1991 will cease to apply on a date to be proclaimed when the
Minister is satisfied that the Commonwealth’s equity has declined below 50
per cent.
The above proposal has caused concern in the community that
should the Ministerial power under section 9 of the Telstra Corporation Act
1991 cease there will be lack of Ministerial control over
Telstra.
The proposed Ministerial power of direction under the proposed
Telecommunications (Consumer Protection and Service Standards) Act 1998
is to ensure that the Minister may direct Telstra to comply with the new
Consumer Act.
CSG
The CSG Standard specifies a
range of minimum performance standards which all carriage service providers
(CSPs) are required to meet in relation to the standard telephone service and
its associated call enhanced features.
Although a CSP is required to pay
compensation under the CSG if it does not meet the CSG Standard, it is apparent
that in some instances payment of compensation is preferable to the CSP rather
than rectifying the underlying cause, resulting in sub-standard customer
service.
TIO
In October 1998, a firm of solicitors
wrote to the TIO asking ‘the basis upon which it is said that the
Telecommunications Industry Ombudsman Limited ACN 057 634 787 is the scheme
contemplated by section 246 of the Telecommunications Act 1997.’
It was unclear whether the solicitors’ clients were objecting to
joining the TIO, or contemplating attempting to set up a rival scheme. However,
there is an identified issue that at least some carriage service providers may
seek to exploit a perceived ambiguity in the Act.
Price control
arrangements
There are several minor amendments to the Telstra
price control arrangements. It will be made clear
that:
(a) Telstra-specific price cap arrangements and other price control
arrangements may relate to charges for untimed local calls in particular
areas;
(b) that different price control arrangements may apply to
different customers in relation to one type of Telstra service
charge;
(c) Telstra must comply with any determination setting out price
control arrangements.
SPECIFICATION OF THE DESIRED
OBJECTIVE
Ministerial Power of Direction
The
object is to provide a targeted Ministerial power of direction over Telstra that
relates specifically to the safeguards in the proposed
Telecommunications (Consumer Protection and Service Standards) Act 1998.
These are the areas of greatest concern about Telstra's
performance.
CSG
The objective of the proposed
amendment is to provide a substantial incentive to the CSPs to identify and
solve recurring problems which have resulted in their not being able to meet the
CSG Standard on a regular basis.
TIO
The objective
is to remove any uncertainty, to ensure that there is only one TIO scheme.
Part 10 of the Telecommunications Act 1997 considerably broadened
and strengthened the role of the TIO beyond the provisions of the 1991 Act. In
particular, subsection 246 (1) required carriers and eligible carriage
service providers in association with each other to ‘enter into a scheme
providing for a Telecommunications Industry Ombudsman’. Subsection 246
(2) provides that ‘the scheme be known as the Telecommunications Industry
Ombudsman’.
The Telecommunications Industry Ombudsman Limited
(ACN 057 634 787) is a company limited by guarantee with a Memorandum and
Articles of Association. The TIO’s logo and the logo in conjunction with
the words Telecommunications Industry Ombudsman were registered as Associated
Trade Marks under the Trade Marks Act 1955 on 1 December 1995.
The
Act and Explanatory Memorandum envisaged that the Telecommunications Industry
Ombudsman Limited, the existing industry-based scheme, was the scheme for the
purposes of section 246.
Price control
arrangements
The insertion of a provision making clear that price
control arrangements may relate to charges for untimed local calls in particular
areas was moved by Senator Boswell on behalf of the Government during the debate
on the proposed Telstra (Transition to Full Private Ownership)
Act 1998 in July 1998.
The insertion of a provision making it
clear that different price control arrangements may apply in relation to one
type of Telstra service charge is intended to avoid any doubt that a price
control determination may apply different price control arrangements in relation
to residential and business customers being supplied with the standard telephone
service, as the current determination (the Telstra Carrier Charges – Price
Control Arrangements, Notification and Disallowance Determination 1997) does.
This doubt would not arise under the current Act, but may arise under the new
Act if clause 155 did not contain an equivalent provision to subclause
43(5).
The insertion of a provision making it clear that Telstra must
comply with any determination setting out price control arrangements is intended
to remove any doubt that Telstra must comply, and to ensure that civil penalty
provisions for contravention of Telstra’s carrier licence may be applied
in the event of non-compliance.
IDENTIFICATION OF
OPTIONS
Ministerial Power of
Direction
Option 1 Do nothing (ie retain the
current power of direction under s. 9 of the Telstra Corporation Act
1991).
Option 2 Provide a more targeted Ministerial
power of direction over Telstra directly related to the issues of
concern.
Option 3 Remove the s. 9 Ministerial power of
direction over Telstra and rely on the general provisions under the
Telecommunications Act 1997, the proposed Telecommunications (Consumer
Protection and Service Standards) Act 1998 and the general provisions under
the Trade Practices Act 1974 that applies to all
industries.
CSG
Option 1 Do
nothing.
Option 2 Give the ACA a power to direct a CSP
where it consistently fails to comply with any element of the CSG Standard,
Australia wide or within a geographical location. Should the CSP fail to comply
with an ACA direction to take remedial action to improve its customer service
performance, a fine of up to $10 million could be imposed.
Option
3 To impose substantial customer compensation on a CSP where it
consistently fails to meet any element of the CSG
Standard.
TIO
Option 1 Take no
specific action and rely on the current legislation to require all carriers and
carriage service providers to enter into the existing TIO
scheme.
Option 2 Make a minor amendment to section 246 of
the Telecommunications Act 1997 to remove any possible doubt of the
intention that there should only be one TIO scheme.
Price control
arrangements
Option 1 Do
nothing.
Option 2 Seek to remove doubt about the
application of the provisions.
ASSESSMENT OF IMPACTS (COSTS AND
BENEFITS) OF EACH OPTION
Ministerial Power of
Direction
Option 1 To not take any action would
mean that the current Ministerial direction power under the Telstra
Corporation Act 1991 would remain. This power is not sufficiently targeted
or defined. No direction has ever been issued under this section.
Option 2 A more specific power of direction will address
community concerns as it will be targeted at the service standards and consumer
safeguards. It would also be clearly related to the Minister’s regulatory
responsibilities rather than the Government’s shareholder/ownership role.
The impact on Telstra would only be relevant if the power is used and would
depend on the nature of any direction. It is not expected to have any direct
effect on the rest of the industry but it may have some indirect effect if
competition induces CSPs to improve their performance in line with any direction
to Telstra.
Option 3 It is arguable that, in principle, a
privatised Telstra should not be subject to a directions power that does not
apply equally to its competitors. While the ACA has considerable power under
the Telecommunications Act 1997, it is considered that a special power of
direction over Telstra is appropriate because of Telstra’s considerable
market power and significant influence over many parts of the industry.
CSG
Option 1 Not to make any
amendment may result in lower quality of service, especially in non-metropolitan
areas.
Submissions made to the Senate Environment, Recreation,
Communications and the Arts Legislation Committee (Senate Committee) gave an
overwhelming view that customer service was declining. The Senate Committee
expressed concern that at the current rate at which penalties are imposed it
might be cheaper for a carrier to pay the current penalty rather than provide
the minimum performance level in customer service.
This approach does not
place any additional financial burden on CSPs.
Option 2 It
is difficult to assess the cost of a direction by the ACA as it would depend on
the direction. The benefits should be an improvement in the quality of
services. The threat of a substantial fine, up to $10 million, were a
CSP to fail to comply with an ACA direction to take remedial action to improve
its customer service performance, would place a high incentive on that CSP to
improve its performance. This additional power for the ACA to enforce the
standards under the CSG scheme would be exercised in accordance with written
guidelines for identification and investigation of systemic problems developed
after wide consultation with the industry. The maximum level of civil penalty
($10m) which may be awarded by the Federal Court is consistent with penalty
provisions elsewhere in the Telecommunications Act 1997.
Although
this option does not guarantee good customer service from CSPs it does provide a
high degree of motivation for a CSP to comply with any ACA direction requiring
it to improve in an area of its performance or to perform better in a particular
geographical location.
Option 3 An increased level of
customer damages where a CSP fails to comply with the CSG standards should place
a high incentive on that CSP to improve its performance. However, it may also
provide a high incentive for customers to deliberately set out to gain
compensation.
The CSG Scale of Damages has recently been changed from
$11.65 for each day of delay to increase the rate after the first 5 days of
delay to $40 a day for individual residential customers, and individual business
customers will have the $20 per day of delay also increased to $40 per day after
the first 5 days of delay.
The recent increase in the CSG Scale of
Damages is an interim measure whilst the ACA reviews the CSG Standard and Scale
of Damages. The review’s recommendations are expected in November
1998.
Increasing the level of damages is likely to increase the costs of
CSPs who consistently fail to meet the CSG standard. The biggest impact for the
foreseeable future would be on
Telstra.
TIO
Option 1 If no specific
action were taken and reliance is placed on the intent of current legislation,
it is possible that certain carriage service providers could exploit perceived
ambiguity in the Act to avoid joining the existing TIO scheme and/or to seek to
establish a rival scheme.
In the event that another organisation began
operating under the name ‘TIO scheme’, or similar, the
Telecommunications Industry Ombudsman Limited would probably seek an injunction
preventing the use of that name, under the Trade Practices Act 1974 or
State and Territory fair trading legislation. It would be both costly and time
consuming should such a situation eventuate.
If the establishment of a
rival scheme were to succeed, it would be an unnecessary duplication of staff,
accommodation and other administrative costs.
For the general public
there may be confusion in finding the appropriate avenue for investigation of
consumer complaints if two TIO schemes were operating.
It is difficult to
envisage any benefits flowing from the establishment of a rival TIO scheme. A
rival organisation could reduce the consistency and continuity in handling
consumer complaints, leading to disadvantage to consumers.
Option
2 A minor amendment to section 246 of the Telecommunications Act
1997 could remove any possible ambiguity and ensure that there is only one
scheme, achieving the intent of the legislation.
There would be no cost
involved, and indeed there would be potential savings in that it would avoid the
possible duplication of the establishment of a rival scheme.
There are
benefits in having only one TIO scheme, as envisaged by the Act, as aside from
the cost advantages of establishing and running a single organisation, there
would also be greater continuity and consistency in the handling of consumer
complaints.
Price control arrangements
Option
1 Senator Boswell’s proposed amendment reflects the existence of
some doubt in the community about whether regional price cap arrangements, such
as the ‘local call pricing parity scheme’, are permitted under the
current legislation. In the absence of an amendment, there would be some doubt
about whether the legislation permits the application of different price
controls to different customers. Continuance of doubt on these issues leads to
regulatory uncertainty and should be avoided.
The absence of any
explicit requirement on Telstra to comply with a price control determination
raises concerns that Telstra will not have appropriate incentives to
comply.
Option 2 The proposed amendments will reduce
regulatory uncertainty and provide Telstra with appropriate incentives to comply
with the price control arrangements.
CONSULTATION
The
Senate Committee held a public inquiry into the proposed Telstra (Transition
to Full Private Ownership) Act 1998. This inquiry was extensive and
far reaching, with 103 submissions, from a range of stakeholders including the
three levels of government, industry, unions, community bodies, special interest
groups, consumer representatives and individuals.
The Senate
Committee’s report was made public on 21 May 1998. In the majority report
the Senate Committee stated that evidence obtained showed that customers would
rather have the carrier adhere to its CSG obligations than receive compensation
for non-compliance.
Ministerial Power of Direction
A
number of witnesses to the inquiry indicated that they considered that the
regulatory framework was insufficiently effective to justify the removal of the
Ministerial power of direction over Telstra. It is considered that a more
targeted power of direction is more appropriate as it is aimed specifically at
the areas of consumer concern.
CSG
The Senate
Committee’s report did not appear to address the likely impact on the
industry and flow on effects of the CSP passing on the increased costs to
customers. It appears that the Senate Committee’s report concentrated on
how to make the CSPs comply with their obligation under the CSG
Standard.
Considerable consultation was undertaken by the Senate
Committee which enabled views to be gathered from concerned parties on all
issues.
TIO
No specific consultation has been
undertaken, given that any minor amendment to section 246 would in fact be
clarifying the original intent of the Telecommunications Act
1997.
Price control arrangements
These
amendments are largely a response to submissions to the Senate Committee.
Telstra has not been consulted on the amendment requiring it to comply with a
price control determination.
CONCLUSION AND RECOMMENDED
OPTION
Ministerial Power of
Direction
Option 2 is the preferred option as it
more specifically addresses the concerns of consumers.
Option
1 provides an insufficiently targeted power which Ministers may be
reticent to use.
Option 3 does not provide the safeguard
of a Ministerial direction power.
CSG
Option
2 is the preferred option since it does not provide an incentive for
customers to contrive to defraud a CSP whilst at the same time providing the CSP
with an incentive to comply with any ACA direction to improve its service to the
customer. A further benefit is that this option does not place any financial
burden on CSPs who make the effort to improve their customer
service.
Option 1 was rejected since there would be no
increased incentive for CSPs to improve their customer service beyond that
currently existing in the CSG. It is therefore reasonable to assume that
current performance standards will remain the same or even
diminish.
Option 3 was rejected since the consultation
process undertaken by the Senate Committee formed the view that customers
preferred a good standard of service to compensation and a continued poor
customer service.
It was also considered that this option could
possibly entice customers to make false complaints in order to defraud
CSPs.
TIO
Option 2 is the preferred
option because it removes any perceived ambiguity in the current legislation.
There is no cost associated with implementing this option. In fact it avoids
the potential costs of duplication through the establishment of a rival scheme,
confusion to consumers, and the potentially high costs to the TIO of
demonstrating its position either through legal action or awareness
surveys.
Price control arrangements
Option 2
is the preferred option because it removes regulatory uncertainty and
provides appropriate incentives for Telstra to comply with a price control
determination.
IMPLEMENTATION AND
REVIEW
Ministerial Power of Direction
No
specific review of this provision is proposed, but a full review of
telecommunications regulation is to occur by 30 June
2002.
CSG
The ACA will be required to develop
guidelines in consultation with consumer groups and industry as to what
constitutes a systemic fault and the type of problems in relation to which it
would consider making a direction.
Under s. 105 of the
Telecommunications Act 1997, the ACA is required to monitor and report to
the Minister on the appropriateness and adequacy of the approaches taken by the
carriage service providers in carrying out their obligations, and discharging
their liabilities under the provisions relating to the CSG.
TIO
Given that the TIO scheme has been in existence
for a number of years, beyond the enactment of a minor amendment to the Act,
there is no implementation involved with the preferred option. The TIO scheme
already has a membership of over 500 carriers and carriage service
providers.
The TIO’s current public reporting arrangements,
primarily through the agency’s annual report, will
continue.
Price control arrangements
The Government
has announced that a review will be conducted in 2000 into the need for price
controls from 2001.
It is Government policy that the Minister for
Communications, Information Technology and the Arts will conduct a full review
of telecommunications regulation by 30 June 2002.
ABBREVIATIONS
The following abbreviations are used in this explanatory
memorandum:
ACA: Australian Communications Authority
ACA
Act: Australian Communications Authority Act
1997
ACCC: Australian Competition and Consumer
Commission
Bill: Telecommunications (Consumer Protection and Service
Standards) Bill 1998
CSG: customer service
guarantee
NCA: net cost area
NUSC: net universal service
cost
Radcom Act: Radiocommunications Act
1992
STS: standard telephone service
Telecommunications
Act: Telecommunications Act 1997
Telstra: Telstra Corporation
Limited
Telstra Corporation Act: Telstra Corporation Act
1991
TIO: Telecommunications Industry
Ombudsman
TPA: Trade Practices Act
1974
USO: universal service obligation
USP: universal
service provider
NOTES ON CLAUSES
Part 1—Preliminary
Clause 1 – Short title
Clause 1 provides that the
Bill, when enacted, may be cited as the Telecommunications (Consumer
Protection and Service Standards) Act 1998.
Clause 2 –
Commencement
Subclause 2(1) provides that subject to that clause the
Bill, when enacted, will commence on the 28th day after the day on which it
receives the Royal Assent.
Subclause 2(2) provides that certain
provisions of the Bill that are used in Part 2 (dealing with the universal
service regime) as well as Part 2 itself and Part 3 (dealing with the National
Relay Service) will commence on 1 July 1999. This will ensure that Parts 7 and
7A of the Telecommunications Act 1997 will apply in relation to the
1998-1999 financial year and that Parts 2 and 3 of this Bill will apply to
subsequent financial years.
The Telecommunications Legislation Amendment
Bill 1998 contains transitional provisions to ensure that all regulations,
instruments and other things done for the purposes of a particular provision of
the Telecommunications Act or Part 6 of the Telstra Corporation Act have effect,
after the commencement of this Bill, as if they had been done for the purposes
of the corresponding provision of this Bill.
Clause 3 – Objects
and regulatory policy
Clause 3 provides that sections 3 and 4 of the
Telecommunications Act apply to this Bill in a corresponding way to the way in
which they apply to that Act.
Section 3 of the Telecommunications Act
sets out the objects of that Act, when read together with Parts XIB and XIC of
the Trade Practices Act 1974 (TPA), dealing with anti-competitive conduct
and record keeping rules in the telecommunications industry and the
telecommunications access regime.
The main object is to provide a
regulatory framework that promotes the long-term interests of end-users of
carriage services or services supplied by means of carriage services and the
efficiency and international competitiveness of the Australian
telecommunications industry. The reference to promoting ‘the long-term
interests of end-users’ is intended to have a wide meaning, and is not
intended to be read down by reference to the narrower definition of promoting
the long-term interests of end-users in section 152AB in Part XIC of the TPA.
That section sets out an object for Part XIC alone.
A list of other
objects is set out in subsection 3(2) of the Telecommunications Act. These
objects include:
• ensuring that standard telephone services,
payphones and other carriage services of social importance
are:
– reasonably accessible to all people in Australia on an
equitable basis, wherever they reside or carry on business;
and
– are supplied as efficiently and economically as practicable;
and
– are supplied at performance standards that reasonably meet
the social, industrial and commercial needs of the Australian
community;
• promoting the equitable distribution of benefits from
improvements in the efficiency and effectiveness of the provision of
telecommunications networks and facilities and the supply of carriage services;
and
• providing appropriate community safeguards in relation to
telecommunications activities and to regulate adequately participants in
sections of the Australian telecommunications industry.
Section 4 of the
Telecommunications Act sets out a statement of regulatory policy intended to
guide the telecommunications regulators in the performance of their functions
and the exercise of their powers under that Act. This statement is to the
effect that the Parliament intends that telecommunications be regulated in a
manner that promotes the greatest practicable use of industry self-regulation
and does not impose undue financial and administrative burdens on participants
in the industry, but does not compromise the effectiveness of regulation in
achieving the objects mentioned in section 3 of that Act.
This
regulatory policy is intended to give guidance to the Minister, the ACA and the
ACCC in the exercise of their powers and functions under the Bill and the
Telecommunications Act.
Clause 4 – Simplified
outline
Clause 4 contains a simplified outline of the Bill to assist
readers.
Clause 5 – Definitions
Subclause 5(1)
provides that unless the contrary intention appears, expressions used in the
Bill and in the Telecommunications Act have the same meaning in the Bill as they
have in that Act.
Subclause 5(2) sets out other definitions mainly for
the purposes of Part 2 of the Bill (dealing with the universal service regime)
and Part 6 of the Bill (dealing with the Telecommunications Industry
Ombudsman).
Clause 6 – Standard telephone
service
Clause 6 defines ‘standard telephone service’ for
the purposes of the Bill and the Telecommunications Act.
The standard
telephone service is a fundamental concept in the Bill and in the
Telecommunications Act. The concept plays a central role in the provisions
relating to the universal service regime (Part 2 of the Bill), continued access
to untimed local calls (Part 4 of the Bill), the Telecommunications Industry
Ombudsman (Part 6 of the Bill), protection for residential customers against
failure by a carriage service provider (Part 7 of the Bill) and the provision of
emergency call services (Part 8 of the Bill).
The use of a uniform
concept of the standard telephone service reflects the practical reality that
there is a basic carriage service, based on voice telephony, that the community
expects to be available (with this goal being achieved through the USO) and to
which certain attributes (eg. untimed local calls, emergency call access, etc)
attach.
The definition focuses attention on the functionality of the
service, namely basic communications (by voice, or an equivalent service for
end-users with a disability); is technologically neutral; accommodates non-voice
users of ‘voice services’; supports a consistent definition of the
standard telephone service throughout telecommunications legislation; and
enables a better, more transparent approach to be taken to definition of the
universal service obligation (USO).
The concept of the standard telephone
service is not explicitly linked to the concept of the public switched telephone
service or any particular service technology. By breaking this link between the
standard telephone service and the public switched telephone service, it becomes
possible to use the concept throughout the Bill and the Telecommunications Act
as a device to which to attach certain requirements which are generally
applicable to voice telephony, regardless of the underlying carriage service or
delivery technology.
Under subclause 6(1) a reference in a particular
provision of the Bill or the Telecommunications Act to a standard telephone
service is a reference to a carriage service for each of three purposes,
namely:
• the purpose of voice telephony;
• if voice
telephony is not practical for a particular end-user with a disability and
another form of communication that is equivalent to voice telephony would be
required to be supplied to the end-user in order to comply with the
Disability Discrimination Act 1992, the purpose of that form of
communication;
• a purpose declared by regulations to be a
designated purpose for the purposes of that
provision;
where:
• the service passes the connectivity
test; and
• to the extent that the service is for a purpose
referred to above, the service has the characteristics (if any) declared by the
regulations to be the designated characteristics in relation to that service for
the purposes of that provision.
The standard telephone service is a
‘carriage service’ which is defined in section 7 of the
Telecommunications Act as ‘a service for carrying communications by means
of guided and/or unguided electromagnetic energy’.
The standard
telephone service is based on the concept of voice telephony (or its equivalent
for people with a disability) reflecting that, in the first instance, the
service is for basic voice communications. In practical terms, ‘voice
telephony’ is intended to refer to communications by voice by telephone.
The key idea behind the concept is the ‘plain old telephone service’
or simple, real time, two-way voice communication. By basing the standard
telephone service on voice telephony (or its equivalent for people with a
disability) the legislation sets a firm baseline below which the standard
telephone service cannot fall.
The definition of standard telephone
service does not include customer equipment. Such an inclusion is inappropriate
given the multiple roles the concept plays in the Bill and in the
Telecommunications Act. The supply of customer equipment will continue to be a
component of the USO (under clauses 13 and 14) but without being an inherent
part of the standard telephone service itself.
The explicit reference in
the standard telephone service definition to people with a disability is
intended to make clear that the standard telephone service is to be supplied to
people with a disability. The Government’s decision to rely on the
Disability Discrimination Act 1992 accords with its preference to rely on
general, rather than industry-specific, legislation and to treat disability
issues as mainstream concerns. The approach also means the telecommunications
industry is subject to the same general level of regulation in relation to
disability matters as other sectors of the economy.
Building the needs of
disabled people into the standard telephone service also ensures that attributes
that attach to that service (eg. untimed local calls, emergency call access)
also attach to the standard service as it is supplied to people with a
disability.
Given the important regulatory role the standard telephone
service plays, it is appropriate for there to be scope
to:
• prescribe other purposes for the standard telephone service;
and
• precisely specify the performance characteristics of the
standard telephone service;
as it applies generally throughout the Bill
and the Telecommunications Act and in relation to specific regulatory
provisions.
The ability to prescribe additional purposes for the standard
telephone service provides an effective functionality-based means of clarifying
or upgrading the standard telephone service concept over time. Examples of
other purposes that may be declared include the carriage of data and tone
signalling (subclause 6(3)).
The ability to declare in regulations
additional purposes for the standard telephone service and characteristics of
the service enables the standard telephone service for the purposes of the USO
(Part 2 of the Bill) to be readily upgraded and more precisely specified. It is
intended, for example, that if another purpose was declared for the standard
telephone service for the purposes of the USO (say, for example, tone
signalling) it would be part of the USO to ensure that the standard telephone
service supplied under the USO would be for that purpose. Specific
characteristics could be declared as appropriate. The ability to change the
standard telephone service for the purposes of the USO in this way ensures that
the basic service that will be of general appeal to most customers can be
adjusted where appropriate, while reserving the prescribed carriage service
component of the USO to ensure there is reasonable access to services that may
not be of general appeal.
The ability to prescribe standard telephone
service purposes for specific regulatory purposes also means that should the
standard telephone service be modified for the purposes of the USO, then it can
be similarly modified for other provisions. This means that the standard
telephone service concept in different provisions can be kept in tandem if
appropriate, enabling various attributes to continue to be attached to the
standard telephone service that must be supplied under the USO.
The
requirement that the standard telephone service meets the connectivity test
(paragraph (1)(d)) is intended to make it clear that the standard telephone
service is to facilitate general communications between end-users supplied with
the standard telephone service. This replicates the ‘public
switched’ concept in the definition of the standard telephone service in
the former Telecommunications Act 1991 which refers to a service being
offered to the public and enabling users of the service to communicate with one
another because calls can be switched as needed. Further comments about the
connectivity test are made in relation to subclause 6(2).
The ability to
precisely specify the performance characteristics of the standard telephone
service provides an effective means of clearly delineating the detailed
characteristics of the service, thereby giving certainty to persons to whom the
service is relevant. Where the standard telephone service’s
characteristics are specified for USO purposes, the obligation of the universal
service provider and the rights of end-users will be clearer. The specification
of characteristics for other regulatory purposes will enable carriage service
providers to be given a clear idea of the precise service to which obligations
attach. A universal service provider must ensure that the standard telephone
service it supplies can be used for the purposes it is required to serve under
clause 6. This may require the universal service provider to upgrade its
infrastructure if this is necessary to supply the service for the purpose
declared (but see the comment in relation to subclause 6(4)).
It is
intended that the regulations should be able to declare a wide range of
characteristics to be designated characteristics, including, but without being
limited to, performance characteristics (subclause 6(5)). Designated
characteristics will be able to be declared in relation to the standard
telephone service for the purpose declared in relation to a particular
provision. This enables particular characteristics to be declared in a very
focussed way. At the same time, other characteristics can be applied uniformly
by declaring a purpose in relation to all provisions of the
Bill.
Subclause 6(2) sets out the connectivity test for the purposes of
paragraph 6(1)(d), which a service must meet to be a ‘standard telephone
service'. A service passes the connectivity test if an end-user supplied with
the standard telephone service for a purpose mentioned in paragraph (1)(a), (b)
or (c) is ordinarily able to communicate by means of the service, with each
other end-user who is supplied with the same service for the same purpose,
whether or not the end-users are connected to the same network.
As noted
above, the purpose of the connectivity test is to ensure the standard telephone
service is a carriage service which enables general communications between
end-users. It is intended that connectivity include the ability to communicate
with people locally, nationally and internationally and whether or not end-users
are mobile. (It is not intended that a carriage service provider supplying only
an access and/or local call service can argue that it is not providing a
standard telephone service because it does not provide access to end-users
outside the local call area. The Bill assumes that that standard telephone
service interconnects with long distance services, thus passing the connectivity
test.)
‘Ordinarily able to communicate’ means that the
service has been designed to enable end-users to communicate with other
end-users of the service unless something happens to prevent this, for example,
network outage or call barring.
It is intended that in determining
whether end-users supplied with the ‘same service’ are able to
communicate, ‘same service’ should be interpreted broadly and with
regard to the relevant purpose of the standard telephone service, rather than
the underlying delivery technology. Thus a person should be able to use the
standard telephone service to communicate by voice telephony with any other
person supplied with a service to communicate by voice telephony, whether it be
supplied, for example, by different types of line links or terrestrial or
satellite radiocommunications. It is not assumed that where the standard
telephone service is for more than one purpose that communications should be
possible across those purposes (eg. if the carriage of data was declared a
purpose, it is not envisaged that a person using the service for voice telephony
should be ordinarily able to communicate with a person using the service for
data carriage).
That end-users need not be ‘connected to the same
telecommunications network’ to communicate means that they can be
connected to networks owned and/or operated by different persons or networks
employing different technologies (see the preceding comment about ‘the
same service’).
Subclause 6(3) gives examples of purposes that
could be declared to be ‘designated purposes’ by regulations made
for the purposes of paragraph (1)(c). The examples given are the purpose of the
carriage of data and the purpose of tone signalling. Tone signalling refers to
the ability to send communications by means of tone signals, for example, when a
person uses an automated telephone payment system to pay a bill. The examples
are illustrative only and not exhaustive.
Subclause 6(4) requires the
Minister, in making a recommendation to the Governor-General at a particular
time about making regulations for the purposes of declaring a ‘designated
purpose’ for the purposes of paragraph (1)(c), to have regard
to:
• whether a carriage service for the purpose proposed to be
declared by the regulations can be supplied using the same infrastructure as is,
at the time, being used by universal service providers to supply a standard
telephone service for the purpose in paragraph (1)(a); and
• such
other matters (if any) as the Minister considers relevant.
The purpose of
this provision is to ensure that the Minister considers whether the same
infrastructure would be used to deliver the standard telephone service where
that service is for a purpose declared in the regulations. This reflects the
view that when consideration is being given to upgrading the standard telephone
service, especially for USO purposes, consideration should be given to the
implications of, and for, the delivery infrastructure. This will require the
Minister to consider whether any upgraded standard telephone service could be
delivered using existing infrastructure, and particularly the public switched
telephone network. This requirement reflects the practical reality that the
standard telephone service has historically been delivered using this network
and an upgrade requiring the use (or building) of another network has
significant implications that must be considered closely. In giving
consideration to this matter, the Minister would consider whether the upgrade to
the USO might be better achieved by prescribing a prescribed carriage service
under clause 12.
Subclause 6(5) provides that clause 6 does not prevent
a characteristic declared by regulations made for the purposes of paragraph
(1)(e), (f) or (g) from being a performance characteristic.
This
provision makes it clear that designated characteristics may include performance
characteristics. It is envisaged that particular data rates could be declared
as performance characteristics if the carriage of data was declared under
paragraph (1)(c). Other examples of performance characteristics which could be
declared in regulations include loss limits, noise limits, distortion limits and
call failure rates.
Clause 7 – Application of this
Act
Clause 7 provides that ss. 8 to 13 of the Telecommunications Act
will apply to the Bill in a corresponding way to the way in which they apply to
that Act.
Section 8 of the Telecommunications Act provides that that Act
binds the Crown in right of the Commonwealth, each of the States, the Australian
Capital Territory, the Northern Territory and Norfolk Island.
Telecommunications activities of these governments are therefore subject to that
Act and this Bill.
Subsection 8(2) of the Telecommunications Act provides
that the Crown is not liable to a pecuniary penalty or to be prosecuted for an
offence. This protection does not apply to an authority of the Crown
(subsection 8(3)).
Section 9 of the Telecommunications Act provides that
that Act applies within and outside Australia. The application outside
Australia is necessary to enable the regime to apply to facilities outside
Australia which are used to provide services to, from or within Australia (for
example, a satellite) and to allow the international activities of the
telecommunications industry to be regulated (Part 20 of the Telecommunications
Act).
Section 10 of the Telecommunications Act provides that that Act
applies to the Territories of Christmas Island and Cocos (Keeling) Islands and
any other prescribed external Territories.
Subsection 11(1) of the
Telecommunications Act provides that that Act applies to the adjacent areas of
each of the States and each of the eligible Territories and references to
Australia include references to those adjacent areas. Subsection 11(2) limits
this application to being in relation to acts, matters and things touching,
concerning, arising out of or connected with the exploration or exploitation of
the continental shelf of Australia. This is extended to all acts done by or in
relation to, and all circumstances and things affecting any person who is in the
adjacent area for a reason touching, concerning, arising out of or connected
with the exploration or exploitation of the continental shelf of Australia
(subsection 11(3)).
Section 12 of the Telecommunications Act provides
that that Act has effect subject to the Radiocommunications Act 1992
(Radcom Act). Subsection 12(2) makes it clear that a person being authorised to
do something by a licence under the Radcom Act does not entitle the person to do
that thing if the person is prohibited by or under the Telecommunications Act
from doing it, unless a condition of the licence requires the person to do
it.
Section 13 of the Telecommunications Act provides that a change in
the composition of a partnership does not affect the continuity of the
partnership.
Part 2—Universal service regime
Part 2 of the Bill continues the regime currently contained in Part 7 of
the Telecommunications Act for delivering universal service in
telecommunications. It is designed to ensure that a minimum level of
telecommunications service is reasonably available to all people in Australia on
an equitable basis, regardless of where they reside or carry on business. As an
adjunct to imposing this obligation on the telecommunications industry, Part 2
also provides for the funding by telecommunications carriers of losses incurred
in fulfilling the universal service obligation (USO). Contributions to USO
losses are levied under the Telecommunications (Universal Service Levy) Act
1997.
The universal service regime continued in existence under Part
2 of the Bill is one means by which the Government can promote access to
carriage and related goods and services. Other means include price control and
specific statutory requirements relating to untimed local calls, emergency call
services, directory services and itemised billing, which are dealt with
elsewhere in this Bill.
The universal service regime has nine main
elements relating to:
1. the definition of the
USO;
2. identification of universal service providers and participating
carriers;
3. plans relating to the fulfilment of the
USO;
4. charges for services supplied under the USO;
5. the
calculation of net universal service costs, that is, the loss incurred in
fulfilling the USO;
6. the calculation of participating carriers’
contributions to the net universal service cost;
7. the making of
assessments;
8. the disclosure of information about the basis and methods
of an assessment; and
9. collection, recovery and payment of
levy.
Provisions relating to compliance, enforcement, penalties,
inquiries, investigations, monitoring and reporting are relevant to the
universal service regime and are located in the Telecommunications
Act.
Under clause 1 of Schedule 1 to the Telecommunications Act, as
proposed to be amended by the Telecommunications Legislation Amendment Bill
1998, compliance with that Act and this Bill, and thus including Part 2 of this
Bill, is a standard carrier licence condition. Section 68 of the
Telecommunications Act provides that a carrier must not contravene a condition
of a carrier licence held by the carrier and that this is a civil penalty
provision. Part 31 of the Telecommunications Act provides for pecuniary
penalties for breaches of civil penalty provisions.
Under Part 25 of the
Telecommunications Act, the ACA, at the Minister’s direction or of its own
volition, may hold public inquiries about certain matters relating to
telecommunications. Such an inquiry may deal with the universal service regime.
In particular, the Minister could direct the ACA to undertake a public inquiry
about the adequacy of a universal service provider’s draft universal
service plan.
Under Part 26 of the Telecommunications Act, as proposed to
be amended by the Telecommunications Legislation Amendment Bill 1998, a person
may complain to the ACA about, amongst other things, a contravention of the
Telecommunications Act or this Bill, including a contravention of the universal
service regime under Part 2 of this Bill and in particular, a failure to take
all reasonable steps to fulfil the USO (subclause 21(5) of the Bill) or to
comply with a universal service plan (clause 39 of the Bill). The ACA has the
power to investigate such a complaint.
Under section 105 of the
Telecommunications Act, as proposed to be amended by the Telecommunications
Legislation Amendment Bill 1998, the ACA must monitor, and report each year to
the Minister on the performance of carriers, including the adequacy of each
universal service providers’ compliance with its obligations under Part 2
of this Bill. The ACA has powers to require records to be kept and to gather
information (Part 27 of the Telecommunications Act) that will assist it in its
performance of its monitoring and reporting functions.
This Bill sets out
the legislative framework for the delivery of the Universal Service Obligation
for the 1999-2000 financial year and subsequent financial years. Part 7 of the
Telecommunications Act will apply to the 1998-99 financial year. In terms of
the services it requires to be delivered, the Bill maintains existing service
obligations.
Division
1—Introduction
Clause 8 – Simplified outline
Clause 8 sets out a
simplified outline of Part 2 of the Bill to assist readers.
Clause 9
– Objects
Clause 9 sets out four key policy principles that
Part 2 of this Bill is intended to give effect to. It provides a basic
framework for understanding and interpreting this Part as a whole.
The
fundamental policy principle is set out in paragraph 9(a). That is, that all
people in Australia, wherever they reside or carry on business, should have
reasonable access, on an equitable basis, to:
• standard telephone
services;
• payphones; and
• prescribed carriage
services.
The USO’s fundamental purpose is to safeguard access to a
minimum level of essential telecommunications services for all persons in
Australia. This recognises the fundamental importance of telecommunications in
supporting effective participation in Australian society. The regime is
constructed to ensure that access to a voice service, the ‘standard
telephone service’, will always be available and cannot be altered, except
by legislative amendment by Parliament. It is also recognised that the services
people may need to have access to may evolve over time, for example to reflect
changes in the uses of communications services. Thus the policy principle
provides for people to be given reasonable access to services in addition to the
standard telephone service by such services being made prescribed carriage
services. Because universal service is a ‘needs-based’ concept, the
designation of a service as a USO service would depend on the need for it in the
community.
This principle is the basis for the USO which is defined in
clause 19. In relation to the concepts of ‘reasonable access’ and
‘equitable basis’, it should be noted that these concepts are
intended to relate primarily to access in geographical terms and equity in terms
of equality of opportunity, rather than concepts of affordability. While
affordability is clearly important to access in general terms, it is a matter
which the Government considers should not be embedded in the USO itself, but
should be tackled through other (transparent) mechanisms such as competition,
price control and targeted assistance.
Division 5 of Part 2 of the Bill
enables the direct regulation of universal service charges. Accordingly, the
affordability of services supplied under the USO is not dealt with in defining
the USO itself.
Paragraph 9(a) refers to all people in Australia having
reasonable access to certain carriage services, but does not include the detail
that is part of the USO under clause 19. This is because the policy principle
is a broad objective from which the more detailed composition of the USO in
clause 19 flows and which therefore subsumes the detailed elements of the USO.
For example, if the standard telephone service is to be reasonably accessible to
all people in Australia, it follows that that service must be supplied on
reasonable request, as provided for in subclauses 19(1) and (2).
The
other policy principles to which Part 2 of the Bill gives effect support the key
principle of providing all people in Australia with reasonable access to
telecommunications services.
The policy principle in paragraph 9(b) is
that the universal service obligation described in clause 19 should be fulfilled
as efficiently and economically as practicable. This recognises that universal
service in telecommunications involves a significant allocation of resources and
maximum effort should be made to fulfil the USO at the least possible cost.
However, while it is intended that costs be minimised, this is not intended to
be at the expense of achieving the USO itself. This principle should be seen as
both imposing a requirement on the universal service provider to fulfil its USO
in an efficient and economical manner and foreshadowing a number of external
mechanisms in the legislation designed to promote this outcome. These external
mechanisms include, for example: provision for the Minister to determine a
selection system, including tendering, for selecting universal service
providers; provision for the Minister to declare more than one universal service
provider in a service area; the advance approval of net cost areas (NCAs);
provision for the Minister to determine principles to be used in determining
whether net universal service costs (NUSC) should be treated as excessive; and
the scrutiny of NUSC claims by the ACA and participating carriers (under the
information disclosure provisions).
The policy principle in paragraph
9(c) is that losses that result from supplying loss-making services in the
course of fulfilling the universal service obligation should be shared among
carriers. Much of the administrative machinery of the universal service regime
is concerned with achieving this outcome, including the provisions for
calculating NUSCs, determining participating carriers’ contributions and
collecting and distributing levy. The losses are to be shared among carriers so
that the financial burden of universal service is spread across participating
carriers, thus distributing the burden more widely and making universal service
sustainable on an ongoing basis. Moreover, sharing the losses amongst carriers
on a pro-rata or agreed basis minimises any distortions in competitive or
financial performance that would be expected to arise if the cost of fulfilling
the USO was borne solely by the universal service provider or a limited group of
carriers. (It is generally recognised that a universal service provider that
must subsidise USO losses by itself in a competitive regime faces a competitive
disadvantage.)
The final policy principle in paragraph 9(d) is that
information on the basis of which, and the methods by which, losses incurred in
fulfilling the USO and participating carriers’ shares in those losses are
determined should be open to scrutiny by those carriers and the public to the
greatest extent possible, without causing undue damage to a carrier’s
interests. This object reflects the importance of ensuring that where the
Government effectively directs the allocation of significant national resources,
those allocations should be open to the maximum possible public scrutiny. Such
scrutiny is also important in promoting the efficient and economical fulfilment
of the USO. To protect the legitimate commercial interests of universal service
providers and participating carriers, constraints are placed on the extent of
the information that can be made available under the Act.
Clause 10
– Special meaning of Australia
Clause 10 defines
Australia for the purposes of Part 2 of the Bill and provides that a reference
to ‘Australia’ includes a reference to the territories of Christmas
Island and Cocos (Keeling) Islands and an external territory specified in the
regulations. This requires the Government to make a conscious decision to
extend the universal service regime to other external territories, such as
Norfolk Island. The definition of ‘Australia’ in section 7 of the
Telecommunications Act does not apply to Part 2 of the Bill. This definition of
Australia applies the USO to the territories of Christmas and Cocos (Keeling)
Islands and is consistent with previous Government decisions to extend the body
of Commonwealth laws to these territories.
Clause 11 –
Payphones
Clause 11 defines a payphone for the purposes of Part 2 of the Bill. For the
purposes of Part 2, a payphone is a fixed telephone that is a means by which a
standard telephone service is supplied and when in normal working order,
generally cannot be used to make a call unless payment or similar activation
takes place. A ‘fixed telephone’ refers to a payphone fixed at a
single geographical location and does not include a telephone that is fixed in a
vehicle (eg. a taxi, train or aircraft). In relation to the USO,
‘payphone’ includes all payphones, not just payphones in public
places, thus ensuring that payphones in hotel lobbies, shopping malls and other
private places which are nonetheless reasonably accessible to the public can be
taken into account when fulfilling the USO. It is intended that a universal
service provider’s obligation to provide payphones to meet the needs of
people with a disability should be determined under the Disability
Discrimination Act 1992.
Clause 12 – Prescribed carriage
services
Clause 12 provides that for the purposes of Part 2 of the
Bill, a ‘prescribed carriage service’ is a carriage service
specified in the regulations. ‘Carriage service’ is defined in
section 7 of the Telecommunications Act to be a ‘service for carrying
communications by means of guided and/or unguided electromagnetic energy’.
This provision does not, therefore, enable the prescription of services other
than carriage services to be made part of the USO. (This outcome could be
achieved under paragraphs 13(1)(d) and 14(c) of the
Bill.)
‘Prescribed carriage services’ are, along with
payphones and the standard telephone service, the basic constituents of the USO.
Should the Government seek to clarify, expand or upgrade the USO, it will have
two avenues open to it. First, it can make regulations for the purposes of
clause 6 of the Bill declaring that the standard telephone service must serve
additional purposes or have particular performance characteristics. (This is
discussed in more detailed in the notes on clause 6.) Second, the Government
can make regulations prescribing new carriage services for the purposes of Part
2 as provided for in clause 12.
The USO is able to be upgraded in these
two ways to ensure, through compartmentalising the components of the USO, that
people will always have reasonable access to a minimum service that is of
general appeal and that can change over time, while providing a mechanism to
ensure more advanced services, which may not be of general appeal, can be
required to be made accessible under the USO, without affecting overall access
to the basic service.
Nothing is intended to preclude multiple services
under the USO (for example, the standard telephone service and a high capacity
data service, if it were prescribed) being supplied using a single
infrastructure connection or being supplied, as it were, as a type of combined
service.
The corresponding provision to this in the Telecommunications
Act, section 141, provided for a review to be conducted prior to 30 September
1998. This review has been conducted and the findings announced. The report of
the review has been tabled in Parliament as required under subsection 141(7) of
the Telecommunications Act. Accordingly those provisions in the
Telecommunications Act are spent and therefore have not been included in the
Bill.
Clause 13 – Supply of standard telephone services
Clause 13 is a definitional provision that sets out what is included in a
reference to the supply of a standard telephone service (for example, under
paragraph 19(2)(a)) and thereby provides a means of adding further requirements
to the USO. Clause 13 provides that a reference in Part 2 of the Bill to the
supply of a standard telephone service includes a reference to the supply
of:
• if the regulations prescribe customer equipment – that
customer equipment or customer equipment supplied instead of that
first-mentioned customer equipment in order to comply with the Disability
Discrimination Act 1992; and
• if the regulations do not
prescribe customer equipment – a telephone handset that does not have
switching functions or other customer equipment supplied instead of such a
handset in order to comply with the Disability Discrimination Act 1992;
and
• other prescribed goods; and
• prescribed
services;
where the equipment, goods or services, as the case may be, are
for use in connection with the standard telephone service.
Subclause
13(2) provides that a reference in Part 2 of the Bill to the supply of a
standard telephone service includes a reference to the supply, to a person with
a disability, of prescribed customer equipment and other prescribed goods and
services where the equipment, goods or services, as the case may be, are for use
in connection with the standard telephone service.
Subclause 13(3)
provides that the term ‘disability’ has the same meaning as in the
Disability Discrimination Act 1992.
Clause 13 ensures that
customer equipment will be supplied under the USO along with the standard
telephone service. Unless regulations provide otherwise, that customer
equipment will be, at a minimum, a telephone that does not have switching
functions; that is, a basic telephone that allows calls to be made and received
but does not necessarily have other functionality (including, for example, the
ability to redirect calls, ie. a switching function).
In the case of
people with a disability, the customer equipment would be the equipment supplied
instead of such a telephone, in order to comply with the Disability
Discrimination Act 1992.
A power is included to enable regulations
to prescribe other customer equipment to be supplied for use in connection with
the standard telephone service. This enables upgrade of the type of customer
equipment for use in connection with the standard telephone service under the
USO. For example, a regulation might prescribe a telephone with switching
functions or with a liquid crystal display (LCD) for use with calling line
identification (CLI) services. In the case of people with a disability, the
customer equipment would be the equipment supplied instead of such equipment, in
order to comply with the Disability Discrimination Act. Reliance on the
Disability Discrimination Act 1992 is consistent with the
Government’s overall approach of relying on the general provisions of that
Act to address the needs of people with a disability. (This matter is discussed
further in the context of clause 6.)
In addition to customer equipment,
paragraphs 13(1)(c) and (d) and 14(b) and (c) also enable regulations to provide
that a reference to the supply of the standard telephone service also includes a
reference to the supply of prescribed goods (other than customer equipment) and
prescribed services (other than carriage services). These provisions give the
Government considerable flexibility in constructing the package of products that
may be supplied under the USO for use in connection with the standard telephone
service. Other prescribed goods could include, for example, particular
telephone add-ons or manuals on how to use a service. Prescribed services could
include non-carriage services, for example, customer helplines or relay services
for speech/hearing impaired users.
It is important to note that
equipment, other goods and services included in a reference to the supply of a
standard telephone service must be for use in connection with the standard
telephone service. Equipment, other goods and services not for use in
connection with the standard telephone service cannot be required to be supplied
under this provision. Furthermore, equipment, other goods and services for use
in connection with the standard telephone service are not required to be
supplied on a stand-alone basis, but only for use in conjunction with the
standard telephone service. For example, persons cannot request that they be
supplied with just a telephone; they can only request a telephone be supplied
for use in connection with a standard telephone service.
It is intended,
however, that if regulations are made under clause 25 or 26 providing for the
declaration of multiple universal service providers in a single area to provide
different components of the USO (eg. the standard telephone service and customer
equipment), that one universal service provider might only supply the standard
telephone service while another supplies the customer equipment. In such a
circumstance, however, the equipment would still be provided for use in
connection with the standard telephone service and the person responsible for
providing customer equipment would not be expected to provide it except for use
in connection with that service, even though it may have been acquired from a
different universal service provider. To the extent that legislative
modification might be necessary to ensure this outcome, regulations under
clauses 25 and 26 authorising multiple universal service providers can make such
modifications to the Part as are required to make a scheme for multiple
universal service providers effective.
Clause 14 – Supply of prescribed carriage services
Clause 14 is a companion provision to clause 13 that sets out what is
included in a reference to the supply of a prescribed carriage service (for
example, under paragraph 19(2)(c)). Like clause 13, clause 14 provides a
further means of adding items, for use in connection with a prescribed carriage
service, to the USO. Clause 14 provides that a reference in Part 2 of the Bill
to the supply of a prescribed carriage service includes a reference to the
supply of:
• prescribed customer equipment;
• other
prescribed goods; and
• prescribed services;
where the
equipment, goods or services, as the case may be, are for use in connection with
the prescribed carriage service.
Clause 15 – Service
area
Clause 15 is a definitional provision that provides that, for
the purposes of Part 2 of the Bill, a ‘service area’ is: a
geographical area within Australia; any area of land; or any premises or part of
premises; regardless of size. To avoid doubt, it is intended that the universal
service obligation applies to premises that are within another building, for
example, a flat or shop in a multi-unit complex. ‘Service area’ is
used, for example in clause 20, in defining the area in relation to which
regional and national universal service providers have the obligation to fulfil
the USO.
Clause 16 – Participating carriers
Clause 16
is a definitional provision. It provides that, for the purposes of Part 2, a
‘participating carrier’ is a person who in relation to a financial
year, was a carrier at any time during the financial year. However, the clause
does not apply to a person if the person is of a kind declared by the
regulations to be exempt from this clause.
Participating carriers are
those carriers who participate in the universal service regime by contributing
to the cost of the losses incurred in fulfilling the USO. Importantly, any
person who was a carrier during a financial year is a participating carrier in
relation to that year. Accordingly, if a person has ceased to be a carrier when
the USO assessment is made, that person is nevertheless still a participating
carrier for the purpose of the assessment and liable to pay levy. This approach
is designed to ensure that persons who were carriers in a financial year and
earned revenue in the industry make a contribution to the cost of fulfilling the
USO. Clause 90 requires participating carriers to take out levy guarantees.
This is designed to ensure levy contributions are paid, including in the case of
insolvency.
A person who is a carrier in relation to financial year may
be exempt from being a participating carrier if the person is a kind of person
declared by regulations to be exempt from the clause. It is envisaged that
regulations would exempt the class of participating carriers whose revenues are
such that their contribution to total net universal service cost would be
minimal and may not exceed the administrative cost in levying it. It is
intended that the regulations could, for example, declare that persons who do
not earn eligible revenue (see clause 17) above a certain level are not
participating carriers.
Clause 17 – Eligible
revenue
Clause 17 is a definitional provision. It provides that, for
the purposes of Part 2, the ‘eligible revenue’ of a participating
carrier for a financial year is the amount that, under the regulations, is taken
to be the eligible revenue of the carrier for the financial year. That is,
‘eligible revenue’ has the meaning given to it in the regulations.
‘Eligible revenue’ is an important concept because it is the basis
upon which participating carriers’ USO contributions will be normally
determined under clause 67.
The Telecommunications Universal Service
Obligation (Eligible Revenue) Regulations 1998 (SR. No 180 of 1998) were made
for the purposes of section 147 of the Telecommunications Act 1997 on
which clause 17 is based. The Telecommunications Legislation Amendment Bill
1998 contains transitional provisions to ensure that these regulations will have
effect, after the commencement of this Bill, as if they had been made for the
purposes of the corresponding provision of this Bill.
Clause 17 gives the
Government wide discretion in defining what constitutes ‘eligible
revenue’. Because eligible revenue is the amount ‘taken’ to
be eligible revenue, it is not restricted to revenue received by a participating
carrier. It may include any amounts, including revenue received by persons
other than the carrier. Amongst other things, this wide-ranging approach has
been taken to avoid disputes as to what can and cannot be treated as eligible
revenue and to provide a means of addressing tactics to avoid levy, for example
by minimising eligible revenue by engaging in transfer pricing. Should
participating carriers seek to minimise levy by diverting revenue to related
service provider operations, such revenue will be able to be included under the
regulations. Similarly, revenue paid to an infrastructure owner, rather than a
participating carrier that is a nominated carrier in relation to the
infrastructure, could be included in ‘eligible
revenue’.
Clause 18 – Approved auditor
Clause
18 is a definitional provision. It provides that a reference in Part 2 to an
‘approved auditor’ is a reference to a person included in a class of
persons specified in a written determination, published in the Commonwealth
Gazette, made by the ACA for the purposes of this clause.
Net
universal service claims (clause 54) and eligible revenue returns (clause 62)
must be audited by an independent auditor. As the ACA is ultimately responsible
for accepting such claims and returns, it is appropriate that the ACA determine
the class of persons who it will accept as approved auditors.
Division 2––Universal service obligation
Clause 19 – Universal service obligation
Clause 19 is
a definitional clause which, because it defines the universal service
obligation, is a key provision of Part 2 of the Bill.
Subclause 19(1)
provides that for the purposes of the Bill, the universal service obligation is
the obligation to ensure that:
• standard telephone
services;
• payphones; and
• prescribed carriage
services;
are reasonably accessible to all people in Australia on an
equitable basis, wherever they reside or carry on business.
Subclause
19(1) provides a broad conceptual definition of the universal service
obligation: people in Australia are to have reasonable access to certain
specified carriage services. In relation to the concepts of ‘reasonable
access’ and ‘equitable basis’, it should be noted that these
concepts are intended to relate primarily to access in geographical terms and
equity in terms of equality of opportunity, rather than concepts of
affordability. While affordability is clearly important to access in general
terms, it is a matter which the Government considers should not be embedded in
the USO itself, but should be tackled through other (transparent) mechanisms
such as competition, price control and targeted assistance.
This broad
conceptual obligation is backed up by a further part of the obligation, namely
to supply the services and payphones necessary to achieve the objective of
ensuring the specified services and payphones are reasonably accessible to
people in Australia on an equitable basis.
Subclause 19(2) therefore
provides that to the extent necessary to achieve the obligation mentioned in
subclause 19(1), it is part of the universal service obligation:
• to supply standard telephone services to people in Australia on request; and
• to supply, install and maintain payphones in Australia; and
• to supply prescribed carriage services to people in Australia on
request.
This two tier approach to defining the universal service
obligation provides a clear ‘headland’ statement of the core of the
universal service obligation, and indicates that the supply of services under
the obligation supports the broad obligation.
Importantly, subclause
19(2) provides for the supply of the specified carriage services ‘on
request’, that is, on the request of the person seeking supply of the
relevant service. The ‘on request’ concept clarifies the nature of
the universal service obligation, particularly in a situation in the future
where more than one carriage service or ancillary item (other than payphones),
might be required to be supplied under the universal service obligation. For
example, some customers may only want to receive a standard telephone service
and no other prescribed carriage services. It is not considered appropriate,
therefore, for the universal service provider to be required to supply that
customer with all the services under the USO, including services the customer
does not want (see subclauses 19(8) and (9)).
Subclause 19(3) enables the
Minister to determine in writing that it is part of the USO to install payphones
at specified locations. This enables specific community concerns, should they
arise, about the availability of payphones to be addressed. Such a
determination would be an integral component of the USO.
Subclause 19(4)
requires any determination under subclause 19(3) to be published in the
Commonwealth Gazette. This ensures the full extent of a universal
service providers’ obligation is publicly known.
Subclause 19(5)
enables regulations to prescribe what is, or is not, necessary to ensure
payphones are reasonably accessible. Such regulations would be an
integral component of the USO.
Subclauses 19(6) and (7) are interpretive
rules which prevent subclauses 19(3) and (5) being used to read down the meaning
of each other.
Subclause 19(10) makes it clear that an obligation to
supply standard telephone services that extends to customer equipment requires
the customer to be given the option of hiring the equipment.
Division 3—Universal service
providers
Clause 20 – Universal service providers
Clause 20 enables
the Minister to declare in writing that a specified carrier is the universal
service provider for Australia or for a specified service area. ‘Service
area’ is defined in clause 15. Under subclause 21(5), a universal service
provider must take all reasonable steps to fulfil the universal service
obligation so far as it relates to the area for which it is the universal
service provider. Under clause 39, a universal service provider must take all
reasonable steps to ensure that its universal service plan, which sets out how
it is to progressively fulfil its USO, is complied with. A universal service
provider must fulfil the USO in its respective area and can claim for proceeds
of the levy to compensate it for the losses it incurs in fulfilling the
USO.
There is nothing in the legislation to prevent a carrier who wishes
to be declared a universal service provider approaching the Minister to be so
declared. Except where a system for selecting a universal service provider has
been determined under clause 22 or 23, the Minister has a full discretion as to
who is declared to be a universal service provider.
Subclause 20(1)
enables the Minister to declare that a specified carrier is the national
universal service provider. By virtue of subclause 20(11), a
‘carrier’ must be a ‘participating carrier’. The effect
of being declared the national universal service provider, in terms of
geographical responsibilities, is stated in subclause 21(1).
Clause 22
enables the Minister to determine in writing a selection system for the
selection of a national universal service provider.
Clause 25 enables
regulations to authorise the Minister to declare multiple national universal
service providers in relation to the USO as a whole or, more importantly, in
relation to particular components of the USO. Regulations made for the
purposes of clause 25 may modify Part 2 of the Bill as required so that it is
consistent with the operation of multiple national universal service providers.
Clause 20 would require such modification if it becomes desirable to proceed
with the declaration of multiple national universal service providers in the
future.
Subclause 20(2) enables the Minister to declare that a specified
carrier is the regional universal service provider for a specified service area.
By virtue of subclause 20(11), a ‘carrier’ must be a
‘participating carrier’. The effect of being declared a regional
universal service provider, in terms of geographical responsibilities, is stated
in subclause 21(2). ‘Service area’ is defined in clause
15.
Clause 23 enables the Minister to determine in writing a selection
system for selecting a regional universal service provider.
Clause 26
enables regulations to authorise the Minister to declare multiple regional
universal service providers in relation to the USO as a whole or, more
importantly, in relation to particular components of the USO. Regulations made
for the purposes of clause 26 may modify Part 2 of the Bill as required so that
it is consistent with the operation of multiple regional universal service
providers. Clause 20 would require such modification if it becomes desirable to
proceed with the declaration of multiple regional universal service providers in
the future.
If a selection system for regional universal service
providers has been determined under clause 23, a declaration under subclause
20(2) must be consistent with the selection system. In the absence of such a
selection system, it is intended, however, that the Minister can declare a
person to be a regional universal service provider at his or her
discretion.
Subclause 20(3) provides that a declaration under subclause
20(1) or (2) has effect accordingly. The effect of such declarations is stated
in subclauses 21(1), (2) and (5).
Subclause 20(4) requires the Minister
to exercise his or her powers in such a way that at any particular time there is
only one national universal service provider and the service areas of any
regional universal service providers do not overlap. This provision is designed
to remove confusion over which universal service provider, under the normal
operation of the universal service regime, is obliged to fulfil the USO for a
service area. The responsibilities of the national universal service provider
when there are one or more regional universal service providers are stated in
subclause 21(1).
Where it becomes desirable to proceed with the
declaration of multiple national and/or regional universal service providers for
the same area under clause 25 and/or clause 26, clause 20 will need to be
modified by regulations made under those clauses to be consistent with the
operation of these multiple operators. It is intended that the multiple
provider powers in clauses 25 and 26 will enable the regulations to modify these
provisions to allow for the declaration of two or more national or regional
universal service providers for the same service area, or one or more national
and regional universal service providers for the same service
area.
Subclause 20(5) makes a declaration take effect at the start of the
financial year after the financial year in which it is made and cease at the end
of the financial year the declaration specifies unless it is sooner revoked. If
the declaration does not include a cessation date, it continues in force until
it is revoked. This provision is subject to subclauses 20(7), (8) and (9) which
deal with replacement of declarations and the cessation of a carrier licence.
The universal service regime operates in relation to financial
years.
Subclause 20(6) makes a revocation take effect at the end of the
financial year it specifies or the financial year in which it is made if it does
not specify another financial year.
Subclause 20(7) is designed to
enable a carrier that is the existing national universal service provider to be
replaced by another carrier. It provides that if a fresh declaration declaring
another carrier to be the national universal service provider is made to replace
an existing declaration (the ‘original declaration’) the fresh
declaration takes effect, and the original declaration ceases to have effect,
from the time specified in the fresh declaration. A fresh declaration may be
made before the date it is to come into effect (ie. the date specified in the
declaration), thereby providing a period for the new carrier to prepare itself
for its role of national universal service provider.
Subclause 20(8)
mirrors subclause 20(7) but is designed to enable a carrier that is a regional
universal service provider to be replaced by another carrier. It provides that
if a fresh declaration declaring another carrier to be the regional universal
service provider for a particular area is made to replace an existing
declaration (the ‘original declaration’) the fresh declaration takes
effect, and the original declaration ceases to have effect, from the time
specified in the fresh declaration. A fresh declaration may be made before the
date it is to come into effect (ie. the date specified in the declaration),
thereby providing a period for the new carrier to prepare itself for its role of
regional universal service provider.
Subclause 20(9) provides that if a
carrier is a regional universal service provider and the carrier ceases to hold
a carrier licence, then the declaration in relation to that carrier ceases to be
in force from that time. That is, on ceasing to be a carrier, the person is no
longer a regional universal service provider. In this instance, unless the
Minister declares another carrier to be the regional service provider for that
particular service area, fulfilment of the USO in that area will become the
responsibility of the national universal service provider (see subclauses 21(1)
and (2)).
Subclause 20(10) makes a declaration of a universal service
provider a disallowable instrument which accordingly must be notified in the
Gazette, tabled in the Parliament and is subject to Parliamentary
disallowance.
Subclause 20(11) provides that a reference in clause 20 to
a carrier does not include a reference to a person of a kind declared by the
regulations to be exempt from clause 16. That is, to be declared a universal
service provider, a person must be a participating carrier.
Clause 21
– Effect of universal service provider declaration
Clause 21
sets out the effect, in terms of geographical responsibilities and legal
obligations, of being declared a universal service provider. The explicit
linkage between the USO and being a universal service provider is established in
subclause 21(5) and is supported through the universal service plans (Division
4).
This clause would require modification under regulations made for the
purposes of clause 25 and/or clause 26 if multiple national and/or regional
universal service providers were to be declared in accordance with regulations
made for the purposes of those clauses.
Subclause 21(1) makes the
national universal service provider the universal service provider for all of
Australia except for each service area in relation to which a regional universal
service provider has been declared and for so much of a service area as is not
within such an area.
Paragraph 21(1)(b) is a drafting device designed
to link a national universal service provider to the concept of ‘service
area’ (clause 15), which is a geographical area to which the USO relates.
The provision assumes that all of Australia is the ‘service area’ of
a national universal service provider. Accordingly, a national universal
service provider’s service area is any service area other than a service
area of a regional universal service provider (as stated in paragraph (a)).
(The ‘service area’ referred to in paragraph (b) is not the
‘service area’ of the regional universal service provider referred
to in paragraph (a).)
It is also worth noting here that a national
universal service provider, as the ‘underlying’ universal service
provider may also be responsible for ‘enclave’ service areas within
the service area of a regional universal service provider if that service area
is so designed.
Subclause 21(2) makes a regional universal service
provider in relation to a particular service area the universal service provider
for that area and for each service area within that area. As in subclause
21(1), paragraph (2)(b) is a drafting device to link the universal service
provider to the ‘service area’ concept for the purpose of particular
provisions.
One of the effects of subclauses 21(1) and (2) is that where
there ceases to be a regional universal service provider, the national universal
service provider automatically becomes responsible for fulfilling the USO in
that regional universal service provider’s service area. Nothing in the
legislation, however, requires a national universal service provider to maintain
infrastructure in the service area of a regional universal service
provider.
Subclause 21(3) provides that a person in relation to whom
there is a declaration in force under subclause 20(1) or (2) at any time during
a financial year is a universal service provider in relation to that financial
year. This means that that person is eligible to make a claim for levy
credit under clause 54, even though the person may no longer be a universal
service provider.
Subclause 21(4) provides that the areas for which a
person is a universal service provider are taken to be a single area. This
means that although a universal service provider may be responsible for
fulfilling the USO in a number of non-contiguous areas (for example, Victoria
and Western Australia) for the purposes of the Part, those areas are treated as
a single area. This assists with administration of the USO costing
arrangements.
Subclause 21(5) provides that the universal service
provider for an area must take all reasonable steps to fulfil the universal
service obligation, so far as the obligation relates to that area. This
provision performs the function of requiring the universal service provider to
fulfil the USO. Division 4 of Part 2 of the Bill places further obligations on
the universal service provider for a particular area in relation to universal
service plans and clause 39 requires such a universal service provider to take
all reasonable steps to ensure that the plan is complied with. Under clause 28,
a universal service plan sets out how the universal service provider will
progressively fulfil the USO in the provider’s area. In considering
whether a provider has taken all reasonable steps to fulfil the USO, regard
should be had to whether the provider has complied with its universal service
plan.
Note that in the case of the national universal service provider,
the relevant area is Australia, except for each service area in relation to
which there is a regional universal service provider (subclause
21(1)).
The obligation in subclause 21(5) is expressed in terms of taking
‘all reasonable steps’. The reasonableness requirement recognises
that a universal service provider may only be able to fulfil the USO
progressively in its area. This is particularly the case where the USO is
upgraded, as the rollout of additional network infrastructure may be
required.
Section 581 of the Telecommunications Act, when read with the
proposed amendments to the ACA Act and to the definition of ‘ACA’s
telecommunications powers’ in the Telecommunications Act proposed to be
made by the Telecommunications Legislation Amendment Bill 1998, enables the ACA
to give written directions to a carrier in connection with performing any of the
ACA’s telecommunications functions or exercising any of the ACA’s
telecommunications powers. Those functions include regulating
telecommunications in accordance with the Telecommunications Act or this Bill.
As subclause 21(5) requires the universal service provider to take all
reasonable steps to fulfil the USO, clause 1 of Schedule 1 to the
Telecommunications Act, as proposed to be amended, makes this obligation a
standard carrier licence condition and the ACA has the powers to enforce this
carrier licence condition (see sections 68 and 69 and Parts 30 and 31 of the
Telecommunications Act) and the ACA will have the power under section 581 of the
Telecommunications Act to direct a universal service provider in relation to its
compliance with this obligation.
Clause 22 – Selection system
for national universal service provider
Clause 22 provides a head of
power to enable the Minister to determine a selection system for selecting the
national universal service provider for Australia in relation to specified
financial years. Amongst other things, the provision is intended to enable the
national universal service provider to be selected by tender (ie. with the
tenderer submitting the lowest cost being declared the national universal
service provider), particularly where the provider would, by virtue of
regulations made under clause 25, be one national provider, along with others,
of a component of the USO. The selection system for national universal service
providers (particularly in the case of tendering) is envisaged as generally
working in tandem with a multiple universal service provider scheme under clause
25 and in relation to a discrete component of the USO rather than the USO as a
whole.
The precise requirements of the selection system are to be dealt
with in subordinate legislation rather than the Act because of the significant
detail that may need to be specified.
A selection system determined by
the Minister need not involve price-based tendering. The Minister has full
discretion as to the nature of a selection system. A selection system could,
for example, provide for the selection of a provider according to non-price
criteria such as industry experience, innovation, infrastructure and ability to
fulfil the USO.
Where the Minister declares a national universal service
provider selection system, the Minister is obliged to use that system. This
protects applicants by preventing the Minister disregarding a determined system.
Where no selection system has been determined, however, the Minister has full
discretion as to the selection and declaration of a universal service
provider.
Where the national universal service provider is selected
according to a selection process, it would still be necessary for that person to
be declared the national universal service provider under subclause
20(1).
While clauses 22 and 23 provide a mechanism for tendering out the
USO nationally or in a particular service area, the precise arrangements will be
dealt with in the Minister’s determination. Some comments, however can be
made about envisaged linkages between the operation of clauses 22 and 23 and the
remainder of Part 2 of the Bill. Where the selection system involves tendering,
it is envisaged that the system would provide for the preparation of a tender
specification. This specification would set out the requirements the Government
would require of the successful tenderer. These requirements would largely
derive from the USO as it is defined in clause 19 and any price control
arrangements provided for under Division 5 of Part 2 of the Bill.
Successful universal service providers would be subject to other
requirements applying to the standard telephone service (and other services)
under other legislative provisions in the Bill (eg. untimed local calls,
customer service guarantee) as a matter of course.
The Bill enables the
Minister to require an applicant for selection under a selection system to
submit a draft universal service plan as part of its application or tender.
Where a tenderer was successful, it would be declared the national or regional
(as appropriate) universal service provider. As such it would be bound by the
USO and price control as provided for in the legislation (and as identified in
the tender specification).
Subclause 22(1) enables the Minister, by
written instrument, to determine a selection system for the purpose of selecting
a carrier to be the national universal service provider in relation to specified
financial years.
It is intended that where regulations have authorised the Minister to declare
multiple national universal providers, particularly in relation to different
components of the USO, that a selection system under clause 22 could be used to
select a national universal service provider in relation to a particular
component. For example, regulations under clause 25 may authorise the Minister
to declare different national universal service providers for the standard
telephone service and payphones. The Minister may exercise his or her
discretion in declaring the provider of the standard telephone service, while
deciding that the provider of the payphones should be selected via a selection
system under clause 22.
Subclause 22(2) requires that a selection
system so determined must require the selected carrier to have elected
that:
• an amount specified in the election will be the
carrier’s net universal service cost for the financial year concerned;
or
• a method of ascertaining an amount, being a method specified
in the election, will apply for the purposes of determining the carrier’s
net universal service cost for the financial year concerned.
Accordingly, subclause 22(2) requires the selected carrier to have elected that a specific amount is to be its net universal service cost (for example, an amount that it has tendered as its cost to fulfil the USO) or to have elected that its net universal service costs will be ascertained by means of a particular method (again, for example, possibly as proposed by an applicant during a selection process).
Subclause 22(3) provides that a selection system determined by the
Minister may require an applicant for selection under such a system to give the
Minister a copy of the document that the applicant would be required to give to
the Minister under clause 27, namely a draft universal service plan, in the
event that the applicant is successful. This provision is intended to enable
the submission of a draft universal service plan as part of the process for the
selection of a universal service provider. Whether a successful applicant (or
the Minister) would be bound by such a document should the applicant be
successful would depend on the details of the selection system determined by the
Minister. This provision, does not, by implication, limit the kind of selection
scheme the Minister can determine under subclause 22(1).
Subclause 22(4) prevents the Minister from exercising his or her power to declare a national universal service provider under subclause 20(1), in any way that is inconsistent with the determined selection system. That is, where a system is in place for determining the national universal service provider, that system must be used. However, where no system has been determined, the Minister may exercise his or her discretion in selecting a national universal service provider.
Subclause 22(5) provides that Part 2 of the Bill does not prevent a method mentioned in paragraph 22(2)(b) from being the same as a method that would have applied if the system concerned had not been determined. This means that even if a national universal service provider is selected under clause 22, the successful carrier may elect to have its net universal service cost calculated according to a methodology determined by the Minister, with the agreement of all participating carriers under paragraph 57(1)(c), or using the avoidable cost less revenue forgone methodology under paragraph 57(1)(d).
Subclause 22(6) makes a selection system determination a disallowable
instrument.
Clause 23 – Selection system for regional universal
service providers
Clause 23 is a parallel provision to clause 22 but
provides for the determination of selection systems for regional, rather than
national, universal service providers. Most of the explanation in relation to
clause 22 is also applicable to this clause.
Clause 23 provides a head of
power to enable the Minister to determine a selection system for selecting
regional universal service providers for particular areas in relation to
specified financial years. Amongst other things, the provision is intended to
enable a regional universal service provider for a particular area to be
selected by tender (eg. where the tenderer submitting the lowest cost is
declared the regional universal service provider). The precise requirements of
the selection system are to be dealt with in subordinate legislation rather than
the Act because of the significant detail that may need to be
specified.
Where a regional universal service provider is selected
according to a selection process, it would still be necessary for that person to
be declared a regional universal service provider under subclause
20(2).
Subclause 23(1) enables the Minister, by written instrument, to
determine a selection system for the purpose of selecting carriers to be
regional universal service providers for specified service areas in relation to
specified financial years.
Subclause 23(2) provides that a selection
system so determined must require the selected carrier to have elected
that:
• an amount specified in the election will be the
carrier’s net universal service cost for the financial year concerned;
or
• a method of ascertaining an amount, being a method specified
in the election, will apply for the purposes of determining the carrier’s
net universal service cost for the financial year concerned.
Subclause 23(3) provides that a selection system determined by the
Minister may require an applicant for selection under such a system to give the
Minister a copy of the document that the applicant would be required to give to
the Minister under clause 27, namely a draft universal service plan, in the
event that the applicant is successful. This provision is intended to enable
the submission of a draft universal service plan as part of the process for the
selection of a universal service provider. Whether a successful applicant (or
the Minister) would be bound by such a document should the applicant be
successful would depend on the details of the selection system determined by the
Minister. This provision, does not, by implication, limit the kind of selection
system the Minister can determine under subclause 23(1).
Subclause 23(4) prevents the Minister from exercising his or her power to declare a regional universal service provider under subclause 20(2), in any way that is inconsistent with the determined selection system. That is, where a system is in place for determining the regional universal service provider for a particular area, that system must be used. However, where no system has been determined in relation to a particular area, the Minister may exercise his or her discretion in selecting a regional universal service provider for that area.
Subclause 23(5) provides that Part 2 of the Bill does not prevent a method
mentioned in paragraph 23(2)(b) from being the same as a method that would have
applied if the system concerned had not been determined. This means that even
if a regional universal service provider is selected under clause 23, the
successful carrier may elect to have its net universal service cost calculated
according to a methodology determined by the Minister, with the agreement of all
participating carriers under paragraph 57(1)(c), or using the avoidable cost
less revenue forgone methodology under paragraph 57(1)(d).
Subclause
23(6) makes a selection system determination a disallowable instrument.
Clause 24 – Selection systems – information gathering
powers
Clause 24 is designed to enable information relevant to
selection systems to be obtained from carriers and carriage service
providers.
Subclause 24(1) enables the Minister, by a written notice
given to a carrier or carriage service provider, to require the carrier or
carriage service provider to give the Minister, within the period and in the
manner and form specified in the notice, any information that is relevant
to:
• the exercise of the powers to determine a selection system
for a national or regional universal service providers under clause 22 or 23;
or
• the administration of such a selection system.
A
carrier or carriage service provider must comply with any such requirement for
information (subclause 24(2)).
For a selection system to operate
effectively, particularly if it involves tendering, it will be necessary for
relevant information to be obtained from relevant industry players, particularly
from the person who is the universal service provider in an area to which a
selection system is to apply. In seeking information, it is expected that the
Minister would confine his or her request to the minimum needed for the purpose
of preparing and conducting the selection system and would have due regard to
the commercial confidentiality requested by carriers and carriage service
providers. However, such commercially confidential information may need to be
made available to applicants under a selection system if the selection system is
to work effectively. While a universal service provider must be a carrier,
provision has been made to obtain information from carriage service providers as
such persons may be involved in the fulfilment of the USO and may have relevant
information, particularly in relation to revenue.
Clause 25 –
Multiple national universal service providers
Clause 25, and its
companion provision, clause 26, allow flexibility in the declaration of
universal service providers, enabling multiple universal service providers to be
declared in relation to the fulfilment of the USO as a whole or with the effect
of enabling different universal service providers to be declared in relation to
discrete, constituent components of the USO. The provisions will enable
specialist providers to be declared where more than one service may be
designated under the USO. The approach also provides for the possibility of
having two or more universal service providers competing in the delivery of
services in an area.
Subclause 25(1) provides that regulations may
authorise the Minister to declare that two or more carriers are to be national
universal service providers. Under this provision the universal service
providers could be responsible for supplying the same services.
Subclause
25(2) provides that the regulations may also authorise the Minister to declare
that the Bill has effect, in relation to any multiple national universal service
provider that is declared, as if the USO applicable to the provider were limited
as set out in the declaration. This power is intended to enable the Minister to
split the USO as a whole between a number of service providers, for example, in
accordance with their expertise in relation to a particular component. For
example, the Minister may declare one person the universal service provider in
relation to the standard telephone service, another the universal service
provider in relation to payphones and a third in relation to a prescribed
carriage service. The approach will also make possible use of a selection
system under clause 22 to select the best universal service provider for a
particular USO component. It is intended that this provision could further
limit the USO in relation to a declared provider so that the provider is only
required to supply customer equipment for use in connection with a standard
telephone service or prescribed carriage service.
Subclause 25(2) also
requires, however, that declarations may only be made in accordance with the
clause for the purpose of dividing the universal service obligation between two
or more declared providers. This means that although the USO may be limited in
relation to one of a number of multiple universal service providers, it is not
limited in relation to the providers as a whole: the limitations on any
individual are complemented by the obligations applying to its companion
universal service providers so that there is no limitation on the delivery of
the USO as a whole.
Subclause 25(2) envisages that the different national
universal service providers would be responsible for the supply of different
components of the USO, rather than the USO as a whole.
This approach
gives the Minister the ability to declare as national universal service
providers persons who may have a particular expertise or other advantage in
supplying the components of the USO. This may be the case where quite
disparate services are required to be reasonably accessible under the USO,
particularly, where separate infrastructures may be involved. This would be the
case, for example, if the standard telephone service, public mobile
telecommunications services and broadband services were all required to be
reasonably accessible under the USO.
It is conceivable that subclauses
25(1) and (2) could also operate together with the effect that there could be
multiple providers of the same component of the USO, as well as different
components.
Subclause 25(3) provides that a declaration made in a manner
consistent with regulations authorising multiple regional universal service
providers has effect accordingly.
Subclause 25(4) enables regulations to
provide that Part 2 of the Bill applies in relation to any such declared
multiple national universal service providers subject to such modifications as
are specified in the regulations. Modifications includes additions, omission
and substitutions (subclause 25(5)).
Part 2 of the Bill has been drafted
on the premise that there will generally be only one universal service provider
responsible for the whole USO in any one service area. If it is decided that
multiple universal service providers should be declared, regulations can alter
any provision of Part 2 as is required to enable the declaration of multiple
national universal service providers to operate under Part 2. Provisions that
may require modification to support multiple national universal service
providers include clauses 20, 21, 28, 32, 49, 50 and 57.
Alternative
provisions for dealing with multiple universal service providers have not been
incorporated into the legislation because they would add significantly to the
complexity of Part 2 of the Bill.
Clause 26 – Multiple regional
universal service providers
Clause 26 is a parallel provision to
clause 25 but provides for the regulations to authorise the declaration of
multiple regional, rather than national, universal service providers. Most of
the explanation in relation to clause 25 is also applicable to this
clause.
Subclause 26(1) provides that regulations may authorise the
Minister to declare that two or more carriers are to be regional universal
service providers. Under this provision, the universal service providers would
be responsible for supplying the same services.
Subclause 26(2) provides
that the regulations may also authorise the Minister to declare that the Bill
has effect, in relation to any multiple regional universal service provider that
is declared, as if the USO applicable to the provider were limited as set out in
the declaration. This power is intended to enable the Minister to split the USO
as a whole between a number of service providers, for example, in accordance
with their expertise in relation to a particular component. For example, the
Minister may declare one person the regional universal service provider in
relation to the standard telephone service, another the regional universal
service provider in relation to payphones and a third in relation to a
prescribed carriage service. The approach will also make possible use of a
selection system under clause 23 to select the best regional universal service
provider for a particular USO component.
Subclause 26(2) also requires,
however, that declarations may only be made in accordance with the clause for
the purpose of dividing the universal service obligation between two or more
declared regional providers. This means that although the USO may be limited in
relation to one of a number of multiple universal service providers, it is not
limited in relation to the overall fulfilment of the USO in the service area
concerned by declared providers as a whole.
Subclause 26(2) envisages
that the different regional universal service providers would be responsible for
the supply of different components of the USO, rather than the USO as a whole.
It is conceivable that subclauses 26(1) and (2) could also operate
together with the effect that there could be multiple regional universal service
providers of the same component of the USO, as well as different components.
Subclause 26(3) provides that a declaration made in a manner consistent
with regulations authorising multiple regional universal service providers has
effect accordingly.
Subclause 26(4) enables regulations to provide that
Part 2 of the Bill applies in relation to any such declared multiple regional
universal service providers subject to such modifications as are specified in
the regulations. Modifications includes additions, omission and substitutions
(subclause 26(5)). These provisions enable regulations to modify Part 2 of the
Bill as required to accommodate the operation of multiple regional universal
service providers. The provisions that would need modification would be the
same as those identified above in relation to multiple national universal
service providers.
Division 4—Universal service plans
Division 4 of Part 2 of the Bill provides for the development by
universal service providers of universal service plans, for those plans to be
approved by the Minister, and for universal service providers to comply with
approved plans. Universal service plans are intended to assist with the
achievement of the following objectives:
• better planning of USO
delivery by requiring universal service providers to focus on what they must do
to fulfil their obligations and how they should do it;
• better
community information about the USO and what the universal service provider is
doing to fulfil it (approved universal service plans will be public
documents);
• better monitoring of USO fulfilment through measuring
a universal service provider’s performance against its
plan;
• better enforcement of the USO (a plan will be able to be
used in identifying failures to adequately fulfil the USO).
A universal
service provider has the obligation, under subclause 21(5), to take all
reasonable steps to fulfil the USO. Universal service plans are intended to
support and supplement this obligation by setting out how the provider will
progressively fulfil the USO.
Division 4 of Part 2 sets out a scheme
under which a universal service provider must develop plans about how it is to
fulfil the USO in the area for which it is responsible. These plans will be
subject to Ministerial approval and monitoring by the ACA. Through his or her
ability to formulate requirements for plans, to approve or refuse plans and
require variations or replacements of plans, the Minister will have considerable
scope to oversee the fulfilment of the USO. At the same time, however,
universal service providers have primary responsibility for determining how they
are to fulfil their USO and initiative in planning rests with them. The
planning requirement will force universal service providers to focus on the
fulfilment of their responsibilities under the USO and set themselves concrete
targets, timeframes and performance indicators.
Clause 27 –
Universal service provider must submit universal service plan
Clause
27 requires a universal service provider for a particular area to give the
Minister a draft universal service plan for that area (subclause 27(1)) within
90 days of becoming the universal service provider for that area (subclause
27(2)). Where a national universal service provider takes over responsibility
for a service area from a regional universal service provider that ceases to
have responsibility for that service area, this requirement will apply to the
national universal service provider. Nothing would prevent that service
provider adopting the plan of the former regional universal service
provider.
Clause 28 – Universal service plans
Clause
28 states that a draft or approved universal service plan for an area is a plan
that sets out how the universal service provider for that area will
progressively fulfil the USO (in so far as it relates to that area).
The requirements imposed on the universal service provider by the USO
provide the basis for a universal service plan. The plan is intended to set out
the means by which the universal service provider will fulfil those
requirements. Given that it may take time for a universal service provider to
fulfil its obligations in an area, particularly if the obligation has been
significantly expanded or upgraded, the plan may provide for the progressive
fulfilment of the obligation.
Amongst other things, it is envisaged that
universal service plans could specify:
• the levels of service
quality, in terms of both technical performance and customer service, at which
the universal service provider intends to supply the services required under the
USO;
• the timeframes within which a service would be made
accessible within an area (for example, where significant network upgrading
would be required);
• the timeframes within which services would be
supplied (ie. connected) to a customer (which may vary from area to area, if
such differences are reasonable); and
• timeframes for the
rectification of faults and targets in terms of payphone densities or
availability.
Performance levels under a universal service plan would be
separate from, and not have any implications for, standards under the Customer
Service Guarantee (CSG). However, where there are standards under the CSG
(which applies to carriage service providers, not just universal service
providers), it would be expected that those standards would be co-ordinated with
the universal service plans.
Clause 29 – Replacement of approved
universal service plan
Clause 29 provides that a draft universal
service plan for an area may be expressed to replace a pre-existing approved
plan for an area if such a plan is in force. When the draft plan becomes an
approved plan, the pre-existing plan ceases to be in force. This provides a
means by which universal service providers can change their universal service
plans as they consider it appropriate. Changes might be required, for example,
if the USO is revised, an area’s demographics change, a provider decides
to deploy different technologies or experience reveals deficiencies in service
provision, including quality.
Clause 30 – Approval of draft
universal service plan by Minister
Clause 30 provides for the
approval or rejection of a draft universal service plan by the Minister. The
Minister’s ability to refuse to approve a draft plan and to direct a
universal service provider to submit a new plan enables the Minister to
contribute to the planning of fulfilment of the USO and provides an active level
of Governmental involvement appropriate to this important
obligation.
Subclause 30(1) requires the Minister to approve or refuse to
approve a draft universal service plan. In assessing a plan, the Minister must
have regard to the criteria set out in clause 32.
Subclause 30(2) makes
a draft plan approved by the Minister an approved universal service plan. Under
clause 39, a universal service provider must take all reasonable steps to ensure
that an approved universal service plan is complied with.
Subclause 30(3)
enables the Minister to direct a universal service provider to give the
Minister, within the period specified and in the terms specified in the
direction, a fresh draft universal service plan if the Minister refuses to
approve a draft plan (for example, if the Minister considers the plan does not
adequately provide for the fulfilment of the USO in an area). The content of
such a direction can state where the Minister considers a draft plan was
deficient and how those deficiencies should be rectified in a new draft plan.
The provider must comply with a direction to submit a new draft
plan.
Clause 31 – Public comment – draft
plan
Clause 31 requires a universal service provider to undertake
public consultation on a draft universal service plan before submitting it to
the Minister for approval.
This provision is intended to ensure that the
public has an opportunity to comment on draft universal service plans as they
are being developed.
Subclause 31(1) requires that, before giving the
Minister a draft universal service plan under clause 30, a universal service
provider must:
• publish a preliminary version of the draft plan
and invite members of the public to make submissions to the provider about the
preliminary version within a specified period; and
• give
consideration to any submissions that were received from members of the public
within that period.
This provision provides a mechanism for the public to
comment on draft universal service plans and for the public’s comments to
be considered. A universal service plan sets out how a universal service
provider will progressively fulfil its USO (clause 28).
Subclause 31(2)
requires that the period specified in the invitation to comment must run for at
least 30 days. This provides the public with a guaranteed minimum period within
which to make comments.
Subclause 31(3) provides that clause 31 does not
apply to a draft plan given to the Minister in accordance with a direction under
subclause 30(3). Subclause 30(3) enables the Minister to direct a universal
service provider to provide a fresh draft universal service plan where the
Minister refuses to approve an original plan. Given that the Minister’s
direction will take into account the public comments which occurred in relation
to the original plan and there are timing pressures if a revised plan is
required, it is not appropriate to require public consultation in these
circumstances.
Subclause 31(4) provides that clause 31 does not apply to
a draft plan given to the Minister in accordance with a notice under clause 38.
Clause 38 enables the Minister to require a universal service provider to give
the Minister a draft variation of a current plan or draft replacement plan.
Given that public consultation will have occurred in relation to the original
plan and there are timing pressures if a revised plan is required, it is not
appropriate to require public consultation in these
circumstances.
Clause 32 – Minister to have regard to certain
matters
Clause 32 sets out criteria the Minister must have regard to
in considering whether or not to approve a draft universal service plan. The
criteria are designed to ensure the USO is fulfilled in a manner consistent with
relevant objects of the Bill (including Part 2) and of Telecommunications
Act.
Subclause 32(1) requires the Minister, in deciding whether to
approve a draft universal service plan for an area, to have regard to whether
the plan provides for the USO (in so far as it relates to that area) to be
fulfilled:
• as efficiently and economically as practicable;
and
• at performance standards that reasonably meet the social,
industrial and commercial needs of the Australian community;
and
• progressively throughout that area within such period as the
Minister considers reasonable; and
the draft plan complies with any
requirement (formulated by the Minister) in force under clause 33.
The
three detailed criteria derive from the objects of the Bill (including Part 2)
and the Telecommunications Act (see clauses 3 and 9).
As a matter of
course, the Minister would have regard to any advice or report provided by the
ACA to the Minister at the Minister’s request, including any report on a
public inquiry on a draft universal service plan the Minister has asked the ACA
to conduct. Subclause 32(1) does not, by implication, limit the matters to
which regard may be had (subclause 32(2)).
This clause is important in
providing a means by which the Minister can contribute to planning the
fulfilment of the USO.
Clause 33 – Minister may formulate
requirements for draft plans
Clause 33 enables the Minister to
formulate requirements to be complied with by a draft universal service plan
(subclause 33(1)) and gives examples of possible types of requirements,
including:
• timetables for the supply of services (for example,
that a newly prescribed carriage service must be accessible to a particular
percentage of the population or in particular areas by a particular time or
within a particular period);
• performance standards relating to
the fulfilment of the USO (relating to both the technical performance of a
service and customer service in the supply of a service, for example, that the
standard telephone service have a specified dial tone delay or voice
transmission quality or be connected within a specified period); and
• the form of a draft universal service plans (eg. what must be
included in a plan in terms of information).
The Minister’s
requirements must be consistent with the USO as it is defined in clause 19. The
Minister cannot formulate a requirement that would require a universal service
provider to do something that does not fall within the USO as defined in clause
19. Under subsection 33(3A) of the Acts Interpretation Act 1901,
different provision can be made for different types of providers. Subclause
33(3) makes an instrument setting out such requirements a disallowable
instrument.
Clause 34 – Notification of
decision
Clause 34 requires the Minister to notify the universal
service provider that has submitted the draft plan and the ACA as to whether he
or she has approved or refused to approve the draft plan (subclause 34(1)). A
copy of the Minister’s notice must be published in the Commonwealth
Gazette (subclause 34(2)).
The Minister must give the universal
service provider submitting the plan a written notice setting out the reasons
for refusing to approve the draft plan if the Minister has rejected the plan
(subclause 34(3)). Note that under subclause 30(3) the Minister may direct the
universal service provider to give the Minister another draft plan, within the
period and within the terms specified in the direction.
Clause 35
– Variation of approved universal service plan
Clause 35 sets
out the process for varying an approved universal service plan, as may be
necessary, for example, because of changes to the USO, changes in the
demographics of a service area, or changes to the service provider’s
delivery strategy.
Subclause 35(1) makes this clause apply if an
approved plan (‘the current plan’) is in force and the universal
service provider for the area gives the Minister a draft variation of the
plan.
Subclause 35(2) requires the Minister to approve or refuse to
approve the variation.
Subclause 35(3) prevents the Minister from
approving the variation unless the Minister is satisfied that he or she would
approve a draft universal service plan in the same terms as the current plan but
varied as proposed in the draft variation.
Subclause 35(4) requires the
Minister to notify the universal service provider that has submitted the draft
plan and the ACA as to whether he or she has approved or refused to approve the
variation. A copy of the notice must be published in the Commonwealth
Gazette (subclause 35(5)).
Subclause 35(6) requires the Minister
to give the universal service provider submitting the draft variation a written
notice setting out the reasons for refusing to approve the variation if the
Minister has rejected it.
Subclause 35(7) provides that a current plan is
varied accordingly if the Minister approves a variation.
Clause 36
– Public comment – variation of plan
Clause 36 requires a
universal service provider to undertake public consultation on a variation of an
approved universal service plan before submitting the variation to the Minister
for approval.
This clause is intended to ensure that the public has an
opportunity to comment on variations to approved universal service
plans.
Subclause 36(1) requires that, before giving the Minister a draft
variation to a universal service plan under clause 35, a universal service
provider must:
• publish a preliminary version of the draft
variation and invite members of the public to make submissions to the provider
about the preliminary version within a specified period; and
• give
consideration to any submissions that were received from members of the public
within that period.
Subclause 36(2) requires that the period specified in
the invitation to comment must run for at least 30 days. This provides the
public with a guaranteed minimum period within which to make
comments.
Subclause 36(3) provides that clause 36 does not apply to a
draft variation given to the Minister in accordance with a notice under clause
38. Clause 38 enables the Minister to require a universal service provider to
give the Minister a draft variation of a current plan or draft replacement plan.
Given that public consultation will have occurred in relation to the original
plan and there are timing pressures if a revised plan is required, it is not
appropriate to require public consultation in these
circumstances.
Clause 37 – Minister may direct the ACA to give
reports and/or advice
Clause 37 enables the Minister to direct the
ACA to give the Minister such reports and/or advice as the Minister requires to
assist him or her in deciding whether to approve a draft universal service plan
or draft variation (subclause 37(1)). The ACA must comply with the direction
(subclause 37(2)). The ACA’s role here is to provide specialist research
and advice to the Minister, particularly in light of its responsibility
for monitoring and reporting on the fulfilment of the USO (paragraph 105(3)(e)
of the Telecommunications Act). The provision does not by implication
limit the Minister’s powers in relation to public inquiries (subclause
37(3)) and the Minister is able to direct the ACA to hold a public inquiry on a
draft plan if he or she considers it is appropriate to do so.
Clause
38 – Minister may direct variation or replacement of
plan
Clause 38 applies if an approved universal service plan for an
area is in force (subclause 38(1)). The clause enables the Minister to give the
universal service provider for the area a notice requiring the provider to give
the Minister a draft variation of its current plan or a fresh draft plan for the
area that is expressed to replace the current plan (subclause 38(2)). The
provider must comply with the notice (subclause 38(3)).
This clause
enables the Minister to require changes to, or replacement of, an approved
universal service plan should the Minister form the view that the approved plan
is no longer adequate. A plan may need to be changed, for example, because
experience reveals deficiencies with the approved plan, circumstances within the
service area change, or the USO itself is changed (and the universal service
provider has failed to automatically vary its plan
accordingly).
Clause 39 – Compliance with approved universal
service plan
Clause 39 requires the universal service provider for an
area to take all reasonable steps to ensure that it complies with an approved
universal service plan for that area.
Clause 39 provides a test of
‘reasonableness’ in relation to compliance with a universal service
plan in recognition that the supply of telecommunications services on a national
or even regional basis is a complex undertaking involving many factors, not all
of which may be within the control of the universal service provider. For
example, compliance with a plan may be rendered difficult or impossible because
of natural disasters or failure of suppliers (eg. satellite launch failure).
Clause 39 requires compliance with an approved universal service plan.
Clause 1 of Schedule 1 to the Telecommunications Act (as proposed to be amended
by the Telecommunications Legislation Amendment Bill 1998) makes it a statutory
condition of licence that a carrier (and a universal service provider must be a
carrier) comply with the Bill and that Act. Contravention of the Bill and the
Telecommunications Act is subject to civil penalty provisions (see Part 31 as
proposed to be amended) involving pecuniary penalties of up to $10
million.
Subclause 21(5) provides that the universal service provider for
an area must take all reasonable steps to fulfil the universal service
obligation, so far as the obligation relates to that area. Clause 39 requires a
universal service provider for a particular area to take all reasonable steps to
ensure that the plan for the area is complied with. Under clause 28, a
universal service plan sets out how the universal service provider will
progressively fulfil the USO in the provider’s area. In considering
whether a provider has taken all reasonable steps to fulfil the USO for the
purpose of subclause 21(5), it is intended that regard should be had to whether
the provider has complied with its universal service plan.
Clause 40
– Register of universal service plans
Clause 40 requires the
ACA to maintain a register including all approved universal service plans
currently in force (subclause 40(1)). The register may be maintained by
electronic means such as a computer database (subclause 40(2)).
Subclause
40(3) allows a person to inspect the Register and take copies or extracts from
it. For this the person is required to pay any charge determined by the ACA
under s. 53 of the ACA Act. That provision restricts the ACA to recovery of its
costs in relation to the provision of the service to which the charge applies so
that a charge may not amount to taxation.
Subclause 40(4) makes it clear
that a printout from the Register, if it is kept in an electronic form, is to be
taken to be an extract from the Register.
Subclause 40(5) makes it clear
that the ACA may provide extracts or copies of the Register in the form of a
data processing device (paragraph (a)) such as a floppy disk or a CD; or by way
of electronic transmission (paragraph (b)) such as e-mail or on the
Internet.
The register is similar to other public registers maintained by
the ACA. The register should enable greater public awareness and scrutiny of
how universal service providers intend to fulfil their USOs and facilitate
public action to ensure providers fulfil their obligations.
Division 5—Regulation of universal
service charges
Division 5 of Part 2 of the Bill, together with Part 9 of the Bill, are
intended to provide a means of ensuring the prices of services supplied under
the universal service obligation can be controlled, with a view to ensuring they
are affordable. This is in recognition that the affordability of services is a
central determinant of the use that is made of access. As noted in relation to
clause 9, the affordability of services under the USO is intended to be
addressed through external mechanisms such as competition, targeted assistance
and price control; it is not intended to be inherent in the universal service
concept itself.
The USO set out in clause 19 will ensure that standard
telephone services, payphones and prescribed carriage services are reasonably
accessible to all people in Australia, regardless of where they reside or carry
on business, and are supplied to people on reasonable request. Of itself,
however, the USO does not ensure the prices at which such services are supplied
are necessarily affordable for end-users. The obligation simply ensures the
services are available. While a universal service carrier would be required by
its obligation to supply services in an area, in the absence of external price
control it would be free to charge what the market would bear for its services.
Given the economics of supplying services in areas which are typically
loss-making (for example, rural and remote Australia), for the foreseeable
future and in the absence of price controls such prices might be higher than the
Government might generally prefer, and higher than many customers could pay.
In the past, as Telstra has been the universal service carrier and has
been subject to price control under the Telstra Corporation Act, the prices at
which services were supplied under the USO has not been an issue. Price
controls, interacting with Telstra’s historical price structures, have
meant that prices for services supplied under the USO in loss-making areas have
remained generally affordable and comparable with those of services supplied in
profitable service areas. With the possibility of carriers other than Telstra
becoming universal service providers in future, there is a need for the
Government to be able to regulate the prices at which they provide services
under the USO.
This Division will only apply to Telstra to the extent
that Telstra is not subject to price control under Part 9 of the
Bill.
Consistent with the preference to rely on general regulation where
practicable, The ACCC will continue to administer Division 5. The ACCC has
responsibility for general prices surveillance. The ACCC will also continue to
have responsibility for administration of the price controls currently imposed
on Telstra under Part 6 of the Telstra Corporation Act (which is proposed to be
dealt with in future by Part 9 of the Bill).
Clause 41 –
Universal service charges
Clause 41(1) makes clause 41 apply if a
person is a universal service provider for a particular area. The substantive
provision of the clause, subclause 41(2), provides that for the purposes of this
Division, a ‘universal service charge’ is a charge imposed or
proposed to be imposed, by the person for:
• the supply of standard
telephone services to persons in the area (this reference to
‘supply’ includes customer equipment, other goods and prescribed
services of the kind mentioned in clause 13 and charges for such items are
universal service charges); or
• calls made from payphones in the
area; or
• the supply of prescribed carriage services to persons in
the area (this reference to ‘supply’ includes prescribed customer
equipment, other prescribed goods and prescribed services of the kind mentioned
in clause 14 and charges for such items are universal service
charges).
It is intended that the full range of charges relating to these
services should be universal service charges and be eligible for price control,
including, but not limited to, charges for network extension, charges for
service connection, annual or periodic rental charges (including for customer
equipment) and charges for local, national and international
calls.
Universal service charges can only apply to services provided
under the USO and in areas where a person is the universal service provider.
Thus if a person is a universal service provider in one region and also supplies
services in another region where it is not a universal service provider, its
charges in the second region are not subject to price controls under Division
5.
Clause 42 – Declaration subjecting universal service charges
to
price control arrangements
Clause 42 enables the
Minister, by a notice published in the Commonwealth Gazette, to declare
that specified universal service charges are subject to price control
arrangements under this Division (subclause 42(1)). Subclause 42(2) makes such
a declaration a disallowable instrument.
Clause 43 – Price
control determinations
Clause 43 enables the Minister to determine
the actual price control arrangements to which declared universal service
charges are to be subject.
Subclause 43(1) makes this clause apply if a
declaration is in force under clause 42 in relation to a particular universal
service charge.
Subclause 43(2) enables the Minister to make a written
determination setting out:
• price-cap arrangements and other price
control arrangements that are to apply in relation to the charge; or
• principles or rules in accordance with which the universal
service provider may impose or alter the charge;
or both.
Price
control determinations may set out any manner of price controls, including
maximum monetary charges, parity with charges in other areas, rates at which
existing charges may change and notification and disallowance provisions. A
price control determination will be able, for example, to stipulate the exact
level of a particular charge. This is seen as particularly important where a
new universal service provider may be commencing service in an area and it does
not yet have charges in the market place that may be otherwise regulated. Some
further examples of the kinds of controls that may be included in a
determination are given in subclause 44(1). Subclause 44(1) does not limit
clause 43 (subclause 44(2)).
Subclause 43(3) makes a determination have
effect in accordance with its content.
Subclause 43(4) makes a
determination under clause 43 take effect at the start of the next financial
year after the one in which it is made. A price control determination must,
therefore, be made in the financial year before the financial year in which it
is to apply. This is because universal service providers need to know what
prices they will be able to charge for the services they supply under the USO to
determine what areas will be net cost areas – under clause 49, universal
service providers must propose their net cost areas within 60 days of the
beginning of the financial year.
Subclause 43(5) provides that a price
control determination under clause 43 may make different provision with respect
to different customers. Clause 43, however, does not, by implication limit
subsection 33(3A) of the Acts Interpretation Act 1901.
It is
intended that a price control determination may provide that different (two or
more) price control arrangements apply in relation to one kind of universal
service charge, with each of the different price control arrangements relating
to customers in a particular class. For example, a price control determination
may apply different price control arrangements in relation to residential and
business customers being supplied with the standard telephone service. (Such
differentiation exists under the Telstra Carrier Charges––Price
Control Arrangements, Notification and Disallowance Determination 1997.) It is
also intended that a price control determination be able to apply particular
price controls in relation to more specific classes of customer, for example,
educational institutions, medical facilities or public libraries. This would
mean, for example, that where a prescribed carriage service is prescribed for
the purposes of the USO, the Minister in a price determination could require
that it be provided to schools, libraries and hospitals at a particular price,
while it may be available to other customers at another regulated price, or even
an unregulated price.
It is also intended that separate determinations
may apply to different universal service providers and different service areas.
That is, it is not intended that if there are two or more universal service
providers they must all be subject to a single price control determination under
clause 36. Subjecting all universal service providers to a single price control
determination would be too inflexible, enabling no account to be taken of the
individual circumstances of each universal service provider.
It is
envisaged (but need not necessarily be the case) that if the provision of
universal service is tendered out using a selection system provided for in
clause 22 or 23, then price requirements in any tender specification would
derive from a price control determination under Division 5.
Subclause
43(6) makes the determination a disallowable instrument.
Clause 44
– Content of price control determinations
Clause 44 lists some
of the price control arrangements, particularly involving notification and
disallowance, that a determination under clause 43 may apply to a universal
service charge.
Subclause 44(1) enables a price control determination
to:
• prohibit a charge from being imposed or altered without the
consent of the Minister or the ACCC (paragraphs 44(1)(a) and (b));
or
• prohibit a charge from being imposed or altered without prior
notice being given to the Minister or the ACCC (paragraphs 44(1)(c) and (d)); or
• empower the Minister to direct the ACCC to give the Minister
such reports and advice as he or she requires for the purposes of assisting the
Minister in deciding whether to give consent in accordance with the
determination (paragraph 44(1)(e)).
Under these provisions both initial
charges (where services have previously not existed or been charged for) and
changes to existing charges for a service may be subject to consent or prior
notification requirements.
Subclause 44(2) states that subclause 44(1)
does not, by implication, limit clause 43. This makes it clear that a price
control determination may provide for price control arrangements other than
those of the type described in clause 44.
Clause 45 – Price
control determinations subject to determinations
under Part
9
Clause 45 renders a price control determination under clause 43
ineffective to the extent that it relates to a charge that is the subject of a
price control determination under subclause 154(1) or 157(1) of the
Bill.
Subclause 45(1) makes this clause apply if a determination under
subclause 154(1) or 157(1) of the Bill is in force in relation to a charge
imposed by Telstra. If such a determination is in force, a determination under
this Division is of no effect in so far as it relates to that charge (subclause
45(2)).
Where Telstra is the universal service provider, primary reliance
will be placed on price control imposed on it under Part 9 of the Bill because
price control under that Part will apply to all Telstra services, not just those
being supplied under the USO, thus giving that price control wider scope.
This is appropriate because the price controls that will continue to be applied
to Telstra have a wider function than those applying to universal service
providers under Part 2 of the Bill. For example, price controls on Telstra play
multiple roles of simulating competitive pressures in uncontested or newly
contested markets, promoting internal efficiency gains in Telstra, passing
efficiency gains onto consumers and distributing those gains in particular ways.
Notwithstanding this, where a determination under this Division is not rendered
ineffective by a determination under Part 9, it will have effect to the extent
that it relates to charges imposed by Telstra as a universal service provider.
That is, it is feasible that Telstra would be subject to determinations under
both this Division and Part 9 of the Bill, albeit in relation to mutually
exclusive charges.
Clause 46 – Compliance with price control
determinations
Clause 46 requires a universal service provider to
comply with a determination in force under this Division. Clause 1 of
Schedule 2 to the Telecommunications Act, as proposed to be amended by the
Telecommunications Legislation Amendment Bill 1998, makes it a statutory
condition of licence that a carrier (a universal service provider must be a
carrier) comply with the Bill. Contravention of the Bill and the
Telecommunications Act is subject to civil penalty provisions (see Part 31 of
that Act) involving pecuniary penalties of up to $10 million.
Division 6—Assessment, collection,
recovery and
distribution of universal service
levy
Subdivision A––Introduction
Clause 47 – Simplified outline
Clause 47 provides a
simplified outline of Division 6 of Part 2 to assist readers.
Clause
48 – Financial year
Clause 48, in conjunction with subclause
2(2), will ensure that Part 7 of the Telecommunications Act 1997 will
apply in relation to the 1998-1999 financial year and that Part 2 of this Bill
will apply to subsequent financial years.
Subdivision B—Net cost areas
The identification of areas where a net cost is expected to be incurred
at the commencement of the financial year enhances the operation of the
avoidability methodology used to determine net universal service costs.
The main purpose of identifying net cost areas in advance is to
encourage universal service providers to control their total universal service
cost by removing the opportunity for them to claim costs in areas that they
expected to be profitable, but through careless management, could be
loss-making. Without net cost areas being declared in advance, a universal
service provider would have less incentive to control costs in marginal areas
because it knew if it did not, and it did incur a loss, it could, nevertheless,
seek compensation under the universal service fund at the end of the
year.
The ACA must scrutinise proposed net cost areas carefully and
reject those that do not qualify as net cost areas. ACA scrutiny of proposed
net cost areas and its approval or rejection of them helps to establish the
boundaries of the costs that can be claimed under the USO and as such acts as a
discipline on the universal service provider to contain its overall costs by not
providing access to subsidies for areas that, in the ACA’s opinion, should
not be loss making.
The net cost area process is also intended
to:
• give greater certainty to the identification of costs using
the avoidable cost less revenue forgone methodology;
• allow the
ACA to judge whether proposed net cost areas should be eligible for inclusion in
the total cost for calculating the levy in accordance with the criteria set down
by the Minister under clause 53;
• provide a framework for the ACA
to assess whether adequate revenue and cost details will be available; and
• provide a streamlined procedure to audit the net costs at the
end of the financial year.
Clause 49 – Universal service
provider must propose service areas for declaration as net cost
areas––ordinary declaration
Clause 49 requires a person
who is a universal service provider in relation to a financial year, to give the
ACA, within 60 days of commencement of the financial year, a notice specifying
service areas for which the person is the universal service provider and which
the person considers the ACA should declare as net cost areas for the financial
year (subclause 49(2)). The notice must be in a form approved by the ACA
(subclause 49(3)) and contain any additional information required by the
approved form (subclause 49(4)).
This clause is self-enforcing. If a
person or carrier does not specify service areas, the ACA cannot declare them as
net cost areas under clause 50. Without having net cost areas declared, the
universal service provider cannot calculate its net universal service cost under
clause 57 and thus not make a claim under clause 54.
Clause 50 –
Net cost areas––ordinary declarations
Clause 50 enables
the ACA to declare areas as net cost areas after receiving a notice under clause
49. An area declared to be a net cost area is taken into account in determining
whether the universal service provider has incurred a net universal service cost
and whether the universal service provider is therefore entitled to proceeds of
the levy.
Subclause 50(1) requires the ACA to decide whether a proposed
area is a net cost area within 60 days of receiving a notice under clause
49.
Subclause 50(2) requires the ACA to decide in relation to each
service area to:
• declare the area as a net cost
area;
• declare a different service area that includes all or part
of that service area; or
• not make such a declaration.
The
second option enables the ACA to declare alternative net cost areas based on net
cost areas proposed by the universal service provider.
Subclause 50(3)
requires the ACA to make a written declaration in accordance with its decision
to declare net cost areas under paragraphs 50(2)(a) and (b).
Subclause
50(4) enables the ACA to make whatever inquiries it thinks necessary or
desirable before making its decision under subclause 50(2). This provision
supports the ACA’s function of closely scrutinising proposed net cost
areas so that the net cost area approach achieves its intended purpose of
setting, in advance, an effective boundary for net universal losses, thereby
promoting better planning, encouraging cost control and streamlining
administration.
Subclause 50(5) requires the ACA, in making its decision
under subclause 50(2), to have regard to the universal service provider’s
reasons, as specified in its notice, for proposing a service area as a net cost
area (paragraph 49(2)(b)) and to comply with any Ministerial directions in force
under clause 53.
Clause 51 – Universal service provider may
propose service areas for declaration as net cost areas – special
declaration
Clause 51 enables a universal service provider to seek to
have new areas declared as net cost areas after the ordinary declaration process
where circumstances beyond the universal service provider’s control
justify such late declaration.
This clause and clause 52 have the
potential to increase payments out of the Universal Service Reserve, which is a
component of the Reserved Money Fund under the Financial Management and
Accountability Act 1997.
It is intended to provide the ACA with a
discretion to retrospectively declare an area to be a net cost area where a
universal service provider incurs a substantial unanticipated loss in an area as
a result of circumstances beyond its control. It is intended that the special
declaration process put in place by clauses 51 and 52 only be used where, after
the ordinary declaration process, a universal service provider becomes aware
that an area will incur a substantial loss due to circumstances beyond its
control. The special declaration process is not intended to allow losses to be
claimed, in retrospect, that simply result from poor planning or management on
the part of the universal service provider.
Clause 51 is similar in
construction to clause 49, but differs as to the timing of
claims.
Subclause 51(1) provides that clause 51 applies if a person is a
universal service provider on the first day of a financial year. If a person is
a universal service provider in relation to a financial year, the person is
eligible to seek the declaration of net cost areas in relation to that
year.
Subclause 51(2) provides that during the financial year, or 45 days
after the end of the financial year, the person may give the ACA written notice
that:
• specifies service areas for which the person is the
universal service provider and that, in the person’s opinion, the ACA
should declare under clause 52 (see below) as net cost areas for the financial
year; and
• sets out why, in the person’s opinion, the ACA
should so declare the specified area.
This provision generally mirrors
subclause 49(2), but departs from it to allow a person to seek the declaration
of areas as net cost areas at any time during the financial year or in the first
45 days of the following financial year. This allows the person to seek special
declaration of such areas where circumstances warrant it, outside the ordinary
declaration process set out in clause 49. Under clause 49, the person must
propose areas within the first 60 days of the financial year, effectively
requiring the net cost areas to be declared in advance. Clause 51 enables net
cost areas to be declared retrospectively, subject to the criteria in subclause
52(6).
This timing constraint is imposed to ensure declarations are made
within the 90 day period allowed under clause 54 for the making of claims.
Together with the ACA’s 30 days to consider special declaration
applications, the special declaration process can extend for up to 75 days into
the new financial year. This will leave a universal service provider a maximum
of 15 days to put in a claim if a new net cost area is specially declared at
this time. This is considered sufficient given that the person will have to
provide the ACA with the same kind of information for the declaration process
and for a claim.
Subclause 51(3) provides that a notice under subclause
51(2) must be in a form approved in writing by the ACA. This allows the ACA to
specify the information and format it requires for declaration notices for
administrative convenience. The provision mirrors subclause
49(3).
Subclause 51(4) provides that in addition to the matters set out
in paragraphs 51(2)(a) and (b), a notice under subclause 51(2) must contain such
other information (if any) as the approved form of notice requires. The
provision mirrors subclause 49(4). This provision ensures that the ACA is
provided with the information it requires for the purposes of special
declaration of net cost areas. Given the strict criteria that apply under
subclause 52(6) to the special declaration of net cost areas, the ability of the
ACA to obtain appropriate information is vital.
Clause 52 – Net
cost areas – special declarations
Clause 52 requires the ACA to
consider applications for the special declaration of new net cost areas outside
the ordinary declaration process where circumstances beyond the universal
service provider’s control justify such declaration.
It is intended
that the special declaration process put in place by new clauses 51 and 52 only
be used where, after the ordinary declaration process, a universal service
provider becomes aware that an area will incur a substantial loss due to
circumstances beyond its control. The special declaration process is not
intended to allow losses to be claimed, in retrospect, that simply result from
poor planning or management on the part of the universal service
provider.
Clause 52 is similar in construction to clause 50, but differs
as to the timing of ACA decisions and because it specifies the matters about
which the ACA must be satisfied before making a declaration.
Subclause
52(1) provides that the ACA must comply with clause 51 within 30 days after
receiving a notice under section 51 from a person. This timing constraint is
imposed to ensure declarations are made within the 90 day period allowed under
clause 54 for the making of claims.
Subclause 52(2) provides that for
each service area specified in the notice the ACA must decide:
• to
declare the area as a net cost area for the financial year;
or
• not to declare as mentioned in paragraph (a).
This
provision generally mirrors subclause 50(2).
Subclause 52(3) provides
that if the ACA makes a decision under paragraph 52(2)(a), the ACA must make a
written declaration stating that the area concerned is a net cost area for the
financial year. The declaration has effect accordingly. The provision mirrors
subclause 50(3).
Subclause 52(4) provides that before making a decision
under subclause 52(2), the ACA must make whatever inquiries it thinks necessary
or desirable in order to determine what decision it should make under that
subclause. The provision mirrors subclause 50(4). The provision is important
in ensuring the ACA applies a high level of scrutiny to net cost area
applications. In relation to special declarations under clause 52, ACA
inquiries should be directed towards, but not limited to, the matters specified
in clause 52, about which the ACA must be satisfied if it is to make a special
net cost area declaration.
Subclause 52(5) provides that the ACA, in
making a decision under subclause 52(2), must:
• have regard to the
reasons specified in accordance with paragraph 51(2)(b); that is, the reasons
why, in the universal service provider’s opinion, the ACA should declare
the area to be a net cost area; and
• comply with any directions in
force under clause 53, being Ministerial directions about declaring net cost
areas.
This provision generally mirrors subclause 50(2).
Subclause
52(6) is the provision in relation to the special declaration of net cost areas
which specifies the particular criteria that the ACA must be satisfied of before
it can make a special declaration. It provides that the ACA must not make a
declaration under this section stating that an area is a net cost area for the
financial year in relation to which the application for the declaration applies
unless the ACA is satisfied that:
• the person has incurred, or is
likely to incur, a substantial loss attributable to the supply by the person of
services to the area during the financial year; and
• the loss is
wholly the result of circumstances beyond the person’s control;
and
• when the person became aware of those circumstances, the
person took all reasonable steps to minimise the loss.
It is important to
note that these criteria are intended to prevent universal service providers
seeking to use the special declaration process to claim losses resulting from
their poor planning, management or operations. The ACA needs to be satisfied of
all three criteria.
Subclause 52(7) is a definitional provision providing
that a reference in subclause 52(6) to ‘a person supplying services during
a financial year’ is a reference to the person supplying services under
the universal service obligation. This is to remove any possible grounds for
the universal service provider seeking declaration of an area as a net cost area
on the ground it incurs losses in supplying services other than those it is
required to supply under the USO. Subclause 57(3) serves an analogous function
in clause 57 which deals with the calculation of net universal service costs of
a universal service provider for a financial year.
Clause 53 –
Minister may give directions about declaring net cost areas
Clause 53
enables the Minister to give the ACA directions about the criteria it should
apply and the matters to which it should have regard in deciding whether or not
to declare an area as a net cost area for a financial year. For example, the
direction might set out the criteria to apply where carrier competition rather
than fulfilment of the USO has resulted in a net cost for the USO carrier in an
area or how short term start-up losses in new Subdivisions should be
treated.
Subdivision C—Assessment of liability for
levy and of
entitlement to levy distributions
Subdivision C sets out the mechanisms for:
• determining the
losses incurred in fulfilling the USO (called net universal service costs);
• determining participating carriers’ contributions to those
losses;
• the making of assessments of levy entitlements and
liabilities by the ACA; and
• recovering levy for participating
carriers and paying it to universal service providers.
Clause 54
– Claims for levy credit
Clause 54 enables a person that is a
universal service provider in relation to a financial year to submit a claim for
levy credit, that is the credit it has in the event of levy being levied. A
universal service provider accrues this levy credit in fulfilling the USO and
the amount of its credit is, in effect, its USO loss.
Subclause 54(1)
makes clause 54 apply to a financial year if a person is a universal service
provider in relation to that financial year. Note, a person need no longer be a
universal service provider at the time of lodgement to be a universal service
provider in relation to a financial year.
Subclause 54(2) enables a
person who is a universal service provider in relation to a financial year to
give the ACA a written claim for levy credit within 90 days of the end of the
financial year to which the claim relates. This period is not extendable. This
period gives universal service providers a reasonable period in which to prepare
their claims and aligns the claim process more closely to other business
reporting requirements.
The claim must be in a form approved in writing
by the ACA (subclause 54(3)). Subclause 54(4) sets out the details that must be
included in a levy credit claim.
The claim must be accompanied by a
report by an approved auditor in a form approved by the ACA stating that the
auditor has had sufficient access to the person’s records in order to
audit the claim, that the auditor has audited the claim and containing a
declaration of the auditor’s opinion, being a declaration in the terms
specified in the form approved by the ACA (subclause 54(5)). ‘Approved
auditor’ is defined in clause 18. The auditing requirement is intended to
provide another check on the appropriateness of claims and place a greater onus
on universal service providers to ensure their claims are
correct.
Clause 55 – No levy payable unless at least one claim
for a levy credit is made
Clause 55 provides that no person is liable
to pay an amount of levy in respect of a financial year, if at the end of the 90
day period within which claims can be submitted, no claim for a levy credit has
been lodged by a universal service provider under clause 54. Clause 55 provides
an incentive for universal service providers to lodge claims within the 90 day
period and reduces administrative activity where no claims are
made.
Clause 56 – ACA to give copies of claims to other
participating carriers
Clause 56 requires the ACA to give, as soon
as practicable or in any case within 14 days, a copy of a claim lodged under
clause 54 to each person (other than the person who lodged the claim) who is a
participating carrier for that financial year. Note, a person need no longer be
a participating carrier at the time the claim is lodged to still be a
participating carrier in relation to a relevant financial year.
This
clause is designed to make the process of assessing and collecting the universal
service levy open and transparent for participating carriers by requiring the
ACA to copy any claims lodged to other participating carriers.
Clause
57 – Net universal service cost of a universal service provider for a
financial year
Clause 57 is central to the calculation of a universal
service provider’s costs in fulfilling its USO. It provides the basis for
determining participating carriers’ respective credits and debits and levy
entitlements and liabilities. The normal manner by which net universal service
costs would be calculated would be using the avoidable cost less revenue forgone
methodology set out in the clause. Two other methods are available to
accommodate the selection of universal service providers using a system
determined by the Minister and to enhance the overall flexibility of the costing
process.
First, the clause provides for a net universal service cost to
be derived in accordance with a selection system under clause 22 or 23. This
sum may be an actual amount that a carrier has elected will be its net universal
service cost on being declared the universal service provider (paragraph
22(2)(a) or 23(2)(a)) or an amount ascertained by means of a methodology that a
carrier has elected will be used to determine its net universal service cost on
being declared the universal service provider (paragraph 22(2)(b) or
23(2)(b)).
Second, the clause enables the Minister to determine, with the
agreement of all participating carriers, a method for ascertaining a
person’s net universal service cost. This second method enhances
administration of the levy arrangements by enabling alternative methods of
calculating the net universal service costs to be utilised where all
participating carriers agree.
Subclause 57(1) enables a person’s
net universal service cost for a financial year to be calculated in one of four
mutually exclusive ways.
First, paragraph 57(1)(a) sets out how a
universal service provider’s net universal service cost is to be
determined where the person is a universal service provider in relation to that
financial year because of the operation of a selection system determined under
clause 22 or 23 and the person has elected that a specified amount will be the
person’s net universal service cost for the financial year. In this
instance, the person’s net universal service cost for the financial year
is equal to the amount the person elected to be its net universal service
cost.
For example, the Minister may undertake a process by which to select a
universal service provider by a tender arrangement. The successful tenderer may
have agreed to fulfil the USO that has been tendered for, say, $50 million
(indexed at CPI), per annum over a ten year period. That universal service
provider’s net universal service cost would then be $50 million (indexed
at CPI) for each applicable year. This amount would then be factored into the
overall USO assessment process as appropriate.
Second, paragraph 57(1)(b)
sets out how a universal service provider’s net universal service cost is
to be determined where the person is a universal service provider in relation to
that financial year because of the operation of a selection system determined
under clause 22 or 23 and the person has elected that a specified method of
ascertaining an amount will apply for the purposes of determining the
person’s net universal service cost for the financial year. In this
instance, the person’s net universal service cost for the financial year
is equal to the amount that is worked out using that method.
This
provision reflects the flexibility that has been built into the selection system
provisions which enables a selection system to not only generate a specific
amount but alternatively, a methodology for ascertaining an amount.
As a
purely hypothetical example, a person selected to be a universal service
provider may have elected that its universal service cost would be calculated on
the basis of a certain amount per customer per month. (In practice, much more
sophisticated methodologies may be involved.) Its net cost would then be worked
out according to that methodology. In the hypothetical example suggested above,
if it is assumed that the service provider has a stable customer base of 3,000
customers per month and it claims $200 per month per customer, its net universal
service cost would be $7.2 million ($200 x 12 x 3000).
Note that subclause 23(4) does not prevent a method that a person elects
to have used in determining its NUSC in a selection system from being the same
that would have applied if the system concerned had not been determined. That
is, the methodology may be a methodology determined by the Minister with the
agreement of participating carriers (see subclause 57(6)) or the default,
avoidable cost less revenue forgone methodology.
Third, paragraph
57(1)(c) sets out how a universal service provider’s net universal service
cost is to be determined where: the person is a universal service provider in
relation to that financial year; the person is not a universal service
provider in relation to that financial year because of the operation of a
selection system determined under clause 22 or 23; and a Ministerial
determination is in force under subclause 57(6) setting out an alternative
methodology. In this instance the person’s net universal service cost for
the financial year is worked out in accordance with the
determination.
The ability for the Minister to determine an alternative
methodology for calculating a universal service provider’s NUSC is
provided for in subclause 57(6) and its use is discussed in detail in that
context.
Fourth, paragraph 57(1)(d) sets out how a universal service
provider’s net universal service cost is to be determined where: the
person is a universal service provider in relation to that financial year; the
person is not a universal service provider in relation to that financial
year because of the operation of a selection system determined under clause 22
or 23; and no determination is in force under subclause 57(6) setting out an
alternative methodology in relation to that financial year. In this instance,
the default methodology, the avoidable cost less revenue forgone methodology, is
to be employed, the formula for which is set out in subclause 57(2).
If
the amount worked out using the avoidable cost less revenue forgone methodology
is greater than zero dollars, the person’s net universal service cost for
the financial year is equal to that amount. This is because the person has
incurred a loss in fulfilling the USO. If, however, the amount worked out using
the avoidable cost less revenue forgone methodology is not greater than zero
dollars, the person’s net universal service cost for the financial year is
zero dollars. This is because the person has not incurred a loss in fulfilling
the USO and it is unnecessary for the person to be compensated for fulfilling
the USO.
Subclause 57(2) gives the formula for determining a
person’s net universal service cost for a financial year when the
universal service provider has not been selected under clause 23 or there is no
Ministerial determination in force in relation to that financial year. The
formula is:
Avoidable costs – Revenue forgone.
The formula
provides for net universal service costs to be calculated by subtracting the
revenue it is reasonable to expect the person would not have earned if the
person had not supplied services that under the USO they were required to supply
to net cost areas, from the total of the operating and capital-related costs
that a person would not have incurred had the person not supplied services to
net cost areas.
In the formula, ‘avoidable costs’ means one
of two things.
First, under paragraph 57(2)(a), if a determination is in
force under subclause 57(9), it is the amount ascertained in accordance with the
determination.
Subclause 57(9) enables the ACA to make a written
determination specifying a method of ascertaining an amount for the purposes of
paragraph (a) of the definition of ‘avoidable cost’ in subclause
57(2). Under subclause 57(10) a determination under subclause 57(9) must
provide for an amount to be ascertained wholly or partly by reference to an
indexation factor. It is intended that indexation can be used to establish the
amount of any of the components that comprise avoidable cost or to establish
avoidable cost as a whole. It is also intended that some components should be
able to be based on indexation while others may be based on actual costs. The
ability to enable avoidable costs to be ascertained using indexation recognises
the practical difficulties that can be involved in ascertaining actual avoidable
costs each year and that the use of indexed costs provides a practical and
acceptable alternative.
A determination under subclause 57(9) may only
be made with the consent of the Minister and is a disallowable instrument
(subclause 57(11)). This is to ensure that the Minister has the opportunity to
be satisfied the indexation method is consistent with the intended operation of
the avoidable cost less revenue forgone methodology. Before making a
determination under subclause 57(9), the ACA must also consult with each person
who was a participating carrier immediately before the determination was made.
This is to ensure that there is general acceptance of the proposed methodology
by affected parties.
Second, under paragraph 57(2)(b), if there is no
determination under subclause 57(9), ‘avoidable costs’ means the
total of:
• the amount (if any) of operating
costs;
• the amount (if any) of total allowances made by the person
for depreciation during the financial year of capital items;
• the
amount (if any) of the person’s total opportunity costs of capital;
and
• the amounts (if any) specified for this purpose in a
determination by the ACA under clause 60.
In the formula, ‘revenue
forgone’ means an amount of revenue equal to so much of the revenue earned
by the person during the financial year as it is reasonable to expect the person
would not have earned during that financial year if the person had not supplied
the services (ie. the items required under the USO) to net cost areas during
that financial year.
The capital cost component of ‘avoidable
costs’ includes the total opportunity costs of capital. Under clause 60
the ACA may also determine amounts to be included in ‘avoidable
costs’.
Subclause 57(3) makes clear the meaning of ‘supplying
services’ in subclause 57(2), explaining that a reference in subclause
57(2) to a person supplying services to a net cost area during a financial year
is a reference to the person:
• supplying standard telephone
services to persons in the net cost areas for that financial year for which the
person was the universal service provider; or
• supplying,
installing or maintaining payphones in those areas; or
• supplying
prescribed carriage services in those areas.
Subclause 57(4) makes a
reference in subclauses 57(2) and (3) to the financial year a reference to the
part of the financial year when the person was a carrier if the person was a
carrier for only part of the year. This subclause limits the calculation of a
person’s net universal service cost to the period in which it was a
carrier and thus eligible under clause 20 to be a universal service
provider.
Subclause 57(5) requires that an amount applicable to a person
under the formula in subclause 57(2) must be in accordance with the ACA’s
determinations under clause 60 as they apply to a universal service provider
because of clause 61.
Subclause 57(6) enables the Minister to make
written determinations specifying a method of ascertaining an amount for the
purposes of paragraph 57(1)(c), that is, for determining a person’s net
universal service cost. Such a determination has no effect unless each person
who was a participating carrier immediately before the determination was made
gave written consent to the making of the determination.
Subclause 57(6)
is designed to enable the easier calculation of net universal service costs
instead of using the sophisticated avoidability methodology when all
participating carriers agree. All participating carriers must agree because
they are all contributing to total universal service costs and must be confident
that those costs are reliable. This approach provides an alternative to the
cost calculation process which is involved, requires large amounts of data and
can be time consuming and controversial. Envisaged methods of ascertaining a
net universal service costs including negotiation between parties, continuation
of previously agreed amounts and the indexation of previously agreed
amounts.
Subclause 57(7) states that the amount worked out under a
determination under subclause 57(6) may be zero dollars.
Subclause
57(8) requires that a determination under subclause 57(6) must be published in
the Commonwealth Gazette. This ensures the process for calculating net
universal service costs is publicly known and thus open to scrutiny.
Subclauses 57(9) to (12) are discussed above in relation to paragraph
57(2)(a), to which they relate.
Clause 58 – Reduction of
excessive costs etc.
Clause 58 is intended to provide a further means
for the Government to control excessive net universal service costs of a
universal service provider as calculated using the avoidable cost less revenue
forgone methodology. The provision is largely intended as a reserve power to be
used should it be apparent that a universal service provider's costs are in
excess of widely accepted benchmarks, for example, common industry practice or
world best practice. The methodology enables a universal service provider's
costs to be calculated on the basis of principles determined by the Minister
rather than actual costs. This enables, the Minister, for example, to require a
universal service provider’s costs to be calculated using benchmark
costings derived from other universal service providers in Australia or
overseas. Clause 59 is a parallel provision dealing with ‘revenue
forgone’.
Subclause 58(1) enables the Minister, by written
instrument, to formulate principles that are to be applied in determining the
extent (if any) to which costs, allowances or opportunity costs of a kind
mentioned in subparagraph (b)(i), (ii) or (iii) of the definition of
‘avoidable costs’ in subclause 57(2) are to be treated as excessive
for the purposes of subclause 58(2).
For the purposes of calculating the
avoidable cost less revenue forgone formula in subclause 57(2) in relation to a
particular financial year, if the person who is a universal service provider has
incurred costs, allowances or opportunity costs of a kind mentioned in the
definition of ‘avoidable costs’ in subclause 57(2) and the costs,
allowances or opportunity costs, as the case may be, are treated as excessive to
any extent under the principles determined by the Minister, the amount of the
costs, allowances or opportunity costs, as the case may be, is to be reduced by
the amount of the excess. That is, a universal service provider’s
avoidable costs may be considered against the excessive cost principles
formulated by the Minister and if they are found to be excessive when considered
against those principles, they are to be reduced by the amount of that
excess.
A Ministerial determination setting excessive cost principles
under subclause 58(1) is a disallowable instrument for the purposes of s. 46A of
the Acts Interpretation Act 1901 (subclause 58(3)).
This approach
draws on the concept of ‘best practice’ costing of community service
obligations (CSOs), which recognises that where cost structures in the delivery
of CSOs are not at the most efficient levels, it may be desirable to fund the
CSOs on the basis of ‘best practice’ cost structures.
The
Ministerial principles could include benchmarks, or principles that set out
discounting factors which the Minister considers are reasonable, or other
methods to be applied in determining the extent (if any) to which costs are to
be treated as excessive.
An example of a principle that may be applied
with a view to identifying and reducing excess costs would be the principle that
costs should not exceed such costs as would have been incurred if the USO was
provided using telecommunications networks that were operated and maintained in
accordance with accepted international benchmarks for operational efficiency.
In this context, the principles might then specify those benchmarks in detail
or, alternatively, leave it to the ACA to identify those
benchmarks.
Generally, it is envisaged such principles would be
determined prior to the financial year in which they were to apply, thus
providing the universal service provider with an opportunity to achieve the cost
levels provided for in the principles, or to enable the provider to calculate
its costs in accordance with the principles. Note, however, that nothing in the
legislation requires the principles to be determined in advance of the period to
which they will apply. The Minister may choose to make a written instrument
under subclause 58(1) during a financial year if it became apparent that a
universal service provider’s costs for that year were unacceptably high.
In all instances, however, it is intended that the principles be applied by the
universal service provider in calculating its net universal service cost and
preparing its levy credit claim. Where principles have been formulated and
applied to a year, the ACA will be required to examine the correctness of the
claim having regard to such principles as have been formulated.
Clause
59 – Shortfalls in revenue earned
Clause 59 is intended to
provide a further means for the Government to exercise control over the net
universal service costs of a universal service provider as calculated using the
avoidable cost less revenue forgone methodology. The provision is largely
intended as a reserve power to be used should it be apparent that a universal
service providers’ revenues are unreasonably below widely accepted
benchmarks, for example, common industry practice or world best practice,
particularly as a result of the provider undercharging. The methodology enables
a universal service provider’s revenue to be calculated on the basis of
principles determined by the Minister rather than actual revenue. In practice,
application of the principles would influence the minimum prices at which
carriers supplied the services required under the USO. It is intended that the
principles may be so specific as to set out the precise price at which a service
or component of the USO should be assumed to have been supplied for the purposes
of calculating net universal service costs.
Subclause 59(1) enables the
Minister, by written instrument, to formulate principles that are to be applied
in determining the extent (if any) to which there is taken, for the purposes of
the avoidable cost less revenue forgone methodology in subclause 57(2), to be a
shortfall in relation to revenue earned as mentioned in the definition of
‘revenue forgone’ in that subclause.
For the purposes of
calculating the avoidable cost less revenue forgone formula in subclause 57(2)
in relation to a particular financial year, if the person who is a universal
service provider has earned revenue as mentioned in the definition of
‘revenue forgone’ in subclause 57(2) and under the principles
formulated by the Minister under subclause 59(1), there is taken to be a
shortfall in relation to that revenue, the amount of the revenue in the formula
is to be increased by the amount of the shortfall.
A Ministerial
determination setting excessive cost principles under subclause 59(1) is a
disallowable instrument for the purposes of s. 46A of the Acts Interpretation
Act 1901 (subclause 59(3)).
The ability for the Minister to determine
principles in relation to revenue is intended to deal with the unlikely, but
possible, situation of a universal service provider undercharging for the
services it is required to supply under the USO. It is conceivable that a
universal service provider might behave in this manner to damage competition or
to secure inappropriate subsidies for the services it is supplying under the
USO. Undercharging for anti-competitive purposes should be dealt with under the
competition provisions of the TPA. However, undercharging which does not
constitute anti-competitive conduct may be of concern in the context of the USO
process because it means a universal service provider could incur a greater loss
than it needs to, with that loss being partially subsidised by other
participating carriers. It is desirable that such undercharging can, if the
need arises, be dealt with under the USO process.
It is intended that the
principles determined by the Minister be applied by the universal service
provider in calculating its net universal service cost and preparing its levy
credit claim. The ACA will be required to examine the correctness of claims
having regard to such principles as have been formulated.
Clause 60
– ACA determinations about working out a universal service
provider’s net universal service cost
This provision provides a
mechanism to enable the ACA to give a universal service provider guidance as to
how it is to work out its net universal service cost under subclause
57(2).
Clause 60 enables the ACA to make written determinations for or in
relation to specifying methods of calculating an amount of operating costs,
depreciation allowances, and opportunity costs of capital in the definition of
avoidable costs or an amount in relation to the definition of revenue forgone
(subclause 57(2)). The ACA may also make determinations specifying amounts for
the purposes of subparagraph (b)(iv) of the avoidable costs definition
(paragraph 60(1)(b)). The determination is only to be made with the
Minister’s consent and following consultation with participating carriers
and is a disallowable instrument for the purposes of s. 46A of the Acts
Interpretation Act 1901.
Clause 61– Application of
determinations under section 60
Subclause 61(1) provides that, except
so far as the contrary intention appears in a determination under clause 60, a
provision of the determination applies in relation to the first financial year
which ends after the provision commences and each later financial year. Thus a
provision of a determination applies in the financial year in which it commences
and each later year.
Subclause 61(2) prevents a provision of a
determination under clause 61 from applying in relation to a financial year
ending before the provision commences, subject to the ‘election’
rule in subclause 61(3). Thus, unless a person elects otherwise, a
provision of a determination cannot be applied retrospectively.
Subclause
61(3) enables a person to elect to have a provision of a determination apply to
an earlier financial year and subclause 61(4) makes the election take effect
accordingly. This enables a person to have an ACA determination apply to it in
relation to a financial year when it would not otherwise apply to it. It may
choose to do so, for example, because it would favour it in its calculation of
its net universal service cost.
Subclause 61(5) defines
‘commencement’ for the purposes of clause 61. This is the time when
an original provision or, if the provision has been varied, the variation, took
effect.
Clause 62 – Participating carriers must lodge returns of
eligible revenue
The information provided under clause 62 will be
used by the ACA, along with the net universal service cost information provided
under clause 54 (and calculated in accordance with clause 57), to calculate by
means of the formula in clause 67, the levy debits of participating carriers.
Levy debits in turn are used to determine participating carriers’
liabilities and entitlements.
Clause 62 requires that a participating
carrier for a financial year must lodge with the ACA a return of its eligible
revenue for that financial year in a form approved by the ACA within 90 days of
the end of the financial year (subclauses 62(1) and (2)). ‘Eligible
revenue’ is defined in clause 17.
Subclause 62(3) sets out details
that must be included in the return, namely the carrier’s eligible
revenue, details of how that eligible revenue was worked out and any other
information required by the form approved by the ACA.
Subclause 62(4)
makes a person who intentionally or recklessly contravenes subclause 62(1)
guilty of an offence. The lodgement of returns is subject to an offence
provision because a person who is a participating carrier in relation to a
financial year need not be a carrier at the time it is required to lodge its
eligible revenue return and would not therefore be subject to the general
enforcement provisions of the Telecommunications Act 1997. Contravention
of the provision is an offence, reflecting the importance of ensuring that all
participating carriers contribute to the levy calculation process and USO
funding.
Subclause 62(5) enables the ACA to require statements in a
return to be verified by statutory declaration.
The claim must be
accompanied by a report by an approved auditor in a form approved by the ACA
stating that the auditor has had sufficient access to the person’s records
in order to audit the claim, that the auditor has audited the return and
containing a declaration of the auditor’s opinion, being a declaration in
the terms specified in the form approved by the ACA (subclause 62(6)).
‘Approved auditor’ is defined in clause 18. The auditing
requirement is intended to provide another check on the appropriateness of
returns and place a greater onus on participating carriers to ensure their
returns are correct.
Clause 63 – ACA may inquire into the
correctness of a claim or return
Clause 63 enables the ACA to make
whatever inquiries it thinks necessary or desirable to determine the correctness
of a levy credit claim or eligible revenue return. Information and documents
obtained as a result of such inquiries are to be used by the ACA in making its
assessment of liabilities and entitlements (subclause 64(4)).
Clause
64 – ACA to assess liabilities and entitlement
Subclause 64(1)
requires the ACA to make a written assessment for the purposes of Part 2 for
each financial year.
Subclause 64(2) identifies matters that the
assessment must set out in relation to each participating carrier in relation to
that financial year.
Subclause 64(3) identifies matters that the
assessment must set out in relation to each universal service provider in
relation to that financial year.
Subclause 64(4) sets out the basis on
which the assessment must be made. The assessment must be made on the basis of
the levy credit claims lodged under clause 54, eligible revenue returns lodged
under clause 62, information and documents obtained by the ACA because of its
inquiries under clause 63, and any other information or documents the ACA has
and thinks relevant to making the assessment. This subclause is
important because it makes it clear that the ACA does not need to rely solely on
the information provided to it in claims and returns to make its assessment.
The clause gives the ACA considerable discretion to take into account the
findings of its inquiries and other relevant matters in making its
assessment.
Clause 65 – Explanation to the Minister if
assessment not made within 270 days
Clause 65 provides the ACA with
guidance on the period it should take to complete its USO assessment. (Note
that assessments can be amended). This addresses industry concerns in relation
to arrangements under the Telecommunications Act 1991 about the
assessment period being open-ended and about delays in the ACA finalising
assessments.
If the ACA has not made its original assessment in relation
to a financial year within 270 days after the end of the financial year
(subclause 65(1)), the ACA must give the Minister a written statement explaining
why the ACA has not made its assessment within that 270 day period. With
universal service providers and participating carriers having 90 days to lodge
levy claims and eligible revenue returns, this effectively gives the ACA 180
days to assess the information provided to it and make its assessment.
If the ACA is unable to meet this initial deadline, it will be required
to explain the reason to the Minister. This provides a discipline on the ACA
and enables the Minister to initiate any necessary remedial action that may be
appropriate. The ACA may not be able to meet the deadline for a variety of
reasons, for example, because the ACA is awaiting information or requires
clarification on certain costing issues. However, should the ACA pass the 270
day deadline, it is not intended it be subject to further deadlines. If needed,
the Minister could direct the ACA (section 12 of the Australian
Communications Authority Act 1997) to complete its assessment within a
particular additional period should it fail to meet the 270 day deadline.
It is intended that assessment and payment of levy should, at most, take
no longer than 360 days from the end of the financial year to which it relates.
An assessment for one financial year should be completed before the assessment
process for the next financial year commences. This requires assessments to be
completed within 330 days given that participating carriers then have 28 days
under clause 74 to pay their levy liabilities. It is also a reasonable
expectation on the part of universal service providers that their entitlements
be assessed and reimbursed no later than 12 months after the financial year in
which they were incurred. These matters would be taken into account in response
to an ACA explanation of why it has not met the 270 day deadline.
The
legislation does not specify that the assessment must be completed within a
fixed period because of the practical and legal difficulties that might arise if
that deadline could not be met. For example, if an assessment had to be
completed within an inflexible deadline of, say, 360 days, a court may hold the
assessment to be invalid if this did not occur. This would not be helpful to
universal service providers whose interests are best served by having the
assessment completed as soon as possible.
Clause 66 – Amendment
of assessments
Clause 66 is intended to make it clear that an
original assessment, once made, can be varied.
The ACA may amend its
assessment under clause 64 by making such alterations and additions as it thinks
necessary, even if levy credits or levy has been paid in respect of the
assessment (subclause 66(1)). Unless the contrary intention appears, an amended
assessment is taken, for the purposes of Part 2, to be an assessment under
clause 64.
An assessment of USO liabilities and entitlements is of the
nature of a tax assessment and like an income tax assessment can be amended. To
avoid doubt, this provision makes it clear that an assessment can be altered.
For example, the ACA may become aware of new information that would
substantially alter the assessment. This may particularly occur where universal
service providers or participating carriers challenge elements of the ACA
assessment. It is not intended that uncertainty about an assessment postpone
the recovery of levy or payment to universal service providers. It is intended
that such transactions as specified in the legislation take place as provided
for. If an assessment is subsequently amended, these payments would be adjusted
as necessary. Again, this is similar to processes in relation to income tax
assessments.
It is not intended that the ACA would amend an assessment
for insignificant reasons. As a matter of course, the ACA would have to act
reasonably in deciding to amend an assessment and would be expected to take into
account whether any new evidence or knowledge was of sufficient importance to
justify amendment of the original assessment.
Clause 67 – Levy
debit of a participating carrier for a financial year
Clause 67 sets
out the formula for determining each participating carrier’s levy debit,
that is the amount it must contribute to the overall funding for the USO, and
how elements of that formula are arrived at.
Subclause 67(1) provides
that a participating carrier’s levy debit for a financial year is worked
out using the formula:
Contribution factor x Total net universal service
cost.
‘Contribution factor’ has the meaning given to it in
subclause 67(2). ‘Total net universal service cost’ means the total
net universal service costs of all the universal service providers in relation
to the financial year.
Subclause 67(2) provides that the
‘contribution factor’ depends on whether a determination in relation
to determining the contribution factor is in force under subclause 67(3). If
such a determination is in force, the contribution factor is worked out in
accordance with that determination. If there is no determination, the
contribution factor is worked out in accordance with the
formula:
Carrier’s eligible revenue
Total eligible
revenue.
In the formula, ‘carrier’s eligible revenue’
means the participating carrier's eligible revenue for the financial year and
‘total eligible revenue’ means the total eligible revenue for the
financial year of all the participating carriers in relation to the financial
year.
Application of this formula means that participating
carriers’ contributions to the total net universal service cost are
proportional to their share of total eligible revenue.
The amounts used
for total net universal service cost, carrier’s eligible revenue and total
eligible revenue would be taken from the ACA’s assessment under clause 64,
which reflect the amounts involved after the ACA has inquired into the
correctness of claims and returns (see clause 63) and taken the results of its
inquiries and any other relevant information into account in completing its USO
assessment (paragraph 64(4)(c) and (d)).
Subclause 67(3) provides an
alternative mechanism for determining the contribution factor for the purposes
of the levy debit formula in subclause 67(1). It enables the Minister to make a
written determination specifying a method of ascertaining the contribution
factor for the purpose of the levy debit formula. Such a determination,
however, has no effect unless each person who was a participating carrier
immediately before the determination was made gave written consent to the making
of the determination. A copy of such a determination must be published in the
Gazette for public information purposes (subclause 67(4)). The
determination is not a disallowable instrument because it is made with the
agreement of all parties that it affects.
Like the Minister’s
related ability to determine alternative mechanisms for ascertaining a universal
service provider’s net universal service cost (subclause 57(6)), the
ability of the Minister to determine an alternative methodology for determining
a contribution factor is designed to enhance the flexibility of the legislation,
providing scope for participating carriers to agree to alternative cost sharing
mechanisms where they consider they are desirable. This may occur, for example,
if all participating carriers agree that there is a preferable approach to
relying on eligible revenue, which may result in business costs by requiring
special record keeping.
The requirement that all persons who are
participating carriers immediately before the making of a determination must
agree to an alternative mechanism provides a safeguard against any individual
carrier being disadvantaged by a move away from the default methodology based on
eligible revenue.
Clause 68 – Levy debit balance of a
participating carrier for a financial year
Clause 68 sets out
the means of determining the levy debit balance of a participating carrier. If
a person’s levy debit determined under clause 67 exceeds the
person’s net universal service cost, the person has a levy debit balance.
The amount of that balance is the amount by which the person’s levy debit
exceeds its net universal service cost. If the person’s share of the
total net universal service cost exceeds its own net universal cost (the cost it
has incurred in fulfilling its obligations under the USO) the person is liable
to pay levy equal to the amount of its levy debit.
Under the
Telecommunications (Universal Service Levy) Act 1997, levy is imposed on
a levy debit balance. The amount of the levy is equal to the amount of the levy
debit balance.
Clause 69 – Levy credit balance of a universal
service provider for a financial year
Clause 69 sets out the means of
determining the levy credit balance of a participating carrier. If a
person’s net universal service cost exceeds the person’s levy debit
determined under clause 67, the person has a levy credit balance. The amount of
that balance is the amount by which the person’s net universal service
cost exceeds its levy debit. If the person’s share of the total net
universal service cost is less than its net universal service cost (the cost it
has incurred in fulfilling its obligations under the USO) the person is entitled
to receive levy equal to the amount of its levy credit.
Clause 70
– Publication of assessment
Clause 70 requires the ACA, as soon
as practicable after making an assessment under clause 64, to publish a copy of
its assessment in the Commonwealth Gazette and give a copy to each
participating carrier. If an assessment is amended under clause 66, the amended
assessment will also need to be published and given to participating carriers as
under subclause 66(2) such an assessment is to be taken to be an assessment
under clause 64.
Clause 70 ensures the assessment is placed in the public
domain for information and scrutiny. Under clause 74, levy under the assessment
becomes due and payable on the 28th day after the ACA gives a copy of the
assessment to a participating carrier.
The period for payment of levy of
28 days gives participating carriers a reasonable period in which to organise
funds to pay their levy liabilities. This recognises that levy may involve
substantial amounts and that finalisation of an assessment may be
unpredictable.
Subdivision D—Disclosure by the ACA of
information about decisions relating to net cost areas and
assessments
Subdivision D enables members of the public and
participating carriers to obtain from the ACA information about the basis on
which the ACA has made its assessment under clause 64 and information about how
the ACA has worked out that assessment. The information is intended to be
available to the greatest extent possible without undue damage being caused to a
carrier’s interests by the disclosure of confidential commercial
information (see paragraph 9(d) of the Bill). The purpose of the Subdivision is
to open the assessment process to scrutiny by both the public and participating
carriers.
Clause 71 – Public may request
information
Clause 71 enables a person to request information about
an assessment, namely information on which the assessment is based and about the
methodology, and requires the ACA to comply with the request except in relation
to certain information. The ACA must not make available information obtained
from, or relating to, a universal service provider that could reasonably be
expected to cause substantial damage to the universal service provider, or
information prescribed in regulations.
Clause 72 – Request for
information that is unavailable under section 71
Clause 72 enables a
universal service provider or a participating carrier in relation to a financial
year to request the ACA to provide specified information, being information the
ACA cannot provide under clause 71, and sets out rules in relation to the
ACA’s compliance with the request.
Clause 73 – How the
ACA is to comply with a request
Clause 73 sets out how the ACA is to
comply with a request for information under clause 71 or 72 in terms of the
manner in which it is to provide the information requested to the requesting
party.
Subdivision E—Collection and recovery of
levy
This Subdivision sets out the arrangements for the collection
and recovery of levy payable by participating carriers.
Clause 74
– When levy payable
Clause 74 makes levy due and payable by a
participating carrier 28 days after the ACA has given it an assessment under
clause 70.
Clause 75 – Levy a debt due to the
Commonwealth
Clause 75 makes levy that is due and payable recoverable
in a court of competent jurisdiction as a debt due to the Commonwealth.
Clause 76 – Validity of assessment
Clause 76
provides that the validity of an assessment under clause 64 is not affected by a
contravention of this Act. Clause 76 is intended to include a contravention by
either the ACA or a participating carrier. It is intended to prevent the
validity of an assessment being challenged on a minor technical matter or a
failure of procedure.
Clause 77 – Evidence of
assessment
Clause 77 creates a presumption that a copy, or purported
copy, of a Commonwealth Gazette setting out what purports to be a copy of
an assessment does set out a copy of the assessment and that the ACA has duly
made the assessment and the details set out are correct.
Clause 78
– Onus of establishing incorrectness of assessment
Clause 78
puts the onus of establishing that an assessment under clause 64 is incorrect on
the party that asserts that. Placing the onus on this party recognises the
numerous checks under the Part designed to ensure the accuracy of the USO
process. A person challenging an assessment has the benefit of the information
disclosure provisions of Subdivision D.
Clause 79 – Refund of
overpayment of levy
Clause 79 relates to an overpayment of levy by a
participating carrier. If a participating carrier overpays levy, the
overpayment is to be refunded. This provision will deal with overpayments that
come to light as a result of an amendment of an assessment.
Clause 80
– Cancellation of certain exemptions from levy
Clause 80
cancels the effect of a provision of another Act that would have the effect of
exempting a person from liability to pay levy, except if the provision of the
other Act is enacted after the commencement of this clause and refers
specifically to levy imposed by the Telecommunications (Universal Service
Levy) Act 1997.
The purpose of this provision is to set out the
circumstances in which a provision of another Act can cancel a person’s
liability to pay levy. It is particularly aimed at preventing the unintentional
exemption from levy of Commonwealth authorities that can be made liable to
taxation by law of the Commonwealth (see clause 81). Such authorities would
remain liable for levy unless legislation specifically gave them exemption from
levy and referred specifically to the Telecommunications (Universal Service
Levy) Act 1997.
Clause 81 – Commonwealth not liable to
levy
Clause 81 provides that the Commonwealth is not liable to pay
levy and states that a reference in this clause to the
‘Commonwealth’ includes a reference to an authority of the
Commonwealth that cannot, by law of the Commonwealth, be made liable to taxation
by the Commonwealth. This is consistent with usual Constitutional practice that
the Commonwealth does not impose tax on itself.
Subdivision
F—Distribution of levy
Subdivision F establishes the Universal
Service Reserve into which amounts equal to levy payments are paid by
participating carriers and from which levy payments are paid to universal
service providers. The Subdivision also provides for the payment of levy
entitlements.
Clause 82 – Universal Service
Reserve
Clause 82 provides for the continuation of the Universal
Service Reserve presently existing under the Telecommunications Act 1997.
This Reserve is a component of the Reserved Money Fund under the Financial
Management and Accountability Act 1997 administered by the Department of
Communications, Information Technology and the Arts. The purposes of the
Reserve are set out in clause 84.
Clause 83 – Payments into
Universal Service Reserve
Clause 83 lists the types of
payments that must be paid into the Reserve. Note that amounts equal to
overpayments of levy recovered from a universal service provider can be paid
into the Reserve (paragraph (d)).
Clause 84 – Purposes of
Universal Service Reserve
Clause 84 sets out the purposes of
the Reserve.
Under paragraph 84(1)(d), one of the purposes of the Reserve
is to reimburse the Commonwealth for the costs or expenses it or the ACA incurs
in administering the Telecommunications (Universal Service Levy) Act 1997
and Division 6 of Part 2. The Minister administering the Financial
Management and Accountability Act 1997, currently the Minister for Finance
and Administration may, from time to time, determine the amount of such a
reimbursement (subclause 84(2)). Under subclause 84(3), however, the total of
amounts reimbursed for these purposes must not exceed the total of the amounts
paid into the Universal Service Reserve under paragraphs 83(b) and (c), namely
amounts appropriated by law for the Universal Service Reserve’s purposes
and amounts equal to interest from the investment of money in the Universal
Service Reserve. These amounts are in addition to amounts equal to amounts of
levy paid under Part 2 which are paid out to universal service providers. These
amounts are paid under paragraph 83(a). Any reimbursements to the Commonwealth
or the ACA under paragraph 84(1)(d) would not therefore be deducted from levy to
be paid to universal service providers.
Clause 85 – Levy
distribution to a universal service provider
Clause 85 provides that
if a person has a levy credit balance because of clause 69 for a
financial year, an amount equal to the amount of that balance is payable to that
person out of the Reserve. It is by this means that a universal service
provider who has incurred a loss in fulfilling its USO greater than its share of
the total net universal service cost is compensated for the excess loss it has
incurred.
Clause 86 – Levy not to be distributed until
paid
Clause 86 prevents monies being paid from the Reserve until the
ACA has made its assessment under clause 64 for the financial year and each
participating carrier in respect of which levy was assessed has paid its
levy.
This provision, in general, ensures no payments are made from the
Reserve in relation to a financial year until that year’s assessment is
complete and the levy assessed as necessary to pay universal service providers
has been collected. There would be no money in the Reserve available to pay the
universal service providers until the levy has been paid by carriers with levy
debits. Subdivision G does, however, provide for the ACA to make an advance on
account of payments that may become payable to a universal service provider
under clause 85.
Clause 87 – Recovery of
overpayments
Clause 87 is designed to enable an amount of levy
overpaid to a universal service provider under clause 85 to be recovered. Such
an overpayment may come to light where an amended assessment recognises that a
universal service provider is entitled to less levy than a previous assessment
stated.
For the purposes of the clause, an ‘overpaid amount’
is so much of an amount paid to a universal service provider under clause 85 as
represents an overpayment (subclause 87(1)).
Like levy itself (clause
75), an overpaid amount is a debt due to the Commonwealth (subclause 87(2)) and
may be recovered by the Commonwealth by action in a court of competent
jurisdiction (subclause 87(3)). This clause provides a mechanism for the
Commonwealth to pursue bad debts of universal service providers that fail to
repay overpaid levy.
An overpaid amount may be deducted from one or more
other payments payable to the person (for example, further instalment of levy,
including for subsequent financial years). Where this is done, the other
amounts are taken to be paid in full (subclause
87(4)).
Subdivision G—Advance on account of distribution of
levy
Subdivision G provides a mechanism for universal service
providers to be paid, in special circumstances, advances on account of levy
payments that may become payable to them. This provision is designed to provide
a means of ameliorating possible disadvantage a universal service provider may
suffer by not having access to levy payments.
It is envisaged advances
would generally be paid where an assessment has been made and most, but not all,
levy has been paid. Under clause 86, levy cannot be distributed until it is
fully paid. The mechanism for making an advance provides a means of making some
funds available to a universal service provider in advance of all levy being
paid and thus being able to be distributed to universal service providers. Any
advances which turn out to be excess must be repaid.
This mechanism
recognises, amongst other things, that universal service providers will
generally be carrying substantial losses for up to 24 months (ie. the financial
year to which their claim relates plus an assessment period of up to 12 months)
and it is appropriate that they have prompt access to their levy entitlements.
Clause 88 – Advance on account of distribution of levy
Clause 88 provides that if the ACA is satisfied that, because of
special circumstances, it is appropriate to do so, the ACA may, on behalf of the
Commonwealth, make an advance on account of payments that may become payable to
a person under clause 85 in relation to a financial year. The making of an
advance still depends upon monies already having been paid into the Universal
Service Reserve.
Clause 89 – Repayment of excess
advances
Clause 89 provides for the repayment of excess advances made
under clause 88.
If a person has received a total amount, by way of
advances on account of payments that may become payable to the person under
clause 85 in relation to a particular financial year, and that total amount is
greater than the amount that became payable to the person under clause 85 in
relation to that financial year, the person is liable to pay to the Commonwealth
the amount of the excess.
If a person is liable to pay an amount to the
Commonwealth under subclause (1), the amount may be recovered, as a debt due to
the Commonwealth, by action in a court of competent jurisdiction; or the amount
may be deducted from any other amount that is payable to the person under this
Part, and if the amount is so deducted, the other amount is taken to have been
paid in full to the person.
Subdivision H—Levy
guarantee
Subdivision H is designed to ensure that participating
carriers that are new to the Australian telecommunications market will be able
to pay levy when it falls due, thereby ensuring the burden of USO losses are
shared amongst industry participants.
In summary, Subdivision H requires
certain participating carriers to obtain guarantees from third persons in
respect of the discharge of their liability to pay levy. In the event that a
participating carrier is unable to pay its levy, it will be the responsibility
of the guarantor to pay the levy. This mechanism is seen as particularly
important in the post-1997 telecommunications market where there are increased
risks of new entrants leaving the market before paying levy contributions. The
guarantee is particularly intended to cover the circumstance where a
participating carrier becomes insolvent before discharging its levy liability,
either before it receives its assessment under clause 64 or before levy becomes
due for payment under clause 74.
Telstra, Optus and Vodafone as
established carriers at 1 July 1997 were exempted from the levy guarantee
requirements. The ACA will also have the discretion to exempt persons from the
levy guarantee requirements subject to certain conditions.
While it is
unlikely in practice, it is conceivable that a party that has been exempted from
the levy guarantee requirements may fail to discharge its levy liabilities,
particularly because it has become insolvent. If this situation were to
eventuate, it is intended that the ACA would amend the relevant assessment to
exclude the contribution of the defaulting participating carrier and determine
new levy credit and debit balances for the remaining participating carriers. At
the same time, if it had not already done so, the Commonwealth would initiate
action under general insolvency law to recover the defaulting party’s
levy. (Under clause 75, levy is a debt payable to the Commonwealth.) Should
the Commonwealth succeed in recovering any levy from the insolvent carrier, it
would be reimbursed to other participating carriers according to a further
amendment of the original assessment.
Clause 90 – Levy
guarantee
Clause 90 applies to a person (‘the first
person’) at a particular time if the first person is a carrier at that
time, or the first person ceased to be a carrier during the 2-year period that
ended at that time (subclause 90(1)). This provision applies the levy guarantee
requirement to a person who is a carrier or was a carrier in the preceding two
years. The two year period ensures that even if a person ceases to be a carrier
it will still be required to have a levy guarantee for the two year period it
may take for it to be assessed for levy. For example, a person might cease to
be a carrier on 1 August 1999 but the levy assessment process applicable to it
would not commence until
1 July 2000 and may not be completed until 30 June
2001.
The first person must ensure that, at that time, there is in force
a guarantee given by a third person in respect of the discharge of the first
person’s liability (if any) for levy (subclause 90(2)).
Subclause
90(3) requires that the third person, the guarantor, must be:
• a
body corporate that is an ADI (authorised deposit-taking institution) for the
purposes of the Banking Act 1959); or
• the Reserve Bank of
Australia; or
• a body corporate formed under the law of a State or
Territory to carry on the business of banking within Australia;
or
• a body corporate whose sole or principal business is the
provision of financial accommodation to other persons, where the body corporate
is registered as a financial institution under the Financial Corporations Act
1974; or
• a body corporate accredited in writing by the ACA
for the purposes of paragraph 90(3)(e).
Amongst other things, it is
envisaged that the ACA would be able to accredit corporations with substantial
established businesses that are parents to corporations establishing operations
as carriers in Australia to be guarantor for these corporations. For example,
if a person was a subsidiary of a major overseas telecommunications company, it
is intended that the ACA could accredit that parent company to be the
person’s guarantor.
A reference in clause 90 to a
‘carrier’ refers only to a participating carrier (ie. it does not
include a reference to a person who, under subclause 16(2), is exempt from
clause 16).
Clause 91 – Exemptions from levy
guarantee
Clause 91 sets out the circumstances in which a
participating carrier is exempt from the levy guarantee
requirements.
Telstra, Optus and Vodafone are exempted from the levy
guarantee requirements on the basis that they held a general telecommunications
licence or a public mobile licence, that was in force under the 1991 Act on
30 June 1997 (subclause 91(1)). They have a standing exemption because
they are established market participants.
In addition, subclause 91(2)
enables the ACA to make a written determination exempting a specified person
from the levy guarantee requirements. The ACA can only make such a
determination if:
• in the ACA’s opinion, there is no
reasonable likelihood that the person will incur a liability for levy;
or
• both the person has held a carrier licence for at least 2
years; and in the ACA’s opinion, there is no significant risk that the
person will fail to discharge fully the person’s liability for
levy.
A determination has effect accordingly (subclause
91(3)).
This provision is intended to provide a mechanism for exempting a
person from the levy guarantee requirement (and its attendant administrative and
cost burdens) where there is no significant risk that the person will fail to
pay their levy liability. The first circumstance is where a person is unlikely
to incur a levy liability, for example, because it is a universal service
provider and is likely to have a levy credit balance. The second circumstance
is where the person has been licensed for two years and the ACA is of the
opinion there is no significant risk of them failing to pay their levy, for
example, because they have established a robust market presence or have
the clear backing of a significant parent company.
Clause 92 –
Compliance with levy guarantee obligations
A person must not
contravene clause 90 or in any way, directly or indirectly, cause a person to
contravene the levy guarantee requirements. Subclauses 92(1) and (2) are civil
penalty provisions. Part 31 of the Telecommunications Act 1997 provides
for pecuniary penalties for breaches of civil penalty provisions.
Part 3—The National Relay Service
Part 3 of the Bill deals with the operation of the National Relay Service
(NRS). The NRS is a service that provides people who are deaf or hearing or
speech impaired, with access to the standard telephone service on terms, and in
circumstances, that are comparable to those on which other Australians have
access to a standard telephone service.
Part 3 continues in operation the
arrangements that have applied from 1 July 1998 under which the NRS is provided
by a person, who may or may not be a carrier, under a contract with the
Commonwealth. The NRS is currently provided by Australian Communication
Exchange Limited. The current NRS contract includes an NRS Service Plan,
outlining the services to be provided from 1 July 1998. The NRS Service Plan
also outlines how the service will adapt and implement new technology as it
becomes available, such as speech to speech for those speech impaired people who
find text communications difficult.
Division 1––Introduction
Clause 93 – Simplified outline
Clause 93 sets out a
simplified outline of Part 3 to assist readers.
Clause 94 –
Definitions
Clause 94 sets out key definitions for the purposes of
Part 3.
Division 2––The National Relay Service
Clause 95 – The National Relay Service (the
NRS)
People who are deaf or hearing or speech impaired currently have
access, via the NRS, to the standard telephone service on terms
comparable to other Australians for communications with the speaking and
hearing community. The NRS is provided by Australian Communication Exchange
Limited under a contract with the Commonwealth.
Subclause 95(1) describes
the NRS.
Subclause 95(2) provides for the NRS provider to prepare service
plans for the NRS. NRS Service Plans will include the NRS features, performance
standards, timetable for future provision of services, outreach, complaints
mechanism, staff training and reporting mechanisms. The NRS Service Plan will
be part of the NRS contract.
The Minister will be required to arrange for
the NRS Service Plans to be published in whatever manner the Minister considers
appropriate (subclause 95(3)).
It is also intended that, as technology
advances, new features may be added to the NRS, such as speech to speech for
those speech impaired people who find text communications difficult.
Clause 96 – Publication of costs of providing the
NRS
Under the terms of the contract between the Commonwealth and
Australian Communication Exchange Limited, the provision of the NRS is required
to be fulfilled as efficiently and economically as practicable. This recognises
that the NRS involves a significant allocation of resources and maximum effort
should be made to fulfil all the requirements of the service at the least
possible cost.
The quality and cost of provision of the NRS was assessed
when the current NRS provider was selected through open and competitive tender.
It is intended that information about the cost of providing the NRS should be
available to the carriers and the public, without causing undue damage to the
NRS provider’s interests.
Under the terms of the NRS contract, the
NRS provider is required to estimate the total cost of the NRS service for the
coming year. If needed, this information could be made available to the
carriers to assist their budgeting of levy payments.
Subclause 96(1)
facilitates carrier levy payments so funds are available to pay the NRS
provider. The NRS provider is required to calculate an estimate for the total
cost of providing the NRS for the coming levy quarter, in accordance with the
NRS contract, and for the estimate to be provided to the Minister before the
start of each levy quarter, for publication in the Commonwealth Gazette.
Subclause 96(2) requires the NRS provider to calculate the total cost of
NRS provision for a levy quarter, in accordance with the NRS contract, and for
this to be provided in a written statement to the Minister within 30 days after
the end of a levy quarter, for publication in the Commonwealth Gazette.
This information is to be reconciled against the estimate for that quarter to
determine the carriers’ levy payment.
Clause 97 – ACA
reports and advice about NRS service plans
Subclause 97(1) recognises
that the NRS provider must be held accountable against the NRS Service Plan,
which is part of the agreed NRS contract. The ACA is required to monitor all
significant matters relating to the performance by the NRS provider to assess
compliance with the NRS Service Plan. Any failure by the NRS provider to comply
with the NRS Service Plan will be addressed in accordance with the NRS
contract.
Subclause 97(2) provides for the ACA to give a written report
to the Minister about the NRS provider’s performance under the NRS Service
Plan. This report will be required to be given as soon as practicable after the
end of each financial year.
Subclause 97(3) provides for the ACA report
to be tabled in both Houses of Parliament within 15 sitting days after receiving
the report.
Subclause 97(4) provides for additional reports or advice
requested by the Minister in relation to the NRS Service Plan to be provided by
the ACA.
The ACA has established an advisory council to facilitate
feedback and monitor conduct of the NRS provider and to assist the ACA to
conduct an annual forum to examine NRS provider compliance with the NRS Service
Plan and necessary changes to the plan.
Subclause 97(5), in conjunction
with subclause 2(2), ensure that Part 7A of the Telecommunications Act
1997 will apply in relation to the 1998-1999 financial year and that Part 3
of this Bill will apply to subsequent financial years.
Division 3––The NRS Levy
Division 3 sets out who is liable to pay the NRS levy, the frequency of
NRS levy payment by the participating carriers, and the mechanism by which the
total NRS levy is calculated and apportioned between the participating carriers.
Clause 98 – Levy quarters
Clause 98 provides that
NRS levy is to be paid by participating carriers each quarter, starting in the
1999-2000 financial year. Part 7A of the Telecommunications Act 1997
will apply to the 1998-99 financial year. This will continue existing NRS
funding arrangements and ensure the NRS provider does not have to carry the
additional cost of funding a considerable line of credit. Payments to the NRS
provider are paid around the middle of each quarter in which services are being
provided.
Clause 99 – Persons liable to pay levy
(taxpayers)
It is the intent that the carriers should fund the NRS
therefore, the participating carriers who are operating during the financial
year in which the quarter occurs, and are covered by the most recent assessment
under clause 64 made before the start of that quarter, will be liable to pay
their share of the NRS levy.
Clause 100 – Amount of
levy
Currently, monthly contract payments to the NRS provider are
calculated on the number of call minutes for that month multiplied by the agreed
contractual rate per minute. The contractual rate per minute is a sliding scale
to allow for the economies of scale in the number of call minutes provided.
This method of payment provides for only those call minutes used by the target
community to be costed, however, as a consequence payments are variable in
accordance with the call minutes used each month, therefore estimates are
difficult to predict accurately.
The following sequence of events is
intended to overcome any variance in the estimated cost to the actual cost for a
given quarter:
− The NRS provider submits to
the Minister an estimate of the coming quarter’s cost, calculated in
accordance with the contract, before the beginning of the
quarter.
− Within 30 days after the beginning
of the next quarter the NRS provider is required to submit to the Minister the
actual cost of the NRS for the previous quarter, calculated in accordance with
the contract.
− Any shortfall or surplus on
the actual cost of the NRS for the previous quarter will be added to, or
subtracted from, the estimate of the current quarter, giving a total NRS levy
payable for that quarter.
− The information
about the NRS provider’s estimated cost for the current quarter and the
actual cost for the previous quarter will be publicly available (Gazetted) to
enable carriers to do their own assessment of their levy liability.
− Levy contributions from participating
carriers are due on the fourteenth day of the second month in the
quarter.
− The NRS provider will be paid by
the ACA on receipt of the NRS levy payable from the participating
carriers.
Subclause 100(2) provides for calculation of a participating
carrier’s share of the total NRS cost.
Subclause 100(3) provides
key definitions for use in clause 100.
Clause 101 – Payment of
levy
Subclause 101(1) provides that NRS levy is payable by a
participating carrier to the ACA on behalf of the Commonwealth.
Subclause 101(2) provides for the frequency of NRS levy payment. Each
participating carrier is required to pay its share of the NRS levy to the ACA on
or before the fourteenth day of the second month of the
quarter.
Subclause 101(3) provides for the consequences of non-payment of
the NRS levy. Should the NRS levy not be paid by a participating carrier, the
ACA, on behalf of the Commonwealth, may take steps to recover the debt in a
court of competent jurisdiction.
Division 4 – The NRS Reserve
Division 4 provides for the framework required for the ACA to collect the
NRS levy and make payments to the NRS provider.
Clause 102 – The
NRS Reserve
Subclause 102(1) continues in existence the existing NRS
Reserve so that the ACA can receive monies from the participating
carriers.
Subclause 102(2) provides for the NRS Reserve to be a component
of the Reserved Money Fund under the Financial Management and Accountability
Act 1997.
Subclause 102(3) provides for the ACA to make payments from
the NRS Reserve to the NRS provider in accordance with the NRS
contract.
Subclause 102(4) provides for the amounts of the NRS levy, and
interest made on that money, that are credited to the Consolidated Revenue Fund
to be transferred to the NRS Reserve.
Part 4—Continued access to untimed local calls
Part 4 of the Bill provides for residential/charity customers who had
access to untimed local calls, whether voice or data, immediately before 20
September 1996 to continue to have access to them. It further provides for
other customers who had access to untimed local calls for voice telephony
immediately before 20 September 1996 to continue to have access to
them.
This Part requires carriage service providers who charge customers
located in standard call zones for eligible local calls to offer those customers
the option of having local calls charged for on an untimed basis.
It
does not require carriage service providers who offer other standard telephone
services (eg. long-distance calls) but not local calls to commence offering
local calls. However, where a customer in a traditional local call zone is
supplied with a standard telephone service by the relevant universal service
provider for the customer, the untimed local call obligation applies to eligible
local calls made using that service. This ensures that customers continue to
have access to local calls which are untimed.
Clause 103 –
Simplified outline
Clause 103 provides a simplified outline of Part 4
of the Bill to assist readers.
Clause 104 – Requirement to
provide an untimed local call option
A carriage service provider who
charges an eligible customer for eligible local calls made using a standard
telephone service supplied to that customer must give the customer an untimed
local call option for those calls.
It does not matter who supplies the
standard telephone service to the customer. In particular, if a carrier
supplies the service, but the customer deals with a switchless reseller, the
clause requires that in relation to any eligible local calls the customer is
charged for by that reseller, the customer should receive the option of having
them charged for on an untimed basis.
Clause 105 – Untimed local
call option
A customer receives an untimed local call option if, and
only if, the customer may choose, both at the time of connection and at any
subsequent time, to have the charges for eligible local calls on that service
worked out on an untimed basis.
Subclause 105(2) provides that charges
for eligible local calls will be worked out on an untimed basis if, and only if,
the charges for those calls are worked out by reference to the number of such
calls made during a particular period, regardless of how long each call
lasted.
Clause 106 – Eligible local calls
An eligible
local call is one made using a standard telephone service supplied to an
eligible customer between two points within the relevant applicable zone; and
which:
• in the case of a residential/charity customer, is of a kind that,
immediately before 20 September 1996, a general carrier offered to supply, or
supplied, on an untimed basis (and therefore will include data calls made using
a standard telephone service that were offered at the relevant time on an
untimed basis); or
• in the case of other customers, is a voice
call or the equivalent for an end-user with a disability, which is of a kind
that immediately before 20 September 1996, a general carrier offered to supply,
or supplied, on an untimed basis; or
• in any case, is made using a
standard telephone service supplied to that customer in fulfilment of the
universal service obligation.
Calls to or from a public mobile
telecommunications service (PMTS) or satellite phone do not attract the untimed
local call obligation (except when the PMTS or satellite services involved are
being supplied to fulfil the universal service obligation).
In
determining the meaning of ‘kind’, reference should be made to the
functionality of the service and the technology used to supply it. Therefore,
ISDN services are not of the same ‘kind’ as existing non-ISDN
services which are supplied on an untimed basis. PMTS and satellite services
are not of the same ‘kind’ as existing public switched telephone
network services or cable services.
However, PMTS and satellite services
may have been supplied on an untimed basis in certain cases (eg. weekends)
immediately before 20 September 1996. An explicit exclusion for non-USO PMTS
and satellite services is included for this reason. (Nothing in this Part
prevents a carriage service provider from choosing to offer untimed calls on
PMTS or satellite services to attract
customers.)
‘Residential/charity customer’ is defined by
subclause 106(4) to mean a residential customer or a customer that is a
charitable body or organisation or a welfare body or
organisation.
Clause 107 – Benefits for customers outside
standard zones
Clause 107 enables regulations to be formulated to
give benefits to Australian customers of a carriage service provider that are
not in a standard zone as defined by clause 108. These regulations may impose
requirements on carriage service providers with which they must comply
(subclauses 107(4) and (5)).
The benefits are to relate to charges for
calls made using a standard telephone service supplied to the customer and are
to be comparable to the benefits given to eligible customers under clause 104
(which deals with the requirement to provide an untimed local call option)
(subclause 107(2)).
For the purposes of subclause 107(2), a comparison
of benefits is to have regard, among other things, to the ability to make calls
to essential business and community services on an untimed basis (subclause
107(3)). Charges for particular calls will be worked out on an untimed basis
if, and only if, the charges for those calls are worked out by reference to the
number of such calls made during a particular period, regardless of how long
each call lasted (subclause 107(7)).
The Minister is to take all
reasonable steps to ensure that, at all times after the commencement of clause
107, such regulations are in force (subclause 107(6)).
Clause 108
– Standard zones
Clause 108 defines ‘standard
zones’, which are the traditional local call zones as they stood
immediately before 1 July 1991.
Clause 109 – Applicable
zones
The ‘applicable zone’ is the zone within which
calls are ‘local’ calls. The default ‘applicable zone’
is the relevant ‘standard zone’ in which that customer is situated.
However, a different applicable zone may apply in the following
circumstances:
• for the relevant universal service provider for
that customer – where the provider nominates a different zone to the ACA
and the customer chooses to adopt the nominated zone;
and
• for any other carriage service provider – where the
carriage service provider nominates a different zone to the ACA.
Hence,
each eligible customer will be entitled to be offered a service (by the relevant
universal service provider) for which the zone in which the customer can make
untimed local calls is the traditional local call zone.
Clause 110
– Eligible customer
Clause 110 provides that any customer
located in a ‘standard zone’ is an ‘eligible
customer’.
Clause 111 – Points
Clause 111
defines ‘point’ for mobile-type services to include points which are
mobile or potentially mobile. It is included for the avoidance of
doubt.
Clause 112 – Application of this Part
Existing
contracts for the supply of services entered into before 1 July 1997 are
preserved.
Part 5—Customer service guarantee
Part 5 of the Bill continues the operation of the Customer Service
Guarantee (CSG). The CSG involves the ACA setting performance standards for
carriage service providers, and payment of specified damages to customers where
those standards are contravened. The CSG is not intended to address every
individual service difficulty that may arise, but is intended to supplement
other customer complaint mechanisms. The CSG is intended to guard against poor
service in certain key problem areas and provide a streamlined means for
compensating consumers where set standards in those areas are not met. Matters
not covered by the CSG are addressed by other more appropriate mechanisms either
in statute, licence condition or under the industry code/standard regime in Part
6 of the Telecommunications Act.
Under a scale of damages developed by
the ACA, up to $25,000 can be awarded to a consumer for contravention of a
performance standard by a carriage service provider. The primary intention of
standards however, is not to benefit customers financially, but provide carriage
service providers with an incentive to meet performance standards. It is only
when a carriage service provider fails to meet such standards that customers can
seek compensation. While the CSG must ultimately be enforced by a court, the
scheme has been designed to encourage voluntary compliance by the industry and
the involvement of the Telecommunications Industry Ombudsman (TIO). The CSG
provides a streamlined means of compensating customers in certain specified
circumstances. The CSG does not limit or affect any other rights to action or
damages a person may have.
Clause 113 – Simplified
outline
Clause 113 provides a simplified outline of the Part to
assist readers.
Clause 114 – Interpretation
Clause
114 is an interpretation provision which sets out definitions of terms used in
Part 5 of the Bill and contains an interpretive rule requiring these definitions
to be disregarded in determining the meaning of the terms when used other than
in Part 5.
Clause 115 – Performance standards
Clause
115 provides for the making of performance standards.
Subclause 115(1)
gives the ACA the power to make standards to be complied with by carriage
service providers in relation to:
• the making of arrangements
with customers about the period taken to comply with requests to connect
customers to specified kinds of carriage services;
• the periods
that carriage service providers may offer to customers when making the above
arrangements;
• compliance by carriage service providers with the
terms of those arrangements;
• the period taken to comply with
requests to rectify faults or service difficulties relating to specified kinds
of carriage services;
• the keeping of appointments to meet
customers (or their representatives, eg. family members) about such connections
and rectifications; and
• any other matter concerning the supply,
or proposed supply, of a carriage service to a
customer.
‘Customer’ is defined in subclause 114(1) to
include a prospective customer, to avoid any argument that a person who is not
receiving a service from a carriage service provider but has requested a
connection may not yet be a customer of the carriage service provider.
Subclause 115(2) is intended to provide protection for a carriage
service provider from the requirement to comply with a performance standard for
a particular kind of carriage service where the carriage service provider does
not offer to supply that kind of service at a particular location. For example,
if a carriage service provider has installed cable in particular suburbs of a
city and offers local call services using that cable at locations in close
proximity to where that cable is installed, it should not be subject to a
performance standard for connection of local call services at those locations
which are not in close proximity to where the cable has been
installed.
Subclause 115(3) prevents the ACA making a standard unless
directed to do so by the Minister under clause 124. This provision is included
because it may not be appropriate for all carriage services to be subject to
performance standards, for example services used only by large corporate
customers. The Minister will have the power to direct the ACA to impose
standards in relation to particular services where regulatory attention should
be focussed – for example, the standard telephone service used by
residential and business customers and other services commonly used by
residential customers and small business.
Subclause 115(4) provides that
a performance standard may be of general application or may be limited as
provided for in the standard. This provision is included because a standard may
need to recognise circumstances where the standard should not apply, for example
in circumstances beyond the carriage service provider’s control, such as
when a natural disaster has occurred.
Subclause 115(5) provides for the
commencement of a standard.
Subclause 115(6) provides that a performance
standard is a disallowable instrument which accordingly must be notified in the
Commonwealth Gazette and tabled in the Parliament and is subject to
Parliamentary disallowance.
Performance standards are to be made by
disallowable instrument in order to enable standards to be made for new
services, as they are developed, and to enable standards to be increased
progressively over time, as carriage service provider performance
improves.
Clause 116 – Damages for breach of performance
standards
Clause 116 provides that if a carriage service provider
contravenes a performance standard in relation to a customer, the carriage
service provider will be liable to pay specific damages to that particular
customer.
Subclause 116(2) makes the amount of damages payable equal to
the relevant amount specified in the scale of damages determined by the ACA
under clause 117. ‘Damages’ is defined in subclause 114(1) to
include punitive damages in recognition that the scale of damages is intended to
specify a penalty for the carrier and accordingly may include amounts that go
beyond the real measure of damages suffered by a customer for a contravention of
a performance standard.
Subclause 116(3) provides that if a carriage
service provider credits a customer’s account or pays the customer an
amount as a result of a right or remedy for the event causing the contravention,
the amount of damages is to be reduced by the amount of the credit or payment.
This provision ensures that if the TIO, for example, determines or directs that
an amount is payable under the TIO scheme for the event causing the
contravention, the carriage service provider’s liability under the CSG is
reduced accordingly.
Subclause 116(4) enables a customer to recover the
amount by action against the carriage service provider in a court of competent
jurisdiction. In practice, customers should not need to take court action.
Carriage service providers would be expected to credit customer’s accounts
where they have breached a performance standard. The TIO, in handling
complaints under the TIO scheme, will be able to make determinations or give
directions that reflect the penalties payable under the CSG.
Subclause
116(5) enables a carriage service provider to discharge a liability by giving
the customer a credit in an account the customer has with the carriage service
provider. However, in some circumstances, the customer may not have an account
with the carriage service provider, for example because the customer is now
using a different carriage service provider or has left the country. This
provision allows the carriage service provider and customer to come to an
agreement about another manner for the discharge of the liability to deal with
such circumstances.
Subclause 116(6) requires any court action to be
instituted within 2 years of the contravention occurring or
beginning.
Subclause 116(7) ensures that where a customer dies, the
executor can continue to recover the damages from the carriage service
provider.
Clause 117 – Scale of damages for breach of
performance standards
Clause 117 provides that the ACA may specify a
scale of damages for contraventions of standards by carriage service providers
under clause 115 (subclause 117(1)).
Subclause 117(2) requires the scale
to specify categories of contraventions and a dollar amount as the amount of
damages payable for contraventions covered by each of those
categories.
Subclause 117(3) provides that a dollar amount specified in
the scale of damages must not exceed $25,000. This provision is included to put
a cap on the maximum amount of damages which can be determined by the ACA to
minimise any concern that giving this power to the ACA represents an
inappropriate delegation of legislative power.
The $25,000 maximum is
considered to be the highest amount appropriate to be awarded under the customer
service guarantee scheme, which is mainly aimed at residential and small
business customers. The amount is more than adequate to cover most envisaged
penalties. The maximum will allow higher penalties for more expensive services
if they are included in a performance standard.
The CSG is intended to
supplement, not replace, existing remedies for customers. Accordingly clause
121 specifically saves other laws and remedies. It is intended that customers
with complaints will still be able to seek redress, for example, from the TIO or
the courts. Under the TIO scheme developed by the industry, the TIO may make
determinations of up to $10,000.
Subclause 117(4) makes it clear that a
category of contraventions can be specified by reference to the number of days
the contravention continues and subclause 117(5) makes it clear that this does
not by implication limit the ways a category can be specified. This provision
ensures that damages can accumulate if a contravention of a standard continues
for a number of days.
Subclause 117(6) provides that an instrument
specifying a scale of damages is a disallowable instrument which accordingly
must be notified in the Commonwealth Gazette and tabled in the Parliament
and is subject to Parliamentary disallowance.
Clause 118 –
Remedial directions––compliance with performance
standards
Clause 118 will give the ACA a power to give a carriage
service provider remedial directions about compliance with performance
standards. This power is intended to be used to address any systemic problems
that arise in a carriage service provider’s performance.
Systemic
problems may come to the attention of the ACA in a number of ways – the
TIO may advise the ACA that it is receiving a large number of complaints about a
particular carriage service provider’s performance. The ACA may become
aware of a carriage service provider’s declining performance while
carrying out its duty of monitoring performance under section 105 of the
Telecommunications Act.
Subclause 118(1) provides that clause 118 applies
if a carriage service provider is subject to a standard in force under clause
115.
Subclause 118(2) gives the ACA the power to give the carriage
service provider a direction requiring the carriage service provider
to:
• take specified action directed towards ensuring that the
carriage service provider does not contravene, or is unlikely to contravene the
standard; or
• take such action as will ensure that the extent of
the provider’s compliance reaches or exceeds a specified goal or
target.
Subclause 118(3) gives examples of the kinds of directions that
can be given to a carriage service provider.
Subclause 118(4) provides
that, except in a case where the Minister directs the ACA to make a direction,
the ACA must consult the TIO.
Subclause 118(5) provides that a carriage
service provider must not contravene a direction. As a result of the
Telecommunications Legislation Amendment Bill, this provision will have the
effect of applying the enforcement mechanisms in the Telecommunications Act.
Section 98 and clause 1 of Schedule 2 to the Telecommunications Act make it a
service provider rule that a service provider must comply with that Act and,
following amendment, this Bill. Section 101 of that Act makes a contravention
of a service provider rule a civil penalty provision. Under subsection 570(3)
of the Telecommunications Act, the maximum pecuniary penalty for a service
provider contravening subsection 101(1) is $10 million.
Subclause 118(6)
makes a direction a disallowable instrument which must therefore be notified in
the Commonwealth Gazette and tabled in the Parliament and will be subject
to disallowance by either House of the Parliament.
Clause 119 –
Evidentiary certificate issued by the Telecommunications Industry
Ombudsman
The TIO is an industry ombudsman established by carriers
and carriage service providers continued in existence under Part 6 of the Bill
which requires them to enter into, and comply with, an Ombudsman scheme
providing for investigation in relation to complaints about carriage services by
end-users, including complaints about billing and the manner of charging for
carriage services.
Given the nature of the TIO’s role, it would be
appropriate for it to investigate complaints about breaches of performance
standards and to make determinations against carriage service providers
requiring them to pay compensation of an amount equivalent to the damages
required under the CSG. Such involvement is dependent on the TIO scheme entered
into by carriers and carriage service providers allowing the TIO to take on such
a role. The involvement of the TIO in making such determinations under the TIO
scheme would be expected to significantly reduce the need for customers to take
action in the courts under the CSG. However, if court action needs to be taken,
it is proposed to make taking action easier for the customer by enabling the TIO
or the ACA to provide evidentiary certificates.
This clause gives the TIO
the power to issue evidentiary certificates stating that a specified carriage
service provider has contravened a performance standard and setting out
particulars of the contravention.
Under subclause 119(2), such a
certificate becomes prima facie evidence of the matters contained in it for the
purposes of any proceedings under Part 5 of the Bill.
However, in
recognition that the TIO scheme is an industry-based scheme, the TIO will only
obtain these powers if the TIO gives a written notice consenting to the
conferral of the powers (subclause 119(4)). The notice must be published in the
Commonwealth Gazette (subclause 119(6)).
If the TIO does not
consent to the conferral of the powers or subsequently revokes consent, the ACA
is able to exercise them (subclause 119(5)). Note that although there is no
specific reference to revoking consent, subsection 33(3) of the Acts
Interpretation Act 1901 would provide the basis for the TIO to do so and the
reference to a notice ‘in force’ under subclause 119(4) is intended
to recognise that a notice previously given may be revoked.
Subclause
119(7) makes it clear that the continuity of a notice under subclause 119(4) is
not affected by a change in occupancy of the TIO position. However, if a
vacancy in the TIO position continues for more than 4 months, the power would
revert to the ACA and the new TIO would need to give the Minister a new notice
under subclause 119(4).
While it may be desirable for the Bill to make
direct statutory provision for the TIO to enforce the CSG, this is not possible
for Constitutional reasons. The CSG requires a decision to be made as to
whether a carriage service provider has failed to meet a standard and for a
penalty to be imposed as a consequence. Such a decision is judicial in nature
and Chapter III of the Constitution requires that a court make that decision.
Issues about the exercise of judicial power by bodies other than courts were
considered by the High Court in Brandy v The Human Rights and Equal
Opportunity Commission (1995) 183 CLR 245.
Clause 120 –
Waiver of customer service guarantee
Clause 120 enables the ACA, by
written instrument, to make provision for customers of carriage service
providers to waive, in whole or in part, their protection and rights under this
Part in relation to a particular service supplied, or proposed to be supplied,
by the carriage service provider concerned.
Subclause 120(2) provides
that if such a waiver is made then, to the extent of the waiver, the carriage
service provider is not bound by the performance standards under clause 115
which apply to the supply of the particular service to the
customer.
Subclause 120(3) requires a waiver to be made in accordance
with the rules set out in the instrument.
Subclause 120(4) provides that
an instrument setting out a waiver scheme is a disallowable instrument and
accordingly must be notified in the Commonwealth Gazette and tabled in
the Parliament and is subject to Parliamentary disallowance.
The waiver
power is included because it is intended to ensure that as far as possible
customers are not restricted in the choices they make. It is expected that the
ACA would exercise this power to enable a carriage service provider to offer
cheaper prices for a service where a customer is prepared to waive some or all
of the customer’s rights under this Part.
Clause 121 –
Savings of other laws and remedies
Clause 121 is intended to ensure
that this Part is not interpreted as excluding, limiting, restricting or
affecting any right a person may otherwise have under Commonwealth, State or
Territory or common law where a carriage service provider fails to comply with a
performance standard.
In this context, it should be noted that the
setting of a ceiling of $25,000 on the maximum damages payable under the CSG
(see clause 117) does not affect a customer’s right to seek higher damages
under other laws.
However, subclause 116(3) ensures that the damages
payable under the CSG are reduced where the carriage service provider makes a
payment in such circumstances.
Clause 122 – Breach of
performance standard is not an offence
Clause 122 makes it clear that
contravention of a performance standard under clause 115 is not an offence.
Clause 116 provides the mechanism for dealing with a contravention of a
standard.
Clause 123 – Clause 1 of Schedule 2 to the
Telecommunications Act 1997 does not apply to a breach of a performance
standard
Clause 1 of Schedule 2 to the Telecommunications Act, as
proposed to be amended by the Telecommunications Legislation Amendment Bill, is
a service provider rule which requires a service provider to comply with the
Telecommunications Act and this Bill.
Clause 123 provides that clause 1
of Schedule 2 does not apply to a contravention of a performance standard under
clause 115. Parts 30 and 31 of the Telecommunications Act set out mechanisms
for enforcing contraventions of service provider rules. These mechanisms are
inappropriate in relation to contraventions of performance standards, as clause
116 provides the mechanism for dealing with such
contraventions.
Clause 124 – Minister may direct the ACA about
the use of its powers under this Part
Clause 124 enables the Minister
to give the ACA written directions about how it should exercise its powers under
this Part.
Such a direction could be given, for example, to identify the
kinds of carriage services in relation to which performance standards should be
imposed, the standard that should be imposed for a specified service, the level
of penalty that should be specified in a scale of damages, what provision the
ACA should make for waiver or processes the ACA should follow in making a
performance standard.
Subclause 124(2) requires the ACA to comply with
such a direction.
Subclause 124(3) is an interpretive rule which prevents
the ambit of other directions powers being read down by reference to this
specific power.
Subclause 124(4) makes a direction under this clause a
disallowable instrument which accordingly must be notified in the Commonwealth
Gazette and tabled in the Parliament and will be subject to Parliamentary
disallowance.
Subclause 124(5) provides that the Minister must not give
the ACA a direction under s. 12 of the ACA Act about how the ACA is to exercise
its powers under this Part.
Clause 125 – Review of performance
standards following Ministerial direction
Clause 125 requires a
Ministerial direction to be given under clause 124 before the ACA makes a
performance standard. This will allow the Minister to direct the ACA as to
where regulatory attention should be focussed.
Subclause 125(2) ensures
that where the Minister revokes such a direction, the ACA must revoke the
relevant standard.
Subclause 125(3) ensures that if the Minister varies
such a direction, the ACA must either vary, or revoke and remake, the relevant
standard so that it complies with the varied direction.
Subclause 125(4)
is included to make it clear that the previous rules do not prevent the ACA
varying, or revoking and remaking, a performance standard on its own initiative
as long as it complies with the Ministerial direction.
Part 6—The Telecommunications Industry Ombudsman
Part 6 of the Bill requires carriers and certain carriage service
providers to enter into a Telecommunications Industry Ombudsman scheme which is
a central element of the self-regulatory arrangements for the telecommunications
industry currently provided for by the Telecommunications Act.
The TIO
scheme is intended to provide customers with an independent complaint handling
mechanism after they have taken up their complaints with the respective carrier
or carriage service provider and failed to resolve them. It is expected that
the TIO scheme will continue to operate along current lines, however the detail
of its operation is effectively a matter for the members of the scheme. The TIO
may accept functions and powers under industry codes and industry standards
(section 114 of the Telecommunications Act).
Clause 126 –
Simplified outline
Clause 126 provides a simplified outline of the
Part to assist readers.
Clause 127 – Eligible carriage service
providers
Clause 127 defines an eligible carriage service provider
for the purposes of this Part.
Paragraph 127(a) defines an eligible
carriage service provider as a carriage service provider who supplies a standard
telephone service to residential or small business customers, or a public mobile
telecommunications service or a carriage service that enables end-users to
access the Internet. The exemption in section 89 of the Telecommunications Act
from the definition of carriage service provider ensures that the operators of
hotels, motels and hospitals are not eligible carriage service providers, and
are therefore not subject to obligations under the TIO scheme. Once an eligible
carriage service provider is defined as such, all of the carriage services
supplied by the provider are subject to investigation by the TIO, not just their
standard telephone service.
Paragraph 127(b) includes a carriage
service intermediary who arranges for the supply of a service referred to in
paragraph (a) as an eligible carriage service provider.
Clause 128
– Telecommunications Industry Ombudsman scheme
Subclause 128(1)
provides that each carrier and each eligible carriage service provider must, in
association with other carriers and other eligible carriage service providers,
enter into a scheme providing for a Telecommunications Industry
Ombudsman.
The term ‘eligible carriage service provider’ is
defined in clause 127.
Subclause 128(2) provides that the scheme is to be
known as the Telecommunications Industry Ombudsman scheme.
The
Telecommunications Industry Ombudsman has had correspondence with a solicitor
who sought evidence that the TIO scheme was the scheme referred to in the
legislation.
To address the concerns of the Telecommunications Industry
Ombudsman that the TIO not be put to the unnecessary expense of proof, subclause
128(3) provides that, to avoid doubt, there is only one Telecommunications
Industry Ombudsman scheme and the company Telecommunications Industry Ombudsman
Limited (ACN 057 634 787) is the operator of that scheme. That company has been
conducting business under that name since 1993. The business conducted by the
company is known as the ‘TIO scheme’ and the
‘Telecommunications Industry Ombudsman scheme’.
The scheme
must provide for the TIO to investigate customer complaints about carriage
services and make determinations and give directions relating to those
complaints (subclause 128(4)).
Subclause 128(5) lists complaints about
billing or the manner of charging for the supply of carriage services as
examples of complaints which the TIO may investigate. Other complaints
investigated by the TIO could include, but are not limited to, complaints about:
mobile phones; operators; fault reporting and ‘white pages’
directory entries.
Subclause 128(6) provides that complaints relating
to tariff levels or the content of a content service are outside the
jurisdiction of the TIO scheme. Membership of the TIO scheme must be open to
all carriers and carriage service providers (subclause 128(7)).
Clause
129 – Exemptions from requirement to join scheme
Subclause
129(1) gives the ACA the power, by notice in the Gazette, to exempt a
specified carrier or carriage service provider from the requirement in subclause
128(1) to enter into the TIO scheme. Subclause 129(2) lists matters that the
ACA must have regard to when considering exemptions for carriers or carriage
service providers. These matters are: the extent to which a carrier or carriage
service provider deals with residential and small business customers; and the
potential for complaints about services provided by the carrier or carriage
service provider.
This list does not limit the matters to which the ACA
may have regard when making an exemption (subclause 129(3)). The ACA must
consult the TIO before making an exemption (subclause 129(4)).
A decision
to refuse to exempt a carrier or carriage service provider is subject to merits
review under Part 29 of the Telecommunications Act (see Schedule 4 to that Act,
as proposed to be amended by the Telecommunications Legislation Amendment Bill
1998).
Clause 130 – Direction to join
scheme
Subclause 130(1) gives the ACA the power to direct a carriage
service provider to join the TIO scheme. A carriage service provider must
comply with this direction (subclause 130(2)). Subclause 130(3) lists the
matters the ACA must have regard to when making a direction. These matters are:
the extent to which a carriage service provider deals with residential and small
business customers; and the potential for complaints about services provided by
the carriage service provider.
This list does not limit the matters to
which the ACA may have regard when making a direction (subclause 130(4)).
Before directing a carriage service provider to join the TIO scheme, the ACA
must consult the TIO.
A decision to direct a carriage service provider to
join the TIO scheme is subject to merits review under Part 29 of the
Telecommunications Act (see Schedule 4 of that Act as proposed to be amended by
the Telecommunications Legislation Amendment Bill 1998).
Clause 131
– Determination that a class of carriage service providers must join
scheme
Clause 131 allows the ACA to make a written determination
that requires all members of a class of carriage service providers to enter into
the TIO scheme (subclause 131(1)). Subclause 131(3) requires the ACA to have
regard to certain matters when making a determination. These matters are: the
extent to which members of that class deal with residential and small business
customers; and the potential for complaints to the TIO about services provided
by members of the class.
This list does not limit the matters to which
the ACA may have regard when making a determination (subclause 131(4)). Before
the ACA can determine that all members of a class of carriage service provider
be required to join the TIO scheme, the TIO must be consulted.
Clause
132 – Members of scheme must comply with scheme
Clause 132
provides that all members of the TIO scheme must comply with the
scheme.
Clause 133 – Register of members of
scheme
Clause 133 provides that a public register of the names of all
members of the scheme must be kept by the TIO. The register may be maintained
in electronic form (subclause 133(2)), and must be open for public inspection at
reasonable times (subclause 133(3)).
Part 7—Protection for residential customers against failure by carriage service providers to provide standard carriage services
Part 7 of the Bill is intended to protect residential customers from
losing prepaid monies if a new carriage service provider fails to supply
standard carriage services through circumstances such as insolvency. This Part
provides a safeguard for customers who choose to deal with new carriage service
providers and accordingly represents a significant addition to customer
protection arrangements.
Clause 134 – Simplified
outline
Clause 134 provides a simplified outline of Part 7 to assist
readers.
Clause 135 – Scope of Part
Subclause 135(1) provides that
this Part applies to all carriage service providers supplying, or proposing to
supply, a standard telephone service to residential customers. A carriage
service provider that was a carrier before 1 July 1997 is exempt from this Part
(subclause 135(2)). These carriers have a substantial market presence and
accordingly their customers are unlikely to need these protection
arrangements.
Subclause 135(3) gives the ACA the power to declare a
specified person exempt from this Part, by notice in the Commonwealth
Gazette, having regard to certain listed matters. These matters
are:
• the length of time (if any) that the person had carried on
business in Australia as a carriage service provider;
• the scale
of the person’s prior operations in Australia as a carriage service
provider;
• the person’s business record;
• if
there is a partnership, the business record of each partner;
and:
• if there is an incorporated company, the business record of
each individual who is concerned, or takes part, in the management of the
company.
This list does not limit the matters to which the ACA may have
regard when considering exemptions (subclause 135(5)).
A decision to
refuse to make a declaration giving an exemption is subject to merits review
under Part 29 of the Telecommunications Act (see Schedule 4 of that Act as
proposed to be amended by the Telecommunications Legislation Amendment Bill
1998).
Clause 136 – Standard residential
customer
This clause provides that a residential customer receiving a
standard telephone service is a standard residential customer (paragraph
136(1)(a)), and the service is a standard carriage service (paragraph
136(1)(b)), for the purposes of this Part. Specifically excluded from clause
136 are public mobile telecommunications services, except where supplied in
fulfilment of the universal service obligation.
Clause 137 –
Protected payments
Subclause 137(1) provides that the ACA may make a
written determination that a payment made to a carriage service provider by a
standard residential customer is a protected payment. Under subclause 138(2), a
protected payment must be received, or proposed to be received, by the carriage
service provider directly or indirectly in connection with its business as a
carriage service provider.
Examples of protected payments include line
and equipment rental, connection fees and prepaid standard carriage services
(subclause 137(3)). A determination under clause 137 must specify a minimum
service period for each protected payment (subclause 137(4)), and this period
must not be longer than two years (subclause 137(5)).
A determination
under this clause is a disallowable instrument for the purposes of section 46A
of the Acts Interpretation Act 1901 which accordingly must be notified in
the Commonwealth Gazette and tabled in the Parliament and will be subject
to Parliamentary disallowance.
Clause 138 – Compliance with
protection schemes for protected payments
Clause 138 provides that
before demanding or receiving a protected payment from a residential customer, a
carriage service provider must provide the ACA with a written election to be
bound by a specified protection scheme (subclause 138(1)). Subclause 138(2)
provides that a carriage service provider that has made such an election must
comply with the specified protection scheme. If the carriage service provider
wishes to vary an election, it can do so by substituting another protection
scheme for the original scheme by notice in writing to the ACA (subclause
138(3)). However, the original scheme continues to apply to protected payments
made before the new scheme took effect (subclause 138(4)).
Clause 139
– Protection schemes for protected payments––alternative
supply of standard carriage services
Subclause 139(1) provides
an example of a scheme which the ACA may formulate providing for the alternative
supply of standard carriage services to residential customers. Arrangements
under the scheme would operate if a carriage service provider that has received
a protected payment fails to supply standard carriage services to the customer
at any time during the minimum service period. The scheme would be for the
purpose of ensuring that the customer is supplied with equivalent standard
carriage services for the remainder of the minimum service period at no extra
cost.
Subclause 139(2) provides that a scheme formulated under clause
139 is a disallowable instrument for the purposes of s. 46A of the Acts
Interpretation Act 1901. The instrument must therefore be notified in the
Commonwealth Gazette and tabled in the Parliament and will be subject to
Parliamentary disallowance.
Clause 140 – Protection schemes for
protected payments – third party guarantee
Subclause 140(1)
provides an example of a protection scheme the ACA may formulate that requires a
carriage service provider to reimburse a protected payment to a residential
customer, on a pro-rata basis, depending on the time period for which the
service was not provided. This scheme would also require the carriage service
provider to obtain a third party guarantee on its liability (paragraph
140(1)(b)). The scheme would require the reimbursement to be made if a carriage
service provider that has received a protected payment fails to supply standard
carriage services to the customer at any time during the minimum service
period.
Subclause 140(2) provides that a scheme formulated under clause
140 is a disallowable instrument for the purposes of s. 46A of the Acts
Interpretation Act 1901. The instrument must therefore be notified in the
Commonwealth Gazette and tabled in the Parliament and will be subject to
Parliamentary disallowance.
Clause 141 – Protection schemes for
protected payments – insurance cover
Subclause 141(1) provides
an example of a protection scheme the ACA may formulate that requires a carriage
service provider to reimburse a residential customer for a protected payment on
a pro-rata basis, as well as take out an insurance policy to indemnify the
residential customer (paragraph 141(1)(b)). The scheme would require the
reimbursement to be made if a carriage service provider that has received a
protected payment fails to supply standard carriage services to the customer at
any time during the minimum service period.
Subclause 141(2) provides
that a scheme formulated under clause 141 is a disallowable instrument for the
purposes of s. 46A of the Acts Interpretation Act 1901. The
instrument must therefore be notified in the Commonwealth Gazette and
tabled in the Parliament and will be subject to Parliamentary
disallowance.
Clause 142 – Protection schemes for protected
payments – holding of payments in trust accounts
Subclause
142(1) provides an example of a protection scheme the ACA may formulate that
requires a carriage service provider to reimburse a protected payment on a
pro-rata basis, with those protected payments being held in trust accounts
(paragraph 142(1)(b)). The carriage service provider must not transfer any or
all of the money in such a trust account to its beneficial ownership except in
accordance with the draw-down rules set out in the scheme (paragraph 142(1)(c)).
The scheme would require the reimbursement to be made if a carriage service
provider that has received a protected payment fails to supply standard carriage
services to the customer at any time during the minimum service
period.
Subclause 142(2) provides that a scheme formulated under clause
142 is a disallowable instrument for the purposes of s. 46A of the Acts
Interpretation Act 1901. The instrument must therefore be notified in the
Commonwealth Gazette and tabled in the Parliament and will be subject to
Parliamentary disallowance.
Clause 143 – Waiver of protection by
customers
Subclause 143(1) allows a scheme formulated under this Part
to provide for residential customers to be able to waive their rights under a
protection scheme in relation to a particular protected payment. In such a
case, the carriage service provider is not bound by the scheme in relation to
that payment (subclause 143(2)). Subclause 143(3) requires a waiver to be made
in accordance with the rules of that scheme, which rules may require the
carriage service provider to inform the customer of the consequences of a waiver
(subclause 143(4)). Subclause 143(4) does not limit the matters that may be
dealt with under a standard or a code registered under Part 6 of the
Telecommunications Act (subclause 143(5)).
Clause 144 –
Incidental rules
Subclause 144(1) provides that carriage service
providers participating in a protected payment scheme may be required to comply
with any ancillary or incidental rules set out in the scheme, including rules
about informing residential customers about matters relating to the
implementation of the scheme (subclause 144(2)).
Clause 145 –
Enforcement of protection schemes
Subclause 145(2) provides that an
order may be sought from the Federal Court by a customer or by the ACA in
relation to a breach of a protection scheme by a carriage service provider that
is bound by a scheme formulated under this Part. If satisfied that a carriage
service provider has breached the scheme, the Federal Court can make all or any
of the following orders under subclause 145(3):
• an order
directing the carriage service provider to discharge a liability under the
scheme;
• an order directing the carriage service provider to
comply with the scheme;
• an order directing the carriage service
provider to compensate any person who has suffered loss or damage as a result of
the breach; and
• any other order that the Court thinks
appropriate.
Subclause 145(4) allows the Federal Court to discharge or
vary an order given under clause 145, but any order given under this clause
should not limit other remedies available to a customer (subclause 145(5)).
When enforcing a protection scheme, an order can direct the carriage service
provider’s administrators or receivers. Under paragraph 145(6)(a), when
the carriage service provider is an individual or partnership, an order can
direct the provider’s trustee in bankruptcy. Under paragraph 145(6)(b),
where the carriage service provider is a body corporate or a partnership, an
order can direct the following groups: a receiver or controller of property of
the body or partnership; an administrator of the body or partnership; an
administrator of a deed of arrangement; a liquidator or provisional liquidator;
and a trustee or other person administering a compromise between the body or
partnership and any other person. These provisions are intended to ensure that
protection schemes for residential customers continue to be effective, to the
extent possible, in the event of the carriage service provider becoming
insolvent.
Part 8––Provision of emergency call services
Part 8 of the Bill sets out requirements for the continued provision of
emergency call handling services.
This Part is intended to provide for
the provision of emergency call services, that meet community expectations, in a
multi-carrier and carriage service provider environment. In particular, it is
intended to provide what appears to be a single national service to end-users
and to minimise the possibility of a proliferation of emergency call service
providers, which may result in a decrease in the quality of emergency call
services.
An ‘emergency call service’ is defined in section 7
of the Telecommunications Act as a service for receiving and handling calls to
an emergency service number, and transferring such calls or providing
information about the calls to emergency service organisations for purposes
connected with dealing with the matters raised by the call. Section 466 of the
Telecommunications Act provides for ‘emergency service numbers’ to
be specified under the numbering plan. An ‘emergency call person’
is defined in section 7 of the Telecommunications Act as a recognised person who
operates an emergency call service or its employees, or an emergency call
contractor or its employees. A ‘recognised person who operates an
emergency call service’ is defined in section 19 of the Telecommunications
Act as a person who is specified as a national or regional operator of emergency
services in a written determination made by the ACA. It is intended that the
ACA will identify the most appropriate operator of emergency call services on a
national or a regional basis in order to prevent any undesirable proliferation
of operators of emergency call services which could result in a lower level of
service. Multiple operators may be necessary, however, to manage calls from
different types of services or equipment (for example, calls from teletypewriter
(TTY) machines).
Clause 146 – Simplified
outline
Clause 146 provides a simplified outline of this Part to
assist readers.
Clause 147 – Provision of emergency call
services
Clause 147 requires the ACA to make a determination that
sets out the fundamental emergency call service requirements. This process
allows the requirements to evolve in response to changes in industry
arrangements, technology and community expectations for emergency call handling.
A determination is a disallowable instrument which must be notified in the
Commonwealth Gazette, tabled in the Parliament and is subject to
Parliamentary disallowance (subclause 147(7)).
The determination would be
expected to include, for example, requirements in relation to the way in which
calls are transmitted through a carrier’s or carriage service
provider’s network, the period within which calls must be answered and the
form in which information about calls is transferred to emergency service
organisations. The determination could also include other performance
requirements and technical requirements for the transmission of calls to
emergency service organisations.
Subclause 147(1) requires the ACA to
make a written determination imposing requirements on carriers, carriage service
providers and emergency call persons in relation to emergency call services.
The ACA must have regard to listed objectives when making its determination
(subclause 147(2)). These objectives are that:
• a carriage
service provider who supplies a standard telephone service should provide each
end-user of that service with access, free of charge, to an emergency call
service unless the ACA considers it would be unreasonable for such access to be
provided (note that under section 376 of the Telecommunications Act an ACA
technical standard may include requirements to ensure that customer equipment
can be used to give direct access to an emergency service
number);
• if such a carriage service provider is required to
provide each end-user of the standard telephone service with access to an
emergency call service operated by a recognised person, that person should
receive and handle calls made by those end-users to the relevant emergency
service number and, if appropriate, transfer such calls to an appropriate
emergency service organisation and give information in relation to such calls to
an appropriate emergency service organisation;
• emergency service
organisations should not be responsible for the cost of:
– the
carriage services used to connect calls and transmit the related information
from customers of the carriage service provider to an emergency call
service;
– the services of the recognised person who operates the
emergency call service for receiving and handling the calls to an emergency
service number; and
– the carriage services used to transfer the
emergency call and related information to the relevant emergency service
organisation from the emergency call service;
• as far as
practicable, a common system is used for the transferring of emergency calls and
related information;
• calls made to an emergency service number
are transferred to an appropriate emergency service organisation with the
minimum of delay;
• from the perspective of end-users, there
appears to be a single national emergency call system;
• reasonable
community expectations for the handling of calls to emergency service numbers
are met;
• carriage services used to make calls to an emergency service number should, as far as practicable, provide the emergency call person concerned with automatic information about the location of the caller and the identity of the customer of the service being used by the caller;
• carriers provide carriage service providers with access to controlled carriage services, networks and facilities in order that the providers can comply with their obligations under the determination;
• carriage service providers provide other carriage service providers with access to controlled carriage services, networks and facilities in order that the other providers can comply with their obligations under the determination;
• the determination be consistent with Principle 11 of the Information
Privacy Principles set out in s. 14 of the Privacy Act 1988, and any
registered codes or standards under Part 6 of the Telecommunications Act.
This list does not limit the matters to which the ACA may have regard when
making a determination (subclause 147(3)).
The ACA’s determination
may also deal with ancillary or incidental matters, such as privacy protection
(subclause 147(4)).
Subclause 147(5) provides that requirements imposed
by the ACA under subclause 147(1) may include, but are not limited to,
performance requirements relating to:
• the answering of an emergency call from an end-user;
• the delay in transferring emergency calls to the relevant emergency
service organisation;
• handling of complaints relating to an
emergency call service.
Subclauses 147(4) and (5) do not, by implication,
limit subclause (1) (subclause 147(6)).
If appropriate, the ACA may
apply, adopt or incorporate, with or without modification, any matter contained
in a code or standard proposed or approved by a body or association (subclause
147(8)). This provision is intended to allow the ACA to take into account any
work in the area of emergency call services which may be undertaken by a body
formed for that purpose by representatives from the telecommunications industry,
emergency service organisations and consumers. In any case, before making its
determination, the ACA must consult representatives of carriers, carriage
service providers, recognised emergency call persons, emergency service
organisations (including a police force or service, a fire service, an ambulance
service or a service specified in the numbering plan as an emergency service
organisation) and consumers of standard telephone services (subclause
147(9)).
Subclause 147(10) allows a carriage service provider to arrange
with another person to meet the obligation to provide access to an emergency
call service as set out in paragraph 147(2)(a).
It is expected that the
ACA will have regard to the needs of end-users with a disability, and will
attempt to give effect to the objective of direct access as far as is
technically possible.
Clause 148 – Compliance with
determination
Clause 148 requires a person to comply with any
requirements imposed on the person by a determination made under clause 147,
subject to the requirements of clauses 149 and 151. Pecuniary penalties apply
under Part 31 of the Telecommunications Act for a contravention of a
determination. Funding the costs of meeting any requirements will be a matter
for persons subject to those requirements.
Clause 149 – Access
to emergency call services
Clause 149 allows for the arbitration of
disputes between carriage service providers and recognised persons operating an
emergency call service. Subclause 147(2) makes it clear that carriage service
providers supplying the standard telephone service must provide end-users of
that standard telephone service with access, free of charge, to an emergency
call service. Subclause 147(2) also makes it clear that an emergency service
organisation should not be responsible for the costs of providing access to an
emergency call service.
Where a carriage service provider is required to
provide such access, the terms and conditions under which this access is
provided will be determined by commercial agreements between carriage service
providers and the recognised person operating the emergency call service. Where
these parties are unable to agree on the terms and conditions, the terms and
conditions shall be those determined by an arbitrator appointed by the parties.
If the parties fail to agree on the appointment of an arbitrator, the ACCC is to
be the arbitrator.
The regulations may make provision for and in
relation to a conduct of an arbitration under clause 149 and may deal with the
constitution of the ACCC for the purposes of any arbitration conducted by the
ACCC (subclauses 149(4), (5) and (6)).
The results of any arbitration
made under clause 149 must not be inconsistent with a Ministerial pricing
determination in force under clause 150.
Clause 150 –
Ministerial pricing determinations
Clause 150 gives the Minister the
discretion to make a written determination setting out principles in relation to
the price-related terms and conditions under which access to an emergency call
service is provided to end-users of the standard telephone service. A
determination made under clause 149 may not be inconsistent with a Ministerial
pricing determination under clause 150. The power to make a written
determination is discretionary and will only be exercised where commercial
negotiations are unable to resolve the terms and conditions under which the
costs of providing emergency call services are allocated.
A Ministerial
determination made under subclause 150(1) is a disallowable instrument for the
purposes of s. 46A of the Acts Interpretation Act 1901 (subclause
150(2)). The determination must therefore be notified in the Commonwealth
Gazette and tabled in the Parliament and will be subject to Parliamentary
disallowance.
Clause 151 – Access to be
provided
Clause 151 is intended to facilitate access to the carriage
services, networks and facilities needed by a person subject to requirements in
a determination made under clause 147.
Clause 151 applies if a
determination under clause 147 requires a person to provide access to controlled
carriage services, networks or facilities. It requires the person to provide
access in accordance with the determination and on such terms and conditions as
are agreed between the parties, or failing agreement, as are determined by an
arbitrator appointed by the parties. If the parties fail to agree on the
appointment of an arbitrator, then the ACCC is to be the arbitrator. It is
expected that the ACCC will have regard to the types of issues it is required to
consider in arbitrating disputes under Part XIC of the TPA and would follow
similar procedures. The regulations may make provision for and in relation to
the conduct of an arbitration under this clause.
Part 9––Price control arrangements for Telstra
Part 9 of the Bill re-enacts the price regulation regime currently
contained in Part 6 of the Telstra Corporation Act 1991 (and supported by
the Telstra Carrier Charges––Price Control Arrangements,
Notification and Disallowance Determination 1997) which is to continue to apply
to Telstra.
Clause 152 – Simplified outline
Clause
152 contains a simplified outline of Part 9 of the Bill to assist
readers.
Clause 153 – Definitions
Clause 153 defines
‘carrier charge’ for the purposes of Part 9 of the Bill to mean a
charge for a carriage service or a content service supplied by Telstra or a
charge for a facility supplied by Telstra. As a result of subclause 5(1) of the
Bill, the expression ‘carriage service’ will have the same meaning
as it has in the Telecommunications Act. ‘Carriage service’ is
defined by s. 7 of the Telecommunications Act to mean a service for carrying
communications by means of guided and/or unguided electromagnetic energy (ie by
cable or radiocommunications).
Also as a result of subclause 5(1) of the
Bill, the expression ‘content service’ will have the same meaning as
it has in the Telecommunications Act.
Clause 153 defines
‘charge’ to include (a) any charge or fee and (b) a nil charge or
nil fee; and (c) in relation to a carriage service, includes (i) any charge or
fee (including of a kind referred to in paragraph (a) or (b)) for or in relation
to a facility used, or intended for use, in relation to the supply of the
service; and (ii) any other charge or fee (including of a kind referred to in
paragraph (a) or (b)) for or in relation to the supply of the service.
The definition ensure that price control arrangements can be applied in
relation to services for which there is currently no charge.
Clause
154 – Minister may determine price control
arrangements
Subclause 154(1) empowers the Minister to determine that
the charges for certain carriage services offered by Telstra are subject to
price control arrangements. The current price control arrangements for Telstra
are set out in the Telstra Carrier Charges––Price Control
Arrangements, Notification and Disallowance Determination 1997.
The
Minister’s determination is a disallowable instrument (subclause 154(2)).
It will therefore be required to be notified in the Commonwealth
Gazette, tabled in the Parliament and will be subject to Parliamentary
disallowance.
Clause 155 – Effect of price control
arrangements
Clause 155 empowers the Minister, by disallowable
instrument, to determine
price cap arrangements and other price control
arrangements to apply to any charge for a particular Telstra service. These
arrangements are currently dealt with in Part 3 of the Telstra Carrier
Charges––Price Control Arrangements, Notification and Disallowance
Determination 1997.
Clause 155 also empowers the Minister, by
disallowable instrument, to determine principles to govern the operation of the
price control arrangements. These principles (which are currently dealt with in
Part 4 of the Telstra Carrier Charges––Price Control Arrangements,
Notification and Disallowance Determination 1997) may
cover:
• factors which the ACCC is to consider in assessing whether
or not any price variations proposed by Telstra fall within the pricing
regime;
• types of alterations that require, and do not require,
ACCC consent;
• the period of notice to be given to the ACCC before
making that type of alteration;
• the amount and nature of
information to be provided by Telstra to the ACCC in relation to any particular
alteration; and
• in relation to alterations that require the
ACCC’s consent, the period of time in which the ACCC must give or refuse
consent to the variation.
The principles are designed to allow
flexibility for negotiation of varying arrangements between the ACCC and
Telstra, depending on the particular circumstances surrounding a proposed price
variation.
For the avoidance of doubt, subclause 155(3) makes it clear
that price-cap arrangements and other price control arrangements determined
under clause 154 may relate to charges for untimed local calls in particular
areas. This provision was moved by Senator Boswell on behalf of the Government
during the debate on the Telstra (Transition to Full Private Ownership) Bill
1998 in July 1998.
Subclause 155(4) provides that a price control
determination under clause 155 may make different provision with respect to
different customers. Clause 155, however, does not by implication limit
subsection 33(3A) of the Acts Interpretation Act 1901. Subclause 155(4)
is a technical amendment resulting from the need to ensure consistency with the
USO price control provisions in clause 43.
It is intended that a price
control determination may provide that different (two or more) price control
arrangements apply in relation to one kind of Telstra service charge, with each
of the different price control arrangements relating to customers in a
particular class. For example, a price control determination may apply
different price control arrangements in relation to residential and business
customers being supplied with the standard telephone service. (Such
differentiation exists under the Telstra Carrier Charges––Price
Control Arrangements, Notification and Disallowance Determination 1997.) It is
also intended that a price control determination be able to apply particular
price controls in relation to more specific classes of customer, for example,
educational institutions, medical facilities or public libraries. This would
mean, for example, that the Minister in a price determination could require that
a Telstra service be provided to schools, libraries and hospitals at a
particular price, while it may be available to other customers at another
regulated price, or even an unregulated price.
Subclause 155(5) requires
Telstra to comply with directions made under this clause. Clause 1 of Schedule
2 to the Telecommunications Act, as proposed to be amended by the
Telecommunications Legislation Amendment Bill 1998, makes it a statutory
condition of a licence that a carrier comply with the Bill. Contravention of
the Bill and the Telecommunications Act is subject to civil penalty provisions
(see Part 31 of that Act) involving pecuniary penalties of up to $10
million.
Clause 156 – Alteration of charges subject to price
control arrangements
Clause 156 sets out the process to be followed
by Telstra when it wishes to alter a charge subject to price control
arrangements.
Parts 2 and 3 of the Telstra Carrier
Charges––Price Control Arrangements, Notification and Disallowance
Determination 1997 deal with those charges of Telstra that are subject to price
control arrangements and the price caps that apply, and Part 4 of that
Determination deals with the principles applying to alterations of
charges.
Where, under the applicable Ministerial determinations under
clause 155 dealing with price control arrangements or the principles governing
how Telstra may alter certain charges, the ACCC’s consent is not required
to the proposed alteration, Telstra may make the proposed alteration (subclause
156(2)).
Where the ACCC’s consent is required before alterations to
relevant charges can be made, subclause 156(3) sets out the conditions that must
be satisfied before Telstra can make a proposed alteration. These conditions
are:
• if the Ministerial determinations require Telstra to give
the ACCC a period of notice before the proposed alteration is made – that
period must have ended or the ACCC must have waived the giving of the
notice;
• if the Ministerial determinations require Telstra to give
the ACCC particular information not later than a particular time before the
alteration is made – the information must have been so given or the ACCC
must have waived the giving of all or part of the
information;
• unless the ACCC has requested Telstra to provide
further information about the proposed alteration:
– the ACCC has
consented to the proposed alteration; or
– the ACCC has not refused
its consent to the proposed alteration within the period specified in the
determinations;
• if the ACCC has requested Telstra to provide
further information about the proposed alteration within the period within which
it is required to give or refuse its consent to the alteration, the period is
extended by a period commencing when the request was made and ending on the day
on which the further information was provided.
Clause 157 –
Carrier charges subject to notification and disallowance
Clause 157
enables the Minister to determine, by disallowable instrument, that certain
charges are to be controlled by means of notification and disallowance. This
mechanism will be necessary only in limited circumstances, where control by
price cap is not considered necessary, but where a reserve power to scrutinise
is desirable given the competitive impact of certain charges on other service
providers or on community interests and expectations.
Under Part 5 of the
Telstra Carrier Charges––Price Control Arrangements, Notification
and Disallowance Determination 1997, charges for the provision of certain
directory assistance services are currently subject to notification and
disallowance.
Clause 158 – Alteration of charges subject to
notification and disallowance
Clause 158 relates to the process to be
applied to charges that are subject to notification and disallowance.
If Telstra proposes to alter a carrier charge that is subject to
notification and disallowance, it must inform the Minister in writing of the
proposed alteration at least 30 days before it takes effect (subclause
158(1)).
Within 30 days after receiving notice of the proposed
alteration, the Minister may:
• request the ACCC, in writing, to
give a written report as to whether the proposed alteration should be disallowed
in the public interest; and
• direct Telstra, in writing, not to
make the proposed alteration until the Minister has received and considered the
ACCC’s report (subclause 158(2)).
The ACCC is required to give the
report to the Minister within 30 days after receiving the request (subclause
158(3)).
If the Minister, after taking the ACCC’s report into
account, is of the opinion that the proposed alteration is not in the public
interest, he or she may, by written notice given to Telstra within 30 days after
receiving the report, direct Telstra not to make the alteration (subclause
158(4)).
Telstra will be required to comply with a direction under
subclause 158(4) (subclause 158(5)). Under clause 1 of Schedule 1 to the
Telecommunications Act, as proposed to be amended by the Telecommunications
Legislation Amendment Bill 1998, compliance with that Act and this Bill, and
thus including subclause 158(4) of this Bill, is a standard carrier licence
condition. Section 68 of the Telecommunications Act provides that a carrier
must not contravene a condition of a carrier licence held by the carrier and
that this is a civil penalty provision. Part 31 of the Telecommunications Act
provides for pecuniary penalties of up to $10 million for breaches of civil
penalty provisions.
Part
10––Miscellaneous
Part 10 of the Bill deals with miscellaneous matters, including the ability
of the Minister to direct Telstra to comply with the Bill.
Clause 159
– Direction to Telstra to comply with this Act
Subclause 159(1)
empowers the Minister to direct Telstra in writing to take specified action
directed towards ensuring that Telstra complies with the Bill. The Minister
must consult with Telstra prior to giving a direction (subclause 159(2)). The
consultation requirement will ensure that Telstra has an opportunity to provide
comments on the direction.
This new Ministerial direction power
replaces the current Ministerial direction power in Part 3 of the Telstra
Corporation Act 1991 which is to be repealed by item 28 of Schedule 3 to the
Telstra (Transition to Full Private Ownership) Bill 1998. The new power is
targeted at the consumer and service standards issues dealt with by this Bill,
removing the need for the power in the Telstra Corporation Act.
To avoid
doubt, subclause 159(3) provides that the Minister’s directions power does
not limit other powers in the legislation and is itself not limited by other
powers, including powers conferred on the Minister, the ACA or the ACCC.
Subclause 159(4) requires Telstra to comply with such a direction.
Under clause 1 of Schedule 1 to the Telecommunications Act, as proposed
to be amended by the Telecommunications Legislation Amendment Bill 1998,
compliance with that Act and this Bill, and thus including clause 159 of this
Bill, is a standard carrier licence condition. Section 68 of the
Telecommunications Act provides that a carrier must not contravene a condition
of a carrier licence held by the carrier and that this is a civil penalty
provision. Part 31 of the Telecommunications Act provides for pecuniary
penalties of up to $10 million for breaches of civil penalty
provisions.
Clause 160 – Regulations
Clause 160
contains the standard regulation making power.
The Governor-General will
be empowered to make regulations prescribing matters required or permitted by
the Bill to be prescribed or necessary or convenient to be prescribed for
carrying out or giving effect to the Bill (subclause 160(1)).
The
regulations will be able to prescribe penalties of up to 10 penalty units for
offences against the regulations (subclause 160(2)).