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1998-1999-2000
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TELECOMMUNICATIONS LEGISLATION AMENDMENT BILL 2000
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Communications, Information Technology and the Arts, Senator the Hon Richard Alston)
ISBN: 0642 440972
The Telecommunications Legislation Amendment Bill 2000 (the Bill) consists of two Schedules.
Schedule 1 amends provisions relating to the management of electronic addressing in Part 22 of the Telecommunications Act 1997 (the TA) to clarify the situations in which intervention by government agencies in the management of electronic addressing is warranted.
Schedule 2 amends the Australian Communications Authority Act 1997 (the ACAA) to enable the Minister for Communications, Information Technology and the Arts (the Minister) to give the Australian Communications Authority (the ACA) responsibility for managing a specified type of electronic addressing.
Part 22 of the TA provides for the regulation of numbering and electronic addressing in relation to carriage services. Strictly, all numbering used for carriage services is a form, or subset, of electronic addressing. Electronic addressing is essentially a series of alphanumeric characters that enables a network to recognise the intended destination of a communication across the network, or to establish a connection between two or more points.
In Part 22, numbering means any sequence of characters specified in the numbering plan made by the ACA under Division 2 of Part 22 (see section 455 in particular). On the other hand, electronic addressing is any other sequence used in relation to communication by a carriage service, which is not specified in the numbering plan.
Certain forms of electronic addressing, relating to the Internet, have assumed greater importance since the TA was enacted in 1997. These include the Internet domain name system (DNS).
All computers connected to the Internet have an IP address. An IP address is a numerical code that identifies a computer's location on the network and allows connections according to a global standard called TCP/IP. IP addresses are currently issued by regional registries in co-ordination with the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN is a company incorporated in the United States which coordinates several essential areas of the Internet including the allocation of IP addressing and the management of the domain name system.
Domain names are easily remembered strings of alphanumeric characters that can be used to ‘resolve’ (i.e. translate) IP addresses via a global network of ‘nameservers’. The global DNS is divided hierarchically according to a top level, a second level, a third level, and so on. There are generic top level domains (such as .com, .net and .org) and country code top level domains (such as .au, .uk and .jp).
The Government favours a self-regulatory approach to the management of electronic addressing services such as domain names. The amendments made by this Bill are designed to provide clear and appropriate powers of intervention for use in the event that self-regulation proved ineffective.
Division 3 of Part 22 (sections 474-477) currently provides a mechanism for intervention by the Commonwealth, through the ACA or the Australian Competition and Consumer Commission (ACCC), in the management of electronic addressing. The powers of the ACA and the ACCC are limited and are available only in specified circumstances. The existing mechanism was not intended as a means for the ACA or the ACCC to manage electronic addressing. This reflects the general self-regulatory approach of the TA.
The existing provisions of the TA are to be amended to clarify the situations in which intervention by government agencies is warranted. The amendments made by Schedule 1 clarify the existing conditions under which the ACA and the ACCC can issue directions to a manager of electronic addressing. If the ACCC determines that a manager is not promoting adequate levels of competition or consumer protection, or the ACA determines that management of an electronic addressing service is unsatisfactory, the ACA is able to declare it a 'manager of electronic addressing' for a specified type of electronic addressing. The ACA and the ACCC can then give directions to the manager to rectify problems.
Schedule 2 to the Bill establishes an additional mechanism, to allow the Minister to give the ACA responsibility for managing a specified type of electronic addressing. Schedule 2 amends the ACAA to give the ACA clear legislative authority to enable it to take on this additional function if necessary, under authority from the recognised governing body for those services. This mechanism is intended for those exceptional situations where direct management by the ACA was the only viable alternative.
The amendments allow the ACA, at the instruction of the Minister, to prepare to become a manager of an electronic addressing service. This preparation may require the ACA to secure equipment and personnel, and develop policies. In carrying out its functions of preparing to be a manager of electronic addressing the ACA will be required to consult the ACCC in relation to issues that have a significant effect on competition or consumer protection.
It is anticipated that when the ACA’s preparations were complete, the Minister would issue a further instruction signalling the ACA's assumption of management responsibility for that electronic addressing service. This further instruction would generally operate in concert with an application to the governing body for that form of electronic addressing for delegation to the ACA. It is also proposed that the ACA will be required to consult the ACCC in relation to issues that have a significant effect on competition or consumer protection when carrying out its functions as a manager of electronic addressing.
This mechanism will serve as a safety net in the event that a self-regulatory body at some time in the future is unable to manage an electronic addressing service in an effective manner. It is envisaged that there would be a return to self-regulation when it is considered that it would be more effective for a self-regulatory body to manage an electronic addressing service. In order to return to self-regulation, the Minister may revoke the instruction to the ACA.
The amendments to the TA should have no financial impact as they simply clarify existing powers of the ACA and ACCC.
The amendments to the ACAA are expected to have no financial impact, unless an exceptional situation arises where there is a need for the ACA to become a manager of electronic addressing.
If the ACA were directed by the Minister to become a manager of electronic addressing, the ACA would incur some administrative costs in preparation and establishing the function. The amount of these costs cannot be accurately estimated, as management of electronic addressing is currently in a transitional phase, and there is a wide range of potential situations where the ACA might be required to manage electronic addressing. The maximum expected establishment costs are less than $1M.
The ACA's costs in managing electronic addressing would be recoverable via the ACA's powers in section 53 of the ACAA, as amended by the Bill.
Clause 1 provides for the citation of the Telecommunications Legislation Amendment Act 2000.
The Act will commence on Royal Assent.
By virtue of this clause, provisions of the Telecommunications Act 1997 (the TA) and the Australian Communications Authority Act 1997 (the ACAA) are amended as set out in the Schedules to the Bill, and transitional provisions have effect according to their terms.
Currently under subsection 474(1) of the TA the ACA may, by Gazette notice, determine a specified person or association to be ‘the declared manager of electronic addressing’ in relation to a specified kind of listed carriage service. The person or association declared by the ACA could be the existing private sector manager or another person or association. The power to declare a manager may only be exercised if:
(a) the ACA is directed to do so by the ACCC – the ACCC may only so direct the ACA if it considers that compliance with the direction is likely to have a bearing on competition (see paragraph 474(3)(a) and subsections 474(4), (5) and (6)); or
(b) the ACA considers that the person or association is not managing electronic addressing in accordance with ‘generally accepted principles and standards’ (see paragraph 474(3)(b)).
This item repeals subsection 474(1) of the TA and reenacts it in an amended form. The substantive differences between the existing and new provisions are that the ACA may declare that a specified person or association is a declared manager (rather than the declared manager) in relation to a specified kind of electronic addressing and a specified kind of listed carriage service.
This will allow declarations of different parties to be simultaneously in effect, reflecting those parties’ different functions and responsibilities. It will also, as outlined below in the notes on Schedule 2, allow declarations to be in force simultaneously under the ACAA and the TA in relation to different aspects of the form of electronic addressing in question.
In addition to specifying the kind of listed carriage service, for example the Internet, the declaration will also specify the kind of electronic addressing involved.
One of the situations in which the ACA can currently declare the manager of electronic addressing is if the manager is not managing electronic addressing in accordance with ‘generally accepted principles and standards’ (paragraph 474(3)(b)). However, it may not be possible to clearly identify what, if any, principles or standards are generally accepted in relation to a particular form of electronic addressing.
Accordingly, this item replaces paragraph 474(3)(b) so that the ACA will be able to declare a manager if the person is not managing that kind of electronic addressing to the ACA’s satisfaction.
Examples of situations in which the ACA may not be satisfied include non-compliance with material standards, or mismanagement which threatens the stability or integrity of the system. Given the growing public importance, in both social and economic terms, of certain kinds of electronic addressing (especially the Internet DNS), there may also be other situations where the ACA is not satisfied with the person’s management.
Currently under subsection 474(6) of the TA, the ACCC may direct the ACA to declare a person or association to be the manager of electronic addressing if the ACCC considers that compliance with the direction is likely to have a bearing on competition.
The effect of the amendment made by this item is that the ACCC may also direct the ACA to give such a direction if the ACCC considers that compliance with the direction is likely to have a bearing on consumer protection. This reflects the current range of the ACCC’s functions.
Currently under subsection 475(1) the ACA may give the declared manager a direction to do, or refrain from doing, a specified act or thing. A direction is a disallowable instrument (subsection 475(8)). A direction is binding; non-compliance is an offence (subsections 475(6) and (7)). Before giving a direction, the ACA must consult the ACCC (subsection 475(5)).
This item repeals subsection 475(1) and reenacts it in a form which corresponds to the amendments made to subsection 474(1) by item 1 above.
Currently, the ACA may only give a direction under subsection 475(1) if it considers electronic addressing to be of ‘public importance’ (see subsection 475(2)). Subsection 475(3) sets out matters the ACA must consider in assessing this issue. It requires the ACA to have regard to the extent to which the electronic addressing is of significant social and/or economic importance to service providers and end-users of carriage services. These matters do not limit the matters which the ACA may also consider, if relevant (subsection 475(4)).
The effect of this amendment is to broaden subsection 475(3) to cover the social and economic importance of electronic addressing generally, not simply its importance to particular groups.
Some examples of possible indicators which the ACA may use to determine the extent to which the addressing is of significant social and/or economic importance, include:
• the degree to which a particular kind of electronic addressing is used in the general community or in commerce;
• the purpose or range of purposes for which a particular kind of electronic addressing is used; and
• the significance of particular addresses to the business or individuals to which they may be assigned.
Currently subsection 476(1) gives the ACCC a power to give directions to the declared manager. This power corresponds with the power given to the ACA under subsection 475(1) (see discussion above at item 4).
The amendments to subsection 476(1) in relation to the ACCC correspond to the amendments to subsection 475(1) in relation to the ACA made by item 4 above.
The preconditions for an ACCC direction under subsection 476(1) are that the ACCC considers that the electronic addressing is of public importance, and that compliance with the direction is likely to have a bearing on competition (see subsection 476(2)).
The amendment to paragraph 476(2)(b), which adds a reference to consumer protection, corresponds to the amendment to subsection 474(6) made by item 3 above.
The amendments to subsection 476(3) in relation to the ACCC correspond to the amendments to subsection 475(3) in relation to the ACA made by item 5 above.
SCHEDULE 2 - AUSTRALIAN COMMUNICATIONS AUTHORITY ACT 1997
This item adds a new definition of ‘listed carriage service’ to section 4 of the ACAA. The phrase is used in the amendments to section 8 made by item 2 below.
The term has the same meaning as in the TA. Under section 16 of that Act (read together with the definition of ‘carriage service’ in section 7 of that Act), a ‘listed carriage service’ is a service for carrying communications, by means of guided or unguided electromagnetic energy, between a point in Australia and one or more other points, in Australia or elsewhere. (Under section 4 of the ACAA, ‘carriage service’ has the same meaning in the ACAA as in the TA.) A listed carriage service may be used to access the Internet.
Under sections 6-8 of the ACAA, the ACA has certain functions relating to telecommunications and radiocommunications.
This item adds paragraphs 8(1)(aa) and 8(1)(ab), which provide a mechanism for the ACA to be given additional functions relating to management of electronic addressing.
New paragraph 8(1)(aa) allows the Minister to instruct the ACA to prepare to provide for the management of a specified kind of electronic addressing. Such a direction will be a disallowable instrument (see the notes on new subsection 8(4), inserted by item 3 below).
The effect of an instruction under paragraph 8(1)(aa) (the first instruction) is to trigger the additional function of preparing to provide for the management of electronic addressing as requested. The function of providing for the management of electronic addressing would allow the ACA to choose whether to directly manage all aspects of the electronic addressing, or to enter agreements or other arrangements with other persons under which those persons would perform certain functions.
Paragraph 8(1)(c) and section 9 would allow the ACA to do anything necessary to perform this function. For example, the ACA may need to acquire equipment, hire additional staff or engage contractors, prepare written plans or policies, or consult with stakeholders.
If an instruction under paragraph 8(1)(aa) is in force, new paragraph 8(1)(ab) allows the Minister to instruct the ACA to provide for the management of electronic addressing (the second instruction). Such an instruction must be published in the Gazette (see the notes on new subsection 8(5), inserted by item 3 below).
The scope of the second instruction may be as broad as, or narrower than, the first instruction. That is, both instructions may specify the same kind of electronic addressing and the same kind of listed carriage services. Alternatively, the second instruction may specify a subset of the electronic addressing and/or a subset of the carriage services that were specified in the first instruction.
It is envisaged that this second instruction would take effect when the ACA’s preparations were complete. Where necessary, it would also operate in concert with the governing body transferring authority over that form of electronic addressing to the ACA.
New subsection 8(4) provides that an instruction by the Minister to the ACA to prepare to provide for the management of electronic addressing (under proposed new paragraph 8(1)(aa)), is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. This means that the instruction must be published in the Gazette, tabled in both Houses of Parliament, and will be subject to Parliamentary disallowance.
New subsection 8(5) provides that an instruction by the Minister to the ACA to provide for the management of electronic addressing, under proposed new paragraph 8(1)(ab), must be published in the Gazette.
New subsection 8(6) provides that the Minister may revoke a previous instruction to the ACA to prepare to provide for the management of electronic addressing under proposed new paragraph 8(1)(aa) or a previous instruction to the ACA to provide for the management of electronic addressing under proposed new paragraph 8(1)(ab). This would enable a return to self-regulation of electronic addressing at an appropriate time.
New subsection 8(7) provides that a notice revoking an instruction under paragraph 8(1)(aa) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. This is consistent with the manner in which the initial instruction is made (see discussion above for new subsection 8(4)).
New subsection 8(8) provides that a notice revoking an instruction under paragraph 8(1)(ab) must be published in the Gazette. This is consistent with the manner in which the initial instruction is made (see discussion above for new subsection 8(5)).
New subsection 8(9) provides that the revocation powers under new subsections 8(6), 8(7) and 8(8) do not affect the operation of subsection 33(3) of the Acts Interpretation Act 1901 in relation to other provisions of the Act. It also provides that it does not affect the operation of subsection 33(3) in relation to the power to amend or vary an instruction under new paragraphs 8(1)(aa) and 8(1)(ab). Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make an instrument, then unless specifies otherwise, this includes a power to repeal, rescind, revoke, amend or vary the instrument. This proposed subsection 8(9) clarifies that the Minister retains the power to amend or vary an instruction.
The amendments to section 8 of the ACA Act are in terms of the ACA becoming ‘a’ manager of the specified type of electronic addressing, rather than ‘the’ manager. It may be that the powers of direction under Division 3 of Part 22 of the TA are exercised in relation to the same form of electronic addressing for which the ACA has also been declared a manager under the ACAA. For example, the ACA may simultaneously:
• have been instructed under the ACAA to provide for the management of a specified kind of electronic addressing; and
• make determinations under the TA that one or more people or associations with different functions and responsibilities for that kind of electronic addressing are declared managers, and give appropriate directions to each of those declared managers; the direction would reflect the particular person’s functions and responsibilities in relation to that kind of electronic addressing.
New section 12A requires the ACA to consult with the ACCC before carrying out an act as part of its new functions under paragraphs 8(1)(aa) (preparing to provide for the management of electronic addressing) and 8(1)(ab) (providing for the management of electronic addressing) where, in the ACA’s opinion, the act would have a significant effect on competition or consumer protection. This requirement ensures that the ACCC continues to have a role in issues that have a significant effect on competition or consumer protection in relation to the management of electronic addressing.
Subsection 53(1) of the ACAA allows the ACA to make a written determination fixing charges for:
• services and facilities it provides; and
• any matter in relation to which expenses are incurred by the ACA under the ACAA, the TA, or other legislation.
Such a determination is a disallowable instrument (see subsection 53(4)).
Charges fixed by this determination mechanism must not be such as to amount to taxation (see subsection 53(2)). Further, this determination mechanism cannot be used to fix charges for services or facilities that the ACA provides under contract (see subsection 53(3)).
The amendments to section 53 made by this item are intended to ensure that the ACA is clearly able to recover the costs involved in performing the functions in new paragraphs 8(1)(aa) and (ab), regardless of any legal uncertainties about whether a particular charge relates to ‘services or facilities’, whether a charge relates to services or facilities under a contract, or whether (in the absence of an agreement) a charge would be a tax for the purposes of the Constitution.
This item therefore amends section 53 to allow the ACA to enter agreements relating to the functions in new paragraphs 8(1)(aa) and (ab), which may include terms for payment by the other party of certain of the expenses incurred by the ACA in performing those functions. The amount payable under the agreement may be specified in the agreement, or worked out under a formula specified in the agreement.
In practice, the ACA may enter a number of agreements with various parties with the overall aim of recovering, through those agreements, all its expenses related to performing its additional functions. For example, the ACA may enter an agreement with a person under which that person agrees to manage part of the .au domain (e.g. the .com.au domain), in return for payment of a standard amount. That person may in turn recover their costs by charging individuals or companies a fee for registration of a name in the .com.au domain.