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2013-2014-2015-2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TELECOMMUNICATIONS LEGISLATION AMENDMENT
(ACCESS REGIME AND NBN COMPANIES) BILL 2016
REVISED EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Communications,
Senator the Hon Mitch Fifield)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY
THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
TELECOMMUNICATIONS LEGISLATION AMENDMENT
(ACCESS REGIME AND NBN COMPANIES) BILL 2016
OUTLINE
Overview
The Telecommunications Legislation Amendment (Access Regime and NBN
Companies Bill) 2016 (the Bill) will implement, in part, the Government's response to
the independent cost-benefit analysis and review of regulatory arrangements for the
National Broadband Network (NBN) undertaken by the panel of experts headed by
Dr Michael Vertigan AC (the Vertigan panel).
In addition to its cost-benefit analysis of the NBN, two reports to Government were
produced by the Vertigan panel in 2014, containing a total of 53 recommendations on
regulatory and market structure matters. The Government's response to the Vertigan
panel's recommendations is set out in a policy paper released on 11 December 2014
titled, 'Telecommunications Regulatory and Structural Reform' (the Government
Response).
The Government Response indicated that the Government would introduce legislation
in two tranches. This Bill contains measures that respond to recommendations made
by the Vertigan panel to fine-tune the operation of the telecommunications access
regime and NBN Co's line of business obligations. Most of the panel's
recommendations in this area were made in its statutory review under section
152EOA of the CCA (the Statutory Review).
This explanatory memorandum reflects amendments made by the Government in the
House of Representatives, which removed Parts 3, 4, 5 and 8 of Schedule 1 (in their
entirety), along with Divisions 1 and 3 of Part 7 of Schedule 1 to the Bill, as originally
introduced into the House of Representatives on 2 December 2015.
The Bill proposes amendments to the Telecommunications Act 1997 (Tel Act), the
CCA and the National Broadband Network Companies Act 2011 (NBN Companies
Act), with minor consequential amendments to the National Transmission Network
Sale Act 1998 (NTN Act).
The measures:
clarify and better coordinate the interaction between the facilities access regime in
Schedule 1 to the Tel Act and the access regime in Part XIC of the CCA,
providing greater certainty for the telecommunications industry;
introduce a new obligation to ensure access providers give access to in-building
cabling that they own or control, where they use that cabling to supply an active
declared service, so that competing service providers are able to supply carriage
and/or content services using that active declared service by means of the cabling,
improving competition and providing greater choice for consumers;
1
amend the provisions in the CCA dealing with the ACCC's consideration of fixed
principles provisions in new or varied special access undertakings, to increase the
likelihood that the ACCC can accept fixed principles provisions;
require the ACCC to have regard to relevant fixed principles terms and conditions
included in previous access determinations or special access undertakings when
considering new access determinations or special access undertakings, to ensure
consistency in approach in the ACCC's treatment of fixed principles; and
amend section 19 of the NBN Companies Act in respect of the supply of non-
communications goods to permit NBN companies to dispose of surplus goods
(such as assets) to any person, providing NBN Co (and any other NBN
corporation) with greater flexibility in its business operations.
Regulation impact statements were not required for these measures.
Part 1 - Access to facilities
Currently, there is an a priori right for carriers to access certain facilities owned by
other carriers. This access regime is set out in Parts 3 and 5 of Schedule 1 to the Tel
Act. The Vertigan panel noted that facilities access services may also be regulated by
the ACCC under Part XIC of the CCA and recommended that the Government clarify
the ACCC's powers in relation to regulation of these services (Recommendation 1 of
the Statutory Review).
The facilities access regime in the Tel Act is based on an older 'negotiate/arbitrate'
model that was removed from the CCA in 2011 in favour of up-front determination by
the ACCC of terms and conditions of access. Consequently, if the ACCC were to
declare a facilities access service, under the current regulatory arrangements,
confusion may arise within industry over how terms and conditions of supply are
determined.
The Bill would amend the Tel Act to clarify that once the ACCC has declared a
specific facilities access service, then an access seeker would no longer be able to use
Schedule 1 to the Tel Act to gain access to the service. Instead, the carrier who owns
the relevant facility would be required to supply the service in accordance with the
Standard Access Obligations (SAOs) under the CCA. The terms and conditions of
supply could be set out in an access agreement or match those set by the ACCC in a
final access determination. It is also proposed that the Tel Act be amended to clarify
that, should the ACCC declare a facilities access service, any existing contracts,
arbitration determinations or Ministerial pricing determinations made in relation to
that service continue to have effect until they expire.
Part 2 - Access to in-building cabling
The Vertigan panel observed that carriers or service providers may not always own
in-building cabling (for example, in apartment buildings between the building
basement and customer premises), but may enter into agreements with building
owners which confer control over the cabling to the carrier or carriage service
provider (CSP). As a result, that carrier or CSP will effectively have control over an
access bottleneck. This was seen as a possible barrier to the provision of next-
2
generation broadband services. In such circumstances, the panel considered that Part
XIC of the CCA should clearly apply. The panel therefore recommended that there
should be clear provision of access to in-building cabling controlled by a carrier or a
CSP for use in conjunction with a declared service and that this provision should be
included in the SAOs (recommendation 5 of the Statutory Review).
The Bill amends the Category A and Category B SAOs to provide that an access
provider who:
is required to supply an active declared service to an access seeker, and
owns or otherwise controls physical access to customer cabling, and
uses that cabling and a network to supply the active declared services,
is to give an access seeker access to that cabling where needed for the supply of that
declared service. This ensures that a single provider's control of in-building cabling
cannot prevent access seekers from gaining end-to-end access for the purpose of
supplying carriage or content services to end-users using the relevant declared service.
To give an example of how this would work in practice, consider a scenario where an
access provider supplies an active declared service. In some multi-unit buildings
where the service is supplied, the access provider has an agreement with the body
corporate manager which enables it to control access to some of the customer cabling
after the main distribution frame (MDF). Consequently, when an access seeker
requests the declared service from the access provider in order to supply services to an
occupant of one of the units in the complex, if the access provider controls access to
the customer cabling to that individual unit, the access provider must ensure that the
declared service can also be carried over the in-building cabling. This would mean
that where the access provider controlled the relevant in-building cabling, it could not
argue that its obligation to provide access to the declared service ended at the MDF
but the obligation would also extend to the associated in-building cabling under its
control.
The Bill also amends the Category A SAOs to provide that the access provider must
take all reasonable steps to ensure that the service provider receives fault detection,
handling and rectification of a technical and operational quality and timing that is
equivalent to that which the access provider provides to itself in relation to the
provision of access to such in-building cabling. It is not necessary to make a similar
change to the Category B SAOs given NBN Co's wholesale-only and non-
discrimination obligations.
A consequential amendment is made to the NTN Act to clarify that this amendment
will not apply to the telecommunications access regime provisions within the NTN
Act.
Part 6 - Fixed principles
The Vertigan panel was concerned that the current wording of section 152CBAA of
the CCA, dealing with fixed principles in SAUs, could discourage the ACCC from
accepting fixed principles. Paragraph 152CBAA(5)(h) provides that, when the ACCC
is considering a new or varied SAU, it must not reject the SAU 'for a reason that
3
concerns' a fixed principle term or condition, or a fixed period, that it has previously
accepted as part of the original SAU. The phrase 'for a reason that concerns' is so
broad that the ACCC could be concerned that accepting a fixed principle could cover
a wide range of matters that were not anticipated or foreseen at the time it made its
decision to accept fixed principles. This could discourage the ACCC from accepting
proposed fixed principles in the first place, fearing that its ability to reject a new or
varied undertaking would be significantly constrained.
The panel recommended amending section 152CBAA (recommendation 25 of the
Statutory Review). Part 6 of the Bill replaces the phrase 'for a reason that concerns'
with the phrase 'on the basis of the inclusion or effect of'. This significantly narrows
the scope of section 152CBAA and targets the specific fixed principle itself, or its
effects. The ACCC would therefore know that, should it accept a fixed principles
provision in an SAU, if in future it considers a subsequent SAU or variation to an
SAU it would not be prevented from considering the wider implications of the fixed
principle but only prevented from considering the principle itself or its effects.
Part 6 also makes, as recommended by the panel, changes to section 152BCD to
clarify that, when the ACCC decides whether to include a fixed principles provision
in a final access determination, it must have regard to relevant fixed principles
provisions in other access determinations. The ACCC must also have regard, when
assessing an SAU, to any relevant fixed principles terms or conditions specified in
any other SAUs given to it by the same person or any other person and that it has
accepted. This change is intended to promote consistency in decision-making by the
ACCC in relation to fixed principles in access determinations and SAUs.
Part 7 - NBN corporations - Line of business restrictions and supply of goods and
services
Part 2 of the NBN Companies Act sets out fundamental line of business restrictions
on NBN Co. For example, section 9 of the NBN Companies Act sets out an obligation
on NBN Co to supply services on a wholesale-only basis.
Section19 provides that an NBN corporation must not supply goods to another person
unless the goods are for use in connection with the supply, or prospective supply, of
an eligible service by the NBN corporation.
This restriction, together the other restrictions in section 9, 18 and 20, ensure that
NBN Co is highly focused on its objectives in its operation and limits its ability to
exercise market power through integration in horizontal markets, or participation in
downstream markets.
The Bill provides that an NBN corporation may dispose of surplus non-
communications goods in two additional circumstances; where the NBN corporation
did not obtain the goods for the purpose of supplying the goods; and where the goods
were obtained by NBN corporation for the purpose of supplying them in connection
with the supply of an eligible service by the NBN corporation and the goods are
excess to its requirements. The Government has chosen to make this change explicitly
in the statute given that the evidence presented to it clearly showed that the current
4
drafting was having unintended consequences. The change will not compromise the
key purpose of the existing line of business restrictions.
FINANCIAL IMPACT STATEMENT
The measures in this Bill do not impose any financial impact on the Commonwealth.
5
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
Telecommunications Legislation Amendment (Access Regime and NBN
Companies Bill) 2016
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Telecommunications Legislation Amendment (Access Regime and NBN
Companies Bill) 2016 (the Bill) is the first tranche of reforms being implemented in
relation to the Government's Telecommunications Regulatory and Structural Reform
policy, released on 11 December 2014. This policy paper was issued in response to
the 53 recommendations made by the panel of experts headed by Dr Michael Vertigan
AC (Vertigan panel) in its independent cost-benefit analysis and review of regulation.
Specifically, the Bill as amended proposes amendments to the Telecommunications
Act 1997 (Tel Act), the Competition and Consumer Act 2010 (CCA) and the National
Broadband Network Companies Act 2011 (NBN Companies Act), with minor
consequential amendments to the National Transmission Network Sale Act 1998
(NTN Act).
The key measures:
clarify and better coordinate the interaction between the facilities access regime in
Schedule 1 to the Tel Act and the access regime in Part XIC of the CCA,
providing greater certainty for the telecommunications industry;
introduce a new obligation to ensure access providers give access to in-building
cabling that they own or control, where they use that cabling to supply an active
declared service, so that competing service providers are able to supply carriage
and/or content services using that active declared service by means of the cabling,
improving competition and providing greater choice for consumers;
amend the provisions in the CCA dealing with the ACCC's consideration of fixed
principles provisions in new or varied special access undertakings, to increase the
likelihood that the ACCC can accept fixed principles provisions;
require the ACCC to have regard to relevant fixed principles terms and conditions
included in previous access determinations or special access undertakings when
considering new access determinations or special access undertakings, to ensure
consistency in approach in the ACCC's treatment of fixed principles; and
6
amend section 19 of the NBN Companies Act to permit NBN companies to
dispose of surplus assets to any person, providing NBN Co (and any other NBN
corporation) with greater flexibility in its business operations.
These reforms aim to enhance the operation of the telecommunications access regime
and make one clarification to NBN Co's line of business obligations.
No human rights issues were raised during consultation on the Bill.
Human rights implications
The Bill does not engage any of the applicable rights or freedoms.
Conclusion
The Bill is compatible with human rights as it does not raise any human rights issues.
7
ABBREVIATIONS
The following abbreviations are used in this explanatory memorandum:
ACCC Australian Competition and Consumer Commission
ACMA Australian Communications and Media Authority
Bill Telecommunications Legislation Amendment
(Access Regime and NBN Companies Bill) 2016
CCA Competition and Consumer Act 2010
Department Department of Communications and the Arts
Minister Minister for Communications
NBN National Broadband Network
NBN Co NBN Co Limited
NBN Companies Act National Broadband Network Companies Act 2011
NTN Sale Act National Transmission Network Sale Act 1998
SAOs Standard Access Obligations
SAU Special Access Undertaking
Tel Act Telecommunications Act 1997
8
NOTES ON CLAUSES
TELECOMMUNICATIONS LEGISLATION AMENDMENT
(ACCESS REGIME AND NBN COMPANIES BILL) 2016
Clause 1 - Short title
Clause 1 provides that the Bill, when enacted, may be cited as the
Telecommunications Legislation Amendment (Access Regime and NBN Companies)
Act 2016.
Clause 2 - Commencement
Clause 2 provides for the commencement of the Bill. All of the provisions contained
in the Bill commence on the day after this Act receives the Royal Assent.
Clause 3 - Schedules
Clause 3 provides that legislation that is specified in a Schedule to the Bill is amended
or repealed as set out in the applicable items in that Schedule, and any other item in a
Schedule has effect according to its terms. There is one Schedule to this Bill,
comprising four parts.
9
Schedule 1--Amendments
Part 1--Facilities access
Competition and Consumer Act 2010
Telecommunications Act 1997
Item 1 - At the end of Part 3 of Schedule 1
Item 1 would insert new clause 19A at the end of Part 3 of Schedule 1 to the Tel Act.
New subclause 19A(1) would provide that a carrier must not request access to
supplementary facilities under Part 3 of Schedule 1 to the Tel Act if the service of
providing access to the facilities is a declared service under Part XIC of the CCA.
The default mechanism for obtaining access to a supplementary facility is through the
facilities access regime in Part 3 of Schedule 1. However, in accordance with
proposed subclause 19A(1) of Schedule 1, if a particular service of giving access to a
supplementary facility is declared under Part XIC, the person seeking access will be
able to do so under Part XIC and will no longer be able to rely upon Part 3 of
Schedule 1 to obtain access. This avoids the uncertainty of having two competing
access regimes operating simultaneously. If the ACCC has declared access under Part
XIC, it also needs to determine benchmark prices for access.
Proposed subclause 19A(2) provides that an obligation to supply access to facilities
under Part 3 of Schedule 1 to the Tel Act ceases if the service of giving access to the
facilities becomes a declared service. The clause is to be read as referring to specified
facilities (the facilities) and not broadly as referring to all facilities. This subclause is
required to ensure that both the ex ante right to seek access under Part 3, and the
obligation on a carrier to provide access, cease upon the declaration of a specific
facilities access service.
New subclause 19A(3) would provide that the terms and conditions of existing
agreements entered into under Part 3 of Schedule 1 to the Tel Act are effectively
grandfathered at the time of declaration.
New subclause 19A(4) limits the meaning of 'declared service' for the purposes of the
clause. A declared service means a service that has been declared by the ACCC under
subsection 152AL(3) or (8A) of the CCA. This means that clause 19A will not apply
to active declared services being supplied under a special access undertaking, or to
declared services being supplied by NBN Co under a standard form of access
agreement.
These two types of declared services are not subject to clause 19A to ensure that
carriers retain the right to seek ex ante access to facilities from NBN Co under
Schedule 1 to the Tel Act until a service is declared by the ACCC. All services that
NBN Co supplies are declared services. They become declared through three
mechanisms - through its special access undertaking, through a standard form of
access agreement, or following declaration by the ACCC. NBN Co currently supplies
some facilities access services under its SAU. However, those services have not been
declared by the ACCC and if NBN Co's SAU supplies were not quarantined from
proposed clause 19A, then the services would be taken to be declared without any
10
consideration by the ACCC. Other carriers who supply similar facilities access
services would also find that their services are treated as declared. To avoid this
outcome, proposed subclause 19A(4) limits the services that may switch off ex ante
rights under Schedule 1 to the Tel Act to those services that have been declared by the
ACCC following a public inquiry.
Item 2 - At the end of Part 5 of Schedule 1
Item 2 inserts new clause 39A at the end of Part 5 of Schedule 1 to the Tel Act, which
serves a similar function to new clause 19A, inserted by Item 1.
New clause 39A provides that a carrier must not request access to a tower or eligible
underground facility under Part 5 of Schedule 1 if the service of giving access to any
such facility is a declared service under Part XIC of the CCA.
The default mechanism for obtaining access to a tower or eligible underground
facility is through the access regime in Part 5 of Schedule 1 to the Tel Act. However,
in accordance with proposed subclause 39A(1), if a particular service of giving access
to a tower or eligible underground facility is declared by the ACCC under Part XIC,
the person seeking access will be able to do so under Part XIC and will no longer be
able to rely upon Part 5 of Schedule 1 to obtain access. This avoids the uncertainty of
having two competing regimes operating simultaneously. If the ACCC has declared
access under Part XIC, it also needs to determine benchmark prices for access.
Part 5 covers giving access to a tower, the site of a tower or an eligible underground
facility. Proposed clause 39A only extends to towers or eligible underground
facilities, as the ACCC's powers to declare eligible services under Part XIC may not
extend to granting access to a site for the purpose of installing a new facility.
Proposed subclause 39A(2) largely mirrors proposed subsection 19A(1) but it applies
to the obligation under Part 5 of Schedule 1 to the Tel Act relating to access to a tower
or eligible underground facility ceases. That obligation would be switched off in
relation to any facilities access service that becomes a declared service.
Proposed new subclause 39A(3) will ensure that existing agreements entered into
under Part 5 of Schedule 1 to the Tel Act are effectively grandfathered at the time of
declaration of the particular service.
Proposed new subclause 39A(4) limits the meaning of 'declared service' for the
purposes of the clause. A declared service means a service that has been declared by
the ACCC under subsection 152AL(3) or (8A) of the CCA. This means that clause
39A will not apply to active declared services being supplied under a special access
undertaking, or to declared services being supplied by NBN Co under a standard form
of access agreement, for the same reasons as set out under item 1.
Item 3 - Application and transitional provisions
Item 3 would set out rules for the application of existing and potential future
obligations under Parts 3 and 5 of Schedule 1 to the Tel Act, as a result of the
amendments proposed in Schedule 1 of the Bill.
Item 3 differs from items 1 and 2 as those items establish obligations that apply to a
service after it becomes a declared service, after those items have commenced,
whereas item 3 deals with the possible scenario that a service supplied under Part 3 or
11
Part 5 of Schedule 1 to the Tel Act has been declared under Part XIC of the CCA
prior to the commencement of the item.
Proposed subitem 3(1) sets out the circumstances under which the obligation under
Part 3 or 5 of Schedule 1 will cease. If the obligation is an existing obligation to give
access to a facility, tower, or eligible underground facility, and on commencement of
item 3, the service of giving access to the facility, tower, or eligible underground
facility is a declared service under Part XIC, the obligation will cease.
Proposed subitem 3(2) provides that subitem 3(1) does not affect the continuity or
terms and conditions of any agreements entered into under Schedule 1 to the Tel Act,
determinations made under clauses 9 or 27 of Schedule 1, or agreements or
determinations between carriers for the supply of a service. Proposed subitem 3(2)
additionally would provide that new subitem (1) does not apply in relation to a carrier
supplying a service to another carrier if the relevant agreement or determination
relates to that supply. This ensures there will be no cessation of obligations to provide
access to a facility, tower, site or eligible underground facility under Parts 3 or 5 of
Schedule 1 to the Tel Act, if a relevant agreement or determination mentioned in
proposed subitem 3(2) is in force.
Part 2--Access to customer cabling
Competition and Consumer Act 2010
Item 4 - Subsection 4(1)
Item 4 inserts the definition of 'customer cabling' into the CCA, adopting the same
definition used in the Tel Act, for the purpose of proposed items 5 and 6.
Item 5 - After subsection 152AR(5)
Carriers and carriage service providers who provide active declared services, in
accordance with Part XIC of the CCA, are required to comply with SAOs in relation
to the supply of those services. Customer cabling is usually controlled by the building
owner or manager. However, in some circumstances, an access provider may own the
cabling or have legal or operational control over customer cabling. The current SAOs
under sections 152AR and 152AXB of the CCA do not impose a clear obligation on
the access provider in these circumstances to provide access to that cabling.
Item 5 would insert a new subsection 152AR(5A) after subsection 152AR(5). The
new subsection seeks to implement recommendation 5 of Statutory Review Report,
that Part XIC of the CCA be amended so that giving access to in-building cabling
controlled by a carrier or service provider for use in conjunction with a declared
service is included in the SAOs.
The purpose of the proposed new subsection is to remove the potential for a single
carrier or service provider who controls customer cabling from being able to create an
access bottleneck as a result of its control over the cables, thereby favouring its own
operations over those of its competitors. Importantly, under the new provision, an
access seeker would only be able to request access to customer cabling in relation to
the supply of a declared service. For example, this means that if access has been
declared to a service that needs to use in-building cabling for its delivery, the access
12
provider would also need to provide access to that in-building cabling for the purpose
of the access seeker using that declared service to provide its service. The amendment
is not intended to create an obligation on a person controlling in-building cabling to
provide access to that cabling as a thing in itself in the absence of a declared service
dependent on that cable for its supply. It is not intended, for example, to enable a
carrier to seek access to the cabling to operate its own digital subscriber line access
multiplexer or DSLAM, using the cabling, in the absence of an associated declared
service.
Proposed subparagraphs 152AR(5A)(a) and (b) set out the conditions that must be
met by an access provider when an access seeker requests access to customer cabling.
These are:
access to customer cabling for the purpose of supplying carriage and/or content
services, and
fault detection, handling, and rectification of a technical and operational quality
and timing that it provides to itself.
Proposed paragraphs 152AR(5A)(c) to (e) set out the circumstances that require an
access provider to comply with the access requirements at paragraphs 152AR(5A)(a)
and (b). These circumstance are where:
the service supplied by the access provider is an active declared service, and
the access provider owns or otherwise controls physical access to the cabling, and
the access provider already uses the cabling and a telecommunications network to
supply the active declared service to itself or another person.
The concept of 'control' in proposed paragraph 152AR(5A)(d) is intended to be broad
and capture circumstances where a person, by virtue of an agreement with the legal
owner or some other arrangement or understanding (express or implied by conduct)
between the person and the owner of the cabling, is able to determine who can access
and use the in-building cabling. It also captures circumstances where the access
provider owns the cabling, with ownership having its ordinary meaning.
Item 6 - After subsection 152AXB(5)
Item 6 would insert a new subsection 152AXB(5A), which largely mirrors the
provisions in item 5 but amends the Category B SAOs, which apply to NBN
corporations, except for one item which is unnecessary in an NBN corporations
context, given their separate non-discrimination obligations.
Item 6 ensures that an NBN corporation will also be required to give access to
customer cabling it owns or controls and to which access needs to be provided to
supply an associated active declared service. As noted above, the provisions are not
intended to require NBN Co or any other access provider to provide access to in-
building cabling as a thing in itself, independent of any associated declared service.
13
National Transmission Network Sale Act 1998
Item 7 - Paragraph 16(1)(c)
Item 7 would insert in paragraph 16(1)(c) of the NTN Sale Act, a reference to new
subsection 152AR(5A). This would ensure that proposed subsection 152AR(5A) does
not apply to nominated services under the NTN Sale Act, consistent with the other
exclusions listed in subsection 16(1) of that Act.
This change will mean that the new customer cabling access requirement will not
apply to the access regime in the NTN Sale Act. That access regime is based on the
telecommunications access regime as it existed prior to 2011 and the item ensures it
will be preserved in that form.
Part 6--Fixed principles
Competition and Consumer Act 2010
Item 26 - After subsection 152BCD(1)
This item would insert proposed subsection 152CBD(1A). The new subsection would
require the ACCC to have regard to any relevant fixed principles terms or conditions
included in other access determinations when considering whether to include a fixed
principles provision in an access determination. This item seeks to implement
paragraph (c) of recommendation 25 of the Statutory Review, with a view to
promoting consistency and equity in Part XIC decision-making.
Item 27 - Paragraph 152CBAA(5)(h)
Section 152CBAA allows for a particular class of terms or conditions to be specified
in an SAU, known as 'fixed principles'. If a term or condition is identified as a fixed
principle, and accepted by the ACCC, the ACCC is prevented from rejecting identical
terms or conditions in future SAUs or variations of those undertakings, subject to the
rules set out in section 152CBAA. Fixed principles provide long term certainty for
service providers and access seekers. This has particular significance in the
telecommunications industry given that there can be substantial up-front costs in
rolling out or upgrading telecommunications networks, with those costs often
recouped over a lengthy period.
Currently under subsections 152CBAA(5) and 152CBAA(6) the ACCC cannot reject
an SAU or a variation to an SAU "for a reason that concerns" a corresponding fixed
principles term or condition that the ACCC has previously accepted in relation to a
service. The Vertigan review was concerned that because the phrase "for a reason that
concerns" is so broad, it could discourage the ACCC from accepting a fixed principles
term or condition in the first instance, thereby reducing the effectiveness of fixed
principles in providing industry certainty. The phrase was seen as discouraging the
acceptance of fixed principles because when the ACCC had to consider a new SAU or
variation with that fixed principles term or condition, the ACCC would not be able to
reject the new SAU or variation "for a reason that concerns" the fixed principle, even
if there was a matter that was previously unforeseen, but warranted the SAU or
variation to be rejected. In this context, the ACCC was likely to take a cautious
approach in accepting a fixed principles term or condition in the first instance.
14
Paragraph (a) of recommendation 25 of the Statutory Review proposed the provisions
be amended to address this concerns. Item 27 does this.
Item 27 would omit the phrase "for a reason that concerns" from paragraph
152CBAA(5)(h) and substitute the phrase, "on the basis of the inclusion or effect of".
The amendments would, in effect, narrow the basis upon which the ACCC could
reject a SAU or variation containing a fixed principles term or condition by only
preventing rejection of the undertaking in circumstances where the rejection is "on the
basis of the inclusion or effect" of the relevant fixed principle, the corresponding
notional fixed period, or any specified qualifying circumstances in relation to the
fixed principle. This would provide that the ACCC would have more certainty about
the implications of accepting fixed principles in the first place as it should have a high
degree of certainty as to the principles themselves and their likely effect, as opposed
to "a reason that concerns" which could be difficult to know upfront.
Item 28 - Subsection 152CBAA(6)
Item 28 complements item 27 above and would omit the expression, "for a reason that
concerns" from subsection 152CBAA(6) and substitute "on the basis of the inclusion
or effect of". Again, this amendment would have the effect of narrowing the basis
upon which the ACCC could reject an SAU variation if the varied undertaking
contains a fixed principle that is identical to the original fixed principle contained in
the undertaking.
Item 29 - At the end of section 152CBD
Item 29 would insert proposed subsection 152CBD(7) and 152CBD(8), which relate
to consistency in consideration of fixed principles terms and condition in SAUs.
Proposed subsection 152CBD(7) makes clear proposed subsection 152CBD(8) is not
intended to limit the matters to which the ACCC must have regard in deciding
whether to accept or reject an SAU. Proposed subsection 152CBD(8) would provide
that the ACCC must, however, have regard to any relevant fixed principles term or
condition specified in another SAU accepted by the ACCC in considering fixed
principles in an undertaking. Like Items 17 and 50, this item is intended to promote
greater consistency and equity in Part XIC decision-making.
Part 7--NBN Corporations
Item 31 - Section 19
Section 19 of the NBN Companies Act limits the circumstances under which NBN
Corporations can supply non-communications goods to another person.
Item 31 would replace the current version of section 19 of the NBN Companies Act
with a new version. The revised section would retain the existing provisions relating
to goods for use in connection with supplies of eligible services, and add two new
bases on which an NBN corporation would be entitled to supply such goods.
Currently an NBN corporation can only supply goods to another person if the goods
are in connection with the supply, or prospective supply of an eligible service by the
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NBN Corporation. This restriction means that currently an NBN corporation cannot
sell off surplus assets (for example, office equipment, vehicles) unless it also supplies
eligible services to the person who buys the asset. As a result, an NBN corporation's
ability to dispose of surplus assets at market rates is unduly restricted. The
amendments made by item 31 would permit an NBN corporation to supply goods to
another person if the NBN corporation:
did not obtain the goods for the purpose of supplying the goods; or
obtained the goods for the purpose of supplying the goods in connection with the
supply, or prospective supply, of an eligible service; or
considers the goods to be excess to the NBN corporation's requirements.
These additional grounds will allow NBN corporations to manage their asset holdings
in a more efficient and financially effective manner.
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