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1998-1999-2000-2001
THE PARLIAMENT OF
THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
TRADE PRACTICES AMENDMENT
(TELECOMMUNICATIONS)
BILL
2001
EXPLANATORY
MEMORANDUM
(Circulated by
authority of the Minister for Communications, Information Technology and the
Arts, Senator the Hon Richard Alston)
TRADE PRACTICES AMENDMENT
(TELECOMMUNICATIONS)
BILL 2001
GENERAL OUTLINE
The Trade Practices Amendment (Telecommunications) Bill 2001 makes a
series of amendments to Part XIC of the Trade Practices Act 1974 (TPA) to
streamline the telecommunications access regime. The amendments aim to encourage
commercial negotiation and expedite the resolution of access disputes notified
to the Australian Competition and Consumer Commission (Commission). In
particular, the Bill:
• requires the Commission to determine principles that it would have regard to in an arbitration under Division 8 to determine the price of access to a declared service (item 1, inserting new section 152AQA);
• requires the Commission to have regard to the desirability of access terms and conditions being negotiated and resolved speedily, including through the use of alternative dispute resolution (ADR) methods (items 2 and 3, inserting new sections 152BBD and 152CLA);
• requires the consent of both parties to a dispute, or the notifying party and the Commission, to withdraw a notification of dispute (item 4, inserting new subsections 152CN(1), 152CN(2) and 152CN(2A));
• removes the right of an access seeker to object to the making of an interim determination (item 5, repealing subsection 152CPA(3) and item 6, repealing subsection 152CPA(12));
• provides the Commission with the power to publish a determination, and the reasons for making a determination (item 7, inserting new section 152CRA);
• provides the Chairperson of the Commission with a discretion to nominate one or more members of the Commission to constitute the Commission for a particular arbitration (items 8, 9, 10 & 11 amending subsections 152CV(1) and 152CX(3) and substituting new sections 152CW and 152CWA and new subsections 152CX(1) and 152CX(2));
• provides the Commission with the power to give a person information or documents provided to the Commission in the course of one arbitration for the purposes of another arbitration (item 14, inserting new section 152DBA);
• provides the Commission with the power to hold a joint arbitration hearing in relation to common disputes (item 15, inserting new section 152DMA);
• provides the Commission with the power to backdate the effect of a final determination to a date not earlier than the commencement of negotiations (item 16, substituting new subsection 152DNA(2));
• limits the information, documents and evidence to which the Australian Competition Tribunal (Tribunal) may have regard for the purposes of a review under section 152DO (item 19, inserting new section 152DOA); and
• prevents the stay of a decision of the Tribunal
(items 20 & 21, inserting new section 152DPA and substituting a new section
152DR).
This Bill commences on Royal Assent. However, the application of
certain provisions is described in item 23 and item 24.
FINANCIAL IMPACT STATEMENT
This Bill will not have any financial impact on Commonwealth revenue or
expenditure.
The telecommunications specific access regime contained in Part XIC of the TPA recognises that competitors need to use each other’s networks to achieve ‘any to any’ connectivity, and reflects the Government’s commitment to promoting the diversity of carriage and content services available to users. The regime provides a right of access to prevent those owning and controlling networks from taking advantage of their position in the market to refuse access, or only to provide access on unreasonable terms and conditions. In this way the regime is intended to encourage competition in the telecommunications sector.
Once a service is declared under the regime, carriers and carriage service
providers of those declared services are required to provide access to those
services. Access terms and conditions can be:
• commercially
negotiated;
• consistent with a detailed access undertaking offered by
the access provider; or
• arbitrated by the Commission if that becomes
necessary.
The telecommunications access regime is focussed on achieving
outcomes that are in the “long-term interests of end-users” (LTIE).
The underlying philosophy of the framework is to encourage commercial
negotiation, with Commission arbitration only as a last resort.
In June 2000, the Government issued terms of reference for a review by the PC of telecommunications-specific competition regulation, including a review of Part XIC. In March this year, the PC released its Draft Report on Telecommunications Competition Regulation (PC Draft Report). The PC Draft Report included draft recommendations with respect to the telecommunications access regime. The Final Report of the PC (Final Report) is due for release on 22 September 2001.
This Regulation Impact Statement addresses the issues examined in chapter 9
of the PC Draft Report, with the exception of recommendations 9.1 (recommending
that the telecommunications access regime should be governed by objectives and
principles convergent with those of Part IIIA of the TPA); 9.3 (the removal of
the discretion for Ministerial pricing determinations under Division 6 of Part
XIC of the TPA); 9.4 (the future of the Telecommunications Access Forum); 9.9
(extension of merits appeals to declaration or interim declarations) and 9.10
(that the Commission should produce a published method for calculating
backpayments for access). In addition, the examination of Pricing Principles
under option 3 does not consider the broader considerations relating to those
principles as discussed in Chapter 10 of the PC Draft Report. In addition, this
Regulation Impact Statement addresses a number of options not discussed in the
PC Draft Report.
B1 Issues
Although the intention of the telecommunications access regime is to promote commercial negotiation, in practice, there has been a substantial reliance on Commission arbitration to resolve significant disputes involving major carriers. As at May 2001, of the 44 cases notified to the Commission, 14 disputes had been resolved commercially (and withdrawn) and six finalised. Of the 24 disputes outstanding, interim determinations applied to 11, enabling commercial operations to progress on a reasonable basis while a final determination is being prepared.
These access disputes have not been resolved within the expected timeframes, in part due to the need to consider threshold issues, develop complex network Pricing Principles and regulatory gaming by parties. There is some evidence to indicate that as the significant threshold issues have been considered and principles developed, there is scope to achieve quicker resolution of disputes.
The time taken to resolve some disputes is a matter of concern to large parts of the telecommunications industry. Undue delay in the resolution of telecommunications access disputes is likely to impede competition in the telecommunications industry, and thereby adversely affect the quality and price of telecommunications services offered to customers.
• Delays advantage incumbent owners of infrastructure and have a disproportionate effect on access seekers, potentially forestalling market entry.
• Rapid changes in technology can lead to additional ‘first mover advantages’ being given to incumbent operators with respect to new technologies.
• Delays in regulatory decision making can also affect levels of business certainty and discourage some investment in telecommunications infrastructure.
The PC Draft Report clearly identified a need to improve the ability for the current telecommunications access regime to deliver timely resolution of disputes:
“Current processes for determining conditions for access are
cumbersome, resource-intensive and tardy, reflecting the failure of undertakings
as a mechanism and the predominance of lengthy bilateral arbitrations between
conflicting parties.” [PC Draft Report 9.1]
The PC also noted
that the speed of regulatory processes is particularly relevant for
telecommunications. The PC Draft Report commented on a number of possible
solutions to the inherent delays of the current system and made some draft
recommendations. Reference to these possible solutions and draft recommendations
are detailed below.
B2 Objective
The object of Part XIC of the TPA is to “...promote the long-term interests of end-users of carriage services or of services provided by means of carriage services”.
Consistent with this aim, the objectives of the regulatory action to which this Regulation Impact Statement relates are to expedite the resolution of telecommunications access disputes and thereby:
• promote competition in markets for listed services;
• achieve any-to-any connectivity in relation to carriage services that involve communications between end-users; and
• encourage the economically efficient use of, and economically
efficient investment in, the infrastructure by which listed services are
supplied.
B3 Options
A threshold issue to be addressed in amending the Part XIC access regime is the timing of the introduction of any reform. In particular, the issue is whether to move quickly to address the issues raised by industry, or to wait for the PC’s Final Report. The arguments in relation to these two options are as follows.
The advantage of this approach is that it allows significant problems
raised by industry to be addressed in a timely fashion. Leaving this important
issue unaddressed until the release of the PC’s Final Report in September
2001 would be likely to delay policy decisions until early in 2002, with any
legislative package not being able to be introduced until later that year.
This delay would not be in the best interests of the industry or of
end-users and would extend the existence of problems raised above (see B1
Issues). Consequently, there has been support from industry and the Commission
for early action by the Government on this issue. To fetter the
Government’s power to govern on the basis of the existence of a review
into related issues would be contrary to established constitutional
principles.
B. Delay Response to Allow Consideration of the PC’s
Final Report
The advantage of this approach is that it potentially
allows the Government to develop a response to the final recommendations and
comments of the PC. However, there are strong arguments against this
approach.
1. Despite acting prior to the release of the PC’s Final Report, the Government is still able to benefit from the initial views and reasoning of the PC.
2. The Government is also able to benefit from the extensive consultation already conducted by the PC. Further industry consultation has also been conducted. (see B5 Consultation below)
3. Proposals to expedite proceedings under Part XIC are in accordance with the thrust of the draft recommendations of the PC, which are unlikely to be reversed in the PC’s Final Report.
4. The introduction of new mechanisms to expedite the resolution of disputes
under Part XIC does not limit the Government’s ability to respond to
issues raised by the PC’s Final Report, including additional
recommendations addressing delays in the resolution of disputes.
Legislative or Administrative Approach
While some measures,
such as streamlining merits review, can only be implemented by legislation,
other measures relating to Commission arbitrations can be implemented either
administratively or through legislation. However, in view of industry concern
and the impact on the development of a competitive telecommunications market,
early action that delivers significant benefits and certainty is now essential.
Reliance on administrative measures alone requires industry to make
voluntary undertakings and to forgo existing legal rights. There is a high risk
that any voluntary undertakings will not be sustained, particularly given the
very legalistic approach that some carriers have adopted in relation to access
disputes.
With regards to addressing the problem itself, a number of possible legislative solutions to the problem of delay have been identified. The available options are listed under each separate stage of the arbitration process.
Pre-Commission Arbitration
Options to encourage alternatives to Commission arbitration arrangements include the following:
1. require the Commission to have regard to the desirability of disputes being resolved in a timely manner, including through ADR mechanisms; and
2. mandate ADR prior to Commission arbitrations.
Commission Arbitration
Within the Commission arbitration process, different measures have the potential to expedite the arbitration process. First, options exist to improve transparency by publishing or making market information available to other parties. Transparency should encourage commercial negotiation and expedite arbitrations. Options include the following:
3. require the Commission to have regard to the desirability of publishing Pricing Principles at the same time, or as soon as practicable after, the declaration of a service or variation of a declaration of a service;
4. allow the Commission to pass on information (including costings, methodology and price information) that has been obtained from an (ongoing or previous) arbitration, in another arbitration;
5. require the Commission to hold open arbitrations; and
6. enable the Commission to publish the results of and reasons for interim and final determinations.
Secondly, mechanisms can be introduced to improve the conduct of an arbitration and thereby expedite the process. Options include the following:
7. enable the Commission to backdate the effect of final determinations to the date that commercial negotiations commenced;
8. enable the Commission to require parties to different arbitrations to join in a consolidated arbitration process;
9. allow parties to refer access disputes to specialist arbitrators, rather than rely on the Commission arbitration;
10. require the Commission to impose time limits on the arbitration of disputes;
11. allow a single Commissioner to conduct an access arbitration;
12. allow notification of an access dispute to only be withdrawn with the consent of both the access provider and the access seeker, or the Commission; and
13. enable the Commission to make interim determinations over the objections of access seekers.
Options to expedite the merits review and appeal processes include the following:
14. limit the information which the Tribunal may take into account in a review on the merits of a determination, to that which was considered by the Commission in making the determination;
15. abolish merits review; and
16. remove the Federal Court’s jurisdiction to stay decisions of the
Tribunal upon application by a carrier or carriage service provider, pending a
final decision of the Court on the substance of a legal challenge to the
Tribunal decision.
B4 Impact Analysis
The groups affected by delay in the resolution of access disputes, and therefore also the groups affected by measures to expedite proceedings are:
• access providers;
• access seekers; and
• end-users of carriage services or services provided by means of
carriage services.
Each of these groups benefits from a speedy resolution
of access disputes. The timely resolution of access disputes benefits access
providers and access seekers by requiring less money to be spent on lengthy
arbitrations. In addition, the timely resolution of access disputes is of
particular benefit to access seekers because it provides earlier certainty of
the price of a key input and encourages access seekers to deliver new services.
End-users benefit from greater competition in the industry, with more
operators providing each service, lower prices, and market entrants introducing
new services.
Pre-Commission Arbitration
1. Require the Commission to have regard to the desirability of disputes being resolved in a timely manner, including through ADR mechanisms.
The original aim of Part XIC was to encourage the commercial resolution of disputes, with formal arbitration as a safety-net where commercial negotiation failed. As outlined above, the implementation of Part XIC has instead seen over-reliance on formal arbitration.
The current provisions in Part XIC give the Commission power to direct parties to enter into mediation (sections 152BBA and 152CT) and require the Commission to conduct arbitrations as speedily as proper consideration of the dispute allows (section 152DB). However, there is no guiding principle in Part XIC which encourages the Commission to exercise its powers under that Part in a way which will encourage timely resolution of disputes and to have regard to ADR techniques that will achieve this outcome.
Greater use of ADR mechanisms such as mediation, conciliation and private commercial arbitration, may reduce the time taken to resolve access disputes. ADR can act as a ‘filtering’ process, resolving disputes more quickly, and narrowing the areas of any remaining dispute. Greater use of ADR will also reduce the number of disputes in the formal arbitration process, thereby freeing up Commission resources to more quickly resolve disputes that still require formal arbitration.
ADR is potentially more conducive to the preservation of commercial relationships than formal arbitration. This is of importance in the majority of telecommunications access disputes where parties are required to continue working together beyond resolution of the dispute. In these circumstances, ADR can reduce the stress on the relationship between the access provider and access seeker.
However, where unsuccessful, ADR can result in further delays to the dispute resolution process. This is particularly likely where the parties have limited areas of agreement or where there is a large disparity in bargaining power. In the telecommunications industry, some disputes will suffer from having these qualities and will be likely to require formal arbitration.
This option addresses this concern by providing the Commission with the flexibility to decide whether or not ADR would be appropriate for the particular dispute at hand, taking into account the relative bargaining positions of the parties, and the issues raised in the dispute. It places a greater onus on the Commission to refer appropriate disputes to ADR, but empowers the Commission to use its discretion in a manner that promotes the timely resolution of disputes.
There appears to be general support for this suggestion across industry, by access providers and access seekers.
As provided above, greater use of ADR has the potential to act as a ‘filtering’ process, resolving disputes more quickly, and narrowing the areas of dispute. Under this option, ADR would be mandatory, rather than used as a discretionary tool of the Commission to expedite the resolution of disputes. This option would encourage commercial negotiation.
However, there is the potential that if mandatory, ADR would become merely
another stage in the arbitration process, thereby exacerbating delays rather
than reducing them. As provided above, this is particularly likely where there
are limited points of agreement between the parties to an access dispute, or
there is disparity in bargaining power. For these reasons, industry has
expressed concern with respect to this option.
Options to improve transparency by publishing or making market
information available to other parties should encourage commercial negotiation
and expedite arbitrations. This should benefit industry and end-users. However,
industry will lose a degree of control over information that previously required
their consent before release. Subject to concerns of confidentiality, industry
and the Commission have expressed support for the release of more
information.
Pricing Principles currently provide the Commission’s views on various methodological issues surrounding the pricing of a service and can also provide preliminary views about the various pricing claims that have been made in relation to a service. There is currently no legislative recognition of Pricing Principles. They are currently published by the Commission as a matter of administrative practice. The Commission has previously given priority to declaration of services and published final Pricing Principles just before making final determinations.
Although not binding on the Commission or in any subsequent review, the
methodology that will form the substance of the Pricing Principles will act as a
guide to the market on the likely approach to be adopted in an arbitration
conducted by the Commission. The more timely release of Pricing Principles will
encourage commercial negotiation by providing increased certainty in regulatory
outcomes. Where Pricing Principles are established, the conduct of Commission
arbitrations should also be expedited.
The proposal gives the Commission
scope to determine when it will publish Pricing Principles, having regard to the
desirability of publishing at the same time, or as soon as practicable after,
the declaration of a service. To ensure that the information provided to the
market is current, Pricing Principles should also be published where a
declaration is subsequently varied. The Commission has expressed the view that
it would be able to publish Pricing Principles at the same time as it declares a
service, but considers that this additional work may require it to extend the
indicative timeframe in relation to the declaration of a service.
The
proposal also maintains a degree of flexibility, allowing the Commission to
delay the publication of Pricing Principles where it is not practicable.
Legislative amendments could also be included to ensure that any delay in the
publication of Pricing Principles would not invalidate a
declaration.
4. Allow the Commission to pass on information (including
costings, methodology and price information) that has been obtained from an
(ongoing or previous) arbitration, in another arbitration.
Unless the
parties otherwise agree, access arbitrations must be conducted in private. The
Commission is currently restricted in its use of relevant information from one
arbitration in another arbitration. The Commission must consult all of the
relevant parties prior to using the information and consider their submissions
on whether the disclosure of the information will prejudice a party’s
commercial position.
The proposed amendment would apply in situations where the provision of information between separate arbitrations would enable the arbitration to be conducted in a more efficient and timely manner. In particular, the amendment would be useful where there are separate arbitrations in relation to a common service, either because one of the arbitrations has already been completed or hearings have already commenced. The amendment would also apply in situations where there are not common services, but information derived from one arbitration is nevertheless relevant to another arbitration.
To respect issues of confidentiality, information may be given to a party, a
party’s representative or a person who provides advice or assistance
either to a party or the Commission. This would reflect limitations on
disclosure that currently exist with respect to arbitrations.
This option
would speed up arbitrations by eliminating gaming in the release of information
and is consistent with the PC’s draft recommendation 9.8.
5. Require the Commission to conduct open arbitrations.
As
already provided, unless the parties to an arbitration otherwise agree, an
arbitration hearing for an access dispute is to be held in private. Open
arbitrations would reverse this presumption.
The PC opposed the full
transparency of arbitrations because of:
• the commercial plans of access seekers and providers may incidentally be revealed ,which is appropriate commercially sensitive information;
• transparency about such details is contrary to the customary way in which businesses contract with each other; and
• a “free-rider” problem would emerge, with access seekers
waiting for other access seekers to go to arbitration, so they can receive the
benefit of additional information without having to go through the arbitrations
process.
6. Enable the Commission to publish the results of and
reasons for interim and final determinations.
The private nature of
Commission arbitrations means that the results of arbitrations are also kept
confidential. This option would give the Commission the power to publish the
results of, and reasons behind, final determinations of arbitrations. In making
a decision to publish, the Commission would be required to have regard to,
amongst other things, any submissions received from parties to the
determination.
It is proposed, consistent with the PC Draft Report
(9.46-9.48), that statements of results and reasons do not include full
disclosure of negotiations carried out by the parties to a dispute. The results
of arbitrations will be published with the aim of creating a bargaining
situation in the market such that economically efficient access prices will be
realised. To this extent, consideration should be had to the incentives of both
access seekers and access providers to maintain commercial
confidentiality.
This option would help guide the future commercial
negotiations between access seekers and access providers. By providing certainty
with regards to the likely outcome of an Commission arbitration, the parties are
more likely to find a mutually acceptable price. This will reduce the need for
arbitration, allow disputes to be resolved quickly, and is consistent with the
philosophy of the access regime to promote commercial negotiation.
The
PC saw some merit in the publication of reference prices by the Commission, and
the PC Draft Report sought more information on this issue.
7. Enable
the Commission to backdate the effect of final determinations to the date that
commercial negotiations commenced.
Section 152DNA enables the Commission to “backdate” a
determination to the date of notification of a dispute. This provision is
intended to remove incentives for parties to delay resolution of the dispute.
However, an unintended outcome of section 152DNA is that it encourages access
seekers to notify disputes to the Commission at the earliest possible
opportunity, thereby invoking a formal Commission process and discouraging
commercial resolution of the dispute.
This option will enable the
Commission to backdate determinations to the date that negotiations commenced,
removing incentives for access seekers to immediately invoke the formal
Commission arbitration process. Access seekers and the Commission have indicated
their support for this option.
8. Enable the Commission to require parties to different arbitrations to join in a consolidated arbitration process.
Part XIC currently provides for the Commission to conduct individual arbitrations of each notified dispute between an access provider and an access seeker. There is some administrative scope for the Commission to conduct joint arbitrations under s152CO. However, this has never been used and would bind parties for the duration of the arbitration. Separate hearings of common disputes can slow down the resolution of disputes.
This option would enable the Commission to require parties to join in a
consolidated arbitration process, where there are common disputes and the
Commission is satisfied that a joint arbitration hearing would produce a more
timely and efficient outcome. Giving the Commission the flexibility to
rationalise the number of substantive disputes in relation to common services
could substantially reduce delays caused by the conduct of separate
hearings.
The PC also recommended that the Commission have the power to
hold a multilateral arbitration, but only where a group of access seekers lodge
a joint notification of dispute. (draft recommendation 9.7) The PC’s
option of joining parties for the duration of a dispute would not be as flexible
as this option, which gives the Commission the discretion to join parties for a
joint arbitration hearing and then resume their separate arbitrations. The
rights of access seekers are not affected in the manner contemplated by the PC
because of the temporary nature of the joint arbitration hearing. Accordingly,
the argument for requiring the consent of the parties is weak in relation to the
option proposed.
9. Allow parties to refer disputes to specialist
arbitrators, rather than rely on the Commission
arbitration.
Legislative amendments could give parties who have
notified a dispute to the Commission the option of having their dispute resolved
by an accredited specialist telecommunications arbitrator, and accepting the
final decision. This mechanism may be more attractive to disputing parties than
Commission arbitration because of the specialist skills of the private
arbitrator and an assessment that the dispute will be resolved more quickly
through private arbitration.
However, parties taking up this option
would not be able to subsequently seek Commission arbitration of the dispute and
this would remove the LTIE test as a consideration in the resolution of access
disputes. In addition, a specialist arbitrator may lack the same degree of
expertise that has now been developed by the Commission in the resolution of
access disputes.
10. Require the Commission to impose time limits on the arbitration of
disputes.
The current regime sets out the processes for arbitrations,
but does not specify particular time limits for consideration of the complex
decisions associated with telecommunications networks (although the Commission
has published an indicative timeframe for declaration inquiries).
Fixed
time limits could reduce the time for decisions, by setting clear targets and
reporting requirements. However, the imposition of fixed time limits may not
recognise the complexity and greenfields nature of some decisions. Decisions
made within time constraints may also suffer in terms of quality and increase
the risk of regulatory error and the prospect of successful legal challenge.
There would also be a need to establish a default position in the event that
decisions are not made within any fixed time limits. Any default position (ie
either the terms and conditions sought by the access seeker or the terms and
conditions offered by the access provider) may be seen by the other party to
operate unfairly.
Alternatively, the access regime could specify indicative time limits for Commission determinations in relation to access disputes, or for parties or the Commission to complete specified stages of the arbitration process. Indicative time limits would not provide a guarantee that Commission determinations would be made within specified timeframes.
The PC Draft Report sought feedback from industry with respect to the usefulness of indicative time limits. However, additional consultation has indicated only limited support for the proposal. (see B5 Consultation below)
11. Allow a single Commissioner to conduct an access arbitration.
Section 152CV of the TPA requires that a hearing in relation to a telecommunications access dispute be held by at least two Commissioners.
Allowing one Commissioner to hear a dispute would facilitate the speedy resolution of disputes. The decision on the constitution of the Commission for a particular arbitration would remain with the Chairperson, who would be able to prevent attempts by any individual party to a dispute to have an arbitration conducted by a particular Commissioner. In addition, the Chairperson would retain the discretion to use more than one Commissioner for significant and complex arbitration hearings.
12. Allow notification of an access dispute to only be withdrawn with the consent of both the access provider and the access seeker, or the Commission.
Section 152CN enables an access seeker who has notified a dispute to withdraw from an arbitration at any time; and an access seeker who has not notified the dispute to withdraw in the time between when the Commission issues a draft final determination and the final determination. Access providers are unable to withdraw from a dispute notified by an access seeker, but can withdraw at any time from a dispute they have notified to the Commission.
There is potential for strategic abuse of section 152CN by both access providers and access seekers. For example, an access provider could notify a dispute before the access seeker, then withdraw prior to finalisation of the arbitration. On the other hand, an access seeker with strong bargaining power relative to the access provider could terminate the arbitration process by withdrawing from a dispute notified by the access provider.
The potential for regulatory gaming would be removed by requiring joint
consent of both parties to withdraw a notification. A reserve power for the
Commission to terminate a dispute will enable this action to be taken where the
Commission considers that one party is withholding consent unreasonably. In
exercising this power, the Commission would be required to give consideration to
the long-term interests of end-users, the object of Part
XIC.
13. Enable the Commission to make interim determinations over the
objections of access seekers
The Commission can make an interim
determination in relation to a notified access dispute (s152CPA(1)) Before
making an interim determination, the Commission must first issue a draft
determination and provide a specified period of at least 7 business days (the
objection period) for the access seeker to give a written notice to the
Commission objecting to the determination. If a written notice of objection is
received, the Commission must not make the interim determination. (s152CPA(3))
It is proposed that this right of rejection be removed to allow wider powers to
make interim determinations.
This option is consistent with the
PC’s draft recommendation 9.5. The PC noted that the combination of
s152CPA(1) and s152CN(1) provide an unfair advantage to access seekers to avoid
a large debt in backpayments if the interim determination is considerably lower
than the draft final determination. The PC noted that as a matter of principle,
it is not clear why the access seeker, having sought arbitration, should be able
to escape its consequences if it does not like the draft decision. This is
especially so, given that there is a formal appeals process.
The effect
of this option would be to remove the access seeker’s ability to escape
the consequences of an arbitration, which currently places the access seeker at
an unfair advantage over the access provider. This does not remove the ability
for disputes to be withdrawn should a commercial agreement be reached (see
option 12 above). Nor does it remove an access seeker’s right to merits
review.
Post-Commission Process
14. Limit the information which the Tribunal may take into account in a
review on the merits of a determination, to that which was considered by the
Commission in making the determination.
Section 152DO enables a party
to a Commission determination under Part XIC to seek a review by the Tribunal of
the final determination. The Tribunal review is a re-arbitration of the access
dispute.
Commission determinations involve a lengthy and complex hearing process. It
is proposed that the evidence which the Tribunal can take into account in a
review of a final determination of an access dispute be limited to that which
was considered by the Commission in making the determination. This will ensure
that the Tribunal process involves a review of the merits of the
Commission’s decision, rather than a complete re-arbitration of the
dispute.
Although this option should reduce delay in the review of
Commission decisions, it will reduce the extent of Tribunal review. On balance,
it is considered that the limitations on the review are justified on the basis
of the length and depth of the Commission’s arbitration process. During
the arbitration process, the Commission already has wide-ranging powers to
require that information be provided and to impose sanctions if information is
not provided.
15. Abolish merits review.
Consideration of this option is limited to telecommunications only. Particularly given the broader government policy implications, it is not proposed to proceed with this option at this time.
16. Remove the Federal Court’s jurisdiction to stay decisions of the
Tribunal upon application by a carrier or carriage service provider, pending a
final decision of the Court on the substance of a legal challenge to the
Tribunal decision.
Section 152DNB of the TPA already provides that a
party who receives an unfavourable determination from the Commission cannot have
that decision stayed by the Federal Court. Under this option, it is proposed to
extend the prohibition on staying final determinations to those determinations
of the Tribunal. This would be achieved through the introduction of a clause
similar to s152DNB with respect to a decisions of the Tribunal.
This
option would ensure the consistent operation of Part XIC in relation to
applications and appeals in respect of Commission and Tribunal decisions and
ensure that Tribunal, as well as Commission, decisions are not stayed by the
Federal Court.
B5 Consultation
The Draft Report was based on extensive consultation undertaken with key industry groups and affected parties. Public hearings were conducted in mid-2000, involving service providers and carriers, relevant industry groups and Government agencies.
The PC also invited interested parties to make written submissions. Sixty-four submissions were received prior to publication, representing extensive input from major and small to medium service providers, industry bodies, State and Federal Government agencies, and various individuals. Submissions indicated broad support from access providers and access seekers for measures that expedite the resolution of access disputes.
The Minister for Communications, Information Technology and the Arts held a Telecommunications Access Industry Forum in Sydney on 30 May 2001. The forum provided an opportunity to consult with industry on a range of possible measures to streamline the resolution of telecommunications access disputes. Representatives were invited from all major and small to medium telecommunications carriers, and from relevant industry bodies and Government agencies. In addition, a number of lawyers and academics with experience in telecommunications attended.
Attendees were given the opportunity to participate in discussion and to
express their views on the issue of delay. The discussion covered a number of
the options raised above. There was a broad consensus for the need to resolve
the problem of delay, in particular through increasing the powers of the
Commission to release information and by joining arbitration processes where
common disputes arose.
One view is that these outcomes could be delivered
through increased industry commitment to ADR mechanisms, voluntary industry
agreement to disclose more information and to multilateral arbitration of common
disputes and improved case management by the Commission.
There was also
support for legislative reform to allow the Commission to conduct a joint
arbitration hearing. A number of access providers and access seekers gave
general support to the proposal.
The issue of information sharing was
discussed at length at the Forum. There was general support for the PC’s
general recommendation that the Commission facilitate information-sharing
between arbitrations. However, participants did not identify particular
categories of information for release.
Time limits as a means of
reducing delays received limited support. One access seeker acknowledged that
time limits were excellent in theory but that they would make no real difference
in practice to the length of disputes, as the TPA already requires the
Commission to expeditiously deal with disputes. There was little consensus about
whether fixed or indicative time limits were preferable. However, it was
generally agreed that time limits should not be universal and would, if at all,
need to be set on a case-by-case basis.
On the basis of the clear support for immediate action and the time-critical nature of the problem, it is recommended that a package of solutions be developed and implemented in advance of the PC’s Final Report. This package does not preclude a more wide-ranging Government response to the PC’s Final Report.
It is considered that the most likely options to promote the objectives set out in section B1 of the Regulation Impact Statement are options 1, 3, 4, 6, 7, 8, 11, 12, 13, 14 and 16 as outlined in section B4 above.
The legislative package proposed addresses the problem of delay by
encouraging the resolution of access disputes through commercial negotiation,
while continuing to treat regulation in the form of Division 8 arbitrations as
an option of last resort. The legislative option is consistent with
Government’s policy to minimise regulatory intervention and promote
competition. By speeding up the resolution of telecommunications access
disputes, the recommended options assist industry and
end-users.
B7 Implementation and review
The Commission will
be responsible for compliance with legislative amendments to the
telecommunications access regime. The Government will continue to consult with
relevant industry groups such as SPAN and ATUG regarding the implementation of
the amendments, and their effect on industry. In addition, the Government will
respond to the PC’s review of telecommunications competition regulation
upon the release of its Final Report in September 2001. Although the Commission
is not required to report to the Minister on the implementation of the proposed
reforms, views are readily able to be raised with the Minister, should the
Commission believe that it is appropriate.
Clause 1: Short title
1. Clause 1 provides for the citation
of the Trade Practices Amendment (Telecommunications) Act 2001.
2. The provisions of the Act will commence on Royal
Assent.
Clause 3: Schedule(s)
3. By virtue of this clause,
provisions of the Trade Practices Act 1974 are amended as set out in the
Schedule to the Bill and transitional provisions have effect according to their
terms.
Item 1: After section 152AQ
4. This item inserts a
requirement for the Commission to publish principles. The determination of
principles may also include other price-related terms and conditions, including
indicative prices for access. The principles and any other price-related terms
and conditions must be published as soon as practicable after the declaration of
a service, or variation of a declaration of a service, and must be consistent
with any Ministerial pricing determination. In making a determination under new
section 152AQA, the Commission must invite and consider submissions from the
public. The late publication of the determination will not invalidate it or the
declaration to which the determination relates.
5. The Commission must
have regard to the principles and any other price-related terms and conditions
when determining the price of access in the conduct of an arbitration under
Division 8. The determination made under new section 152AQA is distinct from a
declaration of services under section 152AL and a final determination under
section 152CP. During the course of an arbitration, or subsequent review by the
Tribunal, a party may argue against the application to their particular case of
the determination made under new section 152AQA.
6. The Commission has
already, with respect to a number of declared services, published principles
relevant to the setting of prices for access. This item intends to build on
existing administrative practice, by making publication of principles mandatory.
The requirement to publish principles does not limit the information that the
Commission is able to make available to the market under paragraph 28(1)(a). The
Commission also is able to obtain information, documents and evidence relevant
to its functions under the new section 152AQA pursuant to its existing
information-gathering powers, including those under section 155. A determination
under new section 152AQA is an instrument for the purposes of subsection 33(3)
of the Acts Interpretation Act 1901 and can be revoked or varied by the
Commission.
7. Item 23 provides that new section 152AQA applies only to
services declared or varied after commencement. New section 152AQA does not
affect the status of existing principles released by the
Commission.
Item 2: At the end of Division 3 of Part
XIC
8. This item requires the Commission, prior to the notification
of a dispute, to have regard to the expeditious settlement of terms and
conditions of access. The obligation to provide access is derived from section
152AR.
9. One mechanism available to expedite the resolution of
commercial negotiations is ADR. The provision does not require the Commission to
refer all matters to ADR. The powers to refer a matter to ADR in subsection
152BBA(2) or to attend or mediate at negotiations under subsection 152BBC(3)
remain unchanged.
Item 3: After section 152CL
10. This item
requires the Commission, in the exercise of its powers under Division 8, to have
regard to the desirability of access disputes being resolved in a timely manner,
including through the use of ADR methods. As with the new section 152BBD, the
new section 152CLA does not require the Commission to refer all matters to ADR.
The power under subsection 152CT(1) to refer a matter to ADR remains
unchanged.
11. However, the new section builds on existing requirements
of the Commission to act expeditiously. Powers found in paragraphs 152DB(1)(b)
and 152DC(1)(f) require the Commission to conduct a speedy hearing of an access
dispute. New section 152CLA extends this requirement to the timely resolution of
disputes. This may be facilitated by reliance on methods outside of the hearing
process, such as ADR methods. The timely resolution of disputes may also be
facilitated by effective case management of arbitrations conducted by the
Commission.
Item 4: Subsections 152CN(1) and (2)
12. The
new subsections 152CN(1) and (2) create a new requirement for the withdrawal of
a dispute notified under section 152CM. Only a party that notifies a dispute is
able to withdraw the notification. Under new subsection 152CN(1), where the
carrier or provider notifies the dispute, the notification can only be withdrawn
with either the consent of the access seeker, or failing that, the Commission.
Under new subsection 152CN(2), where the access seeker notifies the dispute, the
notification can only be withdrawn with the consent of the carrier or provider
(as the case may be), or failing that, the Commission.
13. Item 23
provides that item 4 applies only in relation to access disputes notified after
commencement.
Item 5: Subsection 152CPA(3)
14. The effect
of this item is to remove the right of an access seeker to object to the making
of an interim determination. Item 23 provides that item 5 applies only in
relation to access disputes notified after commencement.
Item 6:
Subsection 152CPA(12)
15. Item 6 is a consequential amendment to the
amendment to subsection 152CPA(3). The effect of the item is to delete the
defined term referred to in repealed subsection 152CPA(3).
Item 7:
After section 152CR
16. The effect of new section 152CRA is to allow
the Commission to publish, in whole or in part, an interim or final
determination and the reasons for that determination. Before publishing the
determination and the reasons for that determination, the Commission must
provide parties to the determination with a written notice, specifying what the
Commission is proposing to publish and providing 14 days to object to
publication. The Commission must have regard to, amongst other things, any
submissions received from parties to the determination. This will give parties
an opportunity to raise issues of confidentiality with the Commission.
17. Item 12 inserts a new Note 1 at the end of subsection 152CZ(1) which
indicates that the right to publish is not limited by the private nature of an
arbitration hearing. Item 23 provides that new section 152CRA applies only in
relation to determinations made after commencement.
Item 8:
Subsection 152CV(1)
18. This item allows the Commission to be
constituted for the purposes of a particular arbitration by 1 or more members of
the Commission, nominated in writing by the Chairperson.
Item 9:
Sections 152CW and 152CWA
19. Item 9 is a consequential amendment to
the amendment to subsection 152CV(1).
20. The effect of new item 9 is to
replace existing sections 152CW and 152CWA, dealing with the nomination of
presiding members and the exercise of procedural powers of the Commission, with
new sections dealing with the same subject matter. The new sections are limited
in their application to circumstances where the Chairperson nominates two or
more members of the Commission to constitute the Commission for the purposes of
a particular arbitration. Where the Commission is constituted by one member of
the Commission, that member is to preside at the arbitration and can exercise
the procedural powers of the Commission in relation to the arbitration.
Item 10: Subsections 152CX(1) and (2)
21. Item 10 is a
consequential amendment to the amendment to subsection 152CV(1). The effect of
item 10 is to allow the Chairperson, where the Commission is constituted by one
member, and that member stops being a member or is not available for the
purposes of the arbitration, to direct that the Commission be constituted by one
or more nominated members. Where the Commission is constituted by two or more
members, and one member stops being a member or is not available for the
purposes of the arbitration, the Chairperson must direct that the Commission be
constituted by the remaining member or members, either alone or with one or more
other members nominated by the Chairperson.
Item 11: Subsection
152CX(3)
22. Item 11 is a consequential amendment to the amendment to
subsection 152CV(1). The effect of item 11 is to extend the application of
subsection 152CX(3) to circumstances where the Chairperson directs the
Commission to be reconstituted pursuant to the new subsections 152CX(1) or
152CX(2). This allows the Commission as reconstituted under the direction to
finish the arbitration and have regard to any record of the proceedings of the
arbitration made by the Commission as previously constituted.
Item 12:
At the end of subsection 152CZ(1)
23. Section 152CZ provides that,
unless the parties otherwise agree, an arbitration hearing for an access dispute
is to be in private. The effect of this item is to clarify that the right of a
party to have a hearing conducted in private does not limit the
Commission’s powers to publish determinations and give information to a
person, pursuant to new sections 152CRA and 152DBA.
Item 13: At the
end of subsection 152DB(1)
24. Subsection 152DB(1) outlines the
procedures of the Commission in the conduct of an arbitration hearing in
relation to an access dispute. The effect of item 13 is to note that further
procedures of the Commission with respect to the conduct of joint arbitration
hearings are in new section 152DMA.
Item 14: After section
152DB
25. New section 152DBA gives the Commission, for the purposes
of an arbitration, the power to give a party, a representative of a party or a
person who provides advice or assistance to either a party or the Commission,
information or documents provided to the Commission in the course of another
arbitration. The Commission may only use this power where it considers that it
would result in the arbitration being conducted in a more efficient and timely
manner.
26. Before making a decision to give to a party information or
documents that were provided in a separate arbitration, the Commission must give
the contributor of the information or document 14 days to make a submission with
respect to the release of information. In deciding whether to give a person the
information, the Commission must have regard to the submissions received and any
orders, directions or decisions of the Commission already given in relation to
the information or documents.
27. The Commission gives orders,
directions and decisions in relation to information and documents pursuant to
sections 152DC and 152DK. These include limitations on the disclosure of
documents to parties, their representatives or other persons such as advisers or
expert witnesses. The Commission retains the power to release information to
limited classes of persons in respect of the new section 152DBA. In addition,
the Commission remains able to provide orders under subsection 152DC(3) to a
person who receives information or a document pursuant to new section 152DBA.
28. As indicated in the new Note 2 at the end of subsection 152CZ(1),
the power of the Commission to give to a person any information or document
under the new section 152DBA is not limited by section 152CV.
29. Item 23
provides that item 14 applies in relation to access disputes that are notified
either before or after commencement.
Item 15: After section
152DM
30. The effect of item 15 is to permit the Commission to
conduct a joint arbitration hearing of two or more access disputes where one or
more matters are common to the disputes and the Chairperson considers that a
joint arbitration hearing would result in the disputes being resolved in a more
efficient and timely manner.
31. The joint arbitration hearing is a
procedural mechanism that allows the Commission to hear matters common to more
than one dispute at the same time. It is a joint hearing of matters common to
more than one arbitration, not the joining of the parties into a single
arbitration. At the end of each joint arbitration hearing the parties will
return to their particular arbitration proceedings and the Commission will make
an appropriate determination in relation to each particular arbitration.
32. The new subsections 152DMA(4) and 152DMA(5) apply existing
provisions dealing with the constitution of the Commission and the procedure of
the Commission to joint arbitration hearings.
33. New subsection
152DMA(1) gives power to the Chairperson to determine that the Commission is to
hold a joint arbitration hearing. New subsection 152DMA(3) gives the
Chairperson, for the purposes of the joint arbitration hearing, the power to
issue directions to the presiding member of the joint arbitration hearing. This
would include a direction to terminate the joint arbitration hearing and return
parties to their particular arbitration proceedings. New subsection 152DMA(6)
allows the Commission as constituted for the joint arbitration hearing to have
regard to any record of the proceedings of any nominated dispute. New subsection
152DMA(7) allows the Commission as constituted for each of the nominated
particular disputes to have regard to the record of proceeding and adopt any
finding of fact made in the joint arbitration hearing.
34. The ability
of the Commission to conduct a joint arbitration hearing is referred to in the
new Note at the end of subsection 152DB(1). Item 23 provides that the new
section 152DMA applies to disputes notified either before or after
commencement.
Item 16: Subsection 152DNA(2)
35. The effect
of item 16 is to introduce a new date to which the Commission can backdate the
effect of a final determination. The new date is the commencement of
negotiations with respect to the terms and conditions on which standard access
obligations of s152AR are provided.
36. The Commission’s power
remains a discretion to backdate, to a date no earlier than the date
negotiations started. This does not affect the discretion of the Commission as
to when, if at all, it shall backdate the effect of a determination. In
exercising its discretion, the Commission could have regard to issues such as
the date of supply of the service and the bona fides of
negotiations.
37. The note following the new subsection 152DNA(2) makes
it clear that this power to backdate a determination is subject to the limits on
determinations generally imposed by subsection 152CP(3). In particular,
paragraph 152CP(3)(a), when read with paragraph 152AY(2)(a), restricts the
Commission to determining terms and conditions of access not already agreed
between the parties at the relevant time.
38. Item 23 provides that the
new subsection 152DNA(2) applies to disputes notified after
commencement.
Item 17: Subsection 152DO(4)
39. The effect
of item 17 is to make the powers of the Tribunal under subsection 152DO(4)
subject to new section 152DOA. Item 23 provides that item 17 applies in relation
to applications for review that are made after commencement.
Item 18:
Subsection 152DO(5)
40. The effect of item 18 is to make the
information, other assistance and reports that the Tribunal can require from the
Commission under subsection 152DO(5) subject to new section 152DOA. Item 23
provides that item 18 applies in relation to applications for review that are
made after commencement.
Item 19: After section
152DO
41. The new section 152DOA limits the information, documents
and evidence to which the Tribunal can have regard for the purposes of a review.
The Tribunal may only have regard to information given, documents produced or
evidence given to the Commission in connection with the making of the final
determination and any other information referred to in the Commission’s
reasons for making the determination.
42. The information available to
the Tribunal in the conduct of a review should be easily identified in the
determination. Powers of the Commission to refer to information obtained outside
of an arbitration hearing in the making of a determination exist pursuant to
subsection 152DB(1). Under subsection 152CP(5), the Commission is required to
provide its reasons for making a determination. Due to the application of s25D
of the Acts Interpretation Act 1901, the Commission is also required to
provide the findings on material questions of fact and refer to the evidence or
other material on which those findings were based.
43. Item 23 provides
that item 19 applies in relation to applications for review that are made after
commencement.
Item 20: After section 152DP
44. New
subsection 152DPA(1) provides that if a person applies, under section 5 of the
Administrative Decisions (Judicial Review) Act 1977, to the Federal Court
for a review of a decision of the Tribunal under s152DO, the Federal Court is to
have no power to stay the decision pending finalisation of the application.
45. New subsection 152DPA(2) provides that if a person applies, under
subsection 39B(1) of the Judiciary Act 1903, to the Federal Court for a
writ or injunction in relation to a decision of the Tribunal under s152DO, the
Federal Court is to have no power to stay the decision pending finalisation of
the application.
46. Item 23 provides that item 20 applies in relation to
applications for review, or applications for a writ or injunction, that are made
after commencement.
Item 21: Section 152DR
46. New section
152DR provides that if a person appeals, under section 152DQ, to the Federal
Court from a decision of the Tribunal under s152DO, the Federal Court is to have
no power to stay the decision pending finalisation of the
appeal.
47. Item 23 provides that item 21 applies in relation to appeals
that are made after commencement.
Item 22: After section
152EA
48. This item provides that powers to disclose information under Division 8
do not limit the powers of the Commission pursuant to Division 6 of Part XIB.
This item is inserted for the avoidance of doubt.
Item 23: Application
of amendments
49. Item 23 outlines the application of the amendments,
as follows:
(1) The amendment made by item 1 (dealing with pricing principles) applies in relation to services that are declared and declared services that are varied after commencement.
(2) The amendments made by items 4 (dealing with the withdrawal of notification), 5 and 6 (dealing with rights to remove objection rights of access seekers) and 16 (dealing with backdating of final determinations) apply in relation to access disputes that are notified after commencement.
(3) The amendment made by item 7 (dealing with publication of determinations) applies in relation to determinations that are made after commencement.
(4) The amendments made by items 14 (dealing with the use of information from one arbitration in another arbitration) and 15 (dealing with joint arbitration hearings) apply in relation to access disputes that are notified either before or after commencement.
(5) The amendments made by items 17, 18 & 19 (dealing with limiting evidence before the Tribunal) apply in relation to applications for review that are made after commencement.
(6) The amendment made by item 20 (dealing with staying of Tribunal decisions) applies in relation to applications for review, or applications for a writ or injunction, that are made after commencement.
(7) The amendment made by item 21 (dealing with staying of Tribunal
decisions) applies in relation to appeals that are made after
commencement.
50. The effect of this item is that where a dispute is notified prior to
commencement, the Commission retains its power to backdate to the date of
notification of the dispute. Where a dispute is notified after commencement, the
Commission has a discretion to backdate to the date of commencement or the date
that negotiations started, whichever is the later.