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1998-1999-2000
THE PARLIAMENT OF THE COMMONWEALTH
OF AUSTRALIA
SENATE
TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE
STANDARDS) AMENDMENT BILL (NO. 2)
2000
SUPPLEMENTARY EXPLANATORY
MEMORANDUM
Amendments to be moved on behalf of the
Government
(Circulated by authority of the
Minister for Communications,
Information Technology and the Arts, Senator the
Hon. Richard Alston)
ISBN: 0642 45292X
AMENDMENTS TO THE TELECOMMUNICATIONS (CONSUMER
PROTECTION AND SERVICE STANDARDS) AMENDMENT BILL (NO. 2)
2000
OUTLINE
The Telecommunications (Consumer Protection and Service Standards) Amendment
Bill (No. 2) 2000 provides for the repeal and substitution of the universal
service regime in the existing Part 2 of the Telecommunications (Consumer
Protection and Service Standards) Act 1999. The Bill improves the delivery
and funding of the universal service obligation (USO) and the digital data
service obligation (DDSO). It does not seek to alter the substance of the
obligations. Rather it seeks to improve service levels and provide greater
choice for consumers, by improving delivery mechanisms.
The proposed
Government Amendments to the Telecommunications (Consumer Protection and Service
Standards) Amendment Bill (No. 2) 2000:
§ restrict the capacity of the Minister to
expand the contestability arrangements beyond two pilot areas until a review on
the operation of the pilots is conducted and report is tabled in both Houses of
Parliament (Amendments (1), (2) and (3));
§ ensure that a person who is a primary
universal service provider (PUSP) as a result of a deemed determination under
proposed section 12E has three years’ exclusive access to ongoing USO
subsidies from the date its USO in relation to an area commences (Amendment
(4));
§ require a universal service provider
(USP), in providing a person with an alternative telecommunications service
(ATS), to make available to that person information on how the ATS differs from
the service provided by the PUSP under the standard marketing plan (Amendments
(5) and (6)); and
§ deem, as a transitional matter, that a
pre-existing request to the Australian Communications Authority (ACA) by the
Minister for advice in relation to USO subsidies for 2000-01, 2001-02 and
2002-03 satisfies the requirement that the Minister direct the ACA to provide
such advice (Amendment (7)).
The proposed Government amendments are not expected to have any
significant financial impact on Commonwealth expenditure or revenue.
NOTES ON AMENDMENTS
TELECOMMUNICATIONS
(CONSUMER PROTECTION AND SERVICE STANDARDS) AMENDMENT BILL (No. 2)
2000
AMENDMENTS (1), (2) AND (3)
An important component of the Government’s USO reform strategy is
to introduce competition into the provision of services supplied under the USO.
Recognising the challenging nature of this initiative, the Government is moving
forward by way of two USO contestability pilots. The Government’s policy
has always been that the pilots would be fully evaluated before USO
contestability was extended. Amendments (1), (2) and (3) give statutory effect
to this intention by providing for a legislative evaluation
process.
Amendment (3) inserts a new section 11F into the Bill. The
amendment acts to restrict the capacity of the Minister to make contestable
service obligation determinations under proposed section 11C until after the
assessment of the operation of USO contestability in the pilot areas.
Under proposed new subsection 11F(1), the Minister may only determine
universal service obligations to be contestable under proposed section 11C in
relation to a pilot area until the Minister has satisfied two conditions.
Firstly, the Minister must review the operation of the contestability
arrangements in the pilot areas, and secondly, the Minister must table a report
of that review in both Houses of Parliament.
A pilot area is determined
by the Minister (proposed new subsection 11F(2)). The Minister’s
determination must be published in the Commonwealth Gazette (proposed new
subsection 11F(4)). The determination is not disallowable because it is
essentially administrative in nature, giving effect to the Government’s
intention to conduct two pilots in two already identified areas. The Minister
may determine a maximum of two pilots areas and cannot change the boundaries of
the pilot areas once they have been determined. This is a reference to the
external boundaries of the pilot areas and is intended to prevent the Minister
extending USO contestability by expanding the size of the pilot areas. The
provision does not, however, affect the Minister’s ability to determine
universal service areas, to which subsidies relate, within the pilot areas.
The Government announced its two proposed pilot areas on 23 August 2000,
consisting of local government areas in:
• central-west and
south-west Victoria and south-east South Australia; and
• north-east New South Wales and inland south-east
Queensland.
Proposed new subsection 11F(3) inserts the requirement for
the Minister to make a determination of one or more universal service areas
(under proposed new section 9G) covering the pilot areas before making a
contestable service obligation determination (under proposed section 11C). The
provision establishes a link between pilot areas, universal service areas and
determinations of contestability.
Amendments (1) and (2) insert a new
note under proposed section 11C referring to the restriction under proposed new
section 11F on the Minister making contestability determinations under the
section until the requirements of proposed new subsection 11F(1) are
satisfied.
AMENDMENT (4)
An important part of the Government’s USO reform strategy is the
conduct of the tender for the provision of untimed calls in remote Australia
(Telstra’s so-called Extended Zones), with the successful tenderer
subsequently becoming the USP for the area. The Government has decided that the
successful tenderer should be assured of gaining exclusive access to USO
subsidies for a period of three years from the progressive determination as the
USP in each area. This exclusivity period recognises that the size of the
investment required in remote Australia is such that, even after accessing the
$150 million to be allocated by the tender for the provision of untimed local
calls, the successful tenderer will require sole access to the ongoing USO
subsidies for the Extended Zones to make the investment viable. This policy is
discussed in detail in the explanatory memorandum to the Bill as introduced (see
pages 11 to 14).
As the Bill is drafted, other persons would only be able
to access the relevant subsidies if the Minister took necessary regulatory
action (ie. declaring a new primary USP or allowing contestability in the area)
and it is not intended that this happen. Amendment (4) underpins this policy and
is intended to provide prospective tenderers with greater certainty about their
exclusive access to the subsidies.
Proposed new subsection 12EA(1)
provides that, if a person is a primary universal service provider for a
universal service area in respect of a service obligation because of subsection
12E(2):
• the Minister must not determine any other person to be a
primary universal service provider (see proposed s.12A); and
• the
ACA must not approve any other person as a competing universal service provider
(see proposed s.13B);
for that area in respect of that service
obligation.
‘Service obligation’ and ‘universal service
area’ are defined in proposed sections 9B and 9G respectively. Proposed
section 12E provides for the successful tenderer in the Extended Zones Tender to
automatically become the primary universal service provider for the areas
specified in the agreement with effect from the dates specified.
Proposed
new subsection 12EA(1) works by effectively preventing another person becoming a
USP for the Extended Zones and thus being eligible for USO subsidies. While the
ACA cannot approve a person to be a competing universal service provider unless
the Minister has determined a service obligation to be contestable in an area,
proposed paragraph 12EA(1)(b) focuses on ACA approval of a person as a competing
universal service provider because this is more directly linked to a person
becoming a universal service provider.
Proposed new subsection 12EA(2)
provides that proposed subsection 12EA(1) applies in relation to an area while
the agreement referred to in subsection 12E(2) remains in force in relation to
that area but no longer than 3 years after the commencement date for that area.
Proposed new subsection 12EA(2) is intended to limit the restriction on
new universal service providers for an area within the Extended Zones to a
maximum of three years or a lesser period should the agreement cease to apply in
relation to an area before three years. This means, for example, that should
the agreement be terminated in relation to an area covered by the agreement
within three years, the Minister would be able to determine a new primary
universal service provider in relation to that area.
The reference to
areas recognises that proposed section 12E envisages that the successful
tenderer may commence as the universal service provider for constituent areas
within the Extended Zones at different dates as it rolls out its services. The
exclusivity period is intended to apply on an area by area basis and extend for
three years from the commencement date for the area concerned.
Proposed
subsection 12EA(3) provides that the three year exclusivity arrangements set out
in proposed section 12EA apply despite anything else in the Part. Proposed Part
2 contains a number of provisions (eg. proposed sections 9J, 11E, 14), enabling
modification of the Part so it can evolve with changing industry conditions and
deal with unforeseen circumstances. Proposed subsection 12EA(3) is intended to
make it clear that the exclusivity arrangements in proposed section 12EA cannot
be modified by any of these mechanisms, with a view to enhancing certainty for
tenderers.
AMENDMENT (5)
As drafted, the Bill provides scope for primary and competing universal
service providers to supply ‘alternative telecommunications
services’ (ATS) in fulfillment of the USO. These are services, which
would differ in some characteristic from standard telecommunications service
supplied in fulfillment of the USO. It is envisaged that USPs supplying ATS
would draw to the attention of consumers differences between their ATS and
standard offerings. As an additional consumer safeguard, Amendments (5) and (6)
make this a statutory requirement. Amendment (6) makes analogous changes in
relation to ATS offered by competing USPs.
Amendment (5) inserts a new
paragraph 12T(2)(ea) that supplements the matters the ACA must be satisfied of
before approving a draft ATS marketing plan submitted by a PUSP. A marketing
plan sets out commitments a USP must comply with in providing a service under
the USO.
The amendment requires the ACA to be satisfied that the draft
ATS marketing plan includes a requirement in relation to information supplied to
ATS customers. Before supplying a person with a service, the PUSP must make
available to the person information about the substantive differences between
the ATS service and the service supplied by the PUSP under the standard
marketing plan.
The focus on ‘substantive differences’
recognises that telecommunications services have many points of differentiation
and any two services may be stronger on some points and weaker on others. That
is, services need to be assessed as a whole.
Examples of
‘substantive differences’ include differences in relation to
functionality and service features (eg. mobility, enhanced calling features),
data speeds, service quality, minimum term contracts, connection and fault
rectification times and pricing, including connection charges and the
availability of untimed local calls. The ACA is expected to exercise its
discretion in determining what are ‘substantive differences’. It is
intended that they be differences of reasonable importance to consumers. They
do not include every minor difference. The requirement is not intended to place
an undue burden on prospective ATS providers or deny consumers the benefits of
ATS.
This amendment is intended to enable customers to compare the ATS to
the standard telephone service also available from the PUSP before deciding to
purchase an ATS. This amendment is intended to build upon the requirement in
proposed paragraph 12T(2)(e), as introduced into the House of Representatives on
29 June 2000, and is not intended to limit it in any way.
AMENDMENT (6)
Amendment (6) makes changes analogous to those in Amendment (5), except
that they relate an ATS offered by a competing USP, rather than a primary USP.
The general comments made in relation to Amendment (5) apply in this
case.
Amendment (6) inserts a new paragraph 13Q(2)(ea) that supplements
the matters the ACA must be satisfied of before approving a draft ATS marketing
plan submitted by a competing USP. Like Amendment (5), the amendment requires
the ACA to be satisfied that the CUSP will make available to a person seeking a
service information about the substantive differences between the ATS and the
service supplied by the PUSP under the standard marketing plan.
AMENDMENT (7)
Proposed section 16A, as introduced by Government amendment in the House
of Representatives, requires the Minister to seek the advice of the ACA before
determining or varying USO subsidies under proposed section 16. On 11 April
2000 the Minister asked the ACA to provide advice on appropriate USO subsidies
for 2000-01, 2001-02 and 2002-03, with a view to expediting the
Government’s USO reforms. The Minister received the ACA’s advice on
18 September 2000. Further advice pursuant to the request is expected in
October.
Having already sought the ACA’s advice in a manner
consistent with proposed section 16A, it would be unnecessary and
administratively wasteful for the Minister to seek the ACA’s advice a
second time. Amendment (7) therefore inserts a new item, 6A, into Schedule 2 of
the Bill (which deals with application and transitional provisions) to address
this issue. Proposed new item 6A provides that if, before 31 December
2000, the ACA has given an advice relating to universal service subsidies (see
proposed s.16) to the Minister, the advice is taken to have been given to the
Minister in accordance with section 16A. It is intended that the reference to
the advice having been given in accordance with s.16A mean that an appropriate
direction under proposed subsection 16A(1) is taken to have been given and that
the ACA has complied with the direction. It is also intended that the advice
provided by the ACA be taken to be appropriate advice for the Minister to use in
determining subsidies under proposed section 16.