Commonwealth of Australia Explanatory Memoranda

[Index] [Search] [Download] [Bill] [Help]

TELECOMMUNICATIONS (UNIVERSAL SERVICE LEVY) BILL 1996

1996


THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA


HOUSE OF REPRESENTATIVES











TELECOMMUNICATIONS (UNIVERSAL SERVICE LEVY) BILL 1996




EXPLANATORY MEMORANDUM














(Circulated by authority of Senator the Hon. Richard Alston, Minister for Communications and the Arts)

79582 Cat. No. 96 5540 9 ISBN 0644 480130

TELECOMMUNICATIONS (UNIVERSAL SERVICE LEVY)
BILL 1996

OUTLINE

This Bill imposes a levy on telecommunications carriers with a view to funding losses incurred by universal service providers in fulfilling the Universal Service Obligation (USO) under the proposed Telecommunications Act 1996. The USO is defined in proposed section 144 of that Act. As such this Bill is an integral part of the legislative machinery for ensuring all people in Australia, regardless of where they reside or carry on business, have reasonable access, on an equitable basis, to the standard telephone service, payphones and prescribed carriage services.

The details of the USO arrangements are set out in Part 7 of the proposed Telecommunications Act 1996. Briefly, the proposed Act sets out the method for calculating universal service carriers’ net universal service costs incurred in fulfilling their USOs and for calculating participating carriers’ contributions to these costs on the basis of their shares of total eligible revenue. Levy is only payable when a carrier’s contribution exceeds the net costs it has itself incurred as a universal service provider.

This Bill imposes levy on a participating carrier to the extent that, in a financial year, its contribution exceeds the amount of its own universal service costs. This excess is known as its levy debit balance. The amount of the levy is equal to the levy debit balance.

FINANCIAL IMPACT

Part 7 of the proposed Telecommunications Act 1996 provides for the calculation of the universal service levy.

The levy is designed to recover from carriers the losses that result from supplying loss making services in the course of fulfilling the USO. The total net cost of supplying those services will depend on all carriers with a USO identifying loss making areas and the extent of losses in those areas. Total losses may vary from year to year according to a range of factors including demand, new investment, traffic levels, any change to the definition of the USO and the cost of capital.

The relative contributions of participating carriers will depend on the total net universal service cost and each carrier’s share of total eligible revenue. The share provides the basis on which total costs are apportioned to each carrier. Thus a carrier earning 50% of total eligible revenue would be liable to fund 50% of the total net universal service cost. Deducted from a carrier’s total contribution (known as its “levy debit”) are the amounts it has already expended in fulfilling its USO. The actual levy imposed on, and payable by, a carrier is therefore the amount by which the carrier’s contribution exceeds what it has already expended as a universal service carrier (“levy debit balance”). Where a universal service carrier’s expenditure in fulfilling the USO exceeds its contribution requirement, it has a levy credit balance and is entitled to receive a payment from the levy that is collected.

Given the number of variables that are involved both in terms of universal service costs and carrier revenue shares, it is impossible to quantify what amounts will be payable under the levy. Historical figures give some idea of the costs that have been involved in the past. The total net universal service cost was $235m for 1994-95. Of this 1994-95 figure, on the basis of their shares of timed traffic (rather than eligible revenue) Telstra contributed 94.2%, Optus 5.6% and Vodafone 0.2% of USO funding. It can be expected, however, that as new entrants’ businesses grow, their relative contributions to funding the net cost of loss-making service will increase. Correspondingly, Telstra’s contribution should decrease.

NOTES ON CLAUSES

Clause 1 - Short title

This clause provides for the citation of the Telecommunications (Universal Service Levy) Act 1996.

Clause 2 - Commencement

This clause provides for the Bill, when enacted, to commence on 1 July 1997.

Clause 3 - Act to bind Crown

This clause provides that the Act binds the Crown in the right of each of the States, of the Australian Capital Territory, of the Northern Territory and of Norfolk Island.

Clause 4 - Extension to external Territories

This clause extends the Bill to each external Territory referred to in proposed section 135 of the Telecommunications Act 1996. Proposed section 135 refers to the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands and any external Territory specified in the regulations.

Clause 5 - Definitions

This clause defines “participating carrier” for the purposes of the Bill, giving it the same meaning as in proposed section 141 of the Telecommunications Act 1996.

This definition constitutes a major change to the Telecommunications (Universal Service Levy) Act 1991, section 4 of which enables the Minister to declare a carrier to be a participating carrier. The change gives effect to the policy principle that in normal circumstances all licensed carriers should contribute to the funding of USO losses. Proposed section 141 of the Telecommunications Act 1996 includes a power for regulations to exempt particular kinds of carriers.

Clause 6 - Imposition of levy

This clause imposes a levy on the levy debit balance in relation to a financial year (as determined in proposed section 188 of the Telecommunications Act 1996) of a participating carrier.

This clause must be read in conjunction with proposed section 188 which sets out the means of determining a carrier’s levy debit balance and the amount of that balance. In general, the levy would only be payable where a participating carrier’s liability to contribute to the net costs of fulfilling the USO exceeds the net costs (levy credit) that the carrier has itself incurred.

Clause 7 - Amount of levy

This clause provides that the amount of the levy imposed is the amount of the participating carrier’s levy debit balance.

Clause 8 - Carrier liable to pay levy

This clause provides that the levy imposed on a participating carrier is payable by the participating carrier. Under proposed section 194 of the Telecommunications Act 1996, the levy is payable on the 28th day after the ACA gives the participating carrier a copy of the ACA’s assessment of levy under proposed section 184 of that Act. Under proposed section 195 of that Act, the levy is a debt due to the Commonwealth and may be recovered in a court of competent jurisdiction.

[Index] [Search] [Download] [Bill] [Help]