1998

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) BILL 1998

EXPLANATORY MEMORANDUM

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

ISBN:  0642 377685

TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) BILL 1998

OUTLINE

The Telecommunications (Consumer Protection and Service Standards) Bill 1998 (the Bill) brings together the consumer protection measures that were contained in the Telecommunications Act 1997 to provide greater visibility and clarity.  There are, however, new powers in relation to compliance reflecting the sale of Telstra.

The Bill makes the following changes while re-enacting the pre-existing consumer protection measures.

(a)	The Minister will have the power to direct Telstra to ensure that it complies with the Act (clause 159). 

(b)	The Australian Communications Authority (ACA) will be given the power (clause 118) to direct a telephone company to redress systemic problems in relation to the Customer Service Guarantee (CSG).  This will enable the ACA to look proactively into systemic problems (eg. consistent faults in a particular geographic area) and direct a carriage service provider about the things it should do to ensure those problems do not recur.

(c)	Subclause 128(3) will make it clear that there is only one Telecommunications Industry Ombudsman (TIO) scheme.

(d)	Subclause 155(3) will clarify that price control arrangements can include charges for untimed local calls in regional areas.

(e)	Subclause 155(4) will allow different price control arrangements to apply to different customers in relation to one type of Telstra service charge.

(f)	Subclause 155(5) will require Telstra to comply with any determination setting out price control arrangements.

The Bill imposes obligations on telecommunications carriers and carriage service providers for the benefit of consumers relating to:

•	universal service;

•	the National Relay Service;

•	untimed local calls;

•	the customer service guarantee;

•	the Telecommunications Industry Ombudsman scheme;

•	protection in the event of the insolvency of a carriage service provider;

•	provision of emergency call services; and

•	price control arrangements applying to Telstra.

Part 2 of the Bill establishes a regime for delivering universal service in telecommunications.  The Part re-enacts Part 7 of the Telecommunications Act 1997.  It imposes a universal service obligation on carriers to ensure that standard telephone services, payphones and prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.  The provisions in this Part maintain existing requirements in regard to the types of services and equipment obliged to be supplied under the universal service obligation.

Part 3 of the Bill deals with the operation of the National Relay Service (NRS).  The NRS is a service that provides people who are deaf or hearing or speech impaired, with access to a standard telephone service on terms, and in circumstances, that are comparable to those on which other Australians have access to a standard telephone service.

Part 3 of the Bill continues in operation the arrangements that have applied from 
1 July 1998 under which the NRS is provided by a person, who may or may not be a carrier, under a contract with the Commonwealth.  The NRS is currently provided by Australian Communication Exchange Limited.  The current NRS contract includes an NRS Service Plan, outlining the services to be provided from 1 July 1998.  The NRS Service Plan also outlines how the service will adapt and implement new technology as it becomes available, such as speech to speech for those speech impaired people who find text communications difficult.  

Part 4 of the Bill continues the operation of a scheme for ensuring that customers in Australia who have historically had access to untimed local calls will continue to get such access.  It also includes special benefits for rural and regional customers of carriage service providers.

Part 5 of the Bill continues the operation of the customer service guarantee arrangements contained in Part 9 of the Telecommunications Act but also enables the ACA to look proactively into systemic problems (eg. consistent faults in a particular geographic area) and direct a carriage service provider about the things it should do to ensure those problems do not recur.

Part 6 of the Bill continues the operation of the Telecommunications Industry Ombudsman scheme contained in Part 10 of the Telecommunications Act.  It also makes it clear that there is only one Telecommunications Industry Ombudsman scheme.  Both carriers and carriage service providers supplying the standard telephone service to residential customers or supplying public mobile telecommunications services are required to enter the scheme.  In addition, the ACA is empowered to require other classes of service providers to enter the scheme where appropriate.

Part 7 of the Bill continues the operation of Part 11 of the Telecommunications Act to give a measure of protection to residential customers of standard telephone services against a failure by their carriage service provider to supply those services when the customer has made a protected payment.

Existing requirements in regard to emergency service arrangements will be continued under Part 8 of the Bill.  These provisions allow the ACA to determine arrangements for the provision of direct access by end-users, free of charge, to emergency call numbers, and ancillary arrangements for emergency call handling.  

Part 9 of the Bill re-enacts the price regulation regime currently contained in Part 6 of the Telstra Corporation Act 1991 which is to continue to apply to Telstra.  It also:

•	makes it clear that price caps can include charges for untimed local calls in regional areas;

•	allows different price control arrangements to apply in relation to one type of Telstra service charge; and

•	requires Telstra to comply with any determination setting out price control arrangements.

Part 10 of the Bill deals with miscellaneous matters, including giving the Minister a power to direct Telstra to comply with the Bill.

FINANCIAL IMPACT STATEMENT

Implementation of the protections contained in the Bill will continue to require considerable effort from the ACA, the ACCC and the Department of Communications, Information Technology and the Arts.  Expenditure by the ACA and the ACCC will be offset by carrier licence application charges and annual charges imposed by the Telecommunications (Carrier Licence Charges) Act 1997.  The details of the ongoing resource requirements for the ACA and ACCC will be considered in the 1998-99 and subsequent budget processes.

The Bill will not alter the current financial impact on carriers since they will continue to be required to fund the operation of consumer protection and service standards measures such as the universal service obligation and the NRS under this Bill and related Acts.

REGULATION IMPACT STATEMENT

The proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 brings together the consumer protection measures that were contained in the Telecommunications Act 1997 to provide greater visibility and clarity.  There are however, new powers in relation to compliance reflecting the sale of Telstra.

(a)	The Minister will have the power to direct Telstra to ensure that it complies with the new Consumer Act. 

(b)	The Australian Communications Authority (ACA) will be given the power to direct a telephone company to redress systemic problems in relation to the Customer Service Guarantee (CSG).  This will enable the ACA to look proactively into systemic problems (eg. consistent faults in a particular geographic area) and direct a carriage service provider about the things it should do to ensure those problems do not recur.

(c)	Subclause 128(3) of the Act will make it clear that there is only one Telecommunications Industry Ombudsman (TIO) scheme.

(d)	Subclause 155(3) will clarify that price control arrangements can include charges for untimed local calls in regional areas.

(e)	Subclause 155(4) will allow different price control arrangements to apply to different customers in relation to one type of Telstra service charge.

(f)	Subclause 155(5) will require Telstra to comply with any determination setting out price control arrangements.

Problem identification

Ministerial Power of Direction

It is proposed that under the proposed Telstra (Transition to Full Private Ownership) Act 1998 the Ministerial power under section 9 of the Telstra Corporation Act 1991 will cease to apply on a date to be proclaimed when the Minister is satisfied that the Commonwealth’s equity has declined below 50 per cent.   

The above proposal has caused concern in the community that should the Ministerial power under section 9 of the Telstra Corporation Act 1991 cease there will be lack of Ministerial control over Telstra.

The proposed Ministerial power of direction under the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 is to ensure that the Minister may direct Telstra to comply with the new Consumer Act.  

CSG

The CSG Standard specifies a range of minimum performance standards which all carriage service providers (CSPs) are required to meet in relation to the standard telephone service and its associated call enhanced features.

Although a CSP is required to pay compensation under the CSG if it does not meet the CSG Standard, it is apparent that in some instances payment of compensation is preferable to the CSP rather than rectifying the underlying cause, resulting in sub-standard customer service. 

TIO

In October 1998, a firm of solicitors wrote to the TIO asking ‘the basis upon which it is said that the Telecommunications Industry Ombudsman Limited ACN 057 634 787 is the scheme contemplated by section 246 of the Telecommunications Act 1997.’  

It was unclear whether the solicitors’ clients were objecting to joining the TIO, or contemplating attempting to set up a rival scheme.  However, there is an identified issue that at least some carriage service providers may seek to exploit a perceived ambiguity in the Act.

Price control arrangements

There are several minor amendments to the Telstra price control arrangements.  It will be made clear that:

(a)	Telstra-specific price cap arrangements and other price control arrangements may relate to charges for untimed local calls in particular areas;

(b)	that different price control arrangements may apply to different customers in relation to one type of Telstra service charge;

(c)	Telstra must comply with any determination setting out price control arrangements.

Specification of the desired objective

Ministerial Power of Direction

The object is to provide a targeted Ministerial power of direction over Telstra that relates specifically to the safeguards in the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998.  These are the areas of greatest concern about Telstra's performance.

CSG

The objective of the proposed amendment is to provide a substantial incentive to the CSPs to identify and solve recurring problems which have resulted in their not being able to meet the CSG Standard on a regular basis.

TIO

The objective is to remove any uncertainty, to ensure that there is only one TIO scheme.  

Part 10 of the Telecommunications Act 1997 considerably broadened and strengthened the role of the TIO beyond the provisions of the 1991 Act.  In particular, subsection 246 (1) required carriers and eligible carriage service providers in association with each other to ‘enter into a scheme providing for a Telecommunications Industry Ombudsman’.  Subsection 246 (2) provides that ‘the scheme be known as the Telecommunications Industry Ombudsman’.  

The Telecommunications Industry Ombudsman Limited (ACN 057 634 787) is a company limited by guarantee with a Memorandum and Articles of Association.  The TIO’s logo and the logo in conjunction with the words Telecommunications Industry Ombudsman were registered as Associated Trade Marks under the Trade Marks Act 1955 on 1 December 1995.

The Act and Explanatory Memorandum envisaged that the Telecommunications Industry Ombudsman Limited, the existing industry-based scheme, was the scheme for the purposes of section 246.

Price control arrangements

The insertion of a provision making clear that price control arrangements may relate to charges for untimed local calls in particular areas was moved by Senator Boswell on behalf of the Government during the debate on the proposed Telstra (Transition to Full Private Ownership) Act 1998 in July 1998.

The insertion of a provision making it clear that different price control arrangements may apply in relation to one type of Telstra service charge is intended to avoid any doubt that a price control determination may apply different price control arrangements in relation to residential and business customers being supplied with the standard telephone service, as the current determination (the Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination 1997) does.  This doubt would not arise under the current Act, but may arise under the new Act if clause 155 did not contain an equivalent provision to subclause 43(5).

The insertion of a provision making it clear that Telstra must comply with any determination setting out price control arrangements is intended to remove any doubt that Telstra must comply, and to ensure that civil penalty provisions for contravention of Telstra’s carrier licence may be applied in the event of non-compliance.

Identification of options

Ministerial Power of Direction

Option 1	Do nothing (ie retain the current power of direction under s. 9 of the Telstra Corporation Act 1991).

Option 2	Provide a more targeted Ministerial power of direction over Telstra directly related to the issues of concern.

Option 3	Remove the s. 9 Ministerial power of direction over Telstra and rely on the general provisions under the Telecommunications Act 1997, the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 and the general provisions under the Trade Practices Act 1974 that applies to all industries.

CSG

Option 1	Do nothing.

Option 2	Give the ACA a power to direct a CSP where it consistently fails to comply with any element of the CSG Standard, Australia wide or within a geographical location.  Should the CSP fail to comply with an ACA direction to take remedial action to improve its customer service performance, a fine of up to $10 million could be imposed.

Option 3	To impose substantial customer compensation on a CSP where it consistently fails to meet any element of the CSG Standard.

TIO

Option 1	Take no specific action and rely on the current legislation to require all carriers and carriage service providers to enter into the existing TIO scheme.

Option 2	Make a minor amendment to section 246 of the Telecommunications Act 1997 to remove any possible doubt of the intention that there should only be one TIO scheme.

Price control arrangements 

Option 1   Do nothing.

Option 2   Seek to remove doubt about the application of the provisions.

Assessment of impacts (costs and benefits) of each option

Ministerial Power of Direction

Option 1	To not take any action would mean that the current Ministerial direction power under the Telstra Corporation Act 1991 would remain.  This power is not sufficiently targeted or defined.  No direction has ever been issued under this section.  

Option 2	A more specific power of direction will address community concerns as it will be targeted at the service standards and consumer safeguards.  It would also be clearly related to the Minister’s regulatory responsibilities rather than the Government’s shareholder/ownership role.  The impact on Telstra would only be relevant if the power is used and would depend on the nature of any direction.  It is not expected to have any direct effect on the rest of the industry but it may have some indirect effect if competition induces CSPs to improve their performance in line with any direction to Telstra.

Option 3 	It is arguable that, in principle, a privatised Telstra should not be subject to a directions power that does not apply equally to its competitors.  While the ACA has considerable power under the Telecommunications Act 1997, it is considered that a special power of direction over Telstra is appropriate because of Telstra’s considerable market power and significant influence over many parts of the industry.  

CSG

Option 1	Not to make any amendment may result in lower quality of service, especially in non-metropolitan areas.

Submissions made to the Senate Environment, Recreation, Communications and the Arts Legislation Committee (Senate Committee) gave an overwhelming view that customer service was declining.  The Senate Committee expressed concern that at the current rate at which penalties are imposed it might be cheaper for a carrier to pay the current penalty rather than provide the minimum performance level in customer service.

This approach does not place any additional financial burden on CSPs. 

Option 2	It is difficult to assess the cost of a direction by the ACA as it would depend on the direction.  The benefits should be an improvement in the quality of services.  The threat of a substantial fine, up to $10 million, were a CSP to fail to comply with an ACA direction to take remedial action to improve its customer service performance, would place a high incentive on that CSP to improve its performance.  This additional power for the ACA to enforce the standards under the CSG scheme would be exercised in accordance with written guidelines for identification and investigation of systemic problems developed after wide consultation with the industry.  The maximum level of civil penalty ($10m) which may be awarded by the Federal Court is consistent with penalty provisions elsewhere in the Telecommunications Act 1997.

Although this option does not guarantee good customer service from CSPs it does provide a high degree of motivation for a CSP to comply with any ACA direction requiring it to improve in an area of its performance or to perform better in a particular geographical location.

Option 3	An increased level of customer damages where a CSP fails to comply with the CSG standards should place a high incentive on that CSP to improve its performance.  However, it may also provide a high incentive for customers to deliberately set out to gain compensation.

The CSG Scale of Damages has recently been changed from $11.65 for each day of delay to increase the rate after the first 5 days of delay to $40 a day for individual residential customers, and individual business customers will have the $20 per day of delay also increased to $40 per day after the first 5 days of delay.  

The recent increase in the CSG Scale of Damages is an interim measure whilst the ACA reviews the CSG Standard and Scale of Damages.  The review’s recommendations are expected in November 1998.

Increasing the level of damages is likely to increase the costs of CSPs who consistently fail to meet the CSG standard.  The biggest impact for the foreseeable future would be on Telstra.

TIO

Option 1	If no specific action were taken and reliance is placed on the intent of current legislation, it is possible that certain carriage service providers could exploit perceived ambiguity in the Act to avoid joining the existing TIO scheme and/or to seek to establish a rival scheme.

In the event that another organisation began operating under the name ‘TIO scheme’, or similar, the Telecommunications Industry Ombudsman Limited would probably seek an injunction preventing the use of that name, under the Trade Practices Act 1974 or State and Territory fair trading legislation.  It would be both costly and time consuming should such a situation eventuate.

If the establishment of a rival scheme were to succeed, it would be an unnecessary duplication of staff, accommodation and other administrative costs.  

For the general public there may be confusion in finding the appropriate avenue for investigation of consumer complaints if two TIO schemes were operating.

It is difficult to envisage any benefits flowing from the establishment of a rival TIO scheme.  A rival organisation could reduce the consistency and continuity in handling consumer complaints, leading to disadvantage to consumers.

Option 2	A minor amendment to section 246 of the Telecommunications Act 1997 could remove any possible ambiguity and ensure that there is only one scheme, achieving the intent of the legislation.

There would be no cost involved, and indeed there would be potential savings in that it would avoid the possible duplication of the establishment of a rival scheme.

There are benefits in having only one TIO scheme, as envisaged by the Act, as aside from the cost advantages of establishing and running a single organisation, there would also be greater continuity and consistency in the handling of consumer complaints.

Price control arrangements 

Option 1	Senator Boswell’s proposed amendment reflects the existence of some doubt in the community about whether regional price cap arrangements, such as the ‘local call pricing parity scheme’, are permitted under the current legislation.  In the absence of an amendment, there would be some doubt about whether the legislation permits the application of different price controls to different customers.  Continuance of doubt on these issues leads to regulatory uncertainty and should be avoided.  

The absence of any explicit requirement on Telstra to comply with a price control determination raises concerns that Telstra will not have appropriate incentives to comply.

Option 2	The proposed amendments will reduce regulatory uncertainty and provide Telstra with appropriate incentives to comply with the price control arrangements. 

Consultation

The Senate Committee held a public inquiry into the proposed Telstra (Transition to Full Private Ownership) Act 1998.  This inquiry was extensive and far reaching, with 103 submissions, from a range of stakeholders including the three levels of government, industry, unions, community bodies, special interest groups, consumer representatives and individuals.

The Senate Committee’s report was made public on 21 May 1998.  In the majority report the Senate Committee stated that evidence obtained showed that customers would rather have the carrier adhere to its CSG obligations than receive compensation for non-compliance.

Ministerial Power of Direction

A number of witnesses to the inquiry indicated that they considered that the regulatory framework was insufficiently effective to justify the removal of the Ministerial power of direction over Telstra.  It is considered that a more targeted power of direction is more appropriate as it is aimed specifically at the areas of consumer concern.

CSG

The Senate Committee’s report did not appear to address the likely impact on the industry and flow on effects of the CSP passing on the increased costs to customers.  It appears that the Senate Committee’s report concentrated on how to make the CSPs comply with their obligation under the CSG Standard.

Considerable consultation was undertaken by the Senate Committee which enabled views to be gathered from concerned parties on all issues.

TIO

No specific consultation has been undertaken, given that any minor amendment to section 246 would in fact be clarifying the original intent of the Telecommunications Act 1997.

Price control arrangements 

These amendments are largely a response to submissions to the Senate Committee.  Telstra has not been consulted on the amendment requiring it to comply with a price control determination.

Conclusion and recommended option

Ministerial Power of Direction

Option 2 is the preferred option as it more specifically addresses the concerns of consumers.  

Option 1 provides an insufficiently targeted power which Ministers may be reticent to use.  

Option 3 does not provide the safeguard of a Ministerial direction power.

CSG

Option 2 is the preferred option since it does not provide an incentive for customers to contrive to defraud a CSP whilst at the same time providing the CSP with an incentive to comply with any ACA direction to improve its service to the customer.  A further benefit is that this option does not place any financial burden on CSPs who make the effort to improve their customer service.

Option 1 was rejected since there would be no increased incentive for CSPs to improve their customer service beyond that currently existing in the CSG.  It is therefore reasonable to assume that current performance standards will remain the same or even diminish.

Option 3 was rejected since the consultation process undertaken by the Senate Committee formed the view that customers preferred a good standard of service to compensation and  a continued poor customer service.  

It was also considered that this option could possibly entice customers to make false complaints in order to defraud CSPs.

TIO

Option 2 is the preferred option because it removes any perceived ambiguity in the current legislation.  There is no cost associated with implementing this option.  In fact it avoids the potential costs of duplication through the establishment of a rival scheme, confusion to consumers, and the potentially high costs to the TIO of demonstrating its position either through legal action or awareness surveys.

Price control arrangements

Option 2 is the preferred option because it removes regulatory uncertainty and provides appropriate incentives for Telstra to comply with a price control determination.

Implementation and review

Ministerial Power of Direction

No specific review of this provision is proposed, but a full review of telecommunications regulation is to occur by 30 June 2002.

CSG

The ACA will be required to develop guidelines in consultation with consumer groups and industry as to what constitutes a systemic fault and the type of problems in relation to which it would consider making a direction.

Under s. 105 of the Telecommunications Act 1997, the ACA is required to monitor and report to the Minister on the appropriateness and adequacy of the approaches taken by the carriage service providers in carrying out their obligations, and discharging their liabilities under the provisions relating to the CSG. 

TIO

Given that the TIO scheme has been in existence for a number of years, beyond the enactment of a minor amendment to the Act,  there is no implementation involved with the preferred option.  The TIO scheme already has a membership of over 500 carriers and carriage service providers.

The TIO’s current public reporting arrangements, primarily through the agency’s annual report, will continue.

Price control arrangements 

The Government has announced that a review will be conducted in 2000 into the need for price controls from 2001.  

It is Government policy that the Minister for Communications, Information Technology and the Arts will conduct a full review of telecommunications regulation by 30 June 2002.

ABBREVIATIONS

The following abbreviations are used in this explanatory memorandum:

ACA:				Australian Communications Authority

ACA Act:			Australian Communications Authority Act 1997

ACCC:			Australian Competition and Consumer Commission

Bill:				Telecommunications (Consumer Protection and Service 				Standards) Bill 1998

CSG:				customer service guarantee

NCA:				net cost area

NUSC:				net universal service cost

Radcom Act:			Radiocommunications Act 1992

STS:				standard telephone service

Telecommunications Act:	Telecommunications Act 1997

Telstra:			Telstra Corporation Limited

Telstra Corporation Act:	Telstra Corporation Act 1991

TIO:				Telecommunications Industry Ombudsman

TPA:				Trade Practices Act 1974

USO:				universal service obligation

USP:				universal service provider

NOTES ON CLAUSES

Part 1—Preliminary

Clause 1 – Short title

Clause 1 provides that the Bill, when enacted, may be cited as the Telecommunications (Consumer Protection and Service Standards) Act 1998.

Clause 2 – Commencement

Subclause 2(1) provides that subject to that clause the Bill, when enacted, will commence on the 28th day after the day on which it receives the Royal Assent.

Subclause 2(2) provides that certain provisions of the Bill that are used in Part 2 (dealing with the universal service regime) as well as Part 2 itself and Part 3 (dealing with the National Relay Service) will commence on 1 July 1999.  This will ensure that Parts 7 and 7A of the Telecommunications Act 1997 will apply in relation to the 1998-1999 financial year and that Parts 2 and 3 of this Bill will apply to subsequent financial years.

The Telecommunications Legislation Amendment Bill 1998 contains transitional provisions to ensure that all regulations, instruments and other things done for the purposes of a particular provision of the Telecommunications Act or Part 6 of the Telstra Corporation Act have effect, after the commencement of this Bill, as if they had been done for the purposes of the corresponding provision of this Bill.

Clause 3 – Objects and regulatory policy

Clause 3 provides that sections 3 and 4 of the Telecommunications Act apply to this Bill in a corresponding way to the way in which they apply to that Act.

Section 3 of the Telecommunications Act sets out the objects of that Act, when read together with Parts XIB and XIC of the Trade Practices Act 1974 (TPA), dealing with anti-competitive conduct and record keeping rules in the telecommunications industry and the telecommunications access regime.

The main object is to provide a regulatory framework that promotes the long-term interests of end-users of carriage services or services supplied by means of carriage services and the efficiency and international competitiveness of the Australian telecommunications industry.  The reference to promoting ‘the long-term interests of end-users’ is intended to have a wide meaning, and is not intended to be read down by reference to the narrower definition of promoting the long-term interests of end-users in section 152AB in Part XIC of the TPA.  That section sets out an object for Part XIC alone.

A list of other objects is set out in subsection 3(2) of the Telecommunications Act.  These objects include:

•	ensuring that standard telephone services, payphones and other carriage services of social importance are:

–	reasonably accessible to all people in Australia on an equitable basis, wherever 	they reside or carry on business; and

–	are supplied as efficiently and economically as practicable; and

–	are supplied at performance standards that reasonably meet the social, 	industrial and commercial needs of the Australian community;

•	promoting the equitable distribution of benefits from improvements in the efficiency and effectiveness of the provision of telecommunications networks and facilities and the supply of carriage services; and

•	providing appropriate community safeguards in relation to telecommunications activities and to regulate adequately participants in sections of the Australian telecommunications industry.

Section 4 of the Telecommunications Act sets out a statement of regulatory policy intended to guide the telecommunications regulators in the performance of their functions and the exercise of their powers under that Act.  This statement is to the effect that the Parliament intends that telecommunications be regulated in a manner that promotes the greatest practicable use of industry self-regulation and does not impose undue financial and administrative burdens on participants in the industry, but does not compromise the effectiveness of regulation in achieving the objects mentioned in section 3 of that Act.  

This regulatory policy is intended to give guidance to the Minister, the ACA and the ACCC in the exercise of their powers and functions under the Bill and the  Telecommunications Act.

Clause 4 – Simplified outline

Clause 4 contains a simplified outline of the Bill to assist readers.

Clause 5 – Definitions

Subclause 5(1) provides that unless the contrary intention appears, expressions used in the Bill and in the Telecommunications Act have the same meaning in the Bill as they have in that Act.

Subclause 5(2) sets out other definitions mainly for the purposes of Part 2 of the Bill (dealing with the universal service regime) and Part 6 of the Bill (dealing with the Telecommunications Industry Ombudsman).

Clause 6 – Standard telephone service

Clause 6 defines ‘standard telephone service’ for the purposes of the Bill and the Telecommunications Act.

The standard telephone service is a fundamental concept in the Bill and in the Telecommunications Act.  The concept plays a central role in the provisions relating to the universal service regime (Part 2 of the Bill), continued access to untimed local calls (Part 4 of the Bill), the Telecommunications Industry Ombudsman (Part 6 of the Bill), protection for residential customers against failure by a carriage service provider (Part 7 of the Bill) and the provision of emergency call services (Part 8 of the Bill).

The use of a uniform concept of the standard telephone service reflects the practical reality that there is a basic carriage service, based on voice telephony, that the community expects to be available (with this goal being achieved through the USO) and to which certain attributes (eg. untimed local calls, emergency call access, etc) attach.

The definition focuses attention on the functionality of the service, namely basic communications (by voice, or an equivalent service for end-users with a disability); is technologically neutral; accommodates non-voice users of ‘voice services’; supports a consistent definition of the standard telephone service throughout  telecommunications legislation; and enables a better, more transparent approach to be taken to definition of the universal service obligation (USO).

The concept of the standard telephone service is not explicitly linked to the concept of the public switched telephone service or any particular service technology.  By breaking this link between the standard telephone service and the public switched telephone service, it becomes possible to use the concept throughout the Bill and the Telecommunications Act as a device to which to attach certain requirements which are generally applicable to voice telephony, regardless of the underlying carriage service or delivery technology.

Under subclause 6(1) a reference in a particular provision of the Bill or the Telecommunications Act to a standard telephone service is a reference to a carriage service for each of three purposes, namely:

•	the purpose of voice telephony;

•	if voice telephony is not practical for a particular end-user with a disability and another form of communication that is equivalent to voice telephony would be required to be supplied to the end-user in order to comply with the Disability Discrimination Act 1992, the purpose of that form of communication;

•	a purpose declared by regulations to be a designated purpose for the purposes of that provision;

where:

•	the service passes the connectivity test; and

•	to the extent that the service is for a purpose referred to above, the service has the characteristics (if any) declared by the regulations to be the designated characteristics in relation to that service for the purposes of that provision.

The standard telephone service is a ‘carriage service’ which is defined in section 7 of the Telecommunications Act as ‘a service for carrying communications by means of guided and/or unguided electromagnetic energy’.

The standard telephone service is based on the concept of voice telephony (or its equivalent for people with a disability) reflecting that, in the first instance, the service is for basic voice communications.  In practical terms, ‘voice telephony’ is intended to refer to communications by voice by telephone.  The key idea behind the concept is the ‘plain old telephone service’ or simple, real time, two-way voice communication.  By basing the standard telephone service on voice telephony (or its equivalent for people with a disability) the legislation sets a firm baseline below which the standard telephone service cannot fall.

The definition of standard telephone service does not include customer equipment.  Such an inclusion is inappropriate given the multiple roles the concept plays in the Bill and in the Telecommunications Act.  The supply of customer equipment will continue to be a component of the USO (under clauses 13 and 14) but without being an inherent part of the standard telephone service itself.

The explicit reference in the standard telephone service definition to people with a disability is intended to make clear that the standard telephone service is to be supplied to people with a disability.  The Government’s decision to rely on the Disability Discrimination Act 1992 accords with its preference to rely on general, rather than industry-specific, legislation and to treat disability issues as mainstream concerns.  The approach also means the telecommunications industry is subject to the same general level of regulation in relation to disability matters as other sectors of the economy.

Building the needs of disabled people into the standard telephone service also ensures that attributes that attach to that service (eg. untimed local calls, emergency call access) also attach to the standard service as it is supplied to people with a disability.

Given the important regulatory role the standard telephone service plays, it is appropriate for there to be scope to:

•	prescribe other purposes for the standard telephone service; and

•	precisely specify the performance characteristics of the standard telephone service;

as it applies generally throughout the Bill and the Telecommunications Act and in relation to specific regulatory provisions.

The ability to prescribe additional purposes for the standard telephone service provides an effective functionality-based means of clarifying or upgrading the standard telephone service concept over time.  Examples of other purposes that may be declared include the carriage of data and tone signalling (subclause 6(3)).

The ability to declare in regulations additional purposes for the standard telephone service and characteristics of the service enables the standard telephone service for the purposes of the USO (Part 2 of the Bill) to be readily upgraded and more precisely specified.  It is intended, for example, that if another purpose was declared for the standard telephone service for the purposes of the USO (say, for example, tone signalling) it would be part of the USO to ensure that the standard telephone service supplied under the USO would be for that purpose.  Specific characteristics could be declared as appropriate.  The ability to change the standard telephone service for the purposes of the USO in this way ensures that the basic service that will be of general appeal to most customers can be adjusted where appropriate, while reserving the prescribed carriage service component of the USO to ensure there is reasonable access to services that may not be of general appeal.

The ability to prescribe standard telephone service purposes for specific regulatory purposes also means that should the standard telephone service be modified for the purposes of the USO, then it can be similarly modified for other provisions.  This means that the standard telephone service concept in different provisions can be kept in tandem if appropriate, enabling various attributes to continue to be attached to the standard telephone service that must be supplied under the USO.

The requirement that the standard telephone service meets the connectivity test (paragraph (1)(d)) is intended to make it clear that the standard telephone service is to facilitate general communications between end-users supplied with the standard telephone service.  This replicates the ‘public switched’ concept in the definition of the standard telephone service in the former Telecommunications Act 1991 which refers to a service being offered to the public and enabling users of the service to communicate with one another because calls can be switched as needed.  Further comments about the connectivity test are made in relation to subclause 6(2).

The ability to precisely specify the performance characteristics of the standard telephone service provides an effective means of clearly delineating the detailed characteristics of the service, thereby giving certainty to persons to whom the service is relevant.  Where the standard telephone service’s characteristics are specified for USO purposes, the obligation of the universal service provider and the rights of end-users will be clearer.  The specification of characteristics for other regulatory purposes will enable carriage service providers to be given a clear idea of the precise service to which obligations attach.  A universal service provider must ensure that the standard telephone service it supplies can be used for the purposes it is required to serve under clause 6.  This may require the universal service provider to upgrade its infrastructure if this is necessary to supply the service for the purpose declared (but see the comment in relation to subclause 6(4)).

It is intended that the regulations should be able to declare a wide range of characteristics to be designated characteristics, including, but without being limited to, performance characteristics (subclause 6(5)).  Designated characteristics will be able to be declared in relation to the standard telephone service for the purpose declared in relation to a particular provision.  This enables particular characteristics to be declared in a very focussed way.  At the same time, other characteristics can be applied uniformly by declaring a purpose in relation to all provisions of the Bill.

Subclause 6(2) sets out the connectivity test for the purposes of paragraph 6(1)(d), which a service must meet to be a ‘standard telephone service'.  A service passes the connectivity test if an end-user supplied with the standard telephone service for a purpose mentioned in paragraph (1)(a), (b) or (c) is ordinarily able to communicate by means of the service, with each other end-user who is supplied with the same service for the same purpose, whether or not the end-users are connected to the same network.

As noted above, the purpose of the connectivity test is to ensure the standard telephone service is a carriage service which enables general communications between end-users.  It is intended that connectivity include the ability to communicate with people locally, nationally and internationally and whether or not end-users are mobile.  (It is not intended that a carriage service provider supplying only an access and/or local call service can argue that it is not providing a standard telephone service because it does not provide access to end-users outside the local call area.  The Bill assumes that that standard telephone service interconnects with long distance services, thus passing the connectivity test.)   

‘Ordinarily able to communicate’ means that the service has been designed to enable end-users to communicate with other end-users of the service unless something happens to prevent this, for example, network outage or call barring.  

It is intended that in determining whether end-users supplied with the ‘same service’ are able to communicate, ‘same service’ should be interpreted broadly and with regard to the relevant purpose of the standard telephone service, rather than the underlying delivery technology.  Thus a person should be able to use the standard telephone service to communicate by voice telephony with any other person supplied with a service to communicate by voice telephony, whether it be supplied, for example, by different types of line links or terrestrial or satellite radiocommunications.  It is not assumed that where the standard telephone service is for more than one purpose that communications should be possible across those purposes (eg. if the carriage of data was declared a purpose, it is not envisaged that a person using the service for voice telephony should be ordinarily able to communicate with a person using the service for data carriage).

That end-users need not be ‘connected to the same telecommunications network’ to communicate means that they can be connected to networks owned and/or operated by different persons or networks employing different technologies (see the preceding comment about ‘the same service’).

Subclause 6(3) gives examples of purposes that could be declared to be ‘designated purposes’ by regulations made for the purposes of paragraph (1)(c).  The examples given are the purpose of the carriage of data and the purpose of tone signalling.  Tone signalling refers to the ability to send communications by means of tone signals, for example, when a person uses an automated telephone payment system to pay a bill.  The examples are illustrative only and not exhaustive.

Subclause 6(4) requires the Minister, in making a recommendation to the Governor-General at a particular time about making regulations for the purposes of declaring a ‘designated purpose’ for the purposes of paragraph (1)(c), to have regard to:

•	whether a carriage service for the purpose proposed to be declared by the regulations can be supplied using the same infrastructure as is, at the time, being used by universal service providers to supply a standard telephone service for the purpose in paragraph (1)(a); and 

•	such other matters (if any) as the Minister considers relevant.

The purpose of this provision is to ensure that the Minister considers whether the same infrastructure would be used to deliver the standard telephone service where that service is for a purpose declared in the regulations.  This reflects the view that when consideration is being given to upgrading the standard telephone service, especially for USO purposes, consideration should be given to the implications of, and for, the delivery infrastructure.  This will require the Minister to consider whether any upgraded standard telephone service could be delivered using existing infrastructure, and particularly the public switched telephone network.  This requirement reflects the practical reality that the standard telephone service has historically been delivered using this network and an upgrade requiring the use (or building) of another network has significant implications that must be considered closely.  In giving consideration to this matter, the Minister would consider whether the upgrade to the USO might be better achieved by prescribing a prescribed carriage service under clause 12.  

Subclause 6(5) provides that clause 6 does not prevent a characteristic declared by regulations made for the purposes of paragraph (1)(e), (f) or (g) from being a performance characteristic.

This provision makes it clear that designated characteristics may include performance characteristics.  It is envisaged that particular data rates could be declared as performance characteristics if the carriage of data was declared under paragraph (1)(c).  Other examples of performance characteristics which could be declared in regulations include loss limits, noise limits, distortion limits and call failure rates.

Clause 7 – Application of this Act

Clause 7 provides that ss. 8 to 13 of the Telecommunications Act will apply to the Bill in a corresponding way to the way in which they apply to that Act.

Section 8 of the Telecommunications Act provides that that Act binds the Crown in right of the Commonwealth, each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island.  Telecommunications activities of these governments are therefore subject to that Act and this Bill.

Subsection 8(2) of the Telecommunications Act provides that the Crown is not liable to a pecuniary penalty or to be prosecuted for an offence.  This protection does not apply to an authority of the Crown (subsection 8(3)).

Section 9 of the Telecommunications Act provides that that Act applies within and outside Australia.  The application outside Australia is necessary to enable the regime to apply to facilities outside Australia which are used to provide services to, from or within Australia (for example, a satellite) and to allow the international activities of the telecommunications industry to be regulated (Part 20 of the Telecommunications Act).

Section 10 of the Telecommunications Act provides that that Act applies to the Territories of Christmas Island and Cocos (Keeling) Islands and any other prescribed external Territories.

Subsection 11(1) of the Telecommunications Act provides that that Act applies to the adjacent areas of each of the States and each of the eligible Territories and references to Australia include references to those adjacent areas.  Subsection 11(2) limits this application to being in relation to acts, matters and things touching, concerning, arising out of or connected with the exploration or exploitation of the continental shelf of Australia.  This is extended to all acts done by or in relation to, and all circumstances and things affecting any person who is in the adjacent area for a reason touching, concerning, arising out of or connected with the exploration or exploitation of the continental shelf of Australia (subsection 11(3)).

Section 12 of the Telecommunications Act provides that that Act has effect subject to the Radiocommunications Act 1992 (Radcom Act).  Subsection 12(2) makes it clear that a person being authorised to do something by a licence under the Radcom Act does not entitle the person to do that thing if the person is prohibited by or under the Telecommunications Act from doing it, unless a condition of the licence requires the person to do it.

Section 13 of the Telecommunications Act provides that a change in the composition of a partnership does not affect the continuity of the partnership.

Part 2—Universal service regime

Part 2 of the Bill continues the regime currently contained in Part 7 of the Telecommunications Act for delivering universal service in telecommunications.  It is designed to ensure that a minimum level of telecommunications service is reasonably available to all people in Australia on an equitable basis, regardless of where they reside or carry on business.  As an adjunct to imposing this obligation on the telecommunications industry, Part 2 also provides for the funding by telecommunications carriers of losses incurred in fulfilling the universal service obligation (USO).  Contributions to USO losses are levied under the Telecommunications (Universal Service Levy) Act 1997.

The universal service regime continued in existence under Part 2 of the Bill is one means by which the Government can promote access to carriage and related goods and services.  Other means include price control and specific statutory requirements relating to untimed local calls, emergency call services, directory services and itemised billing, which are dealt with elsewhere in this Bill.

The universal service regime has nine main elements relating to:

1.	the definition of the USO;

2.	identification of universal service providers and participating carriers;

3.	plans relating to the fulfilment of the USO;

4.	charges for services supplied under the USO;

5.	the calculation of net universal service costs, that is, the loss incurred in fulfilling the USO;

6.	the calculation of participating carriers’ contributions to the net universal service cost;

7.	the making of assessments;

8.	the disclosure of information about the basis and methods of an assessment; and 

9.	collection, recovery and payment of levy.

Provisions relating to compliance, enforcement, penalties, inquiries, investigations, monitoring and reporting are relevant to the universal service regime and are located in the Telecommunications Act.

Under clause 1 of Schedule 1 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, compliance with that Act and this Bill, and thus including Part 2 of this Bill, is a standard carrier licence condition.  Section 68 of the Telecommunications Act provides that a carrier must not contravene a condition of a carrier licence held by the carrier and that this is a civil penalty provision.  Part 31 of the Telecommunications Act provides for pecuniary penalties for breaches of civil penalty provisions.

Under Part 25 of the Telecommunications Act, the ACA, at the Minister’s direction or of its own volition, may hold public inquiries about certain matters relating to telecommunications.  Such an inquiry may deal with the universal service regime.  In particular, the Minister could direct the ACA to undertake a public inquiry about the adequacy of a universal service provider’s draft universal service plan.

Under Part 26 of the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, a person may complain to the ACA about, amongst other things, a contravention of the Telecommunications Act or this Bill, including a contravention of the universal service regime under Part 2 of this Bill and in particular, a failure to take all reasonable steps to fulfil the USO (subclause 21(5) of the Bill) or to comply with a universal service plan (clause 39 of the Bill).  The ACA has the power to investigate such a complaint.

Under section 105 of the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, the ACA must monitor, and report each year to the Minister on the performance of carriers, including the adequacy of each universal service providers’ compliance with its obligations under Part 2 of this Bill.  The ACA has powers to require records to be kept and to gather information (Part 27 of the Telecommunications Act) that will assist it in its performance of its monitoring and reporting functions.

This Bill sets out the legislative framework for the delivery of the Universal Service Obligation for the 1999-2000 financial year and subsequent financial years.  Part 7 of the Telecommunications Act will apply to the 1998-99 financial year.  In terms of the services it requires to be delivered, the Bill maintains existing service obligations.

Division 1—Introduction

Clause 8 – Simplified outline

Clause 8 sets out a simplified outline of Part 2 of the Bill to assist readers.

Clause 9 – Objects

Clause 9 sets out four key policy principles that Part 2 of this Bill is intended to give effect to.  It provides a basic framework for understanding and interpreting this Part as a whole.

The fundamental policy principle is set out in paragraph 9(a).  That is, that all people in Australia, wherever they reside or carry on business, should have reasonable access, on an equitable basis, to:

•	standard telephone services;

•	payphones; and

•	prescribed carriage services.

The USO’s fundamental purpose is to safeguard access to a minimum level of essential telecommunications services for all persons in Australia.  This recognises the fundamental importance of telecommunications in supporting effective participation in Australian society.  The regime is constructed to ensure that access to a voice service, the ‘standard telephone service’, will always be available and cannot be altered, except by legislative amendment by Parliament.  It is also recognised that the services people may need to have access to may evolve over time, for example to reflect changes in the uses of communications services.  Thus the policy principle provides for people to be given reasonable access to services in addition to the standard telephone service by such services being made prescribed carriage services.  Because universal service is a ‘needs-based’ concept, the designation of a service as a USO service would depend on the need for it in the community.

This principle is the basis for the USO which is defined in clause 19.  In relation to the concepts of ‘reasonable access’ and ‘equitable basis’, it should be noted that these concepts are intended to relate primarily to access in geographical terms and equity in terms of equality of opportunity, rather than concepts of affordability.  While affordability is clearly important to access in general terms, it is a matter which the Government considers should not be embedded in the USO itself, but should be tackled through other (transparent) mechanisms such as competition, price control and targeted assistance.

Division 5 of Part 2 of the Bill enables the direct regulation of universal service charges.  Accordingly, the affordability of services supplied under the USO is not dealt with in defining the USO itself.

Paragraph 9(a) refers to all people in Australia having reasonable access to certain carriage services, but does not include the detail that is part of the USO under clause 19.  This is because the policy principle is a broad objective from which the more detailed composition of the USO in clause 19 flows and which therefore subsumes the detailed elements of the USO.  For example, if the standard telephone service is to be reasonably accessible to all people in Australia, it follows that that service must be supplied on reasonable request, as provided for in subclauses 19(1) and (2).

The other policy principles to which Part 2 of the Bill gives effect support the key principle of providing all people in Australia with reasonable access to telecommunications services.

The policy principle in paragraph 9(b) is that the universal service obligation described in clause 19 should be fulfilled as efficiently and economically as practicable.  This recognises that universal service in telecommunications involves a significant allocation of resources and maximum effort should be made to fulfil the USO at the least possible cost.  However, while it is intended that costs be minimised, this is not intended to be at the expense of achieving the USO itself.  This principle should be seen as both imposing a requirement on the universal service provider to fulfil its USO in an efficient and economical manner and foreshadowing a number of external mechanisms in the legislation designed to promote this outcome.  These external mechanisms include, for example: provision for the Minister to determine a selection system, including tendering, for selecting universal service providers; provision for the Minister to declare more than one universal service provider in a service area; the advance approval of net cost areas (NCAs); provision for the Minister to determine principles to be used in determining whether net universal service costs (NUSC) should be treated as excessive; and the scrutiny of NUSC claims by the ACA and participating carriers (under the information disclosure provisions).  

The policy principle in paragraph 9(c) is that losses that result from supplying loss-making services in the course of fulfilling the universal service obligation should be shared among carriers.  Much of the administrative machinery of the universal service regime is concerned with achieving this outcome, including the provisions for calculating NUSCs, determining participating carriers’ contributions and collecting and distributing levy.  The losses are to be shared among carriers so that the financial burden of universal service is spread across participating carriers, thus distributing the burden more widely and making universal service sustainable on an ongoing basis.  Moreover, sharing the losses amongst carriers on a pro-rata or agreed basis minimises any distortions in competitive or financial performance that would be expected to arise if the cost of fulfilling the USO was borne solely by the universal service provider or a limited group of carriers.  (It is generally recognised that a universal service provider that must subsidise USO losses by itself in a competitive regime faces a competitive disadvantage.)

The final policy principle in paragraph 9(d) is that information on the basis of which, and the methods by which, losses incurred in fulfilling the USO and participating carriers’ shares in those losses are determined should be open to scrutiny by those carriers and the public to the greatest extent possible, without causing undue damage to a carrier’s interests.  This object reflects the importance of ensuring that where the Government effectively directs the allocation of significant national resources, those allocations should be open to the maximum possible public scrutiny.  Such scrutiny is also important in promoting the efficient and economical fulfilment of the USO.  To protect the legitimate commercial interests of universal service providers and participating carriers, constraints are placed on the extent of the information that can be made available under the Act.

Clause 10 – Special meaning of Australia

Clause 10 defines Australia for the purposes of Part 2 of the Bill and provides that a reference to ‘Australia’ includes a reference to the territories of Christmas Island and Cocos (Keeling) Islands and an external territory specified in the regulations.  This requires the Government to make a conscious decision to extend the universal service regime to other external territories, such as Norfolk Island.  The definition of ‘Australia’ in section 7 of the Telecommunications Act does not apply to Part 2 of the Bill.  This definition of Australia applies the USO to the territories of Christmas and Cocos (Keeling) Islands and is consistent with previous Government decisions to extend the body of Commonwealth laws to these territories.

Clause 11 – Payphones

Clause 11 defines a payphone for the purposes of Part 2 of the Bill.  For the purposes of Part 2, a payphone is a fixed telephone that is a means by which a standard telephone service is supplied and when in normal working order, generally cannot be used to make a call unless payment or similar activation takes place.  A ‘fixed telephone’ refers to a payphone fixed at a single geographical location and does not include a telephone that is fixed in a vehicle (eg. a taxi, train or aircraft).  In relation to the USO, ‘payphone’ includes all payphones, not just payphones in public places, thus ensuring that payphones in hotel lobbies, shopping malls and other private places which are nonetheless reasonably accessible to the public can be taken into account when fulfilling the USO.  It is intended that a universal service provider’s obligation to provide payphones to meet the needs of people with a disability should be determined under the Disability Discrimination Act 1992.

Clause 12 – Prescribed carriage services

Clause 12 provides that for the purposes of Part 2 of the Bill, a ‘prescribed carriage service’ is a carriage service specified in the regulations.  ‘Carriage service’ is defined in section 7 of the Telecommunications Act to be a ‘service for carrying communications by means of guided and/or unguided electromagnetic energy’.  This provision does not, therefore, enable the prescription of services other than carriage services to be made part of the USO.  (This outcome could be achieved under paragraphs 13(1)(d) and 14(c) of the Bill.)

‘Prescribed carriage services’ are, along with payphones and the standard telephone service, the basic constituents of the USO.  Should the Government seek to clarify, expand or upgrade the USO, it will have two avenues open to it.  First, it can make regulations for the purposes of clause 6 of the Bill declaring that the standard telephone service must serve additional purposes or have particular performance characteristics.  (This is discussed in more detailed in the notes on clause 6.)  Second, the Government can make regulations prescribing new carriage services for the purposes of Part 2 as provided for in clause 12.

The USO is able to be upgraded in these two ways to ensure, through compartmentalising the components of the USO, that people will always have reasonable access to a minimum service that is of general appeal and that can change over time, while providing a mechanism to ensure more advanced services, which may not be of general appeal, can be required to be made accessible under the USO, without affecting overall access to the basic service.

Nothing is intended to preclude multiple services under the USO (for example, the standard telephone service and a high capacity data service, if it were prescribed) being supplied using a single infrastructure connection or being supplied, as it were, as a type of combined service.

The corresponding provision to this in the Telecommunications Act, section 141, provided for a review to be conducted prior to 30 September 1998.  This review has been conducted and the findings announced.  The report of the review has been tabled in Parliament as required under subsection 141(7) of the Telecommunications Act.  Accordingly those provisions in the Telecommunications Act are spent and therefore have not been included in the Bill. 

Clause 13 – Supply of standard telephone services

Clause 13 is a definitional provision that sets out what is included in a reference to the supply of a standard telephone service (for example, under paragraph 19(2)(a)) and thereby provides a means of adding further requirements to the USO.  Clause 13 provides that a reference in Part 2 of the Bill to the supply of a standard telephone service includes a reference to the supply of:

•	if the regulations prescribe customer equipment – that customer equipment or customer equipment supplied instead of that first-mentioned customer equipment in order to comply with the Disability Discrimination Act 1992; and

•	if the regulations do not prescribe customer equipment – a telephone handset that does not have switching functions or other customer equipment supplied instead of such a handset in order to comply with the Disability Discrimination Act 1992; and

•	other prescribed goods; and 

•	prescribed services;

where the equipment, goods or services, as the case may be, are for use in connection with the standard telephone service.

Subclause 13(2) provides that a reference in Part 2 of the Bill to the supply of a standard telephone service includes a reference to the supply, to a person with a disability, of prescribed customer equipment and other prescribed goods and services where the equipment, goods or services, as the case may be, are for use in connection with the standard telephone service.  

Subclause 13(3) provides that the term ‘disability’ has the same meaning as in the Disability Discrimination Act 1992.

Clause 13 ensures that customer equipment will be supplied under the USO along with the standard telephone service.  Unless regulations provide otherwise, that customer equipment will be, at a minimum, a telephone that does not have switching functions; that is, a basic telephone that allows calls to be made and received but does not necessarily have other functionality (including, for example, the ability to redirect calls, ie. a switching function).  

In the case of people with a disability, the customer equipment would be the equipment supplied instead of such a telephone, in order to comply with the Disability Discrimination Act 1992.  

A power is included to enable regulations to prescribe other customer equipment to be supplied for use in connection with the standard telephone service.  This enables upgrade of the type of customer equipment for use in connection with the standard telephone service under the USO.  For example, a regulation might prescribe a telephone with switching functions or with a liquid crystal display (LCD) for use with calling line identification (CLI) services.  In the case of people with a disability, the customer equipment would be the equipment supplied instead of such equipment, in order to comply with the Disability Discrimination Act.  Reliance on the Disability Discrimination Act 1992 is consistent with the Government’s overall approach of relying on the general provisions of that Act to address the needs of people with a disability.  (This matter is discussed further in the context of clause 6.)

In addition to customer equipment, paragraphs 13(1)(c) and (d) and 14(b) and (c) also enable regulations to provide that a reference to the supply of the standard telephone service also includes a reference to the supply of prescribed goods (other than customer equipment) and prescribed services (other than carriage services).  These provisions give the Government considerable flexibility in constructing the package of products that may be supplied under the USO for use in connection with the standard telephone service.  Other prescribed goods could include, for example, particular telephone add‑ons or manuals on how to use a service.  Prescribed services could include non‑carriage services, for example, customer helplines or relay services for speech/hearing impaired users.

It is important to note that equipment, other goods and services included in a reference to the supply of a standard telephone service must be for use in connection with the standard telephone service.  Equipment, other goods and services not for use in connection with the standard telephone service cannot be required to be supplied under this provision.  Furthermore, equipment, other goods and services for use in connection with the standard telephone service are not required to be supplied on a stand-alone basis, but only for use in conjunction with the standard telephone service.  For example, persons cannot request that they be supplied with just a telephone; they can only request a telephone be supplied for use in connection with a standard telephone service.

It is intended, however, that if regulations are made under clause 25 or 26 providing for the declaration of multiple universal service providers in a single area to provide different components of the USO (eg. the standard telephone service and customer equipment), that one universal service provider might only supply the standard telephone service while another supplies the customer equipment.  In such a circumstance, however, the equipment would still be provided for use in connection with the standard telephone service and the person responsible for providing customer equipment would not be expected to provide it except for use in connection with that service, even though it may have been acquired from a different universal service provider.  To the extent that legislative modification might be necessary to ensure this outcome, regulations under clauses 25 and 26 authorising multiple universal service providers can make such modifications to the Part as are required to make a scheme for multiple universal service providers effective.

Clause 14 – Supply of prescribed carriage services

Clause 14 is a companion provision to clause 13 that sets out what is included in a reference to the supply of a prescribed carriage service (for example, under paragraph 19(2)(c)).  Like clause 13, clause 14 provides a further means of adding items, for use in connection with a prescribed carriage service, to the USO.  Clause 14 provides that a reference in Part 2 of the Bill to the supply of a prescribed carriage service includes a reference to the supply of:

•	prescribed customer equipment; 

•	other prescribed goods; and 

•	prescribed services;

where the equipment, goods or services, as the case may be, are for use in connection with the prescribed carriage service.

Clause 15 – Service area

Clause 15 is a definitional provision that provides that, for the purposes of Part 2 of the Bill, a ‘service area’ is: a geographical area within Australia; any area of land; or any premises or part of premises; regardless of size.  To avoid doubt, it is intended that the universal service obligation applies to premises that are within another building, for example, a flat or shop in a multi-unit complex.  ‘Service area’ is used, for example in clause 20, in defining the area in relation to which regional and national universal service providers have the obligation to fulfil the USO.

Clause 16 – Participating carriers

Clause 16 is a definitional provision.  It provides that, for the purposes of Part 2, a ‘participating carrier’ is a person who in relation to a financial year, was a carrier at any time during the financial year.  However, the clause does not apply to a person if the person is of a kind declared by the regulations to be exempt from this clause.

Participating carriers are those carriers who participate in the universal service regime by contributing to the cost of the losses incurred in fulfilling the USO.  Importantly, any person who was a carrier during a financial year is a participating carrier in relation to that year.  Accordingly, if a person has ceased to be a carrier when the USO assessment is made, that person is nevertheless still a participating carrier for the purpose of the assessment and liable to pay levy.  This approach is designed to ensure that persons who were carriers in a financial year and earned revenue in the industry make a contribution to the cost of fulfilling the USO.  Clause 90 requires participating carriers to take out levy guarantees.  This is designed to ensure levy contributions are paid, including in the case of insolvency.

A person who is a carrier in relation to financial year may be exempt from being a participating carrier if the person is a kind of person declared by regulations to be exempt from the clause.  It is envisaged that regulations would exempt the class of participating carriers whose revenues are such that their contribution to total net universal service cost would be minimal and may not exceed the administrative cost in levying it.  It is intended that the regulations could, for example, declare that persons who do not earn eligible revenue (see clause 17) above a certain level are not participating carriers.

Clause 17 – Eligible revenue

Clause 17 is a definitional provision.  It provides that, for the purposes of Part 2, the ‘eligible revenue’ of a participating carrier for a financial year is the amount that, under the regulations, is taken to be the eligible revenue of the carrier for the financial year.  That is, ‘eligible revenue’ has the meaning given to it in the regulations.  ‘Eligible revenue’ is an important concept because it is the basis upon which participating carriers’ USO contributions will be normally determined under clause 67.

The Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998 (SR. No 180 of 1998) were made for the purposes of section 147 of the Telecommunications Act 1997 on which clause 17 is based.  The Telecommunications Legislation Amendment Bill 1998 contains transitional provisions to ensure that these regulations will have effect, after the commencement of this Bill, as if they had been made for the purposes of the corresponding provision of this Bill.

Clause 17 gives the Government wide discretion in defining what constitutes ‘eligible revenue’.  Because eligible revenue is the amount ‘taken’ to be eligible revenue, it is not restricted to revenue received by a participating carrier.  It may include any amounts, including revenue received by persons other than the carrier.  Amongst other things, this wide-ranging approach has been taken to avoid disputes as to what can and cannot be treated as eligible revenue and to provide a means of addressing tactics to avoid levy, for example by minimising eligible revenue by engaging in transfer pricing.  Should participating carriers seek to minimise levy by diverting revenue to related service provider operations, such revenue will be able to be included under the regulations.  Similarly, revenue paid to an infrastructure owner, rather than a participating carrier that is a nominated carrier in relation to the infrastructure, could be included in ‘eligible revenue’.

Clause 18 – Approved auditor

Clause 18 is a definitional provision.  It provides that a reference in Part 2 to an ‘approved auditor’ is a reference to a person included in a class of persons specified in a written determination, published in the Commonwealth Gazette, made by the ACA for the purposes of this clause.

Net universal service claims (clause 54) and eligible revenue returns (clause 62) must be audited by an independent auditor.  As the ACA is ultimately responsible for accepting such claims and returns, it is appropriate that the ACA determine the class of persons who it will accept as approved auditors.

Division 2––Universal service obligation

Clause 19 – Universal service obligation

Clause 19 is a definitional clause which, because it defines the universal service obligation, is a key provision of Part 2 of the Bill.

Subclause 19(1) provides that for the purposes of the Bill, the universal service obligation is the obligation to ensure that:

•	standard telephone services;

•	payphones; and

•	prescribed carriage services;

are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.

Subclause 19(1) provides a broad conceptual definition of the universal service obligation: people in Australia are to have reasonable access to certain specified carriage services.  In relation to the concepts of ‘reasonable access’ and ‘equitable basis’, it should be noted that these concepts are intended to relate primarily to access in geographical terms and equity in terms of equality of opportunity, rather than concepts of affordability.  While affordability is clearly important to access in general terms, it is a matter which the Government considers should not be embedded in the USO itself, but should be tackled through other (transparent) mechanisms such as competition, price control and targeted assistance.

This broad conceptual obligation is backed up by a further part of the obligation, namely to supply the services and payphones necessary to achieve the objective of ensuring the specified services and payphones are reasonably accessible to people in Australia on an equitable basis.

Subclause 19(2) therefore provides that to the extent necessary to achieve the obligation mentioned in subclause 19(1), it is part of the universal service obligation: 

•	to supply standard telephone services to people in Australia on request; and

•	to supply, install and maintain payphones in Australia; and

•	to supply prescribed carriage services to people in Australia on request.

This two tier approach to defining the universal service obligation provides a clear ‘headland’ statement of the core of the universal service obligation, and indicates that the supply of services under the obligation supports the broad obligation.

Importantly, subclause 19(2) provides for the supply of the specified carriage services ‘on request’, that is, on the request of the person seeking supply of the relevant service.  The ‘on request’ concept clarifies the nature of the universal service obligation, particularly in a situation in the future where more than one carriage service or ancillary item (other than payphones), might be required to be supplied under the universal service obligation.  For example, some customers may only want to receive a standard telephone service and no other prescribed carriage services.  It is not considered appropriate, therefore, for the universal service provider to be required to supply that customer with all the services under the USO, including services the customer does not want (see subclauses 19(8) and (9)).

Subclause 19(3) enables the Minister to determine in writing that it is part of the USO to install payphones at specified locations.  This enables specific community concerns, should they arise, about the availability of payphones to be addressed.  Such a determination would be an integral component of the USO.

Subclause 19(4) requires any determination under subclause 19(3) to be published in the Commonwealth Gazette.  This ensures the full extent of a universal service providers’ obligation is publicly known.

Subclause 19(5) enables regulations to prescribe what is, or is not, necessary to ensure payphones are reasonably accessible.  Such regulations would be an integral component of the USO.

Subclauses 19(6) and (7) are interpretive rules which prevent subclauses 19(3) and (5) being used to read down the meaning of each other.

Subclause 19(10) makes it clear that an obligation to supply standard telephone services that extends to customer equipment requires the customer to be given the option of hiring the equipment.

Division 3—Universal service providers

Clause 20 – Universal service providers

Clause 20 enables the Minister to declare in writing that a specified carrier is the universal service provider for Australia or for a specified service area.  ‘Service area’ is defined in clause 15.  Under subclause 21(5), a universal service provider must take all reasonable steps to fulfil the universal service obligation so far as it relates to the area for which it is the universal service provider.  Under clause 39, a universal service provider must take all reasonable steps to ensure that its universal service plan, which sets out how it is to progressively fulfil its USO, is complied with.  A universal service provider must fulfil the USO in its respective area and can claim for proceeds of the levy to compensate it for the losses it incurs in fulfilling the USO.

There is nothing in the legislation to prevent a carrier who wishes to be declared a universal service provider approaching the Minister to be so declared.  Except where a system for selecting a universal service provider has been determined under clause 22 or 23, the Minister has a full discretion as to who is declared to be a universal service provider.

Subclause 20(1) enables the Minister to declare that a specified carrier is the national universal service provider.  By virtue of subclause 20(11), a ‘carrier’ must be a ‘participating carrier’.  The effect of being declared the national universal service provider, in terms of geographical responsibilities, is stated in subclause 21(1).

Clause 22 enables the Minister to determine in writing a selection system for the selection of a national universal service provider.

Clause 25 enables regulations to authorise the Minister to declare multiple national universal service providers in relation to the USO as a whole or, more importantly, in relation to particular components of the USO.   Regulations made for the purposes of clause 25 may modify Part 2 of the Bill as required so that it is consistent with the operation of multiple national universal service providers.  Clause 20 would require such modification if it becomes desirable to proceed with the declaration of multiple national universal service providers in the future.

Subclause 20(2) enables the Minister to declare that a specified carrier is the regional universal service provider for a specified service area.  By virtue of subclause 20(11), a ‘carrier’ must be a ‘participating carrier’.  The effect of being declared a regional universal service provider, in terms of geographical responsibilities, is stated in subclause 21(2).  ‘Service area’ is defined in clause 15.

Clause 23 enables the Minister to determine in writing a selection system for selecting a regional universal service provider.

Clause 26 enables regulations to authorise the Minister to declare multiple regional universal service providers in relation to the USO as a whole or, more importantly, in relation to particular components of the USO.   Regulations made for the purposes of clause 26 may modify Part 2 of the Bill as required so that it is consistent with the operation of multiple regional universal service providers.  Clause 20 would require such modification if it becomes desirable to proceed with the declaration of multiple regional universal service providers in the future.

If a selection system for regional universal service providers has been determined under clause 23, a declaration under subclause 20(2) must be consistent with the selection system.  In the absence of such a selection system, it is intended, however, that the Minister can declare a person to be a regional universal service provider at his or her discretion.

Subclause 20(3) provides that a declaration under subclause 20(1) or (2) has effect accordingly.  The effect of such declarations is stated in subclauses 21(1), (2) and (5).

Subclause 20(4) requires the Minister to exercise his or her powers in such a way that at any particular time there is only one national universal service provider and the service areas of any regional universal service providers do not overlap.  This provision is designed to remove confusion over which universal service provider, under the normal operation of the universal service regime, is obliged to fulfil the USO for a service area.  The responsibilities of the national universal service provider when there are one or more regional universal service providers are stated in subclause 21(1).

Where it becomes desirable to proceed with the declaration of multiple national and/or regional universal service providers for the same area under clause 25 and/or clause 26, clause 20 will need to be modified by regulations made under those clauses to be consistent with the operation of these multiple operators.  It is intended that the multiple provider powers in clauses 25 and 26 will enable the regulations to modify these provisions to allow for the declaration of two or more national or regional universal service providers for the same service area, or one or more national and regional universal service providers for the same service area.

Subclause 20(5) makes a declaration take effect at the start of the financial year after the financial year in which it is made and cease at the end of the financial year the declaration specifies unless it is sooner revoked.  If the declaration does not include a cessation date, it continues in force until it is revoked.  This provision is subject to subclauses 20(7), (8) and (9) which deal with replacement of declarations and the cessation of a carrier licence.  The universal service regime operates in relation to financial years.

Subclause 20(6) makes a revocation take effect at the end of the financial year it specifies or the financial year in which it is made if it does not specify another financial year. 

Subclause 20(7) is designed to enable a carrier that is the existing national universal service provider to be replaced by another carrier.  It provides that if a fresh declaration declaring another carrier to be the national universal service provider is made to replace an existing declaration (the ‘original declaration’) the fresh declaration takes effect, and the original declaration ceases to have effect, from the time specified in the fresh declaration.  A fresh declaration may be made before the date it is to come into effect (ie. the date specified in the declaration), thereby providing a period for the new carrier to prepare itself for its role of national universal service provider.

Subclause 20(8) mirrors subclause 20(7) but is designed to enable a carrier that is a regional universal service provider to be replaced by another carrier.  It provides that if a fresh declaration declaring another carrier to be the regional universal service provider for a particular area is made to replace an existing declaration (the ‘original declaration’) the fresh declaration takes effect, and the original declaration ceases to have effect, from the time specified in the fresh declaration.  A fresh declaration may be made before the date it is to come into effect (ie. the date specified in the declaration), thereby providing a period for the new carrier to prepare itself for its role of regional universal service provider.

Subclause 20(9) provides that if a carrier is a regional universal service provider and the carrier ceases to hold a carrier licence, then the declaration in relation to that carrier ceases to be in force from that time.  That is, on ceasing to be a carrier, the person is no longer a regional universal service provider.  In this instance, unless the Minister declares another carrier to be the regional service provider for that particular service area, fulfilment of the USO in that area will become the responsibility of the national universal service provider (see subclauses 21(1) and (2)).

Subclause 20(10) makes a declaration of a universal service provider a disallowable instrument which accordingly must be notified in the Gazette, tabled in the Parliament and is subject to Parliamentary disallowance.

Subclause 20(11) provides that a reference in clause 20 to a carrier does not include a reference to a person of a kind declared by the regulations to be exempt from clause 16.  That is, to be declared a universal service provider, a person must be a participating carrier.

Clause 21 – Effect of universal service provider declaration

Clause 21 sets out the effect, in terms of geographical responsibilities and legal obligations, of being declared a universal service provider.  The explicit linkage between the USO and being a universal service provider is established in subclause 21(5) and is supported through the universal service plans (Division 4).

This clause would require modification under regulations made for the purposes of clause 25 and/or clause 26 if multiple national and/or regional universal service providers were to be declared in accordance with regulations made for the purposes of those clauses.

Subclause 21(1) makes the national universal service provider the universal service provider for all of Australia except for each service area in relation to which a regional universal service provider has been declared and for so much of a service area as is not within such an area.  

Paragraph 21(1)(b) is a drafting device designed to link a national universal service provider to the concept of ‘service area’ (clause 15), which is a geographical area to which the USO relates.  The provision assumes that all of Australia is the ‘service area’ of a national universal service provider.  Accordingly, a national universal service provider’s service area is any service area other than a service area of a regional universal service provider (as stated in paragraph (a)).  (The ‘service area’ referred to in paragraph (b) is not the ‘service area’ of the regional universal service provider referred to in paragraph (a).)

It is also worth noting here that a national universal service provider, as the ‘underlying’ universal service provider may also be responsible for ‘enclave’ service areas within the service area of a regional universal service provider if that service area is so designed.

Subclause 21(2) makes a regional universal service provider in relation to a particular service area the universal service provider for that area and for each service area within that area.  As in subclause 21(1), paragraph (2)(b) is a drafting device to link the universal service provider to the ‘service area’ concept for the purpose of particular provisions.

One of the effects of subclauses 21(1) and (2) is that where there ceases to be a regional universal service provider, the national universal service provider automatically becomes responsible for fulfilling the USO in that regional universal service provider’s service area.  Nothing in the legislation, however, requires a national universal service provider to maintain infrastructure in the service area of a regional universal service provider.

Subclause 21(3) provides that a person in relation to whom there is a declaration in force under subclause 20(1) or (2) at any time during a financial year is a universal service provider in relation to that financial year.  This means that that person is eligible to make a claim for levy credit under clause 54, even though the person may no longer be a universal service provider.

Subclause 21(4) provides that the areas for which a person is a universal service provider are taken to be a single area.  This means that although a universal service provider may be responsible for fulfilling the USO in a number of non-contiguous areas (for example, Victoria and Western Australia) for the purposes of the Part, those areas are treated as a single area.  This assists with administration of the USO costing arrangements.

Subclause 21(5) provides that the universal service provider for an area must take all reasonable steps to fulfil the universal service obligation, so far as the obligation relates to that area.  This provision performs the function of requiring the universal service provider to fulfil the USO.  Division 4 of Part 2 of the Bill places further obligations on the universal service provider for a particular area in relation to universal service plans and clause 39 requires such a universal service provider to take all reasonable steps to ensure that the plan is complied with.  Under clause 28, a universal service plan sets out how the universal service provider will progressively fulfil the USO in the provider’s area.  In considering whether a provider has taken all reasonable steps to fulfil the USO, regard should be had to whether the provider has complied with its universal service plan.

Note that in the case of the national universal service provider, the relevant area is Australia, except for each service area in relation to which there is a regional universal service provider (subclause 21(1)).

The obligation in subclause 21(5) is expressed in terms of taking ‘all reasonable steps’.  The reasonableness requirement recognises that a universal service provider may only be able to fulfil the USO progressively in its area.  This is particularly the case where the USO is upgraded, as the rollout of additional network infrastructure may be required.

Section 581 of the Telecommunications Act, when read with the proposed amendments to the ACA Act and to the definition of ‘ACA’s telecommunications powers’ in the Telecommunications Act proposed to be made by the Telecommunications Legislation Amendment Bill 1998, enables the ACA to give written directions to a carrier in connection with performing any of the ACA’s telecommunications functions or exercising any of the ACA’s telecommunications powers.  Those functions include regulating telecommunications in accordance with the Telecommunications Act or this Bill.  As subclause 21(5) requires the universal service provider to take all reasonable steps to fulfil the USO, clause 1 of Schedule 1 to the Telecommunications Act, as proposed to be amended, makes this obligation a standard carrier licence condition and the ACA has the powers to enforce this carrier licence condition (see sections 68 and 69 and Parts 30 and 31 of the Telecommunications Act) and the ACA will have the power under section 581 of the Telecommunications Act to direct a universal service provider in relation to its compliance with this obligation.

Clause 22 – Selection system for national universal service provider

Clause 22 provides a head of power to enable the Minister to determine a selection system for selecting the national universal service provider for Australia in relation to specified financial years.  Amongst other things, the provision is intended to enable the national universal service provider to be selected by tender (ie. with the tenderer submitting the lowest cost being declared the national universal service provider), particularly where the provider would, by virtue of regulations made under clause 25, be one national provider, along with others, of a component of the USO.  The selection system for national universal service providers (particularly in the case of tendering) is envisaged as generally working in tandem with a multiple universal service provider scheme under clause 25 and in relation to a discrete component of the USO rather than the USO as a whole.  

The precise requirements of the selection system are to be dealt with in subordinate legislation rather than the Act because of the significant detail that may need to be specified.

A selection system determined by the Minister need not involve price-based tendering.  The Minister has full discretion as to the nature of a selection system.  A selection system could, for example, provide for the selection of a provider according to non-price criteria such as industry experience, innovation, infrastructure and ability to fulfil the USO.

Where the Minister declares a national universal service provider selection system, the Minister is obliged to use that system.  This protects applicants by preventing the Minister disregarding a determined system.  Where no selection system has been determined, however, the Minister has full discretion as to the selection and declaration of a universal service provider.

Where the national universal service provider is selected according to a selection process, it would still be necessary for that person to be declared the national universal service provider under subclause 20(1).

While clauses 22 and 23 provide a mechanism for tendering out the USO nationally or in a particular service area, the precise arrangements will be dealt with in the Minister’s determination.  Some comments, however can be made about envisaged linkages between the operation of clauses 22 and 23 and the remainder of Part 2 of the Bill.  Where the selection system involves tendering, it is envisaged that the system would provide for the preparation of a tender specification.  This specification would set out the requirements the Government would require of the successful tenderer.  These requirements would largely derive from the USO as it is defined in clause 19 and any price control arrangements provided for under Division 5 of Part 2 of the Bill.  

Successful universal service providers would be subject to other requirements applying to the standard telephone service (and other services) under other legislative provisions in the Bill (eg. untimed local calls, customer service guarantee) as a matter of course.

The Bill enables the Minister to require an applicant for selection under a selection system to submit a draft universal service plan as part of its application or tender.  Where a tenderer was successful, it would be declared the national or regional (as appropriate) universal service provider.  As such it would be bound by the USO and price control as provided for in the legislation (and as identified in the tender specification).

Subclause 22(1) enables the Minister, by written instrument, to determine a selection system for the purpose of selecting a carrier to be the national universal service provider in relation to specified financial years.
It is intended that where regulations have authorised the Minister to declare multiple national universal providers, particularly in relation to different components of the USO, that a selection system under clause 22 could be used to select a national universal service provider in relation to a particular component.  For example, regulations under clause 25 may authorise the Minister to declare different national universal service providers for the standard telephone service and payphones.  The Minister may exercise his or her discretion in declaring the provider of the standard telephone service, while deciding that the provider of the payphones should be selected via a selection system under clause 22.  

Subclause 22(2) requires that a selection system so determined must require the selected carrier to have elected that:

•	an amount specified in the election will be the carrier’s net universal service cost for the financial year concerned; or

•	a method of ascertaining an amount, being a method specified in the election, will apply for the purposes of determining the carrier’s net universal service cost for the financial year concerned.

Accordingly, subclause 22(2) requires the selected carrier to have elected that a specific amount is to be its net universal service cost (for example, an amount that it has tendered as its cost to fulfil the USO) or to have elected that its net universal service costs will be ascertained by means of a particular method (again, for example, possibly as proposed by an applicant during a selection process).  

Subclause 22(3) provides that a selection system determined by the Minister may require an applicant for selection under such a system to give the Minister a copy of the document that the applicant would be required to give to the Minister under clause 27, namely a draft universal service plan, in the event that the applicant is successful.  This provision is intended to enable the submission of a draft universal service plan as part of the process for the selection of a universal service provider.  Whether a successful applicant (or the Minister) would be bound by such a document should the applicant be successful would depend on the details of the selection system determined by the Minister.  This provision, does not, by implication, limit the kind of selection scheme the Minister can determine under subclause 22(1).
Subclause 22(4) prevents the Minister from exercising his or her power to declare a national universal service provider under subclause 20(1), in any way that is inconsistent with the determined selection system.  That is, where a system is in place for determining the national universal service provider, that system must be used.  However, where no system has been determined, the Minister may exercise his or her discretion in selecting a national universal service provider.
Subclause 22(5) provides that Part 2 of the Bill does not prevent a method mentioned in paragraph 22(2)(b) from being the same as a method that would have applied if the system concerned had not been determined.  This means that even if a national universal service provider is selected under clause 22, the successful carrier may elect to have its net universal service cost calculated according to a methodology determined by the Minister, with the agreement of all participating carriers under paragraph 57(1)(c), or using the avoidable cost less revenue forgone methodology under paragraph 57(1)(d).
Subclause 22(6) makes a selection system determination a disallowable instrument.

Clause 23 – Selection system for regional universal service providers

Clause 23 is a parallel provision to clause 22 but provides for the determination of selection systems for regional, rather than national, universal service providers.  Most of the explanation in relation to clause 22 is also applicable to this clause.

Clause 23 provides a head of power to enable the Minister to determine a selection system for selecting regional universal service providers for particular areas in relation to specified financial years.  Amongst other things, the provision is intended to enable a regional universal service provider for a particular area to be selected by tender (eg. where the tenderer submitting the lowest cost is declared the regional universal service provider).  The precise requirements of the selection system are to be dealt with in subordinate legislation rather than the Act because of the significant detail that may need to be specified.

Where a regional universal service provider is selected according to a selection process, it would still be necessary for that person to be declared a regional universal service provider under subclause 20(2).

Subclause 23(1) enables the Minister, by written instrument, to determine a selection system for the purpose of selecting carriers to be regional universal service providers for specified service areas in relation to specified financial years.

Subclause 23(2) provides that a selection system so determined must require the selected carrier to have elected that:

•	an amount specified in the election will be the carrier’s net universal service cost for the financial year concerned; or

•	a method of ascertaining an amount, being a method specified in the election, will apply for the purposes of determining the carrier’s net universal service cost for the financial year concerned. 

Subclause 23(3) provides that a selection system determined by the Minister may require an applicant for selection under such a system to give the Minister a copy of the document that the applicant would be required to give to the Minister under clause 27, namely a draft universal service plan, in the event that the applicant is successful.  This provision is intended to enable the submission of a draft universal service plan as part of the process for the selection of a universal service provider.  Whether a successful applicant (or the Minister) would be bound by such a document should the applicant be successful would depend on the details of the selection system determined by the Minister.  This provision, does not, by implication, limit the kind of selection system the Minister can determine under subclause 23(1). 
Subclause 23(4) prevents the Minister from exercising his or her power to declare a regional universal service provider under subclause 20(2), in any way that is inconsistent with the determined selection system.  That is, where a system is in place for determining the regional universal service provider for a particular area, that system must be used.  However, where no system has been determined in relation to a particular area, the Minister may exercise his or her discretion in selecting a regional universal service provider for that area.
Subclause 23(5) provides that Part 2 of the Bill does not prevent a method mentioned in paragraph 23(2)(b) from being the same as a method that would have applied if the system concerned had not been determined.  This means that even if a regional universal service provider is selected under clause 23, the successful carrier may elect to have its net universal service cost calculated according to a methodology determined by the Minister, with the agreement of all participating carriers under paragraph 57(1)(c), or using the avoidable cost less revenue forgone methodology under paragraph 57(1)(d).

Subclause 23(6) makes a selection system determination a disallowable instrument. 

Clause 24 – Selection systems – information gathering powers

Clause 24 is designed to enable information relevant to selection systems to be obtained from carriers and carriage service providers.

Subclause 24(1) enables the Minister, by a written notice given to a carrier or carriage service provider, to require the carrier or carriage service provider to give the Minister, within the period and in the manner and form specified in the notice, any information that is relevant to:

•	the exercise of the powers to determine a selection system for a national or regional universal service providers under clause 22 or 23; or

•	the administration of such a selection system.

A carrier or carriage service provider must comply with any such requirement for information (subclause 24(2)).

For a selection system to operate effectively, particularly if it involves tendering, it will be necessary for relevant information to be obtained from relevant industry players, particularly from the person who is the universal service provider in an area to which a selection system is to apply.  In seeking information, it is expected that the Minister would confine his or her request to the minimum needed for the purpose of preparing and conducting the selection system and would have due regard to the commercial confidentiality requested by carriers and carriage service providers.  However, such commercially confidential information may need to be made available to applicants under a selection system if the selection system is to work effectively.  While a universal service provider must be a carrier, provision has been made to obtain information from carriage service providers as such persons may be involved in the fulfilment of the USO and may have relevant information, particularly in relation to revenue.

Clause 25 – Multiple national universal service providers

Clause 25, and its companion provision, clause 26, allow flexibility in the declaration of universal service providers, enabling multiple universal service providers to be declared in relation to the fulfilment of the USO as a whole or with the effect of enabling different universal service providers to be declared in relation to discrete, constituent components of the USO.  The provisions will enable specialist providers to be declared where more than one service may be designated under the USO.  The approach also provides for the possibility of having two or more universal service providers competing in the delivery of services in an area.

Subclause 25(1) provides that regulations may authorise the Minister to declare that two or more carriers are to be national universal service providers.  Under this provision the universal service providers could be responsible for supplying the same services.

Subclause 25(2) provides that the regulations may also authorise the Minister to declare that the Bill has effect, in relation to any multiple national universal service provider that is declared, as if the USO applicable to the provider were limited as set out in the declaration.  This power is intended to enable the Minister to split the USO as a whole between a number of service providers, for example, in accordance with their expertise in relation to a particular component.  For example, the Minister may declare one person the universal service provider in relation to the standard telephone service, another the universal service provider in relation to payphones and a third in relation to a prescribed carriage service.  The approach will also make possible use of a selection system under clause 22 to select the best universal service provider for a particular USO component.  It is intended that this provision could further limit the USO in relation to a declared provider so that the provider is only required to supply customer equipment for use in connection with a standard telephone service or prescribed carriage service.

Subclause 25(2) also requires, however, that declarations may only be made in accordance with the clause for the purpose of dividing the universal service obligation between two or more declared providers.  This means that although the USO may be limited in relation to one of a number of multiple universal service providers, it is not limited in relation to the providers as a whole: the limitations on any individual are complemented by the obligations applying to its companion universal service providers so that there is no limitation on the delivery of the USO as a whole.

Subclause 25(2) envisages that the different national universal service providers would be responsible for the supply of different components of the USO, rather than the USO as a whole. 

This approach gives the Minister the ability to declare as national universal service providers persons who may have a particular expertise or other advantage in supplying the components of  the USO.  This may be the case where quite disparate services are required to be reasonably accessible under the USO, particularly, where separate infrastructures may be involved.  This would be the case, for example, if the standard telephone service, public mobile telecommunications services and broadband services were all required to be reasonably accessible under the USO. 

It is conceivable that subclauses 25(1) and (2) could also operate together with the effect that there could be multiple providers of the same component of the USO, as well as different components. 

Subclause 25(3) provides that a declaration made in a manner consistent with regulations authorising multiple regional universal service providers has effect accordingly. 

Subclause 25(4) enables regulations to provide that Part 2 of the Bill applies in relation to any such declared multiple national universal service providers subject to such modifications as are specified in the regulations.  Modifications includes additions, omission and substitutions (subclause 25(5)).

Part 2 of the Bill has been drafted on the premise that there will generally be only one universal service provider responsible for the whole USO in any one service area.  If it is decided that multiple universal service providers should be declared, regulations can alter any provision of Part 2 as is required to enable the declaration of multiple national universal service providers to operate under Part 2.  Provisions that may require modification to support multiple national universal service providers include clauses 20, 21, 28, 32, 49, 50 and 57.

Alternative provisions for dealing with multiple universal service providers have not been incorporated into the legislation because they would add significantly to the complexity of Part 2 of the Bill. 

Clause 26 – Multiple regional universal service providers

Clause 26 is a parallel provision to clause 25 but provides for the regulations to authorise the declaration of multiple regional, rather than national, universal service providers.  Most of the explanation in relation to clause 25 is also applicable to this clause.

Subclause 26(1) provides that regulations may authorise the Minister to declare that two or more carriers are to be regional universal service providers.  Under this provision, the universal service providers would be responsible for supplying the same services.

Subclause 26(2) provides that the regulations may also authorise the Minister to declare that the Bill has effect, in relation to any multiple regional universal service provider that is declared, as if the USO applicable to the provider were limited as set out in the declaration.  This power is intended to enable the Minister to split the USO as a whole between a number of service providers, for example, in accordance with their expertise in relation to a particular component.  For example, the Minister may declare one person the regional universal service provider in relation to the standard telephone service, another the regional universal service provider in relation to payphones and a third in relation to a prescribed carriage service.  The approach will also make possible use of a selection system under clause 23 to select the best regional universal service provider for a particular USO component. 

Subclause 26(2) also requires, however, that declarations may only be made in accordance with the clause for the purpose of dividing the universal service obligation between two or more declared regional providers.  This means that although the USO may be limited in relation to one of a number of multiple universal service providers, it is not limited in relation to the overall fulfilment of the USO in the service area concerned by declared providers as a whole. 

Subclause 26(2) envisages that the different regional universal service providers would be responsible for the supply of different components of the USO, rather than the USO as a whole. 

It is conceivable that subclauses 26(1) and (2) could also operate together with the effect that there could be multiple regional universal service providers of the same component of the USO, as well as different components. 

Subclause 26(3) provides that a declaration made in a manner consistent with regulations authorising multiple regional universal service providers has effect accordingly. 

Subclause 26(4) enables regulations to provide that Part 2 of the Bill applies in relation to any such declared multiple regional universal service providers subject to such modifications as are specified in the regulations.  Modifications includes additions, omission and substitutions (subclause 26(5)).  These provisions enable regulations to modify Part 2 of the Bill as required to accommodate the operation of multiple regional universal service providers.  The provisions that would need modification would be the same as those identified above in relation to multiple national universal service providers.

Division 4—Universal service plans

Division 4 of Part 2 of the Bill provides for the development by universal service providers of universal service plans, for those plans to be approved by the Minister, and for universal service providers to comply with approved plans.  Universal service plans are intended to assist with the achievement of the following objectives:

•	better planning of USO delivery by requiring universal service providers to focus on what they must do to fulfil their obligations and how they should do it;

•	better community information about the USO and what the universal service provider is doing to fulfil it (approved universal service plans will be public documents);

•	better monitoring of USO fulfilment through measuring a universal service provider’s performance against its plan;

•	better enforcement of the USO (a plan will be able to be used in identifying failures to adequately fulfil the USO).

A universal service provider has the obligation, under subclause 21(5), to take all reasonable steps to fulfil the USO.  Universal service plans are intended to support and supplement this obligation by setting out how the provider will progressively fulfil the USO.

Division 4 of Part 2 sets out a scheme under which a universal service provider must develop plans about how it is to fulfil the USO in the area for which it is responsible.  These plans will be subject to Ministerial approval and monitoring by the ACA.  Through his or her ability to formulate requirements for plans, to approve or refuse plans and require variations or replacements of plans, the Minister will have considerable scope to oversee the fulfilment of the USO.  At the same time, however, universal service providers have primary responsibility for determining how they are to fulfil their USO and initiative in planning rests with them.  The planning requirement will force universal service providers to focus on the fulfilment of their responsibilities under the USO and set themselves concrete targets, timeframes and performance indicators.

Clause 27 – Universal service provider must submit universal service plan

Clause 27 requires a universal service provider for a particular area to give the Minister a draft universal service plan for that area (subclause 27(1)) within 90 days of becoming the universal service provider for that area (subclause 27(2)).  Where a national universal service provider takes over responsibility for a service area from a regional universal service provider that ceases to have responsibility for that service area, this requirement will apply to the national universal service provider.  Nothing would prevent that service provider adopting the plan of the former regional universal service provider.

Clause 28 – Universal service plans

Clause 28 states that a draft or approved universal service plan for an area is a plan that sets out how the universal service provider for that area will progressively fulfil the USO (in so far as it relates to that area).  

The requirements imposed on the universal service provider by the USO provide the basis for a universal service plan.  The plan is intended to set out the means by which the universal service provider will fulfil those requirements.  Given that it may take time for a universal service provider to fulfil its obligations in an area, particularly if the obligation has been significantly expanded or upgraded, the plan may provide for the progressive fulfilment of the obligation.

Amongst other things, it is envisaged that universal service plans could specify:

•	the levels of service quality, in terms of both technical performance and customer service, at which the universal service provider intends to supply the services required under the USO;

•	the timeframes within which a service would be made accessible within an area (for example, where significant network upgrading would be required);

•	the timeframes within which services would be supplied (ie. connected) to a customer (which may vary from area to area, if such differences are reasonable); and 

•	timeframes for the rectification of faults and targets in terms of payphone densities or availability.

Performance levels under a universal service plan would be separate from, and not have any implications for, standards under the Customer Service Guarantee (CSG).  However, where there are standards under the CSG (which applies to carriage service providers, not just universal service providers), it would be expected that those standards would be co-ordinated with the universal service plans.

Clause 29 – Replacement of approved universal service plan

Clause 29 provides that a draft universal service plan for an area may be expressed to replace a pre-existing approved plan for an area if such a plan is in force.  When the draft plan becomes an approved plan, the pre-existing plan ceases to be in force.  This provides a means by which universal service providers can change their universal service plans as they consider it appropriate.  Changes might be required, for example, if the USO is revised, an area’s demographics change, a provider decides to deploy different technologies or experience reveals deficiencies in service provision, including quality.

Clause 30 – Approval of draft universal service plan by Minister

Clause 30 provides for the approval or rejection of a draft universal service plan by the Minister.  The Minister’s ability to refuse to approve a draft plan and to direct a universal service provider to submit a new plan enables the Minister to contribute to the planning of fulfilment of the USO and provides an active level of Governmental involvement appropriate to this important obligation.

Subclause 30(1) requires the Minister to approve or refuse to approve a draft universal service plan.  In assessing a plan, the Minister must have regard to the criteria set out in clause 32. 

Subclause 30(2) makes a draft plan approved by the Minister an approved universal service plan.  Under clause 39, a universal service provider must take all reasonable steps to ensure that an approved universal service plan is complied with.

Subclause 30(3) enables the Minister to direct a universal service provider to give the Minister, within the period specified and in the terms specified in the direction, a fresh draft universal service plan if the Minister refuses to approve a draft plan (for example, if the Minister considers the plan does not adequately provide for the fulfilment of the USO in an area).  The content of such a direction can state where the Minister considers a draft plan was deficient and how those deficiencies should be rectified in a new draft plan.  The provider must comply with a direction to submit a new draft plan.

Clause 31 – Public comment – draft plan

Clause 31 requires a universal service provider to undertake public consultation on a draft universal service plan before submitting it to the Minister for approval.

This provision is intended to ensure that the public has an opportunity to comment on draft universal service plans as they are being developed.

Subclause 31(1) requires that, before giving the Minister a draft universal service plan under clause 30, a universal service provider must:

•	publish a preliminary version of the draft plan and invite members of the public to make submissions to the provider about the preliminary version within a specified period; and

•	give consideration to any submissions that were received from members of the public within that period.

This provision provides a mechanism for the public to comment on draft universal service plans and for the public’s comments to be considered.  A universal service plan sets out how a universal service provider will progressively fulfil its USO (clause 28).

Subclause 31(2) requires that the period specified in the invitation to comment must run for at least 30 days.  This provides the public with a guaranteed minimum period within which to make comments.

Subclause 31(3) provides that clause 31 does not apply to a draft plan given to the Minister in accordance with a direction under subclause 30(3).  Subclause 30(3) enables the Minister to direct a universal service provider to provide a fresh draft universal service plan where the Minister refuses to approve an original plan.  Given that the Minister’s direction will take into account the public comments which occurred in relation to the original plan and there are timing pressures if a revised plan is required, it is not appropriate to require public consultation in these circumstances.

Subclause 31(4) provides that clause 31 does not apply to a draft plan given to the Minister in accordance with a notice under clause 38.  Clause 38 enables the Minister to require a universal service provider to give the Minister a draft variation of a current plan or draft replacement plan.  Given that public consultation will have occurred in relation to the original plan and there are timing pressures if a revised plan is required, it is not appropriate to require public consultation in these circumstances.

Clause 32 – Minister to have regard to certain matters

Clause 32 sets out criteria the Minister must have regard to in considering whether or not to approve a draft universal service plan.  The criteria are designed to ensure the USO is fulfilled in a manner consistent with relevant objects of the Bill (including Part 2) and of Telecommunications Act.

Subclause 32(1) requires the Minister, in deciding whether to approve a draft universal service plan for an area, to have regard to whether the plan provides for the USO (in so far as it relates to that area) to be fulfilled:

•	as efficiently and economically as practicable; and

•	at performance standards that reasonably meet the social, industrial and commercial needs of the Australian community; and

•	progressively throughout that area within such period as the Minister considers reasonable; and

the draft plan complies with any requirement (formulated by the Minister) in force under clause 33.

The three detailed criteria derive from the objects of the Bill (including Part 2) and the Telecommunications Act (see clauses 3 and 9).

As a matter of course, the Minister would have regard to any advice or report provided by the ACA to the Minister at the Minister’s request, including any report on a public inquiry on a draft universal service plan the Minister has asked the ACA to conduct.  Subclause 32(1) does not, by implication, limit the matters to which regard may be had (subclause 32(2)).

This clause is important in providing a means by which the Minister can contribute to planning the fulfilment of the USO.

Clause 33 – Minister may formulate requirements for draft plans

Clause 33 enables the Minister to formulate requirements to be complied with by a draft universal service plan (subclause 33(1)) and gives examples of possible types of requirements, including:

•	timetables for the supply of services (for example, that a newly prescribed carriage service must be accessible to a particular percentage of the population or in particular areas by a particular time or within a particular period);

•	performance standards relating to the fulfilment of the USO (relating to both the technical performance of a service and customer service in the supply of a service, for example, that the standard telephone service have a specified dial tone delay or voice transmission quality or be connected within a specified period); and 

•	the form of a draft universal service plans (eg. what must be included in a plan in terms of information).

The Minister’s requirements must be consistent with the USO as it is defined in clause 19.  The Minister cannot formulate a requirement that would require a universal service provider to do something that does not fall within the USO as defined in clause 19.  Under subsection 33(3A) of the Acts Interpretation Act 1901, different provision can be made for different types of providers.  Subclause 33(3) makes an instrument setting out such requirements a disallowable instrument.  

Clause 34 – Notification of decision

Clause 34 requires the Minister to notify the universal service provider that has submitted the draft plan and the ACA as to whether he or she has approved or refused to approve the draft plan (subclause 34(1)).  A copy of the Minister’s notice must be published in the Commonwealth Gazette (subclause 34(2)).  

The Minister must give the universal service provider submitting the plan a written notice setting out the reasons for refusing to approve the draft plan if the Minister has rejected the plan (subclause 34(3)).  Note that under subclause 30(3) the Minister may direct the universal service provider to give the Minister another draft plan, within the period and within the terms specified in the direction.

Clause 35 – Variation of approved universal service plan

Clause 35 sets out the process for varying an approved universal service plan, as may be necessary, for example, because of changes to the USO, changes in the demographics of a service area, or changes to the service provider’s delivery strategy.  

Subclause 35(1) makes this clause apply if an approved plan (‘the current plan’) is in force and the universal service provider for the area gives the Minister a draft variation of the plan.

Subclause 35(2) requires the Minister to approve or refuse to approve the variation.

Subclause 35(3) prevents the Minister from approving the variation unless the Minister is satisfied that he or she would approve a draft universal service plan in the same terms as the current plan but varied as proposed in the draft variation.

Subclause 35(4) requires the Minister to notify the universal service provider that has submitted the draft plan and the ACA as to whether he or she has approved or refused to approve the variation.  A copy of the notice must be published in the Commonwealth Gazette (subclause 35(5)).

Subclause 35(6) requires the Minister to give the universal service provider submitting the draft variation a written notice setting out the reasons for refusing to approve the variation if the Minister has rejected it.

Subclause 35(7) provides that a current plan is varied accordingly if the Minister approves a variation.

Clause 36 – Public comment – variation of plan

Clause 36 requires a universal service provider to undertake public consultation on a variation of an approved universal service plan before submitting the variation to the Minister for approval.

This clause is intended to ensure that the public has an opportunity to comment on variations to approved universal service plans.

Subclause 36(1) requires that, before giving the Minister a draft variation to a universal service plan under clause 35, a universal service provider must:

•	publish a preliminary version of the draft variation and invite members of the public to make submissions to the provider about the preliminary version within a specified period; and

•	give consideration to any submissions that were received from members of the public within that period.

Subclause 36(2) requires that the period specified in the invitation to comment must run for at least 30 days.  This provides the public with a guaranteed minimum period within which to make comments.

Subclause 36(3) provides that clause 36 does not apply to a draft variation given to the Minister in accordance with a notice under clause 38.  Clause 38 enables the Minister to require a universal service provider to give the Minister a draft variation of a current plan or draft replacement plan.  Given that public consultation will have occurred in relation to the original plan and there are timing pressures if a revised plan is required, it is not appropriate to require public consultation in these circumstances.

Clause 37 – Minister may direct the ACA to give reports and/or advice

Clause 37 enables the Minister to direct the ACA to give the Minister such reports and/or advice as the Minister requires to assist him or her in deciding whether to approve a draft universal service plan or draft variation (subclause 37(1)).  The ACA must comply with the direction (subclause 37(2)).  The ACA’s role here is to provide specialist research and advice to the Minister, particularly in light of its responsibility for monitoring and reporting on the fulfilment of the USO (paragraph  105(3)(e) of the Telecommunications Act).  The provision does not by implication limit the Minister’s powers in relation to public inquiries (subclause 37(3)) and the Minister is able to direct the ACA to hold a public inquiry on a draft plan if he or she considers it is appropriate to do so.

Clause 38 – Minister may direct variation or replacement of plan

Clause 38 applies if an approved universal service plan for an area is in force (subclause 38(1)).  The clause enables the Minister to give the universal service provider for the area a notice requiring the provider to give the Minister a draft variation of its current plan or a fresh draft plan for the area that is expressed to replace the current plan (subclause 38(2)).  The provider must comply with the notice (subclause 38(3)). 

This clause enables the Minister to require changes to, or replacement of, an approved universal service plan should the Minister form the view that the approved plan is no longer adequate.  A plan may need to be changed, for example, because experience reveals deficiencies with the approved plan, circumstances within the service area change, or the USO itself is changed (and the universal service provider has failed to automatically vary its plan accordingly).

Clause 39 – Compliance with approved universal service plan

Clause 39 requires the universal service provider for an area to take all reasonable steps to ensure that it complies with an approved universal service plan for that area.  

Clause 39 provides a test of ‘reasonableness’ in relation to compliance with a universal service plan in recognition that the supply of telecommunications services on a national or even regional basis is a complex undertaking involving many factors, not all of which may be within the control of the universal service provider.  For example, compliance with a plan may be rendered difficult or impossible because of natural disasters or failure of suppliers (eg. satellite launch failure). 

Clause 39 requires compliance with an approved universal service plan.  Clause 1 of Schedule 1 to the Telecommunications Act (as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998) makes it a statutory condition of licence that a carrier (and a universal service provider must be a carrier) comply with the Bill and that Act.  Contravention of the Bill and the Telecommunications Act is subject to civil penalty provisions (see Part 31 as proposed to be amended) involving pecuniary penalties of up to $10 million.

Subclause 21(5) provides that the universal service provider for an area must take all reasonable steps to fulfil the universal service obligation, so far as the obligation relates to that area.  Clause 39 requires a universal service provider for a particular area to take all reasonable steps to ensure that the plan for the area is complied with.  Under clause 28, a universal service plan sets out how the universal service provider will progressively fulfil the USO in the provider’s area.  In considering whether a provider has taken all reasonable steps to fulfil the USO for the purpose of subclause 21(5), it is intended that regard should be had to whether the provider has complied with its universal service plan.

Clause 40 – Register of universal service plans

Clause 40 requires the ACA to maintain a register including all approved universal service plans currently in force (subclause 40(1)).  The register may be maintained by electronic means such as a computer database (subclause 40(2)).

Subclause 40(3) allows a person to inspect the Register and take copies or extracts from it.  For this the person is required to pay any charge determined by the ACA under s. 53 of the ACA Act.  That provision restricts the ACA to recovery of its costs in relation to the provision of the service to which the charge applies so that a charge may not amount to taxation.

Subclause 40(4) makes it clear that a printout from the Register, if it is kept in an electronic form, is to be taken to be an extract from the Register.

Subclause 40(5) makes it clear that the ACA may provide extracts or copies of the Register in the form of a data processing device (paragraph (a)) such as a floppy disk or a CD; or by way of electronic transmission (paragraph (b)) such as e-mail or on the Internet.

The register is similar to other public registers maintained by the ACA.  The register should enable greater public awareness and scrutiny of how universal service providers intend to fulfil their USOs and facilitate public action to ensure providers fulfil their obligations.

Division 5—Regulation of universal service charges

Division 5 of Part 2 of the Bill, together with Part 9 of the Bill, are intended to provide a means of ensuring the prices of services supplied under the universal service obligation can be controlled, with a view to ensuring they are affordable.  This is in recognition that the affordability of services is a central determinant of the use that is made of access.  As noted in relation to clause 9, the affordability of services under the USO is intended to be addressed through external mechanisms such as competition, targeted assistance and price control; it is not intended to be inherent in the universal service concept itself.

The USO set out in clause 19 will ensure that standard telephone services, payphones and prescribed carriage services are reasonably accessible to all people in Australia, regardless of where they reside or carry on business, and are supplied to people on reasonable request.  Of itself, however, the USO does not ensure the prices at which such services are supplied are necessarily affordable for end-users.  The obligation simply ensures the services are available.  While a universal service carrier would be required by its obligation to supply services in an area, in the absence of external price control it would be free to charge what the market would bear for its services.  Given the economics of supplying services in areas which are typically loss-making (for example, rural and remote Australia), for the foreseeable future and in the absence of price controls such prices might be higher than the Government might generally prefer, and higher than many customers could pay.  

In the past, as Telstra has been the universal service carrier and has been subject to price control under the Telstra Corporation Act, the prices at which services were supplied under the USO has not been an issue.  Price controls, interacting with Telstra’s historical price structures, have meant that prices for services supplied under the USO in loss-making areas have remained generally affordable and comparable with those of services supplied in profitable service areas.  With the possibility of carriers other than Telstra becoming universal service providers in future, there is a need for the Government to be able to regulate the prices at which they provide services under the USO.

This Division will only apply to Telstra to the extent that Telstra is not subject to price control under Part 9 of the Bill.

Consistent with the preference to rely on general regulation where practicable, The ACCC will continue to administer Division 5.  The ACCC has responsibility for general prices surveillance.  The ACCC will also continue to have responsibility for administration of the price controls currently imposed on Telstra under Part 6 of the Telstra Corporation Act (which is proposed to be dealt with in future by Part 9 of the Bill).

Clause 41 – Universal service charges

Clause 41(1) makes clause 41 apply if a person is a universal service provider for a particular area.  The substantive provision of the clause, subclause 41(2), provides that for the purposes of this Division, a ‘universal service charge’ is a charge imposed or proposed to be imposed, by the person for:

•	the supply of standard telephone services to persons in the area (this reference to ‘supply’ includes customer equipment, other goods and prescribed services of the kind mentioned in clause 13 and charges for such items are universal service charges); or 

•	calls made from payphones in the area; or

•	the supply of prescribed carriage services to persons in the area (this reference to ‘supply’ includes prescribed customer equipment, other prescribed goods and prescribed services of the kind mentioned in clause 14 and charges for such items are universal service charges).

It is intended that the full range of charges relating to these services should be universal service charges and be eligible for price control, including, but not limited to, charges for network extension, charges for service connection, annual or periodic rental charges (including for customer equipment) and charges for local, national and international calls.

Universal service charges can only apply to services provided under the USO and in areas where a person is the universal service provider.  Thus if a person is a universal service provider in one region and also supplies services in another region where it is not a universal service provider, its charges in the second region are not subject to price controls under Division 5.

Clause 42 – Declaration subjecting universal service charges to 
price control arrangements

Clause 42 enables the Minister, by a notice published in the Commonwealth Gazette, to declare that specified universal service charges are subject to price control arrangements under this Division (subclause 42(1)).  Subclause 42(2) makes such a declaration a disallowable instrument.

Clause 43 – Price control determinations

Clause 43 enables the Minister to determine the actual price control arrangements to which declared universal service charges are to be subject.

Subclause 43(1) makes this clause apply if a declaration is in force under clause 42 in relation to a particular universal service charge.  

Subclause 43(2) enables the Minister to make a written determination setting out:

•	price-cap arrangements and other price control arrangements that are to apply in relation to the charge; or 

•	principles or rules in accordance with which the universal service provider may impose or alter the charge;

or both.  

Price control determinations may set out any manner of price controls, including maximum monetary charges, parity with charges in other areas, rates at which existing charges may change and notification and disallowance provisions.  A price control determination will be able, for example, to stipulate the exact level of a particular charge.  This is seen as particularly important where a new universal service provider may be commencing service in an area and it does not yet have charges in the market place that may be otherwise regulated.  Some further examples of the kinds of controls that may be included in a determination are given in subclause 44(1).  Subclause 44(1) does not limit clause 43 (subclause 44(2)).

Subclause 43(3) makes a determination have effect in accordance with its content.

Subclause 43(4) makes a determination under clause 43 take effect at the start of the next financial year after the one in which it is made.  A price control determination must, therefore, be made in the financial year before the financial year in which it is to apply.  This is because universal service providers need to know what prices they will be able to charge for the services they supply under the USO to determine what areas will be net cost areas – under clause 49, universal service providers must propose their net cost areas within 60 days of the beginning of the financial year.

Subclause 43(5) provides that a price control determination under clause 43 may make different provision with respect to different customers.  Clause 43, however, does not, by implication limit subsection 33(3A) of the Acts Interpretation Act 1901.

It is intended that a price control determination may provide that different (two or more) price control arrangements apply in relation to one kind of universal service charge, with each of the different price control arrangements relating to customers in a particular class.  For example, a price control determination may apply different price control arrangements in relation to residential and business customers being supplied with the standard telephone service.  (Such differentiation exists under the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997.)  It is also intended that a price control determination be able to apply particular price controls in relation to more specific classes of customer, for example, educational institutions, medical facilities or public libraries.  This would mean, for example, that where a prescribed carriage service is prescribed for the purposes of the USO, the Minister in a price determination could require that it be provided to schools, libraries and hospitals at a particular price, while it may be available to other customers at another regulated price, or even an unregulated price.

It is also intended that separate determinations may apply to different universal service providers and different service areas.  That is, it is not intended that if there are two or more universal service providers they must all be subject to a single price control determination under clause 36.  Subjecting all universal service providers to a single price control determination would be too inflexible, enabling no account to be taken of the individual circumstances of each universal service provider.

It is envisaged (but need not necessarily be the case) that if the provision of universal service is tendered out using a selection system provided for in clause 22 or 23, then price requirements in any tender specification would derive from a price control determination under Division 5.

Subclause 43(6) makes the determination a disallowable instrument.

Clause 44 – Content of price control determinations

Clause 44 lists some of the price control arrangements, particularly involving notification and disallowance, that a determination under clause 43 may apply to a universal service charge.

Subclause 44(1) enables a price control determination to:

•	prohibit a charge from being imposed or altered without the consent of the Minister or the ACCC (paragraphs 44(1)(a) and (b)); or

•	prohibit a charge from being imposed or altered without prior notice being given to the Minister or the ACCC (paragraphs 44(1)(c) and (d)); or 

•	empower the Minister to direct the ACCC to give the Minister such reports and advice as he or she requires for the purposes of assisting the Minister in deciding whether to give consent in accordance with the determination (paragraph 44(1)(e)).

Under these provisions both initial charges (where services have previously not existed or been charged for) and changes to existing charges for a service may be subject to consent or prior notification requirements.

Subclause 44(2) states that subclause 44(1) does not, by implication, limit clause 43.  This makes it clear that a price control determination may provide for price control arrangements other than those of the type described in clause 44.

Clause 45 – Price control determinations subject to determinations 
under Part 9

Clause 45 renders a price control determination under clause 43 ineffective to the extent that it relates to a charge that is the subject of a price control determination under subclause 154(1) or 157(1) of the Bill.

Subclause 45(1) makes this clause apply if a determination under subclause 154(1) or 157(1) of the Bill is in force in relation to a charge imposed by Telstra.  If such a determination is in force, a determination under this Division is of no effect in so far as it relates to that charge (subclause 45(2)).

Where Telstra is the universal service provider, primary reliance will be placed on price control imposed on it under Part 9 of the Bill because price control under that Part will apply to all Telstra services, not just those being supplied under the USO, thus giving that price control wider scope.  This is appropriate because the price controls that will continue to be applied to Telstra have a wider function than those applying to universal service providers under Part 2 of the Bill.  For example, price controls on Telstra play multiple roles of simulating competitive pressures in uncontested or newly contested markets, promoting internal efficiency gains in Telstra, passing efficiency gains onto consumers and distributing those gains in particular ways.  Notwithstanding this, where a determination under this Division is not rendered ineffective by a determination under Part 9, it will have effect to the extent that it relates to charges imposed by Telstra as a universal service provider.  That is, it is feasible that Telstra would be subject to determinations under both this Division and Part 9 of the Bill, albeit in relation to mutually exclusive charges.

Clause 46 – Compliance with price control determinations

Clause 46 requires a universal service provider to comply with a determination in force under this Division.  Clause 1 of Schedule 2 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, makes it a statutory condition of licence that a carrier (a universal service provider must be a carrier) comply with the Bill.  Contravention of the Bill and the Telecommunications Act is subject to civil penalty provisions (see Part 31 of that Act) involving pecuniary penalties of up to $10 million.

Division 6—Assessment, collection, recovery and 
distribution of universal service levy

Subdivision A––Introduction

Clause 47 – Simplified outline

Clause 47 provides a simplified outline of Division 6 of Part 2 to assist readers.

Clause 48 – Financial year

Clause 48, in conjunction with subclause 2(2), will ensure that Part 7 of the Telecommunications Act 1997 will apply in relation to the 1998-1999 financial year and that Part 2 of this Bill will apply to subsequent financial years.

Subdivision B—Net cost areas

The identification of areas where a net cost is expected to be incurred at the commencement of the financial year enhances the operation of the avoidability methodology used to determine net universal service costs.  

The main purpose of identifying net cost areas in advance is to encourage universal service providers to control their total universal service cost by removing the opportunity for them to claim costs in areas that they expected to be profitable, but through careless management, could be loss-making.  Without net cost areas being declared in advance, a universal service provider would have less incentive to control costs in marginal areas because it knew if it did not, and it did incur a loss, it could, nevertheless, seek compensation under the universal service fund at the end of the year.

The ACA must scrutinise proposed net cost areas carefully and reject those that do not qualify as net cost areas.  ACA scrutiny of proposed net cost areas and its approval or rejection of them helps to establish the boundaries of the costs that can be claimed under the USO and as such acts as a discipline on the universal service provider to contain its overall costs by not providing access to subsidies for areas that, in the ACA’s opinion, should not be loss making.

The net cost area process is also intended to:

•	give greater certainty to the identification of costs using the avoidable cost less revenue forgone methodology;

•	allow the ACA to judge whether proposed net cost areas should be eligible for inclusion in the total cost for calculating the levy in accordance with the criteria set down by the Minister under clause 53;

•	provide a framework for the ACA to assess whether adequate revenue and cost details will be available; and 

•	provide a streamlined procedure to audit the net costs at the end of the financial year.

Clause 49 – Universal service provider must propose service areas for declaration as net cost areas––ordinary declaration

Clause 49 requires a person who is a universal service provider in relation to a financial year, to give the ACA, within 60 days of commencement of the financial year, a notice specifying service areas for which the person is the universal service provider and which the person considers the ACA should declare as net cost areas for the financial year (subclause 49(2)).  The notice must be in a form approved by the ACA (subclause 49(3)) and contain any additional information required by the approved form (subclause 49(4)).

This clause is self-enforcing.  If a person or carrier does not specify service areas, the ACA cannot declare them as net cost areas under clause 50.  Without having net cost areas declared, the universal service provider cannot calculate its net universal service cost under clause 57 and thus not make a claim under clause 54.

Clause 50 – Net cost areas––ordinary declarations

Clause 50 enables the ACA to declare areas as net cost areas after receiving a notice under clause 49.  An area declared to be a net cost area is taken into account in determining whether the universal service provider has incurred a net universal service cost and whether the universal service provider is therefore entitled to proceeds of the levy.

Subclause 50(1) requires the ACA to decide whether a proposed area is a net cost area within 60 days of receiving a notice under clause 49.

Subclause 50(2) requires the ACA to decide in relation to each service area to:

•	declare the area as a net cost area;

•	declare a different service area that includes all or part of that service area; or 

•	not make such a declaration.

The second option enables the ACA to declare alternative net cost areas based on net cost areas proposed by the universal service provider.

Subclause 50(3) requires the ACA to make a written declaration in accordance with its decision to declare net cost areas under paragraphs 50(2)(a) and (b).

Subclause 50(4) enables the ACA to make whatever inquiries it thinks necessary or desirable before making its decision under subclause 50(2).  This provision supports the ACA’s function of closely scrutinising proposed net cost areas so that the net cost area approach achieves its intended purpose of setting, in advance, an effective boundary for net universal losses, thereby promoting better planning, encouraging cost control and streamlining administration.

Subclause 50(5) requires the ACA, in making its decision under subclause 50(2), to have regard to the universal service provider’s reasons, as specified in its notice, for proposing a service area as a net cost area (paragraph 49(2)(b)) and to comply with any Ministerial directions in force under clause 53.

Clause 51 – Universal service provider may propose service areas for declaration as net cost areas – special declaration

Clause 51 enables a universal service provider to seek to have new areas declared as net cost areas after the ordinary declaration process where circumstances beyond the universal service provider’s control justify such late declaration.

This clause and clause 52 have the potential to increase payments out of the Universal Service Reserve, which is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997.

It is intended to provide the ACA with a discretion to retrospectively declare an area to be a net cost area where a universal service provider incurs a substantial unanticipated loss in an area as a result of circumstances beyond its control.  It is intended that the special declaration process put in place by clauses 51 and 52 only be used where, after the ordinary declaration process, a universal service provider becomes aware that an area will incur a substantial loss due to circumstances beyond its control.  The special declaration process is not intended to allow losses to be claimed, in retrospect, that simply result from poor planning or management on the part of the universal service provider.

Clause 51 is similar in construction to clause 49, but differs as to the timing of claims.

Subclause 51(1) provides that clause 51 applies if a person is a universal service provider on the first day of a financial year.  If a person is a universal service provider in relation to a financial year, the person is eligible to seek the declaration of net cost areas in relation to that year.

Subclause 51(2) provides that during the financial year, or 45 days after the end of the financial year, the person may give the ACA written notice that:

•	specifies service areas for which the person is the universal service provider and that, in the person’s opinion, the ACA should declare under clause 52 (see below) as net cost areas for the financial year; and

•	sets out why, in the person’s opinion, the ACA should so declare the specified area.

This provision generally mirrors subclause 49(2), but departs from it to allow a person to seek the declaration of areas as net cost areas at any time during the financial year or in the first 45 days of the following financial year.  This allows the person to seek special declaration of such areas where circumstances warrant it, outside the ordinary declaration process set out in clause 49.  Under clause 49, the person must propose areas within the first 60 days of the financial year, effectively requiring the net cost areas to be declared in advance.  Clause 51 enables net cost areas to be declared retrospectively, subject to the criteria in subclause 52(6).

This timing constraint is imposed to ensure declarations are made within the 90 day period allowed under clause 54 for the making of claims.  Together with the ACA’s 30 days to consider special declaration applications, the special declaration process can extend for up to 75 days into the new financial year.  This will leave a universal service provider a maximum of 15 days to put in a claim if a new net cost area is specially declared at this time.  This is considered sufficient given that the person will have to provide the ACA with the same kind of information for the declaration process and for a claim.

Subclause 51(3) provides that a notice under subclause 51(2) must be in a form approved in writing by the ACA.  This allows the ACA to specify the information and format it requires for declaration notices for administrative convenience.  The provision mirrors subclause 49(3).

Subclause 51(4) provides that in addition to the matters set out in paragraphs 51(2)(a) and (b), a notice under subclause 51(2) must contain such other information (if any) as the approved form of notice requires. The provision mirrors subclause 49(4).  This provision ensures that the ACA is provided with the information it requires for the purposes of special declaration of net cost areas.  Given the strict criteria that apply under subclause 52(6) to the special declaration of net cost areas, the ability of the ACA to obtain appropriate information is vital.

Clause 52 – Net cost areas – special declarations

Clause 52 requires the ACA to consider applications for the special declaration of new net cost areas outside the ordinary declaration process where circumstances beyond the universal service provider’s control justify such declaration.

It is intended that the special declaration process put in place by new clauses 51 and 52 only be used where, after the ordinary declaration process, a universal service provider becomes aware that an area will incur a substantial loss due to circumstances beyond its control.  The special declaration process is not intended to allow losses to be claimed, in retrospect, that simply result from poor planning or management on the part of the universal service provider.

Clause 52 is similar in construction to clause 50, but differs as to the timing of ACA decisions and because it specifies the matters about which the ACA must be satisfied before making a declaration.

Subclause 52(1) provides that the ACA must comply with clause 51 within 30 days after receiving a notice under section 51 from a person.  This timing constraint is imposed to ensure declarations are made within the 90 day period allowed under clause 54 for the making of claims.

Subclause 52(2) provides that for each service area specified in the notice the ACA must decide:

•	to declare the area as a net cost area for the financial year; or

•	not to declare as mentioned in paragraph (a).

This provision generally mirrors subclause 50(2).

Subclause 52(3) provides that if the ACA makes a decision under paragraph 52(2)(a), the ACA must make a written declaration stating that the area concerned is a net cost area for the financial year.  The declaration has effect accordingly.  The provision mirrors subclause 50(3).

Subclause 52(4) provides that before making a decision under subclause 52(2), the ACA must make whatever inquiries it thinks necessary or desirable in order to determine what decision it should make under that subclause.  The provision mirrors subclause 50(4).  The provision is important in ensuring the ACA applies a high level of scrutiny to net cost area applications.  In relation to special declarations under clause 52, ACA inquiries should be directed towards, but not limited to, the matters specified in clause 52, about which the ACA must be satisfied if it is to make a special net cost area declaration.

Subclause 52(5) provides that the ACA, in making a decision under subclause 52(2), must:

•	have regard to the reasons specified in accordance with paragraph 51(2)(b); that is, the reasons why, in the universal service provider’s opinion, the ACA should declare the area to be a net cost area; and

•	comply with any directions in force under clause 53, being Ministerial directions about declaring net cost areas.

This provision generally mirrors subclause 50(2).

Subclause 52(6) is the provision in relation to the special declaration of net cost areas which specifies the particular criteria that the ACA must be satisfied of before it can make a special declaration.  It provides that the ACA must not make a declaration under this section stating that an area is a net cost area for the financial year in relation to which the application for the declaration applies unless the ACA is satisfied that:

•	the person has incurred, or is likely to incur, a substantial loss attributable to the supply by the person of services to the area during the financial year; and

•	the loss is wholly the result of circumstances beyond the person’s control; and

•	when the person became aware of those circumstances, the person took all reasonable steps to minimise the loss.

It is important to note that these criteria are intended to prevent universal service providers seeking to use the special declaration process to claim losses resulting from their poor planning, management or operations.  The ACA needs to be satisfied of all three criteria.

Subclause 52(7) is a definitional provision providing that a reference in subclause 52(6) to ‘a person supplying services during a financial year’ is a reference to the person supplying services under the universal service obligation.  This is to remove any possible grounds for the universal service provider seeking declaration of an area as a net cost area on the ground it incurs losses in supplying services other than those it is required to supply under the USO.  Subclause 57(3) serves an analogous function in clause 57 which deals with the calculation of net universal service costs of a universal service provider for a financial year.

Clause 53 – Minister may give directions about declaring net cost areas

Clause 53 enables the Minister to give the ACA directions about the criteria it should apply and the matters to which it should have regard in deciding whether or not to declare an area as a net cost area for a financial year.  For example, the direction might set out the criteria to apply where carrier competition rather than fulfilment of the USO has resulted in a net cost for the USO carrier in an area or how short term start‑up losses in new Subdivisions should be treated.

Subdivision C—Assessment of liability for levy and of 
entitlement to levy distributions

Subdivision C sets out the mechanisms for:

•	determining the losses incurred in fulfilling the USO (called net universal service costs); 

•	determining participating carriers’ contributions to those losses;

•	the making of assessments of levy entitlements and liabilities by the ACA; and

•	recovering levy for participating carriers and paying it to universal service providers.

Clause 54 – Claims for levy credit

Clause 54 enables a person that is a universal service provider in relation to a financial year to submit a claim for levy credit, that is the credit it has in the event of levy being levied.  A universal service provider accrues this levy credit in fulfilling the USO and the amount of its credit is, in effect, its USO loss.

Subclause 54(1) makes clause 54 apply to a financial year if a person is a universal service provider in relation to that financial year.  Note, a person need no longer be a universal service provider at the time of lodgement to be a universal service provider in relation to a financial year.

Subclause 54(2) enables a person who is a universal service provider in relation to a financial year to give the ACA a written claim for levy credit within 90 days of the end of the financial year to which the claim relates.  This period is not extendable.  This period gives universal service providers a reasonable period in which to prepare their claims and aligns the claim process more closely to other business reporting requirements.

The claim must be in a form approved in writing by the ACA (subclause 54(3)).  Subclause 54(4) sets out the details that must be included in a levy credit claim.  

The claim must be accompanied by a report by an approved auditor in a form approved by the ACA stating that the auditor has had sufficient access to the person’s records in order to audit the claim, that the auditor has audited the claim and containing a declaration of the auditor’s opinion, being a declaration in the terms specified in the form approved by the ACA (subclause 54(5)).  ‘Approved auditor’ is defined in clause 18.  The auditing requirement is intended to provide another check on the appropriateness of claims and place a greater onus on universal service providers to ensure their claims are correct.

Clause 55 – No levy payable unless at least one claim for a levy credit is made

Clause 55 provides that no person is liable to pay an amount of levy in respect of a financial year, if at the end of the 90 day period within which claims can be submitted, no claim for a levy credit has been lodged by a universal service provider under clause 54.  Clause 55 provides an incentive for universal service providers to lodge claims within the 90 day period and reduces administrative activity where no claims are made.

Clause 56 – ACA to give copies of claims to other participating carriers 

Clause 56 requires the ACA to give, as soon as practicable or in any case within 14 days, a copy of a claim lodged under clause 54 to each person (other than the person who lodged the claim) who is a participating carrier for that financial year.  Note, a person need no longer be a participating carrier at the time the claim is lodged to still be a participating carrier in relation to a relevant financial year.

This clause is designed to make the process of assessing and collecting the universal service levy open and transparent for participating carriers by requiring the ACA to copy any claims lodged to other participating carriers.

Clause 57 – Net universal service cost of a universal service provider for a financial year

Clause 57 is central to the calculation of a universal service provider’s costs in fulfilling its USO.  It provides the basis for determining participating carriers’ respective credits and debits and levy entitlements and liabilities.  The normal manner by which net universal service costs would be calculated would be using the avoidable cost less revenue forgone methodology set out in the clause.  Two other methods are available to accommodate the selection of universal service providers using a system determined by the Minister and to enhance the overall flexibility of the costing process.  

First, the clause provides for a net universal service cost to be derived in accordance with a selection system under clause 22 or 23.  This sum may be an actual amount that a carrier has elected will be its net universal service cost on being declared the universal service provider (paragraph 22(2)(a) or 23(2)(a)) or an amount ascertained by means of a methodology that a carrier has elected will be used to determine its net universal service cost on being declared the universal service provider (paragraph 22(2)(b) or 23(2)(b)).

Second, the clause enables the Minister to determine, with the agreement of all participating carriers, a method for ascertaining a person’s net universal service cost.  This second method enhances administration of the levy arrangements by enabling alternative methods of calculating the net universal service costs to be utilised where all participating carriers agree.

Subclause 57(1) enables a person’s net universal service cost for a financial year to be calculated in one of four mutually exclusive ways.  

First, paragraph 57(1)(a) sets out how a universal service provider’s net universal service cost is to be determined where the person is a universal service provider in relation to that financial year because of the operation of a selection system determined under clause 22 or 23 and the person has elected that a specified amount will be the person’s net universal service cost for the financial year.  In this instance, the person’s net universal service cost for the financial year is equal to the amount the person elected to be its net universal service cost.

For example, the Minister may undertake a process by which to select a universal service provider by a tender arrangement.  The successful tenderer may have agreed to fulfil the USO that has been tendered for, say, $50 million (indexed at CPI), per annum over a ten year period.  That universal service provider’s net universal service cost would then be $50 million (indexed at CPI) for each applicable year.  This amount would then be factored into the overall USO assessment process as appropriate.

Second, paragraph 57(1)(b) sets out how a universal service provider’s net universal service cost is to be determined where the person is a universal service provider in relation to that financial year because of the operation of a selection system determined under clause 22 or 23 and the person has elected that a specified method of ascertaining an amount will apply for the purposes of determining the person’s net universal service cost for the financial year.  In this instance, the person’s net universal service cost for the financial year is equal to the amount that is worked out using that method.

This provision reflects the flexibility that has been built into the selection system provisions which enables a selection system to not only generate a specific amount but alternatively, a methodology for ascertaining an amount.

As a purely hypothetical example, a person selected to be a universal service provider may have elected that its universal service cost would be calculated on the basis of a certain amount per customer per month.  (In practice, much more sophisticated methodologies may be involved.)  Its net cost would then be worked out according to that methodology.  In the hypothetical example suggested above, if it is assumed that the service provider has a stable customer base of 3,000 customers per month and it claims $200 per month per customer, its net universal service cost would be $7.2 million ($200 x 12 x 3000).

Note that subclause 23(4) does not prevent a method that a person elects to have used in determining its NUSC in a selection system from being the same that would have applied if the system concerned had not been determined.  That is, the methodology may be a methodology determined by the Minister with the agreement of participating carriers (see subclause 57(6)) or the default, avoidable cost less revenue forgone methodology.

Third, paragraph 57(1)(c) sets out how a universal service provider’s net universal service cost is to be determined where: the person is a universal service provider in relation to that financial year; the person is not a universal service provider in relation to that financial year because of the operation of a selection system determined under clause 22 or 23; and a Ministerial determination is in force under subclause 57(6) setting out an alternative methodology.  In this instance the person’s net universal service cost for the financial year is worked out in accordance with the determination.

The ability for the Minister to determine an alternative methodology for calculating a universal service provider’s NUSC is provided for in subclause 57(6) and its use is discussed in detail in that context.

Fourth, paragraph 57(1)(d) sets out how a universal service provider’s net universal service cost is to be determined where: the person is a universal service provider in relation to that financial year; the person is not a universal service provider in relation to that financial year because of the operation of a selection system determined under clause 22 or 23; and no determination is in force under subclause 57(6) setting out an alternative methodology in relation to that financial year.  In this instance, the default methodology, the avoidable cost less revenue forgone methodology, is to be employed, the formula for which is set out in subclause 57(2).  

If the amount worked out using the avoidable cost less revenue forgone methodology is greater than zero dollars, the person’s net universal service cost for the financial year is equal to that amount.  This is because the person has incurred a loss in fulfilling the USO.  If, however, the amount worked out using the avoidable cost less revenue forgone methodology is not greater than zero dollars, the person’s net universal service cost for the financial year is zero dollars.  This is because the person has not incurred a loss in fulfilling the USO and it is unnecessary for the person to be compensated for fulfilling the USO.

Subclause 57(2) gives the formula for determining a person’s net universal service cost for a financial year when the universal service provider has not been selected under clause 23 or there is no Ministerial determination in force in relation to that financial year. The formula is:

	Avoidable costs – Revenue forgone.

The formula provides for net universal service costs to be calculated by subtracting the revenue it is reasonable to expect the person would not have earned if the person had not supplied services that under the USO they were required to supply to net cost areas, from the total of the operating and capital‑related costs that a person would not have incurred had the person not supplied services to net cost areas.  

In the formula, ‘avoidable costs’ means one of two things.

First, under paragraph 57(2)(a), if a determination is in force under subclause 57(9), it is the amount ascertained in accordance with the determination.  

Subclause 57(9) enables the ACA to make a written determination specifying a method of ascertaining an amount for the purposes of paragraph (a) of the definition of ‘avoidable cost’ in subclause 57(2).  Under subclause 57(10) a determination under subclause 57(9) must provide for an amount to be ascertained wholly or partly by reference to an indexation factor.  It is intended that indexation can be used to establish the amount of any of the components that comprise avoidable cost or to establish avoidable cost as a whole.  It is also intended that some components should be able to be based on indexation while others may be based on actual costs.   The ability to enable avoidable costs to be ascertained using indexation recognises the practical difficulties that can be involved in ascertaining actual avoidable costs each year and that the use of indexed costs provides a practical and acceptable alternative.

A determination under subclause 57(9)  may only be made with the consent of the Minister and is a disallowable instrument (subclause 57(11)).  This is to ensure that the Minister has the opportunity to be satisfied the indexation method is consistent with the intended operation of the avoidable cost less revenue forgone methodology.  Before making a determination under subclause 57(9), the ACA must also consult with each person who was a participating carrier immediately before the determination was made.  This is to ensure that there is general acceptance of the proposed methodology by affected parties.

Second, under paragraph 57(2)(b), if there is no determination under subclause 57(9), ‘avoidable costs’ means the total of:

•	the amount (if any) of operating costs;

•	the amount (if any) of total allowances made by the person for depreciation during the financial year of capital items;

•	the amount (if any) of the person’s total opportunity costs of capital; and

•	the amounts (if any) specified for this purpose in a determination by the ACA under clause 60.

In the formula, ‘revenue forgone’ means an amount of revenue equal to so much of the revenue earned by the person during the financial year as it is reasonable to expect the person would not have earned during that financial year if the person had not supplied the services (ie. the items required under the USO) to net cost areas during that financial year.

The capital cost component of ‘avoidable costs’ includes the total opportunity costs of capital.  Under clause 60 the ACA may also determine amounts to be included in ‘avoidable costs’.

Subclause 57(3) makes clear the meaning of ‘supplying services’ in subclause 57(2), explaining that a reference in subclause 57(2) to a person supplying services to a net cost area during a financial year is a reference to the person:

•	supplying standard telephone services to persons in the net cost areas for that financial year for which the person was the universal service provider; or

•	supplying, installing or maintaining payphones in those areas; or

•	supplying prescribed carriage services in those areas.

Subclause 57(4) makes a reference in subclauses 57(2) and (3) to the financial year a reference to the part of the financial year when the person was a carrier if the person was a carrier for only part of the year.  This subclause limits the calculation of a person’s net universal service cost to the period in which it was a carrier and thus eligible under clause 20 to be a universal service provider.

Subclause 57(5) requires that an amount applicable to a person under the formula in subclause 57(2) must be in accordance with the ACA’s determinations under clause 60 as they apply to a universal service provider because of clause 61.

Subclause 57(6) enables the Minister to make written determinations specifying a method of ascertaining an amount for the purposes of paragraph 57(1)(c), that is, for determining a person’s net universal service cost.  Such a determination has no effect unless each person who was a participating carrier immediately before the determination was made gave written consent to the making of the determination.

Subclause 57(6) is designed to enable the easier calculation of net universal service costs instead of using the sophisticated avoidability methodology when all participating carriers agree.  All participating carriers must agree because they are all contributing to total universal service costs and must be confident that those costs are reliable.  This approach provides an alternative to the cost calculation process which is involved, requires large amounts of data and can be time consuming and controversial.  Envisaged methods of ascertaining a net universal service costs including negotiation between parties, continuation of previously agreed amounts and the indexation of previously agreed amounts.

Subclause 57(7) states that the amount worked out under a determination under subclause 57(6) may be zero dollars.  

Subclause 57(8) requires that a determination under subclause 57(6) must be published in the Commonwealth Gazette.  This ensures the process for calculating net universal service costs is publicly known and thus open to scrutiny.  

Subclauses 57(9) to (12) are discussed above in relation to paragraph 57(2)(a), to which they relate.

Clause 58 – Reduction of excessive costs etc.

Clause 58 is intended to provide a further means for the Government to control excessive net universal service costs of a universal service provider as calculated using the avoidable cost less revenue forgone methodology.  The provision is largely intended as a reserve power to be used should it be apparent that a universal service provider's costs are in excess of widely accepted benchmarks, for example, common industry practice or world best practice.  The methodology enables a universal service provider's costs to be calculated on the basis of principles determined by the Minister rather than actual costs.  This enables, the Minister, for example, to require a universal service provider’s costs to be calculated using benchmark costings derived from other universal service providers in Australia or overseas.  Clause 59 is a parallel provision dealing with ‘revenue forgone’.

Subclause 58(1) enables the Minister, by written instrument, to formulate principles that are to be applied in determining the extent (if any) to which costs, allowances or opportunity costs of a kind mentioned in subparagraph (b)(i), (ii) or (iii) of the definition of ‘avoidable costs’ in subclause 57(2) are to be treated as excessive for the purposes of subclause 58(2).

For the purposes of calculating the avoidable cost less revenue forgone formula in subclause 57(2) in relation to a particular financial year, if the person who is a universal service provider has incurred costs, allowances or opportunity costs of a kind mentioned in the definition of ‘avoidable costs’ in subclause 57(2) and the costs, allowances or opportunity costs, as the case may be, are treated as excessive to any extent under the principles determined by the Minister, the amount of the costs, allowances or opportunity costs, as the case may be, is to be reduced by the amount of the excess.  That is, a universal service provider’s avoidable costs may be considered against the excessive cost principles formulated by the Minister and if they are found to be excessive when considered against those principles, they are to be reduced by the amount of that excess.

A Ministerial determination setting excessive cost principles under subclause 58(1) is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901 (subclause 58(3)).

This approach draws on the concept of ‘best practice’ costing of community service obligations (CSOs), which recognises that where cost structures in the delivery of CSOs are not at the most efficient levels, it may be desirable to fund the CSOs on the basis of ‘best practice’ cost structures.  

The Ministerial principles could include benchmarks, or principles that set out discounting factors which the Minister considers are reasonable, or other methods to be applied in determining the extent (if any) to which costs are to be treated as excessive.  

An example of a principle that may be applied with a view to identifying and reducing excess costs would be the principle that costs should not exceed such costs as would have been incurred if the USO was provided using telecommunications networks that were operated and maintained in accordance with accepted international benchmarks for operational efficiency.  In this context, the principles might then specify those benchmarks in detail or, alternatively, leave it to the ACA to identify those benchmarks.

Generally, it is envisaged such principles would be determined prior to the financial year in which they were to apply, thus providing the universal service provider with an opportunity to achieve the cost levels provided for in the principles, or to enable the provider to calculate its costs in accordance with the principles.  Note, however, that nothing in the legislation requires the principles to be determined in advance of the period to which they will apply.  The Minister may choose to make a written instrument under subclause 58(1) during a financial year if it became apparent that a universal service provider’s costs for that year were unacceptably high.  In all instances, however, it is intended that the principles be applied by the universal service provider in calculating its net universal service cost and preparing its levy credit claim.  Where principles have been formulated and applied to a year, the ACA will be required to examine the correctness of the claim having regard to such principles as have been formulated.

Clause 59 – Shortfalls in revenue earned 

Clause 59 is intended to provide a further means for the Government to exercise control over the net universal service costs of a universal service provider as calculated using the avoidable cost less revenue forgone methodology.  The provision is largely intended as a reserve power to be used should it be apparent that a universal service providers’ revenues are unreasonably below widely accepted benchmarks, for example, common industry practice or world best practice, particularly as a result of the provider undercharging.  The methodology enables a universal service provider’s revenue to be calculated on the basis of principles determined by the Minister rather than actual revenue.  In practice, application of the principles would influence the minimum prices at which carriers supplied the services required under the USO.  It is intended that the principles may be so specific as to set out the precise price at which a service or component of the USO should be assumed to have been supplied for the purposes of calculating net universal service costs.

Subclause 59(1) enables the Minister, by written instrument, to formulate principles that are to be applied in determining the extent (if any) to which there is taken, for the purposes of the avoidable cost less revenue forgone methodology in subclause 57(2), to be a shortfall in relation to revenue earned as mentioned in the definition of ‘revenue forgone’ in that subclause.

For the purposes of calculating the avoidable cost less revenue forgone formula in subclause 57(2) in relation to a particular financial year, if the person who is a universal service provider has earned revenue as mentioned in the definition of ‘revenue forgone’ in subclause 57(2) and under the principles formulated by the Minister under subclause 59(1), there is taken to be a shortfall in relation to that revenue, the amount of the revenue in the formula is to be increased by the amount of the shortfall.

A Ministerial determination setting excessive cost principles under subclause 59(1) is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901 (subclause 59(3)).

The ability for the Minister to determine principles in relation to revenue is intended to deal with the unlikely, but possible, situation of a universal service provider undercharging for the services it is required to supply under the USO.  It is conceivable that a universal service provider might behave in this manner to damage competition or to secure inappropriate subsidies for the services it is supplying under the USO.  Undercharging for anti-competitive purposes should be dealt with under the competition provisions of the TPA.  However, undercharging which does not constitute anti-competitive conduct may be of concern in the context of the USO process because it means a universal service provider could incur a greater loss than it needs to, with that loss being partially subsidised by other participating carriers.  It is desirable that such undercharging can, if the need arises, be dealt with under the USO process.

It is intended that the principles determined by the Minister be applied by the universal service provider in calculating its net universal service cost and preparing its levy credit claim.  The ACA will be required to examine the correctness of claims having regard to such principles as have been formulated.

Clause 60 – ACA determinations about working out a universal service provider’s net universal service cost

This provision provides a mechanism to enable the ACA to give a universal service provider guidance as to how it is to work out its net universal service cost under subclause 57(2).

Clause 60 enables the ACA to make written determinations for or in relation to specifying methods of calculating an amount of operating costs, depreciation allowances, and opportunity costs of capital in the definition of avoidable costs or an amount in relation to the definition of revenue forgone (subclause 57(2)).  The ACA may also make determinations specifying amounts for the purposes of subparagraph (b)(iv) of the avoidable costs definition (paragraph 60(1)(b)).  The determination is only to be made with the Minister’s consent and following consultation with participating carriers and is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901.  

Clause 61– Application of determinations under section 60

Subclause 61(1) provides that, except so far as the contrary intention appears in a determination under clause 60, a provision of the determination applies in relation to the first financial year which ends after the provision commences and each later financial year.  Thus a provision of a determination applies in the financial year in which it commences and each later year. 

Subclause 61(2) prevents a provision of a determination under clause 61 from applying in relation to a financial year ending before the provision commences, subject to the ‘election’ rule in subclause 61(3).  Thus, unless a person elects otherwise, a provision of a determination cannot be applied retrospectively.

Subclause 61(3) enables a person to elect to have a provision of a determination apply to an earlier financial year and subclause 61(4) makes the election take effect accordingly.  This enables a person to have an ACA determination apply to it in relation to a financial year when it would not otherwise apply to it.  It may choose to do so, for example, because it would favour it in its calculation of its net universal service cost.

Subclause 61(5) defines ‘commencement’ for the purposes of clause 61.  This is the time when an original provision or, if the provision has been varied, the variation, took effect.

Clause 62 – Participating carriers must lodge returns of eligible revenue

The information provided under clause 62 will be used by the ACA, along with the net universal service cost information provided under clause 54 (and calculated in accordance with clause 57), to calculate by means of the formula in clause 67, the levy debits of participating carriers.  Levy debits in turn are used to determine participating carriers’ liabilities and entitlements.

Clause 62 requires that a participating carrier for a financial year must lodge with the ACA a return of its eligible revenue for that financial year in a form approved by the ACA within 90 days of the end of the financial year (subclauses 62(1) and (2)). ‘Eligible revenue’ is defined in clause 17.

Subclause 62(3) sets out details that must be included in the return, namely the carrier’s eligible revenue, details of how that eligible revenue was worked out and any other information required by the form approved by the ACA.

Subclause 62(4) makes a person who intentionally or recklessly contravenes subclause 62(1) guilty of an offence.  The lodgement of returns is subject to an offence provision because a person who is a participating carrier in relation to a financial year need not be a carrier at the time it is required to lodge its eligible revenue return and would not therefore be subject to the general enforcement provisions of the Telecommunications Act 1997.  Contravention of the provision is an offence, reflecting the importance of ensuring that all participating carriers contribute to the levy calculation process and USO funding.

Subclause 62(5) enables the ACA to require statements in a return to be verified by statutory declaration.

The claim must be accompanied by a report by an approved auditor in a form approved by the ACA stating that the auditor has had sufficient access to the person’s records in order to audit the claim, that the auditor has audited the return and containing a declaration of the auditor’s opinion, being a declaration in the terms specified in the form approved by the ACA (subclause 62(6)).  ‘Approved auditor’ is defined in clause 18.  The auditing requirement is intended to provide another check on the appropriateness of returns and place a greater onus on participating carriers to ensure their returns are correct.

Clause 63 – ACA may inquire into the correctness of a claim or return

Clause 63 enables the ACA to make whatever inquiries it thinks necessary or desirable to determine the correctness of a levy credit claim or eligible revenue return.  Information and documents obtained as a result of such inquiries are to be used by the ACA in making its assessment of liabilities and entitlements (subclause 64(4)).

Clause 64 – ACA to assess liabilities and entitlement

Subclause 64(1) requires the ACA to make a written assessment for the purposes of Part 2 for each financial year.

Subclause 64(2) identifies matters that the assessment must set out in relation to each participating carrier in relation to that financial year.

Subclause 64(3) identifies matters that the assessment must set out in relation to each universal service provider in relation to that financial year.

Subclause 64(4) sets out the basis on which the assessment must be made.  The assessment must be made on the basis of the levy credit claims lodged under clause 54, eligible revenue returns lodged under clause 62, information and documents obtained by the ACA because of its inquiries under clause 63, and any other information or documents the ACA has and thinks relevant to making the assessment.  This subclause is important because it makes it clear that the ACA does not need to rely solely on the information provided to it in claims and returns to make its assessment.  The clause gives the ACA considerable discretion to take into account the findings of its inquiries and other relevant matters in making its assessment.

Clause 65 – Explanation to the Minister if assessment not made within 270 days

Clause 65 provides the ACA with guidance on the period it should take to complete its USO assessment.  (Note that assessments can be amended).  This addresses industry concerns in relation to arrangements under the Telecommunications Act 1991 about the assessment period being open-ended and about delays in the ACA finalising assessments.

If the ACA has not made its original assessment in relation to a financial year within 270 days after the end of the financial year (subclause 65(1)), the ACA must give the Minister a written statement explaining why the ACA has not made its assessment within that 270 day period.  With universal service providers and participating carriers having 90 days to lodge levy claims and eligible revenue returns, this effectively gives the ACA 180 days to assess the information provided to it and make its assessment.  

If the ACA is unable to meet this initial deadline, it will be required to explain the reason to the Minister.  This provides a discipline on the ACA and enables the Minister to initiate any necessary remedial action that may be appropriate.  The ACA may not be able to meet the deadline for a variety of reasons, for example, because the ACA is awaiting information or requires clarification on certain costing issues.  However, should the ACA pass the 270 day deadline, it is not intended it be subject to further deadlines.  If needed, the Minister could direct the ACA (section 12 of the Australian Communications Authority Act 1997) to complete its assessment within a particular additional period should it fail to meet the 270 day deadline.  

It is intended that assessment and payment of levy should, at most, take no longer than 360 days from the end of the financial year to which it relates.  An assessment for one financial year should be completed before the assessment process for the next financial year commences.  This requires assessments to be completed within 330 days given that participating carriers then have 28 days under clause 74 to pay their levy liabilities.  It is also a reasonable expectation on the part of universal service providers that their entitlements be assessed and reimbursed no later than 12 months after the financial year in which they were incurred.  These matters would be taken into account in response to an ACA explanation of why it has not met the 270 day deadline.

The legislation does not specify that the assessment must be completed within a fixed period because of the practical and legal difficulties that might arise if that deadline could not be met.  For example, if an assessment had to be completed within an inflexible deadline of, say, 360 days, a court may hold the assessment to be invalid if this did not occur.  This would not be helpful to universal service providers whose interests are best served by having the assessment completed as soon as possible.

Clause 66 – Amendment of assessments

Clause 66 is intended to make it clear that an original assessment, once made, can be varied.

The ACA may amend its assessment under clause 64 by making such alterations and additions as it thinks necessary, even if levy credits or levy has been paid in respect of the assessment (subclause 66(1)).  Unless the contrary intention appears, an amended assessment is taken, for the purposes of Part 2, to be an assessment under clause 64.

An assessment of USO liabilities and entitlements is of the nature of a tax assessment and like an income tax assessment can be amended.  To avoid doubt, this provision makes it clear that an assessment can be altered.  For example, the ACA may become aware of new information that would substantially alter the assessment.  This may particularly occur where universal service providers or participating carriers challenge elements of the ACA assessment.  It is not intended that uncertainty about an assessment postpone the recovery of levy or payment to universal service providers.  It is intended that such transactions as specified in the legislation take place as provided for.  If an assessment is subsequently amended, these payments would be adjusted as necessary.  Again, this is similar to processes in relation to income tax assessments.

It is not intended that the ACA would amend an assessment for insignificant reasons.  As a matter of course, the ACA would have to act reasonably in deciding to amend an assessment and would be expected to take into account whether any new evidence or knowledge was of sufficient importance to justify amendment of the original assessment.

Clause 67 – Levy debit of a participating carrier for a financial year

Clause 67 sets out the formula for determining each participating carrier’s levy debit, that is the amount it must contribute to the overall funding for the USO, and how elements of that formula are arrived at.

Subclause 67(1) provides that a participating carrier’s levy debit for a financial year is worked out using the formula:

	Contribution factor x Total net universal service cost.

‘Contribution factor’ has the meaning given to it in subclause 67(2).  ‘Total net universal service cost’ means the total net universal service costs of all the universal service providers in relation to the financial year.

Subclause 67(2) provides that the ‘contribution factor’ depends on whether a determination in relation to determining the contribution factor is in force under subclause 67(3).  If such a determination is in force, the contribution factor is worked out in accordance with that determination.  If there is no determination, the contribution factor is worked out in accordance with the formula:

	Carrier’s eligible revenue
	Total eligible revenue.

In the formula, ‘carrier’s eligible revenue’ means the participating carrier's eligible revenue for the financial year and ‘total eligible revenue’ means the total eligible revenue for the financial year of all the participating carriers in relation to the financial year.  

Application of this formula means that participating carriers’ contributions to the total net universal service cost are proportional to their share of total eligible revenue.

The amounts used for total net universal service cost, carrier’s eligible revenue and total eligible revenue would be taken from the ACA’s assessment under clause 64, which reflect the amounts involved after the ACA has inquired into the correctness of claims and returns (see clause 63) and taken the results of its inquiries and any other relevant information into account in completing its USO assessment (paragraph 64(4)(c) and (d)).

Subclause 67(3) provides an alternative mechanism for determining the contribution factor for the purposes of the levy debit formula in subclause 67(1).  It enables the Minister to make a written determination specifying a method of ascertaining the contribution factor for the purpose of the levy debit formula.  Such a determination, however, has no effect unless each person who was a participating carrier immediately before the determination was made gave written consent to the making of the determination.  A copy of such a determination must be published in the Gazette for public information purposes (subclause 67(4)).  The determination is not a disallowable instrument because it is made with the agreement of all parties that it affects.

Like the Minister’s related ability to determine alternative mechanisms for ascertaining a universal service provider’s net universal service cost (subclause 57(6)), the ability of the Minister to determine an alternative methodology for determining a contribution factor is designed to enhance the flexibility of the legislation, providing scope for participating carriers to agree to alternative cost sharing mechanisms where they consider they are desirable.  This may occur, for example, if all participating carriers agree that there is a preferable approach to relying on eligible revenue, which may result in business costs by requiring special record keeping.  

The requirement that all persons who are participating carriers immediately before the making of a determination must agree to an alternative mechanism provides a safeguard against any individual carrier being disadvantaged by a move away from the default methodology based on eligible revenue.  

Clause 68 – Levy debit balance of a participating carrier for a financial year

Clause 68 sets out the means of determining the levy debit balance of a participating carrier.  If a person’s levy debit determined under clause 67 exceeds the person’s net universal service cost, the person has a levy debit balance.  The amount of that balance is the amount by which the person’s levy debit exceeds its net universal service cost.  If the person’s share of the total net universal service cost exceeds its own net universal cost (the cost it has incurred in fulfilling its obligations under the USO) the person is liable to pay levy equal to the amount of its levy debit.

Under the Telecommunications (Universal Service Levy) Act 1997, levy is imposed on a levy debit balance.  The amount of the levy is equal to the amount of the levy debit balance.

Clause 69 – Levy credit balance of a universal service provider for a financial year

Clause 69 sets out the means of determining the levy credit balance of a participating carrier.  If a person’s net universal service cost exceeds the person’s levy debit determined under clause 67, the person has a levy credit balance.  The amount of that balance is the amount by which the person’s net universal service cost exceeds its levy debit.  If the person’s share of the total net universal service cost is less than its net universal service cost (the cost it has incurred in fulfilling its obligations under the USO) the person is entitled to receive levy equal to the amount of its levy credit.

Clause 70 – Publication of assessment

Clause 70 requires the ACA, as soon as practicable after making an assessment under clause 64, to publish a copy of its assessment in the Commonwealth Gazette and give a copy to each participating carrier.  If an assessment is amended under clause 66, the amended assessment will also need to be published and given to participating carriers as under subclause 66(2) such an assessment is to be taken to be an assessment under clause 64.

Clause 70 ensures the assessment is placed in the public domain for information and scrutiny.  Under clause 74, levy under the assessment becomes due and payable on the 28th day after the ACA gives a copy of the assessment to a participating carrier.

The period for payment of levy of 28 days gives participating carriers a reasonable period in which to organise funds to pay their levy liabilities.  This recognises that levy may involve substantial amounts and that finalisation of an assessment may be unpredictable.

Subdivision D—Disclosure by the ACA of information about decisions relating to net cost areas and assessments

Subdivision D enables members of the public and participating carriers to obtain from the ACA information about the basis on which the ACA has made its assessment under clause 64 and information about how the ACA has worked out that assessment.  The information is intended to be available to the greatest extent possible without undue damage being caused to a carrier’s interests by the disclosure of confidential commercial information (see paragraph 9(d) of the Bill).  The purpose of the Subdivision is to open the assessment process to scrutiny by both the public and participating carriers.  

Clause 71 – Public may request information

Clause 71 enables a person to request information about an assessment, namely information on which the assessment is based and about the methodology, and requires the ACA to comply with the request except in relation to certain information.  The ACA must not make available information obtained from, or relating to, a universal service provider that could reasonably be expected to cause substantial damage to the universal service provider, or information prescribed in regulations.

Clause 72 – Request for information that is unavailable under section 71

Clause 72 enables a universal service provider or a participating carrier in relation to a financial year to request the ACA to provide specified information, being information the ACA cannot provide under clause 71, and sets out rules in relation to the ACA’s compliance with the request.  

Clause 73 – How the ACA is to comply with a request

Clause 73 sets out how the ACA is to comply with a request for information under clause 71 or 72 in terms of the manner in which it is to provide the information requested to the requesting party.

Subdivision E—Collection and recovery of levy

This Subdivision sets out the arrangements for the collection and recovery of levy payable by participating carriers.

Clause 74 – When levy payable

Clause 74 makes levy due and payable by a participating carrier 28 days after the ACA has given it an assessment under clause 70.

Clause 75 – Levy a debt due to the Commonwealth

Clause 75 makes levy that is due and payable recoverable in a court of competent jurisdiction as a debt due to the Commonwealth.  

Clause 76 – Validity of assessment

Clause 76 provides that the validity of an assessment under clause 64 is not affected by a contravention of this Act.  Clause 76 is intended to include a contravention by either the ACA or a participating carrier.  It is intended to prevent the validity of an assessment being challenged on a minor technical matter or a failure of procedure.

Clause 77 – Evidence of assessment

Clause 77 creates a presumption that a copy, or purported copy, of a Commonwealth Gazette setting out what purports to be a copy of an assessment does set out a copy of the assessment and that the ACA has duly made the assessment and the details set out are correct.

Clause 78 – Onus of establishing incorrectness of assessment

Clause 78 puts the onus of establishing that an assessment under clause 64 is incorrect on the party that asserts that.  Placing the onus on this party recognises the numerous checks under the Part designed to ensure the accuracy of the USO process.  A person challenging an assessment has the benefit of the information disclosure provisions of Subdivision D.

Clause 79 – Refund of overpayment of levy

Clause 79 relates to an overpayment of levy by a participating carrier.  If a participating carrier overpays levy, the overpayment is to be refunded.  This provision will deal with overpayments that come to light as a result of an amendment of an assessment.

Clause 80 – Cancellation of certain exemptions from levy

Clause 80 cancels the effect of a provision of another Act that would have the effect of exempting a person from liability to pay levy, except if the provision of the other Act is enacted after the commencement of this clause and refers specifically to levy imposed by the Telecommunications (Universal Service Levy) Act 1997.

The purpose of this provision is to set out the circumstances in which a provision of another Act can cancel a person’s liability to pay levy.  It is particularly aimed at preventing the unintentional exemption from levy of Commonwealth authorities that can be made liable to taxation by law of the Commonwealth (see clause 81).  Such authorities would remain liable for levy unless legislation specifically gave them exemption from levy and referred specifically to the Telecommunications (Universal Service Levy) Act 1997.

Clause 81 – Commonwealth not liable to levy

Clause 81 provides that the Commonwealth is not liable to pay levy and states that a reference in this clause to the ‘Commonwealth’ includes a reference to an authority of the Commonwealth that cannot, by law of the Commonwealth, be made liable to taxation by the Commonwealth.  This is consistent with usual Constitutional practice that the Commonwealth does not impose tax on itself.  

Subdivision F—Distribution of levy

Subdivision F establishes the Universal Service Reserve into which amounts equal to levy payments are paid by participating carriers and from which levy payments are paid to universal service providers.  The Subdivision also provides for the payment of levy entitlements.

Clause 82 – Universal Service Reserve

Clause 82 provides for the continuation of the Universal Service Reserve presently existing under the Telecommunications Act 1997.  This Reserve is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 administered by the Department of Communications, Information Technology and the Arts.  The purposes of the Reserve are set out in clause 84.

Clause 83 – Payments into Universal Service Reserve

Clause 83 lists the types of payments that must be paid into the Reserve.  Note that amounts equal to overpayments of levy recovered from a universal service provider can be paid into the Reserve (paragraph (d)).

Clause 84 – Purposes of Universal Service Reserve

Clause 84 sets out the purposes of the Reserve.

Under paragraph 84(1)(d), one of the purposes of the Reserve is to reimburse the Commonwealth for the costs or expenses it or the ACA incurs in administering the Telecommunications (Universal Service Levy) Act 1997 and Division 6 of Part 2.  The Minister administering the Financial Management and Accountability Act 1997, currently the Minister for Finance and Administration may, from time to time, determine the amount of such a reimbursement (subclause 84(2)).  Under subclause 84(3), however, the total of amounts reimbursed for these purposes must not exceed the total of the amounts paid into the Universal Service Reserve under paragraphs 83(b) and (c), namely amounts appropriated by law for the Universal Service Reserve’s purposes and amounts equal to interest from the investment of money in the Universal Service Reserve.  These amounts are in addition to amounts equal to amounts of levy paid under Part 2 which are paid out to universal service providers.  These amounts are paid under paragraph 83(a).  Any reimbursements to the Commonwealth or the ACA under paragraph 84(1)(d) would not therefore be deducted from levy to be paid to universal service providers. 

Clause 85 – Levy distribution to a universal service provider

Clause 85 provides that if a person has a levy credit balance because of clause 69 for a financial year, an amount equal to the amount of that balance is payable to that person out of the Reserve.  It is by this means that a universal service provider who has incurred a loss in fulfilling its USO greater than its share of the total net universal service cost is compensated for the excess loss it has incurred.

Clause 86 – Levy not to be distributed until paid

Clause 86 prevents monies being paid from the Reserve until the ACA has made its assessment under clause 64 for the financial year and each participating carrier in respect of which levy was assessed has paid its levy.

This provision, in general, ensures no payments are made from the Reserve in relation to a financial year until that year’s assessment is complete and the levy assessed as necessary to pay universal service providers has been collected. There would be no money in the Reserve available to pay the universal service providers until the levy has been paid by carriers with levy debits.  Subdivision G does, however, provide for the ACA to make an advance on account of payments that may become payable to a universal service provider under clause 85.

Clause 87 – Recovery of overpayments

Clause 87 is designed to enable an amount of levy overpaid to a universal service provider under clause 85 to be recovered.  Such an overpayment may come to light where an amended assessment recognises that a universal service provider is entitled to less levy than a previous assessment stated.

For the purposes of the clause, an ‘overpaid amount’ is so much of an amount paid to a universal service provider under clause 85 as represents an overpayment (subclause 87(1)).  

Like levy itself (clause 75), an overpaid amount is a debt due to the Commonwealth (subclause 87(2)) and may be recovered by the Commonwealth by action in a court of competent jurisdiction (subclause 87(3)).  This clause provides a mechanism for the Commonwealth to pursue bad debts of universal service providers that fail to repay overpaid levy.

An overpaid amount may be deducted from one or more other payments payable to the person (for example, further instalment of levy, including for subsequent financial years).  Where this is done, the other amounts are taken to be paid in full (subclause 87(4)).

Subdivision G—Advance on account of distribution of levy

Subdivision G provides a mechanism for universal service providers to be paid, in special circumstances, advances on account of levy payments that may become payable to them.  This provision is designed to provide a means of ameliorating possible disadvantage a universal service provider may suffer by not having access to levy payments.  

It is envisaged advances would generally be paid where an assessment has been made and most, but not all, levy has been paid.  Under clause 86, levy cannot be distributed until it is fully paid.  The mechanism for making an advance provides a means of making some funds available to a universal service provider in advance of all levy being paid and thus being able to be distributed to universal service providers.  Any advances which turn out to be excess must be repaid.

This mechanism recognises, amongst other things, that universal service providers will generally be carrying substantial losses for up to 24 months (ie. the financial year to which their claim relates plus an assessment period of up to 12 months) and it is appropriate that they have prompt access to their levy entitlements.  

Clause 88 – Advance on account of distribution of levy 

Clause 88 provides that if the ACA is satisfied that, because of special circumstances, it is appropriate to do so, the ACA may, on behalf of the Commonwealth, make an advance on account of payments that may become payable to a person under clause 85 in relation to a financial year.  The making of an advance still depends upon monies already having been paid into the Universal Service Reserve.  

Clause 89 – Repayment of excess advances

Clause 89 provides for the repayment of excess advances made under clause 88.

If a person has received a total amount, by way of advances on account of payments that may become payable to the person under clause 85 in relation to a particular financial year, and that total amount is greater than the amount that became payable to the person under clause 85 in relation to that financial year, the person is liable to pay to the Commonwealth the amount of the excess.

If a person is liable to pay an amount to the Commonwealth under subclause (1), the amount may be recovered, as a debt due to the Commonwealth, by action in a court of competent jurisdiction; or the amount may be deducted from any other amount that is payable to the person under this Part, and if the amount is so deducted, the other amount is taken to have been paid in full to the person.

Subdivision H—Levy guarantee

Subdivision H is designed to ensure that participating carriers that are new to the Australian telecommunications market will be able to pay levy when it falls due, thereby ensuring the burden of USO losses are shared amongst industry participants.

In summary, Subdivision H requires certain participating carriers to obtain guarantees from third persons in respect of the discharge of their liability to pay levy.  In the event that a participating carrier is unable to pay its levy, it will be the responsibility of the guarantor to pay the levy.  This mechanism is seen as particularly important in the post-1997 telecommunications market where there are increased risks of new entrants leaving the market before paying levy contributions.  The guarantee is particularly intended to cover the circumstance where a participating carrier becomes insolvent before discharging its levy liability, either before it receives its assessment under clause 64 or before levy becomes due for payment under clause 74.

Telstra, Optus and Vodafone as established carriers at 1 July 1997 were exempted from the levy guarantee requirements.  The ACA will also have the discretion to exempt persons from the levy guarantee requirements subject to certain conditions.

While it is unlikely in practice, it is conceivable that a party that has been exempted from the levy guarantee requirements may fail to discharge its levy liabilities, particularly because it has become insolvent.  If this situation were to eventuate, it is intended that the ACA would amend the relevant assessment to exclude the contribution of the defaulting participating carrier and determine new levy credit and debit balances for the remaining participating carriers.  At the same time, if it had not already done so, the Commonwealth would initiate action under general insolvency law to recover the defaulting party’s levy.  (Under clause 75, levy is a debt payable to the Commonwealth.)  Should the Commonwealth succeed in recovering any levy from the insolvent carrier, it would be reimbursed to other participating carriers according to a further amendment of the original assessment.

Clause 90 – Levy guarantee

Clause 90 applies to a person (‘the first person’) at a particular time if the first person is a carrier at that time, or the first person ceased to be a carrier during the 2‑year period that ended at that time (subclause 90(1)).  This provision applies the levy guarantee requirement to a person who is a carrier or was a carrier in the preceding two years.  The two year period ensures that even if a person ceases to be a carrier it will still be required to have a levy guarantee for the two year period it may take for it to be assessed for levy.  For example, a person might cease to be a carrier on 1 August 1999 but the levy assessment process applicable to it would not commence until 
1 July 2000 and may not be completed until 30 June 2001.

The first person must ensure that, at that time, there is in force a guarantee given by a third person in respect of the discharge of the first person’s liability (if any) for levy (subclause 90(2)).

Subclause 90(3) requires that the third person, the guarantor, must be:

•	a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959); or

•	the Reserve Bank of Australia; or

•	a body corporate formed under the law of a State or Territory to carry on the business of banking within Australia; or

•	a body corporate whose sole or principal business is the provision of financial accommodation to other persons, where the body corporate is registered as a financial institution under the Financial Corporations Act 1974; or

•	a body corporate accredited in writing by the ACA for the purposes of paragraph 90(3)(e).

Amongst other things, it is envisaged that the ACA would be able to accredit corporations with substantial established businesses that are parents to corporations establishing operations as carriers in Australia to be guarantor for these corporations.  For example, if a person was a subsidiary of a major overseas telecommunications company, it is intended that the ACA could accredit that parent company to be the person’s guarantor.

A reference in clause 90 to a ‘carrier’ refers only to a participating carrier (ie. it does not include a reference to a person who, under subclause 16(2), is exempt from clause 16).

Clause 91 – Exemptions from levy guarantee

Clause 91 sets out the circumstances in which a participating carrier is exempt from the levy guarantee requirements.

Telstra, Optus and Vodafone are exempted from the levy guarantee requirements on the basis that they held a general telecommunications licence or a public mobile licence, that was in force under the 1991 Act on 30 June 1997 (subclause 91(1)).  They have a standing exemption because they are established market participants.

In addition, subclause 91(2) enables the ACA to make a written determination exempting a specified person from the levy guarantee requirements.  The ACA can only make such a determination if:

•	in the ACA’s opinion, there is no reasonable likelihood that the person will incur a liability for levy; or

•	both the person has held a carrier licence for at least 2 years; and in the ACA’s opinion, there is no significant risk that the person will fail to discharge fully the person’s liability for levy.

A determination has effect accordingly (subclause 91(3)).

This provision is intended to provide a mechanism for exempting a person from the levy guarantee requirement (and its attendant administrative and cost burdens) where there is no significant risk that the person will fail to pay their levy liability.  The first circumstance is where a person is unlikely to incur a levy liability, for example, because it is a universal service provider and is likely to have a levy credit balance.  The second circumstance is where the person has been licensed for two years and the ACA is of the opinion there is no significant risk of them failing to pay their levy, for example, because they have established a robust market presence or have the clear backing of a significant parent company.

Clause 92 – Compliance with levy guarantee obligations

A person must not contravene clause 90 or in any way, directly or indirectly, cause a person to contravene the levy guarantee requirements.  Subclauses 92(1) and (2) are civil penalty provisions.  Part 31 of the Telecommunications Act 1997 provides for pecuniary penalties for breaches of civil penalty provisions.

Part 3—The National Relay Service

Part 3 of the Bill deals with the operation of the National Relay Service (NRS).  The NRS is a service that provides people who are deaf or hearing or speech impaired, with access to the standard telephone service on terms, and in circumstances, that are comparable to those on which other Australians have access to a standard telephone service.

Part 3 continues in operation the arrangements that have applied from 1 July 1998 under which the NRS is provided by a person, who may or may not be a carrier, under a contract with the Commonwealth.  The NRS is currently provided by Australian Communication Exchange Limited.  The current NRS contract includes an NRS Service Plan, outlining the services to be provided from 1 July 1998.  The NRS Service Plan also outlines how the service will adapt and implement new technology as it becomes available, such as speech to speech for those speech impaired people who find text communications difficult.  

Division 1––Introduction

Clause 93 – Simplified outline

Clause 93 sets out a simplified outline of Part 3 to assist readers.

Clause 94 – Definitions

Clause 94 sets out key definitions for the purposes of Part 3.

Division 2––The National Relay Service

Clause 95 – The National Relay Service (the NRS)

People who are deaf or hearing or speech impaired currently have access, via the NRS, to the standard telephone service on terms comparable to other Australians for communications with the speaking and hearing community.  The NRS is provided by Australian Communication Exchange Limited under a contract with the Commonwealth.

Subclause 95(1) describes the NRS.

Subclause 95(2) provides for the NRS provider to prepare service plans for the NRS.  NRS Service Plans will include the NRS features, performance standards, timetable for future provision of services, outreach, complaints mechanism, staff training and reporting mechanisms.  The NRS Service Plan will be part of the NRS contract.

The Minister will be required to arrange for the NRS Service Plans to be published in whatever manner the Minister considers appropriate (subclause 95(3)). 

It is also intended that, as technology advances, new features may be added to the NRS, such as speech to speech for those speech impaired people who find text communications difficult.  

Clause 96 – Publication of costs of providing the NRS		

Under the terms of the contract between the Commonwealth and Australian Communication Exchange Limited, the provision of the NRS is required to be fulfilled as efficiently and economically as practicable.  This recognises that the NRS involves a significant allocation of resources and maximum effort should be made to fulfil all the requirements of the service at the least possible cost.

The quality and cost of provision of the NRS was assessed when the current NRS provider was selected through open and competitive tender.  It is intended that information about the cost of providing the NRS should be available to the carriers and the public, without causing undue damage to the NRS provider’s interests.

Under the terms of the NRS contract, the NRS provider is required to estimate the total cost of the NRS service for the coming year.  If needed, this information could be made available to the carriers to assist their budgeting of levy payments.

Subclause 96(1) facilitates carrier levy payments so funds are available to pay the NRS provider.  The NRS provider is required to calculate an estimate for the total cost of providing the NRS for the coming levy quarter, in accordance with the NRS contract, and for the estimate to be provided to the Minister before the start of each levy quarter, for publication in the Commonwealth Gazette.  

Subclause 96(2) requires the NRS provider to calculate the total cost of NRS provision for a levy quarter, in accordance with the NRS contract, and for this to be provided in a written statement to the Minister within 30 days after the end of a levy quarter, for publication in the Commonwealth Gazette.  This information is to be reconciled against the estimate for that quarter to determine the carriers’ levy payment.

Clause 97 – ACA reports and advice about NRS service plans

Subclause 97(1) recognises that the NRS provider must be held accountable against the NRS Service Plan, which is part of the agreed NRS contract.  The ACA is required to monitor all significant matters relating to the performance by the NRS provider to assess compliance with the NRS Service Plan.  Any failure by the NRS provider to comply with the NRS Service Plan will be addressed in accordance with the NRS contract.

Subclause 97(2) provides for the ACA to give a written report to the Minister about the NRS provider’s performance under the NRS Service Plan.  This report will be required to be given as soon as practicable after the end of each financial year.

Subclause 97(3) provides for the ACA report to be tabled in both Houses of Parliament within 15 sitting days after receiving the report.

Subclause 97(4) provides for additional reports or advice requested by the Minister in relation to the NRS Service Plan to be provided by the ACA.

The ACA has established an advisory council to facilitate feedback and monitor conduct of the NRS provider and to assist the ACA to conduct an annual forum to examine NRS provider compliance with the NRS Service Plan and necessary changes to the plan.

Subclause 97(5), in conjunction with subclause 2(2), ensure that Part 7A of the Telecommunications Act 1997 will apply in relation to the 1998-1999 financial year and that Part 3 of this Bill will apply to subsequent financial years.

Division 3––The NRS Levy

Division 3 sets out who is liable to pay the NRS levy, the frequency of NRS levy payment by the participating carriers, and the mechanism by which the total NRS levy is calculated and apportioned between the participating carriers. 

Clause 98 – Levy quarters

Clause 98 provides that NRS levy is to be paid by participating carriers each quarter, starting in the 1999-2000 financial year.  Part 7A of the Telecommunications Act 1997 will apply to the 1998-99 financial year.  This will continue existing NRS funding arrangements and ensure the NRS provider does not have to carry the additional cost of funding a considerable line of credit.  Payments to the NRS provider are paid around the middle of each quarter in which services are being provided.

Clause 99 – Persons liable to pay levy (taxpayers)

It is the intent that the carriers should fund the NRS therefore, the participating carriers who are operating during the financial year in which the quarter occurs, and are covered by the most recent assessment under clause 64 made before the start of that quarter, will be liable to pay their share of the NRS levy.

Clause 100 – Amount of levy

Currently, monthly contract payments to the NRS provider are calculated on the number of call minutes for that month multiplied by the agreed contractual rate per minute.  The contractual rate per minute is a sliding scale to allow for the economies of scale in the number of call minutes provided.  This method of payment provides for only those call minutes used by the target community to be costed, however, as a consequence payments are variable in accordance with the call minutes used each month, therefore estimates are difficult to predict accurately.

The following sequence of events is intended to overcome any variance in the estimated cost to the actual cost for a given quarter:

•	The NRS provider submits to the Minister an estimate of the coming quarter’s cost, calculated in accordance with the contract, before the beginning of the quarter.

•	Within 30 days after the beginning of the next quarter the NRS provider is required to submit to the Minister the actual cost of the NRS for the previous quarter, calculated in accordance with the contract.

•	Any shortfall or surplus on the actual cost of the NRS for the previous quarter will be added to, or subtracted from, the estimate of the current quarter, giving a total NRS levy payable for that quarter.

•	The information about the NRS provider’s estimated cost for the current quarter and the actual cost for the previous quarter will be publicly available (Gazetted) to enable carriers to do their own assessment of their levy liability. 

•	Levy contributions from participating carriers are due on the fourteenth day of the second month in the quarter.

•	The NRS provider will be paid by the ACA on receipt of the NRS levy payable from the participating carriers.

Subclause 100(2) provides for calculation of a participating carrier’s share of the total NRS cost.

Subclause 100(3) provides key definitions for use in clause 100.

Clause 101 – Payment of levy

Subclause 101(1) provides that NRS levy is payable by a participating carrier to the ACA on behalf of the Commonwealth.  

Subclause 101(2) provides for the frequency of NRS levy payment.  Each participating carrier is required to pay its share of the NRS levy to the ACA on or before the fourteenth day of the second month of the quarter.

Subclause 101(3) provides for the consequences of non-payment of the NRS levy.  Should the NRS levy not be paid by a participating carrier, the ACA, on behalf of the Commonwealth, may take steps to recover the debt in a court of competent jurisdiction.

Division 4 – The NRS Reserve

Division 4 provides for the framework required for the ACA to collect the NRS levy and make payments to the NRS provider.

Clause 102 – The NRS Reserve

Subclause 102(1) continues in existence the existing NRS Reserve so that the ACA can receive monies from the participating carriers.

Subclause 102(2) provides for the NRS Reserve to be a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997.

Subclause 102(3) provides for the ACA to make payments from the NRS Reserve to the NRS provider in accordance with the NRS contract.

Subclause 102(4) provides for the amounts of the NRS levy, and interest made on that money, that are credited to the Consolidated Revenue Fund to be transferred to the NRS Reserve.

Part 4—Continued access to untimed local calls

Part 4 of the Bill provides for residential/charity customers who had access to untimed local calls, whether voice or data, immediately before 20 September 1996 to continue to have access to them.  It further provides for other customers who had access to untimed local calls for voice telephony immediately before 20 September 1996 to continue to have access to them.

This Part requires carriage service providers who charge customers located in standard call zones for eligible local calls to offer those customers the option of having local calls charged for on an untimed basis.  

It does not require carriage service providers who offer other standard telephone services (eg. long-distance calls) but not local calls to commence offering local calls.  However, where a customer in a traditional local call zone is supplied with a standard telephone service by the relevant universal service provider for the customer, the untimed local call obligation applies to eligible local calls made using that service.  This ensures that customers continue to have access to local calls which are untimed.

Clause 103 – Simplified outline

Clause 103 provides a simplified outline of Part 4 of the Bill to assist readers.

Clause 104 – Requirement to provide an untimed local call option

A carriage service provider who charges an eligible customer for eligible local calls made using a standard telephone service supplied to that customer must give the customer an untimed local call option for those calls.

It does not matter who supplies the standard telephone service to the customer.  In particular, if a carrier supplies the service, but the customer deals with a switchless reseller, the clause requires that in relation to any eligible local calls the customer is charged for by that reseller, the customer should receive the option of having them charged for on an untimed basis.

Clause 105 – Untimed local call option

A customer receives an untimed local call option if, and only if, the customer may choose, both at the time of connection and at any subsequent time, to have the charges for eligible local calls on that service worked out on an untimed basis.

Subclause 105(2) provides that charges for eligible local calls will be worked out on an untimed basis if, and only if, the charges for those calls are worked out by reference to the number of such calls made during a particular period, regardless of how long each call lasted.

Clause 106 – Eligible local calls

An eligible local call is one made using a standard telephone service supplied to an eligible customer between two points within the relevant applicable zone; and which:
•	in the case of a residential/charity customer, is of a kind that, immediately before 20 September 1996, a general carrier offered to supply, or supplied, on an untimed basis (and therefore will include data calls made using a standard telephone service that were offered at the relevant time on an untimed basis); or

•	in the case of other customers, is a voice call or the equivalent for an end-user with a disability, which is of a kind that immediately before 20 September 1996, a general carrier offered to supply, or supplied, on an untimed basis; or

•	in any case, is made using a standard telephone service supplied to that customer in fulfilment of the universal service obligation.

Calls to or from a public mobile telecommunications service (PMTS) or satellite phone do not attract the untimed local call obligation (except when the PMTS or satellite services involved are being supplied to fulfil the universal service obligation).

In determining the meaning of ‘kind’, reference should be made to the functionality of the service and the technology used to supply it.  Therefore, ISDN services are not of the same ‘kind’ as existing non-ISDN services which are supplied on an untimed basis.  PMTS and satellite services are not of the same ‘kind’ as existing public switched telephone network services or cable services.

However, PMTS and satellite services may have been supplied on an untimed basis in certain cases (eg. weekends) immediately before 20 September 1996.  An explicit exclusion for non-USO PMTS and satellite services is included for this reason.  (Nothing in this Part prevents a carriage service provider from choosing to offer untimed calls on PMTS or satellite services to attract customers.)

‘Residential/charity customer’ is defined by subclause 106(4) to mean a residential customer or a customer that is a charitable body or organisation or a welfare body or organisation.

Clause 107 – Benefits for customers outside standard zones

Clause 107 enables regulations to be formulated to give benefits to Australian customers of a carriage service provider that are not in a standard zone as defined by clause 108.  These regulations may impose requirements on carriage service providers with which they must comply (subclauses 107(4) and (5)).

The benefits are to relate to charges for calls made using a standard telephone service supplied to the customer and are to be comparable to the benefits given to eligible customers under clause 104 (which deals with the requirement to provide an untimed local call option) (subclause 107(2)).  

For the purposes of subclause 107(2), a comparison of benefits is to have regard, among other things, to the ability to make calls to essential business and community services on an untimed basis (subclause 107(3)).  Charges for particular calls will be worked out on an untimed basis if, and only if, the charges for those calls are worked out by reference to the number of such calls made during a particular period, regardless of how long each call lasted (subclause 107(7)).

The Minister is to take all reasonable steps to ensure that, at all times after the commencement of clause 107, such regulations are in force (subclause 107(6)).

Clause 108 – Standard zones

Clause 108 defines ‘standard zones’, which are the traditional local call zones as they stood immediately before 1 July 1991.

Clause 109 – Applicable zones

The ‘applicable zone’ is the zone within which calls are ‘local’ calls.  The default ‘applicable zone’ is the relevant ‘standard zone’ in which that customer is situated.  

However, a different applicable zone may apply in the following circumstances:

•	for the relevant universal service provider for that customer – where the provider nominates a different zone to the ACA and the customer chooses to adopt the nominated zone; and

•	for any other carriage service provider – where the carriage service provider nominates a different zone to the ACA. 

Hence, each eligible customer will be entitled to be offered a service (by the relevant universal service provider) for which the zone in which the customer can make untimed local calls is the traditional local call zone.

Clause 110 – Eligible customer

Clause 110 provides that any customer located in a ‘standard zone’ is an ‘eligible customer’.

Clause 111 – Points

Clause 111 defines ‘point’ for mobile-type services to include points which are mobile or potentially mobile.  It is included for the avoidance of doubt.

Clause 112 – Application of this Part

Existing contracts for the supply of services entered into before 1 July 1997 are preserved.

Part 5—Customer service guarantee

Part 5 of the Bill continues the operation of the Customer Service Guarantee (CSG).  The CSG involves the ACA setting performance standards for carriage service providers, and payment of specified damages to customers where those standards are contravened.  The CSG is not intended to address every individual service difficulty that may arise, but is intended to supplement other customer complaint mechanisms.  The CSG is intended to guard against poor service in certain key problem areas and provide a streamlined means for compensating consumers where set standards in those areas are not met.  Matters not covered by the CSG are addressed by other more appropriate mechanisms either in statute, licence condition or under the industry code/standard regime in Part 6 of the Telecommunications Act.

Under a scale of damages developed by the ACA, up to $25,000 can be awarded to a consumer for contravention of a performance standard by a carriage service provider.  The primary intention of standards however, is not to benefit customers financially, but provide carriage service providers with an incentive to meet performance standards.  It is only when a carriage service provider fails to meet such standards that customers can seek compensation.  While the CSG must ultimately be enforced by a court, the scheme has been designed to encourage voluntary compliance by the industry and the involvement of the Telecommunications Industry Ombudsman (TIO).  The CSG provides a streamlined means of compensating customers in certain specified circumstances.  The CSG does not limit or affect any other rights to action or damages a person may have.

Clause 113 – Simplified outline

Clause 113 provides a simplified outline of the Part to assist readers.

Clause 114 – Interpretation

Clause 114 is an interpretation provision which sets out definitions of terms used in Part 5 of the Bill and contains an interpretive rule requiring these definitions to be disregarded in determining the meaning of the terms when used other than in Part 5. 

Clause 115 – Performance standards

Clause 115 provides for the making of performance standards.

Subclause 115(1) gives the ACA the power to make standards to be complied with by carriage service providers in relation to: 

•	the making of arrangements with customers about the period taken to comply with requests to connect customers to specified kinds of carriage services; 

•	the periods that carriage service providers may offer to customers when making the above arrangements; 

•	compliance by carriage service providers with the terms of those arrangements; 

•	the period taken to comply with requests to rectify faults or service difficulties relating to specified kinds of carriage services;

•	the keeping of appointments to meet customers (or their representatives, eg. family members) about such connections and rectifications; and

•	any other matter concerning the supply, or proposed supply, of a carriage service to a customer.

‘Customer’ is defined in subclause 114(1) to include a prospective customer, to avoid any argument that a person who is not receiving a service from a carriage service provider but has requested a connection may not yet be a customer of the carriage service provider.  

Subclause 115(2) is intended to provide protection for a carriage service provider from the requirement to comply with a performance standard for a particular kind of carriage service where the carriage service provider does not offer to supply that kind of service at a particular location.  For example, if a carriage service provider has installed cable in particular suburbs of a city and offers local call services using that cable at locations in close proximity to where that cable is installed, it should not be subject to a performance standard for connection of local call services at those locations which are not in close proximity to where the cable has been installed.

Subclause 115(3) prevents the ACA making a standard unless directed to do so by the Minister under clause 124.  This provision is included because it may not be appropriate for all carriage services to be subject to performance standards, for example services used only by large corporate customers.  The Minister will have the power to direct the ACA to impose standards in relation to particular services where regulatory attention should be focussed – for example, the standard telephone service used by residential and business customers and other services commonly used by residential customers and small business.

Subclause 115(4) provides that a performance standard may be of general application or may be limited as provided for in the standard.  This provision is included because a standard may need to recognise circumstances where the standard should not apply, for example in circumstances beyond the carriage service provider’s control, such as when a natural disaster has occurred.

Subclause 115(5) provides for the commencement of a standard.

Subclause 115(6) provides that a performance standard is a disallowable instrument which accordingly must be notified in the Commonwealth Gazette and tabled in the Parliament and is subject to Parliamentary disallowance.  

Performance standards are to be made by disallowable instrument in order to enable standards to be made for new services, as they are developed, and to enable standards to be increased progressively over time, as carriage service provider performance improves.

Clause 116 – Damages for breach of performance standards

Clause 116 provides that if a carriage service provider contravenes a performance standard in relation to a customer, the carriage service provider will be liable to pay specific damages to that particular customer.  

Subclause 116(2) makes the amount of damages payable equal to the relevant amount specified in the scale of damages determined by the ACA under clause 117.  ‘Damages’ is defined in subclause 114(1) to include punitive damages in recognition that the scale of damages is intended to specify a penalty for the carrier and accordingly may include amounts that go beyond the real measure of damages suffered by a customer for a contravention of a performance standard.

Subclause 116(3) provides that if a carriage service provider credits a customer’s account or pays the customer an amount as a result of a right or remedy for the event causing the contravention, the amount of damages is to be reduced by the amount of the credit or payment.  This provision ensures that if the TIO, for example, determines or directs that an amount is payable under the TIO scheme for the event causing the contravention, the carriage service provider’s liability under the CSG is reduced accordingly. 

Subclause 116(4) enables a customer to recover the amount by action against the carriage service provider in a court of competent jurisdiction.  In practice, customers should not need to take court action.  Carriage service providers would be expected to credit customer’s accounts where they have breached a performance standard.  The TIO, in handling complaints under the TIO scheme, will be able to make determinations or give directions that reflect the penalties payable under the CSG. 

Subclause 116(5) enables a carriage service provider to discharge a liability by giving the customer a credit in an account the customer has with the carriage service provider.  However, in some circumstances, the customer may not have an account with the carriage service provider, for example because the customer is now using a different carriage service provider or has left the country.  This provision allows the carriage service provider and customer to come to an agreement about another manner for the discharge of the liability to deal with such circumstances.  

Subclause 116(6) requires any court action to be instituted within 2 years of the contravention occurring or beginning.

Subclause 116(7) ensures that where a customer dies, the executor can continue to recover the damages from the carriage service provider.

Clause 117 – Scale of damages for breach of performance standards

Clause 117 provides that the ACA may specify a scale of damages for contraventions of standards by carriage service providers under clause 115 (subclause 117(1)).

Subclause 117(2) requires the scale to specify categories of contraventions and a dollar amount as the amount of damages payable for contraventions covered by each of those categories.

Subclause 117(3) provides that a dollar amount specified in the scale of damages must not exceed $25,000.  This provision is included to put a cap on the maximum amount of damages which can be determined by the ACA to minimise any concern that giving this power to the ACA represents an inappropriate delegation of legislative power.

The $25,000 maximum is considered to be the highest amount appropriate to be awarded under the customer service guarantee scheme, which is mainly aimed at residential and small business customers.  The amount is more than adequate to cover most envisaged penalties.  The maximum will allow higher penalties for more expensive services if they are included in a performance standard.

The CSG is intended to supplement, not replace, existing remedies for customers.  Accordingly clause 121 specifically saves other laws and remedies.  It is intended that customers with complaints will still be able to seek redress, for example, from the TIO or the courts.  Under the TIO scheme developed by the industry, the TIO may make determinations of up to $10,000.

Subclause 117(4) makes it clear that a category of contraventions can be specified by reference to the number of days the contravention continues and subclause 117(5) makes it clear that this does not by implication limit the ways a category can be specified.  This provision ensures that damages can accumulate if a contravention of a standard continues for a number of days.

Subclause 117(6) provides that an instrument specifying a scale of damages is a disallowable instrument which accordingly must be notified in the Commonwealth Gazette and tabled in the Parliament and is subject to Parliamentary disallowance.

Clause 118 – Remedial directions––compliance with performance standards

Clause 118 will give the ACA a power to give a carriage service provider remedial directions about compliance with performance standards.  This power is intended to be used to address any systemic problems that arise in a carriage service provider’s performance.

Systemic problems may come to the attention of the ACA in a number of ways – the TIO may advise the ACA that it is receiving a large number of complaints about a particular carriage service provider’s performance.  The ACA may become aware of a carriage service provider’s declining performance while carrying out its duty of monitoring performance under section 105 of the Telecommunications Act.

Subclause 118(1) provides that clause 118 applies if a carriage service provider is subject to a standard in force under clause 115.

Subclause 118(2) gives the ACA the power to give the carriage service provider a direction requiring the carriage service provider to:

•	take specified action directed towards ensuring that the carriage service provider does not contravene, or is unlikely to contravene the standard; or

•	take such action as will ensure that the extent of the provider’s compliance reaches or exceeds a specified goal or target.

Subclause 118(3) gives examples of the kinds of directions that can be given to a carriage service provider.

Subclause 118(4) provides that, except in a case where the Minister directs the ACA to make a direction, the ACA must consult the TIO.

Subclause 118(5) provides that a carriage service provider must not contravene a direction.  As a result of the Telecommunications Legislation Amendment Bill, this provision will have the effect of applying the enforcement mechanisms in the Telecommunications Act.  Section 98 and clause 1 of Schedule 2 to the Telecommunications Act make it a service provider rule that a service provider must comply with that Act and, following amendment, this Bill.  Section 101 of that Act makes a contravention of a service provider rule a civil penalty provision.  Under subsection 570(3) of the Telecommunications Act, the maximum pecuniary penalty for a service provider contravening subsection 101(1) is $10 million.

Subclause 118(6) makes a direction a disallowable instrument which must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to disallowance by either House of the Parliament.

Clause 119 – Evidentiary certificate issued by the Telecommunications Industry Ombudsman

The TIO is an industry ombudsman established by carriers and carriage service providers continued in existence under Part 6 of the Bill which requires them to enter into, and comply with, an Ombudsman scheme providing for investigation in relation to complaints about carriage services by end-users, including complaints about billing and the manner of charging for carriage services.

Given the nature of the TIO’s role, it would be appropriate for it to investigate complaints about breaches of performance standards and to make determinations against carriage service providers requiring them to pay compensation of an amount equivalent to the damages required under the CSG.  Such involvement is dependent on the TIO scheme entered into by carriers and carriage service providers allowing the TIO to take on such a role.  The involvement of the TIO in making such determinations under the TIO scheme would be expected to significantly reduce the need for customers to take action in the courts under the CSG.  However, if court action needs to be taken, it is proposed to make taking action easier for the customer by enabling the TIO or the ACA to provide evidentiary certificates.

This clause gives the TIO the power to issue evidentiary certificates stating that a specified carriage service provider has contravened a performance standard and setting out particulars of the contravention.

Under subclause 119(2), such a certificate becomes prima facie evidence of the matters contained in it for the purposes of any proceedings under Part 5 of the Bill.

However, in recognition that the TIO scheme is an industry-based scheme, the TIO will only obtain these powers if the TIO gives a written notice consenting to the conferral of the powers (subclause 119(4)).  The notice must be published in the Commonwealth Gazette (subclause 119(6)).

If the TIO does not consent to the conferral of the powers or subsequently revokes consent, the ACA is able to exercise them (subclause 119(5)).  Note that although there is no specific reference to revoking consent, subsection 33(3) of the Acts Interpretation Act 1901 would provide the basis for the TIO to do so and the reference to a notice ‘in force’ under subclause 119(4) is intended to recognise that a notice previously given may be revoked.

Subclause 119(7) makes it clear that the continuity of a notice under subclause 119(4) is not affected by a change in occupancy of the TIO position.  However, if a vacancy in the TIO position continues for more than 4 months, the power would revert to the ACA and the new TIO would need to give the Minister a new notice under subclause 119(4).

While it may be desirable for the Bill to make direct statutory provision for the TIO to enforce the CSG, this is not possible for Constitutional reasons.  The CSG requires a decision to be made as to whether a carriage service provider has failed to meet a standard and for a penalty to be imposed as a consequence.  Such a decision is judicial in nature and Chapter III of the Constitution requires that a court make that decision.  Issues about the exercise of judicial power by bodies other than courts were considered by the High Court in Brandy v The Human Rights and Equal Opportunity Commission (1995) 183 CLR 245.

Clause 120 – Waiver of customer service guarantee

Clause 120 enables the ACA, by written instrument, to make provision for customers of carriage service providers to waive, in whole or in part, their protection and rights under this Part in relation to a particular service supplied, or proposed to be supplied, by the carriage service provider concerned.

Subclause 120(2) provides that if such a waiver is made then, to the extent of the waiver, the carriage service provider is not bound by the performance standards under clause 115 which apply to the supply of the particular service to the customer.

Subclause 120(3) requires a waiver to be made in accordance with the rules set out in the instrument.

Subclause 120(4) provides that an instrument setting out a waiver scheme is a disallowable instrument and accordingly must be notified in the Commonwealth Gazette and tabled in the Parliament and is subject to Parliamentary disallowance.

The waiver power is included because it is intended to ensure that as far as possible customers are not restricted in the choices they make.  It is expected that the ACA would exercise this power to enable a carriage service provider to offer cheaper prices for a service where a customer is prepared to waive some or all of the customer’s rights under this Part.

Clause 121 – Savings of other laws and remedies

Clause 121 is intended to ensure that this Part is not interpreted as excluding, limiting, restricting or affecting any right a person may otherwise have under Commonwealth, State or Territory or common law where a carriage service provider fails to comply with a performance standard.

In this context, it should be noted that the setting of a ceiling of $25,000 on the maximum damages payable under the CSG (see clause 117) does not affect a customer’s right to seek higher damages under other laws.

However, subclause 116(3) ensures that the damages payable under the CSG are reduced where the carriage service provider makes a payment in such circumstances.

Clause 122 – Breach of performance standard is not an offence

Clause 122 makes it clear that contravention of a performance standard under clause 115 is not an offence.  Clause 116 provides the mechanism for dealing with a contravention of a standard.

Clause 123 – Clause 1 of Schedule 2 to the Telecommunications Act 1997 does not apply to a breach of a performance standard

Clause 1 of Schedule 2 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill, is a service provider rule which requires a service provider to comply with the Telecommunications Act and this Bill.

Clause 123 provides that clause 1 of Schedule 2 does not apply to a contravention of a performance standard under clause 115.  Parts 30 and 31 of the Telecommunications Act set out mechanisms for enforcing contraventions of service provider rules.  These mechanisms are inappropriate in relation to contraventions of performance standards, as clause 116 provides the mechanism for dealing with such contraventions.

Clause 124 – Minister may direct the ACA about the use of its powers under this Part

Clause 124 enables the Minister to give the ACA written directions about how it should exercise its powers under this Part.

Such a direction could be given, for example, to identify the kinds of carriage services in relation to which performance standards should be imposed, the standard that should be imposed for a specified service, the level of penalty that should be specified in a scale of damages, what provision the ACA should make for waiver or processes the ACA should follow in making a performance standard.

Subclause 124(2) requires the ACA to comply with such a direction.

Subclause 124(3) is an interpretive rule which prevents the ambit of other directions powers being read down by reference to this specific power.

Subclause 124(4) makes a direction under this clause a disallowable instrument which accordingly must be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Subclause 124(5) provides that the Minister must not give the ACA a direction under s. 12 of the ACA Act about how the ACA is to exercise its powers under this Part.

Clause 125 – Review of performance standards following Ministerial direction

Clause 125 requires a Ministerial direction to be given under clause 124 before the ACA makes a performance standard.  This will allow the Minister to direct the ACA as to where regulatory attention should be focussed.

Subclause 125(2) ensures that where the Minister revokes such a direction, the ACA must revoke the relevant standard.

Subclause 125(3) ensures that if the Minister varies such a direction, the ACA must either vary, or revoke and remake, the relevant standard so that it complies with the varied direction.

Subclause 125(4) is included to make it clear that the previous rules do not prevent the ACA varying, or revoking and remaking, a performance standard on its own initiative as long as it complies with the Ministerial direction.

Part 6—The Telecommunications Industry Ombudsman

Part 6 of the Bill requires carriers and certain carriage service providers to enter into a Telecommunications Industry Ombudsman scheme which is a central element of the self-regulatory arrangements for the telecommunications industry currently provided for by the Telecommunications Act.  

The TIO scheme is intended to provide customers with an independent complaint handling mechanism after they have taken up their complaints with the respective carrier or carriage service provider and failed to resolve them.  It is expected that the TIO scheme will continue to operate along current lines, however the detail of its operation is effectively a matter for the members of the scheme.  The TIO may accept functions and powers under industry codes and industry standards (section 114 of the Telecommunications Act).

Clause 126 – Simplified outline

Clause 126 provides a simplified outline of the Part to assist readers.

Clause 127 – Eligible carriage service providers

Clause 127 defines an eligible carriage service provider for the purposes of this Part.

Paragraph 127(a) defines an eligible carriage service provider as a carriage service provider who supplies a standard telephone service to residential or small business customers, or a public mobile telecommunications service or a carriage service that enables end-users to access the Internet.  The exemption in section 89 of the Telecommunications Act from the definition of carriage service provider ensures that the operators of hotels, motels and hospitals are not eligible carriage service providers, and are therefore not subject to obligations under the TIO scheme.  Once an eligible carriage service provider is defined as such, all of the carriage services supplied by the provider are subject to investigation by the TIO, not just their standard telephone service.  

Paragraph 127(b) includes a carriage service intermediary who arranges for the supply of a service referred to in paragraph (a) as an eligible carriage service provider.

Clause 128 – Telecommunications Industry Ombudsman scheme

Subclause 128(1) provides that each carrier and each eligible carriage service provider must, in association with other carriers and other eligible carriage service providers, enter into a scheme providing for a Telecommunications Industry Ombudsman.

The term ‘eligible carriage service provider’ is defined in clause 127.

Subclause 128(2) provides that the scheme is to be known as the Telecommunications Industry Ombudsman scheme.

The Telecommunications Industry Ombudsman has had correspondence with a solicitor who sought evidence that the TIO scheme was the scheme referred to in the legislation.

To address the concerns of the Telecommunications Industry Ombudsman that the TIO not be put to the unnecessary expense of proof, subclause 128(3) provides that, to avoid doubt, there is only one Telecommunications Industry Ombudsman scheme and the company Telecommunications Industry Ombudsman Limited (ACN 057 634 787) is the operator of that scheme.  That company has been conducting business under that name since 1993.  The business conducted by the company is known as the ‘TIO scheme’ and the ‘Telecommunications Industry Ombudsman scheme’.

The scheme must provide for the TIO to investigate customer complaints about carriage services and make determinations and give directions relating to those complaints (subclause 128(4)).

Subclause 128(5) lists complaints about billing or the manner of charging for the supply of carriage services as examples of complaints which the TIO may investigate.  Other complaints investigated by the TIO could include, but are not limited to, complaints about: mobile phones; operators; fault reporting and ‘white pages’ directory entries.  

Subclause 128(6) provides that complaints relating to tariff levels or the content of a content service are outside the jurisdiction of the TIO scheme.  Membership of the TIO scheme must be open to all carriers and carriage service providers (subclause 128(7)).

Clause 129 – Exemptions from requirement to join scheme

Subclause 129(1) gives the ACA the power, by notice in the Gazette, to exempt a specified carrier or carriage service provider from the requirement in subclause 128(1) to enter into the TIO scheme.  Subclause 129(2) lists matters that the ACA must have regard to when considering exemptions for carriers or carriage service providers. These matters are: the extent to which a carrier or carriage service provider deals with residential and small business customers; and the potential for complaints about services provided by the carrier or carriage service provider.  

This list does not limit the matters to which the ACA may have regard when making an exemption (subclause 129(3)).  The ACA must consult the TIO before making an exemption (subclause 129(4)).

A decision to refuse to exempt a carrier or carriage service provider is subject to merits review under Part 29 of the Telecommunications Act (see Schedule 4 to that Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998).

Clause 130 – Direction to join scheme

Subclause 130(1) gives the ACA the power to direct a carriage service provider to join the TIO scheme.  A carriage service provider must comply with this direction (subclause 130(2)).  Subclause 130(3) lists the matters the ACA must have regard to when making a direction.  These matters are: the extent to which a carriage service provider deals with residential and small business customers; and the potential for complaints about services provided by the carriage service provider.  

This list does not limit the matters to which the ACA may have regard when making a direction (subclause 130(4)).  Before directing a carriage service provider to join the TIO scheme, the ACA must consult the TIO.

A decision to direct a carriage service provider to join the TIO scheme is subject to merits review under Part 29 of the Telecommunications Act (see Schedule 4 of that Act as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998).

Clause 131 – Determination that a class of carriage service providers must join scheme

Clause 131 allows the ACA to make a written determination that requires all members of a class of carriage service providers to enter into the TIO scheme (subclause 131(1)).  Subclause 131(3) requires the ACA to have regard to certain matters when making a determination.  These matters are: the extent to which members of that class deal with residential and small business customers; and the potential for complaints to the TIO about services provided by members of the class. 

This list does not limit the matters to which the ACA may have regard when making a determination (subclause 131(4)).  Before the ACA can determine that all members of a class of carriage service provider be required to join the TIO scheme, the TIO must be consulted.

Clause 132 – Members of scheme must comply with scheme 

Clause 132 provides that all members of the TIO scheme must comply with the scheme.

Clause 133 – Register of members of scheme

Clause 133 provides that a public register of the names of all members of the scheme must be kept by the TIO.  The register may be maintained in electronic form (subclause 133(2)), and must be open for public inspection at reasonable times (subclause 133(3)).

Part 7—Protection for residential customers against failure by carriage service providers to provide standard carriage services

Part 7 of the Bill is intended to protect residential customers from losing prepaid monies if a new carriage service provider fails to supply standard carriage services through circumstances such as insolvency.  This Part provides a safeguard for customers who choose to deal with new carriage service providers and accordingly represents a significant addition to customer protection arrangements.

Clause 134 – Simplified outline

Clause 134 provides a simplified outline of Part 7 to assist readers.

Clause 135 – Scope of Part

Subclause 135(1) provides that this Part applies to all carriage service providers supplying, or proposing to supply, a standard telephone service to residential customers.  A carriage service provider that was a carrier before 1 July 1997 is exempt from this Part (subclause 135(2)).  These carriers have a substantial market presence and accordingly their customers are unlikely to need these protection arrangements.

Subclause 135(3) gives the ACA the power to declare a specified person exempt from this Part, by notice in the Commonwealth Gazette, having regard to certain listed matters.  These matters are:

•	the length of time (if any) that the person had carried on business in Australia as a carriage service provider;

•	the scale of the person’s prior operations in Australia as a carriage service provider;

•	the person’s business record;

•	if there is a partnership, the business record of each partner; and:

•	if there is an incorporated company, the business record of each individual who is concerned, or takes part, in the management of the company.

This list does not limit the matters to which the ACA may have regard when considering exemptions (subclause 135(5)).

A decision to refuse to make a declaration giving an exemption is subject to merits review under Part 29 of the Telecommunications Act (see Schedule 4 of that Act as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998).

Clause 136 – Standard residential customer

This clause provides that a residential customer receiving a standard telephone service is a standard residential customer (paragraph 136(1)(a)), and the service is a standard carriage service (paragraph 136(1)(b)), for the purposes of this Part.  Specifically excluded from clause 136 are public mobile telecommunications services, except where supplied in fulfilment of the universal service obligation.

Clause 137 – Protected payments

Subclause 137(1) provides that the ACA may make a written determination that a payment made to a carriage service provider by a standard residential customer is a protected payment.  Under subclause 138(2), a protected payment must be received, or proposed to be received, by the carriage service provider directly or indirectly in connection with its business as a carriage service provider.

Examples of protected payments include line and equipment rental, connection fees and prepaid standard carriage services (subclause 137(3)).  A determination under  clause 137 must specify a minimum service period for each protected payment (subclause 137(4)), and this period must not be longer than two years (subclause 137(5)).  

A determination under this clause is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 which accordingly must be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 138 – Compliance with protection schemes for protected payments

Clause 138 provides that before demanding or receiving a protected payment from a residential customer, a carriage service provider must provide the ACA with a written election to be bound by a specified protection scheme (subclause 138(1)).  Subclause 138(2) provides that a carriage service provider that has made such an election must comply with the specified protection scheme.  If the carriage service provider wishes to vary an election, it can do so by substituting another protection scheme for the original scheme by notice in writing to the ACA (subclause 138(3)).  However, the original scheme continues to apply to protected payments made before the new scheme took effect (subclause 138(4)).

Clause 139 – Protection schemes for protected payments––alternative supply of standard carriage services

Subclause 139(1) provides an example of a scheme which the ACA may formulate providing for the alternative supply of standard carriage services to residential customers.  Arrangements under the scheme would operate if a carriage service provider that has received a protected payment fails to supply standard carriage services to the customer at any time during the minimum service period.  The scheme would be for the purpose of ensuring that the customer is supplied with equivalent standard carriage services for the remainder of the minimum service period at no extra cost. 

Subclause 139(2) provides that a scheme formulated under clause 139 is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901.  The instrument must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 140 – Protection schemes for protected payments – third party guarantee

Subclause 140(1) provides an example of a protection scheme the ACA may formulate that requires a carriage service provider to reimburse a protected payment to a residential customer, on a pro-rata basis, depending on the time period for which the service was not provided.  This scheme would also require the carriage service provider to obtain a third party guarantee on its liability (paragraph 140(1)(b)).  The scheme would require the reimbursement to be made if a carriage service provider that has received a protected payment fails to supply standard carriage services to the customer at any time during the minimum service period.

Subclause 140(2) provides that a scheme formulated under clause 140 is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901.  The instrument must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 141 – Protection schemes for protected payments – insurance cover

Subclause 141(1) provides an example of a protection scheme the ACA may formulate that requires a carriage service provider to reimburse a residential customer for a protected payment on a pro-rata basis, as well as take out an insurance policy to indemnify the residential customer (paragraph 141(1)(b)).  The scheme would require the reimbursement to be made if a carriage service provider that has received a protected payment fails to supply standard carriage services to the customer at any time during the minimum service period.

Subclause 141(2) provides that a scheme formulated under clause 141 is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901.  The instrument must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 142 – Protection schemes for protected payments – holding of payments in trust accounts

Subclause 142(1) provides an example of a protection scheme the ACA may formulate that requires a carriage service provider to reimburse a protected payment on a pro-rata basis, with those protected payments being held in trust accounts (paragraph 142(1)(b)).  The carriage service provider must not transfer any or all of the money in such a trust account to its beneficial ownership except in accordance with the draw-down rules set out in the scheme (paragraph 142(1)(c)).  The scheme would require the reimbursement to be made if a carriage service provider that has received a protected payment fails to supply standard carriage services to the customer at any time during the minimum service period.

Subclause 142(2) provides that a scheme formulated under clause 142 is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901.  The instrument must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 143 – Waiver of protection by customers

Subclause 143(1) allows a scheme formulated under this Part to provide for residential customers to be able to waive their rights under a protection scheme in relation to a particular protected payment.  In such a case, the carriage service provider is not bound by the scheme in relation to that payment (subclause 143(2)).  Subclause 143(3) requires a waiver to be made in accordance with the rules of that scheme, which rules may require the carriage service provider to inform the customer of the consequences of a waiver (subclause 143(4)).  Subclause 143(4) does not limit the matters that may be dealt with under a standard or a code registered under Part 6 of the Telecommunications Act (subclause 143(5)).

Clause 144 – Incidental rules

Subclause 144(1) provides that carriage service providers participating in a protected payment scheme may be required to comply with any ancillary or incidental rules set out in the scheme, including rules about informing residential customers about matters relating to the implementation of the scheme (subclause 144(2)).

Clause 145 – Enforcement of protection schemes

Subclause 145(2) provides that an order may be sought from the Federal Court by a customer or by the ACA in relation to a breach of a protection scheme by a carriage service provider that is bound by a scheme formulated under this Part.  If satisfied that a carriage service provider has breached the scheme, the Federal Court can make all or any of the following orders under subclause 145(3):

•	an order directing the carriage service provider to discharge a liability under the scheme;

•	an order directing the carriage service provider to comply with the scheme; 

•	an order directing the carriage service provider to compensate any person who has suffered loss or damage as a result of the breach; and

•	any other order that the Court thinks appropriate.

Subclause 145(4) allows the Federal Court to discharge or vary an order given under clause 145, but any order given under this clause should not limit other remedies available to a customer (subclause 145(5)).  When enforcing a protection scheme, an order can direct the carriage service provider’s administrators or receivers.  Under paragraph 145(6)(a),  when the carriage service provider is an individual or partnership, an order can direct the provider’s trustee in bankruptcy.  Under paragraph 145(6)(b), where the carriage service provider is a body corporate or a partnership, an order can direct the following groups: a receiver or controller of property of the body or partnership; an administrator of the body or partnership; an administrator of a deed of arrangement; a liquidator or provisional liquidator; and a trustee or other person administering a compromise between the body or partnership and any other person.  These provisions are intended to ensure that protection schemes for residential customers continue to be effective, to the extent possible, in the event of the carriage service provider becoming insolvent.

Part 8––Provision of emergency call services

Part 8 of the Bill sets out requirements for the continued provision of emergency call handling services.

This Part is intended to provide for the provision of emergency call services, that meet community expectations, in a multi-carrier and carriage service provider environment.  In particular, it is intended to provide what appears to be a single national service to end-users and to minimise the possibility of a proliferation of emergency call service providers, which may result in a decrease in the quality of emergency call services.

An ‘emergency call service’ is defined in section 7 of the Telecommunications Act as a service for receiving and handling calls to an emergency service number, and transferring such calls or providing information about the calls to emergency service organisations for purposes connected with dealing with the matters raised by the call.  Section 466 of the Telecommunications Act provides for ‘emergency service numbers’ to be specified under the numbering plan.  An ‘emergency call person’ is defined in section 7 of the Telecommunications Act as a recognised person who operates an emergency call service or its employees, or an emergency call contractor or its employees.  A ‘recognised person who operates an emergency call service’ is defined in section 19 of the Telecommunications Act as a person who is specified as a national or regional operator of emergency services in a written determination made by the ACA.  It is intended that the ACA will identify the most appropriate operator of emergency call services on a national or a regional basis in order to prevent any undesirable proliferation of operators of emergency call services which could result in a lower level of service.  Multiple operators may be necessary, however, to manage calls from different types of services or equipment (for example, calls from teletypewriter (TTY) machines).

Clause 146 – Simplified outline

Clause 146 provides a simplified outline of this Part to assist readers.

Clause 147 – Provision of emergency call services

Clause 147 requires the ACA to make a determination that sets out the fundamental emergency call service requirements.  This process allows the requirements to evolve in response to changes in industry arrangements, technology and community expectations for emergency call handling.  A determination is a disallowable instrument which must be notified in the Commonwealth Gazette, tabled in the Parliament and is subject to Parliamentary disallowance (subclause 147(7)).

The determination would be expected to include, for example, requirements in relation to the way in which calls are transmitted through a carrier’s or carriage service provider’s network, the period within which calls must be answered and the form in which information about calls is transferred to emergency service organisations.  The determination could also include other performance requirements and technical requirements for the transmission of calls to emergency service organisations.

Subclause 147(1) requires the ACA to make a written determination imposing requirements on carriers, carriage service providers and emergency call persons in relation to emergency call services.  The ACA must have regard to listed objectives when making its determination (subclause 147(2)).  These objectives are that: 

•	a carriage service provider who supplies a standard telephone service should provide  each end-user of that service with access, free of charge, to an emergency call service unless the ACA considers it would be unreasonable for such access to be provided (note that under section 376 of the Telecommunications Act an ACA technical standard may include requirements to ensure that customer equipment can be used to give direct access to an emergency service number);

•	if such a carriage service provider is required to provide each end-user of the standard telephone service with access to an emergency call service operated by a recognised person, that person should receive and handle calls made by those end-users to the relevant emergency service number and, if appropriate, transfer such calls to an appropriate emergency service organisation and give information in relation to such calls to an appropriate emergency service organisation;

•	emergency service organisations should not be responsible for the cost of:

–	the carriage services used to connect calls and transmit the related information 	from customers of the carriage service provider to an emergency call service;

–	the services of the recognised person who operates the emergency call service 	for receiving and handling the calls to an emergency service number; and

–	the carriage services used to transfer the emergency call and related 	information to the relevant emergency service organisation from the 	emergency call service;

•	as far as practicable, a common system is used for the transferring of emergency calls and related information;

•	calls made to an emergency service number are transferred to an appropriate emergency service organisation with the minimum of delay;

•	from the perspective of end-users, there appears to be a single national emergency call system;

•	reasonable community expectations for the handling of calls to emergency service numbers are met;

•	carriage services used to make calls to an emergency service number should, as far as practicable, provide the emergency call person concerned with automatic information about the location of the caller and the identity of the customer of the service being used by the caller;
•	carriers provide carriage service providers with access to controlled carriage services, networks and facilities in order that the providers can comply with their obligations under the determination; 
•	carriage service providers provide other carriage service providers with access to controlled carriage services, networks and facilities in order that the other providers can comply with their obligations under the determination; 
•	the determination be consistent with Principle 11 of the Information Privacy Principles set out in s. 14 of the Privacy Act 1988, and any registered codes or standards under Part 6 of the Telecommunications Act.  
This list does not limit the matters to which the ACA may have regard when making a determination (subclause 147(3)).

The ACA’s determination may also deal with ancillary or incidental matters, such as privacy protection (subclause 147(4)).

Subclause 147(5) provides that requirements imposed by the ACA under subclause 147(1) may include, but are not limited to, performance requirements relating to: 
•	the answering of an emergency call from an end-user;
•	the delay in transferring emergency calls to the relevant emergency service organisation;

•	handling of complaints relating to an emergency call service.

Subclauses 147(4) and (5) do not, by implication, limit subclause (1) (subclause 147(6)).

If appropriate, the ACA may apply, adopt or incorporate, with or without modification, any matter contained in a code or standard proposed or approved by a body or association (subclause 147(8)).  This provision is intended to allow the ACA to take into account any work in the area of emergency call services which may be undertaken by a body formed for that purpose by representatives from the telecommunications industry, emergency service organisations and consumers.  In any case, before making its determination, the ACA must consult representatives of carriers, carriage service providers, recognised emergency call persons, emergency service organisations (including a police force or service, a fire service, an ambulance service or a service specified in the numbering plan as an emergency service organisation) and consumers of standard telephone services (subclause 147(9)).

Subclause 147(10) allows a carriage service provider to arrange with another person to meet the obligation to provide access to an emergency call service as set out in paragraph 147(2)(a).

It is expected that the ACA will have regard to the needs of end-users with a disability, and will attempt to give effect to the objective of direct access as far as is technically possible.

Clause 148 – Compliance with determination

Clause 148 requires a person to comply with any requirements imposed on the person by a determination made under clause 147, subject to the requirements of clauses 149 and 151.  Pecuniary penalties apply under Part 31 of the Telecommunications Act for a contravention of a determination.  Funding the costs of meeting any requirements will be a matter for persons subject to those requirements.

Clause 149 – Access to emergency call services

Clause 149 allows for the arbitration of disputes between carriage service providers and recognised persons operating an emergency call service.  Subclause 147(2) makes it clear that carriage service providers supplying the standard telephone service must provide end-users of that standard telephone service with access, free of charge, to an emergency call service.  Subclause 147(2) also makes it clear that an emergency service organisation should not be responsible for the costs of providing access to an emergency call service. 

Where a carriage service provider is required to provide such access, the terms and conditions under which this access is provided will be determined by commercial agreements between carriage service providers and the recognised person operating the emergency call service.  Where these parties are unable to agree on the terms and conditions, the terms and conditions shall be those determined by an arbitrator appointed by the parties.  If the parties fail to agree on the appointment of an arbitrator, the ACCC is to be the arbitrator. 

The regulations may make provision for and in relation to a conduct of an arbitration under clause 149 and may deal with the constitution of the ACCC for the purposes of any arbitration conducted by the ACCC (subclauses 149(4), (5) and (6)).

The results of any arbitration made under clause 149 must not be inconsistent with a Ministerial pricing determination in force under clause 150.

Clause 150 – Ministerial pricing determinations

Clause 150 gives the Minister the discretion to make a written determination setting out principles in relation to the price-related terms and conditions under which access to an emergency call service is provided to end-users of the standard telephone service.  A determination made under clause 149 may not be inconsistent with a Ministerial pricing determination under clause 150.  The power to make a written determination is discretionary and will only be exercised where commercial negotiations are unable to resolve the terms and conditions under which the costs of providing emergency call services are allocated.

A Ministerial determination made under subclause 150(1) is a disallowable instrument for the purposes of s. 46A of the Acts Interpretation Act 1901 (subclause 150(2)).  The determination must therefore be notified in the Commonwealth Gazette and tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 151 – Access to be provided

Clause 151 is intended to facilitate access to the carriage services, networks and facilities needed by a person subject to requirements in a determination made under clause 147.

Clause 151 applies if a determination under clause 147 requires a person to provide access to controlled carriage services, networks or facilities.  It requires the person to provide access in accordance with the determination and on such terms and conditions as are agreed between the parties, or failing agreement, as are determined by an arbitrator appointed by the parties.  If the parties fail to agree on the appointment of an arbitrator, then the ACCC is to be the arbitrator.  It is expected that the ACCC will have regard to the types of issues it is required to consider in arbitrating disputes under Part XIC of the TPA and would follow similar procedures.  The regulations may make provision for and in relation to the conduct of an arbitration under this clause. 

Part 9––Price control arrangements for Telstra

Part 9 of the Bill re-enacts the price regulation regime currently contained in Part 6 of the Telstra Corporation Act 1991 (and supported by the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997) which is to continue to apply to Telstra.  

Clause 152 – Simplified outline

Clause 152 contains a simplified outline of Part 9 of the Bill to assist readers.

Clause 153 – Definitions

Clause 153 defines ‘carrier charge’ for the purposes of Part 9 of the Bill to mean a charge for a carriage service or a content service supplied by Telstra or a charge for a facility supplied by Telstra.  As a result of subclause 5(1) of the Bill, the expression ‘carriage service’ will have the same meaning as it has in the Telecommunications Act.  ‘Carriage service’ is defined by s. 7 of the Telecommunications Act to mean a service for carrying communications by means of guided and/or unguided electromagnetic energy (ie by cable or radiocommunications).

Also as a result of subclause 5(1) of the Bill, the expression ‘content service’ will have the same meaning as it has in the Telecommunications Act.

Clause 153 defines ‘charge’ to include (a) any charge or fee and (b) a nil charge or nil fee; and (c) in relation to a carriage service, includes (i) any charge or fee (including of a kind referred to in paragraph (a) or (b)) for or in relation to a facility used, or intended for use, in relation to the supply of the service; and (ii) any other charge or fee (including of a kind referred to in paragraph (a) or (b)) for or in relation to the supply of the service.   

The definition ensure that price control arrangements can be applied in relation to services for which there is currently no charge.

Clause 154 – Minister may determine price control arrangements

Subclause 154(1) empowers the Minister to determine that the charges for certain carriage services offered by Telstra are subject to price control arrangements.  The current price control arrangements for Telstra are set out in the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997.

The Minister’s determination is a disallowable instrument (subclause 154(2)).  It will  therefore be required to be notified in the Commonwealth Gazette, tabled in the Parliament and will be subject to Parliamentary disallowance.

Clause 155 – Effect of price control arrangements

Clause 155 empowers the Minister, by disallowable instrument, to determine 
price cap arrangements and other price control arrangements to apply to any charge for a particular Telstra service.  These arrangements are currently dealt with in Part 3 of the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997.

Clause 155 also empowers the Minister, by disallowable instrument, to determine principles to govern the operation of the price control arrangements.  These principles (which are currently dealt with in Part 4 of the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997) may cover:

•	factors which the ACCC is to consider in assessing whether or not any price variations proposed by Telstra fall within the pricing regime;

•	types of alterations that require, and do not require, ACCC consent;

•	the period of notice to be given to the ACCC before making that type of alteration;

•	the amount and nature of information to be provided by Telstra to the ACCC in relation to any particular alteration; and

•	in relation to alterations that require the ACCC’s consent, the period of time in which the ACCC must give or refuse consent to the variation.

The principles are designed to allow flexibility for negotiation of varying arrangements between the ACCC and Telstra, depending on the particular circumstances surrounding a proposed price variation.

For the avoidance of doubt, subclause 155(3) makes it clear that price-cap arrangements and other price control arrangements determined under clause 154 may relate to charges for untimed local calls in particular areas.  This provision was moved by Senator Boswell on behalf of the Government during the debate on the Telstra (Transition to Full Private Ownership) Bill 1998 in July 1998.

Subclause 155(4) provides that a price control determination under clause 155 may make different provision with respect to different customers.  Clause 155, however, does not by implication limit subsection 33(3A) of the Acts Interpretation Act 1901.  Subclause 155(4) is a technical amendment resulting from the need to ensure consistency with the USO price control provisions in clause 43.

It is intended that a price control determination may provide that different (two or more) price control arrangements apply in relation to one kind of Telstra service charge, with each of the different price control arrangements relating to customers in a particular class.  For example, a price control determination may apply different price control arrangements in relation to residential and business customers being supplied with the standard telephone service.  (Such differentiation exists under the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997.)  It is also intended that a price control determination be able to apply particular price controls in relation to more specific classes of customer, for example, educational institutions, medical facilities or public libraries.  This would mean, for example, that the Minister in a price determination could require that a Telstra service be provided to schools, libraries and hospitals at a particular price, while it may be available to other customers at another regulated price, or even an unregulated price.

Subclause 155(5) requires Telstra to comply with directions made under this clause.  Clause 1 of Schedule 2 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, makes it a statutory condition of a licence that a carrier comply with the Bill.  Contravention of the Bill and the Telecommunications Act is subject to civil penalty provisions (see Part 31 of that Act) involving pecuniary penalties of up to $10 million.

Clause 156 – Alteration of charges subject to price control arrangements

Clause 156 sets out the process to be followed by Telstra when it wishes to alter a charge subject to price control arrangements.

Parts 2 and 3 of the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997 deal with those charges of Telstra that are subject to price control arrangements and the price caps that apply, and Part 4 of that Determination deals with the principles applying to alterations of charges.

Where, under the applicable Ministerial determinations under clause 155 dealing with price control arrangements or the principles governing how Telstra may alter certain charges, the ACCC’s consent is not required to the proposed alteration, Telstra may make the proposed alteration (subclause 156(2)).

Where the ACCC’s consent is required before alterations to relevant charges can be made, subclause 156(3) sets out the conditions that must be satisfied before Telstra can make a proposed alteration.  These conditions are:

•	if the Ministerial determinations require Telstra to give the ACCC a period of notice before the proposed alteration is made – that period must have ended or the ACCC must have waived the giving of the notice;

•	if the Ministerial determinations require Telstra to give the ACCC particular information not later than a particular time before the alteration is made – the information must have been so given or the ACCC must have waived the giving of all or part of the information;

•	unless the ACCC has requested Telstra to provide further information about the proposed alteration:

–	the ACCC has consented to the proposed alteration; or

–	the ACCC has not refused its consent to the proposed alteration within the 	period specified in the determinations;

•	if the ACCC has requested Telstra to provide further information about the proposed alteration within the period within which it is required to give or refuse its consent to the alteration, the period is extended by a period commencing when the request was made and ending on the day on which the further information was provided.

Clause 157 – Carrier charges subject to notification and disallowance

Clause 157 enables the Minister to determine, by disallowable instrument, that certain charges are to be controlled by means of notification and disallowance.  This mechanism will be necessary only in limited circumstances, where control by price cap is not considered necessary, but where a reserve power to scrutinise is desirable given the competitive impact of certain charges on other service providers or on community interests and expectations.

Under Part 5 of the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination 1997, charges for the provision of certain directory assistance services are currently subject to notification and disallowance.

Clause 158 – Alteration of charges subject to notification and disallowance

Clause 158 relates to the process to be applied to charges that are subject to notification and disallowance.  

If Telstra proposes to alter a carrier charge that is subject to notification and disallowance, it must inform the Minister in writing of the proposed alteration at least 30 days before it takes effect (subclause 158(1)).

Within 30 days after receiving notice of the proposed alteration, the Minister may:

•	request the ACCC, in writing, to give a written report as to whether the proposed alteration should be disallowed in the public interest; and

•	direct Telstra, in writing, not to make the proposed alteration until the Minister has received and considered the ACCC’s report (subclause 158(2)).

The ACCC is required to give the report to the Minister within 30 days after receiving the request (subclause 158(3)).

If the Minister, after taking the ACCC’s report into account, is of the opinion that the proposed alteration is not in the public interest, he or she may, by written notice given to Telstra within 30 days after receiving the report, direct Telstra not to make the alteration (subclause 158(4)).

Telstra will be required to comply with a direction under subclause 158(4) (subclause 158(5)). Under clause 1 of Schedule 1 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, compliance with that Act and this Bill, and thus including subclause 158(4) of this Bill, is a standard carrier licence condition.  Section 68 of the Telecommunications Act provides that a carrier must not contravene a condition of a carrier licence held by the carrier and that this is a civil penalty provision.  Part 31 of the Telecommunications Act provides for pecuniary penalties of up to $10 million for breaches of civil penalty provisions.

Part 10––Miscellaneous

Part 10 of the Bill deals with miscellaneous matters, including the ability of the Minister to direct Telstra to comply with the Bill.

Clause 159 – Direction to Telstra to comply with this Act

Subclause 159(1) empowers the Minister to direct Telstra in writing to take specified action directed towards ensuring that Telstra complies with the Bill.  The Minister must consult with Telstra prior to giving a direction (subclause 159(2)).  The consultation requirement will ensure that Telstra has an opportunity to provide comments on the direction.  

This new Ministerial direction power replaces the current Ministerial direction power in Part 3 of the Telstra Corporation Act 1991 which is to be repealed by item 28 of Schedule 3 to the Telstra (Transition to Full Private Ownership) Bill 1998.  The new power is targeted at the consumer and service standards issues dealt with by this Bill, removing the need for the power in the Telstra Corporation Act.

To avoid doubt, subclause 159(3) provides that the Minister’s directions power does not limit other powers in the legislation and is itself not limited by other powers, including powers conferred on the Minister, the ACA or the ACCC.  

Subclause 159(4) requires Telstra to comply with such a direction. 

Under clause 1 of Schedule 1 to the Telecommunications Act, as proposed to be amended by the Telecommunications Legislation Amendment Bill 1998, compliance with that Act and this Bill, and thus including clause 159 of this Bill, is a standard carrier licence condition.  Section 68 of the Telecommunications Act provides that a carrier must not contravene a condition of a carrier licence held by the carrier and that this is a civil penalty provision.  Part 31 of the Telecommunications Act provides for pecuniary penalties of up to $10 million for breaches of civil penalty provisions.

Clause 160 – Regulations

Clause 160 contains the standard regulation making power.

The Governor-General will be empowered to make regulations prescribing matters required or permitted by the Bill to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Bill (subclause 160(1)).

The regulations will be able to prescribe penalties of up to 10 penalty units for offences against the regulations (subclause 160(2)).