Liberalization
Telecommunications Act 1997
Radiocommunications Act 1992
Trade Practices Act 1974
Regulatory Bodies
Universal Service Obligation
Customer Service Guarantee
Mobile Number Portability
Closure of Analogue Networks
Broadcasting Scheme
Looking Forward
Since the mid-1980s the telecommunications industry in Australia has developed from a government owned monopoly to a controlled duopoly, and finally, to an open competitive market.
Throughout these developments the need to provide telecommunications services to all Australians on an equitable basis, including those living and working in sparsely populated areas, has remained a central tenet of telecommunications policy. More recently, the promotion of efficiency in the provision of services and the international competitiveness of the industry have also become primary policy objectives.
Two major legislative schemes make up the framework of communications law in Australia: (i) the telecommunications scheme, which primarily deals with the regulation of carriage and carriage services, and (ii) the broadcasting scheme, which deals with the regulation of content.
Ultimate responsibility for telecommunications law and policy in Australia lies with the federal government. This power is derived from Section 51(v) of the Constitution, which confers authority on the federal government to make laws with respect to "postal, telegraphic, telephonic and other like services". Following Australian legislative convention, statutes made pursuant to the Constitution confer powers and responsibilities on the relevant minister. The minister undertakes these functions in conjunction with his or her department. The telecommunications portfolio falls within the responsibility of the Department of Communications, Information Technology and the Arts, which provides advice to the government on all aspects of telecommunications and radiocommmunications policy and regulation.
Prior to 1987 the telecommunications industry was made up of three government owned entities:
- Telecom Australia, a domestic carrier;
- OTC Australia, an international carrier; and
- AUSSAT, a provider of satellite communications.
The first major telecommunications reforms took place in 1992 with the introduction of seven telecommunications acts, including the Telecommunications Act 1991. The new legislation resulted in the merger of Telecom and OTC (now known as Telstra Corporation Limited (Telstra)), the sale of AUSSAT to Optus Communications and the requirement that Telecom provide interconnection to other carriers. The role of AUSTEL (the then regulatory body) was also expanded to include the promotion of an efficient and competitive market.
In the broadcasting arena, in the same year the government announced that it would lift the moratorium on pay television.
Further reforms took place in 1997, with a new suite of legislation coming into effect on July 1 1997. This legislation included the Telecommunications Act 1997, which replaced the 1991 act and established the current regulatory scheme. Parts XIB and XIC of the Trade Practices Act 1974, which relate specifically to competition in the telecommunications industry, were introduced at the same time. The policy considerations contained in the new scheme are reflected in Section 3 of the Telecommunications Act 1997:
"[T]o 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 Telecommunications Act 1997 (the Telcos Act) removed all numerical barriers to entry to the market, enabling any entity with the relevant capacity to provide telecommunications services. There are no limits on the number of carriers that may operate in Australia. The efficacy of these measures has been demonstrated by the significant increase in the number of service providers. In 1992 five carrier licences were issued: general telecommunications licences to Telstra and Optus, and public mobile licences to Telstra, Optus and Arena GSM (now Vodafone). In contrast, 50 carrier licences have now been issued, 16 of which were issued this year.
Industry self-regulation with respect to technical performance, interconnection standards and access is another key aspect of the Telcos Act.
Legislative scheme
The primary areas covered by the Telcos Act are:
- the licensing of telecommunications carriers;
- the regulation of carriers and carriage service providers;
- performance codes and standards;
- the operation of the Universal Service Obligation and the Telecommunications Industry Ombudsman schemes;
- the protection of communications;
- international aspects of activities of the telecommunications industry;
- technical regulation; and
- the numbering of carriage services.
Carrier licensing
A 'carrier' is defined in the legislation as a holder of a carrier licence granted by the Australian Communications Authority under the Telcos Act. General carriers and mobile carriers are not distinguished under the legislation. A 'carriage service provider' is defined as an entity that is involved in the supply of carriage services using network units.
An entity is required to hold a carrier licence where it owns a network unit that is used to supply carrier services to the general public. An exception to this rule is where a carrier, as opposed to an owner, assumes responsibility for the network unit.
'Network units' are defined as line links exceeding 500 metres in length or designated radiocommunications links (eg, mobile service base stations or satellite-based facilities).
Any entity with an industry plan approved by the minister responsible for telecommunications may apply for a carrier licence.
The conditions imposed on carrier licensees are generally determined by legislation and not by the individual licence. Statutory licence conditions include, for example, compliance with standard access obligations. The legislation also confers statutory rights on carriers, such as powers and immunities with respect to the construction and maintenance of facilities on government or privately owned land. These powers are much less expansive than those under the Telecommunications Act 1991.
Service provider rules
Carriage service providers and content service providers (which include providers of pay television and internet services) must comply with the service provider rules. There are five standard service provider rules:
- to comply with the provisions of the Telcos Act;
- to provide directory assistance to consumers;
- to provide operator services;
- to provide itemized billing to customers using a standard telephone service; and
- to provide assistance with the maintenance of an integrated public number database.
The Radiocommunications Act 1992 deals with radio-frequency and spectrum planning, spectrum licences, class licences and apparatus licences.
Spectrum licensing is a new form of licensing that is being introduced by an auction process. It relates to licences which are technology neutral (ie, they refer to the use of spectrum space and not the form of technology or service used). Spectrum licences are also unique in that they are tradeable and assignable.
The Trade Practices Act 1974 is the primary instrument governing competition at the federal level. The act is generally applicable to the telecommunications industry (eg, with respect to mergers, acquisitions, anti-competitive conduct, and misleading and deceptive conduct).
In addition, Parts XIB and XIC of the act, which came into effect on July 1 1997, specifically apply to the telecommunications industry. They deal with the prevention of anti-competitive conduct and the administration of a regime for access to carriage services. Their enactment signified an acknowledgment by the legislature of the risk of anti-competitive conduct in a newly liberalized market.
Australian Communications Authority
The Australian Communications Authority is responsible for the regulation and administration of the telecommunications industry. The authority began operation on July 1 1997 and exercises powers under the Telcos Act, the Radiocommunications Act 1992 and other related legislation. It is responsible for a diverse range of functions, broadly divided into three categories: telecommunications, spectrum management and any additional functions set out in its enabling legislation.
The primary telecommunications functions of the authority include:
- issuing and cancelling carrier licences, monitoring compliance with licence conditions and reporting to the minister on licensing issues;
- formulating service provider rules and monitoring compliance with those rules;
- issuing cabling licences and implementing cabling provider rules;
- registering industry codes of practice and directing compliance with those codes;
- implementing industry standards where the industry fails to self-regulate (eg, with respect to technical standards for customer equipment, customer cabling and interconnection);
- monitoring the Universal Service Obligation scheme, and assessing carriers' liability and entitlements under that scheme;
- implementing and administering the Numbering Plan for the numbering of carriage services in Australia;
- implementing and monitoring the Customer Service Guarantee scheme; and
- conducting public education programmes concerning matters relating to the telecommunications industry.
The spectrum management functions of the authority include:
- facilitating access to, and management of, the radio-frequency spectrum in accordance with the Radiocommunications Act 1992;
- managing interference and interference complaints;
- enforcing compliance with spectrum, class and apparatus licence conditions; and
- advising and assisting the minister with respect to radiocommunications.
The authority also works with industry bodies, such as the Australian Communications Industry Forum (ACIF), to encourage industry self-regulation through the development of voluntary codes of practice and technical standards.
Australian Communications Industry Forum
The ACIF is the primary body involved in the self-regulation of the telecommunications industry. It was established to address issues that affect the industry as a whole. Its members include carriers, service providers, equipment vendors, industry associations, and user and consumer groups. Membership to the ACIF is voluntary. Its main role is to develop and administer industry codes of practice, for example, in relation to technical standards, plans and guidelines. As the processes of the ACIF are consensus based, the development of codes of practice has often taken longer than is desirable. To date, 20 codes dealing with a range of topics have been developed by the ACIF. Eight of these codes have been registered by the Australian Communications Authority. The codes most recently registered relate to the protection of consumers' personal information and calling number displays.
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission is the statutory authority established under the Trade Practices Act 1974 which is responsible for the regulation of competition. The commission has significant powers under Parts XIB and XIC of the act, such as the declaration of access to carriage services. The commission also exercises a variety of functions under the Telcos Act, including:
- the price control of Telstra's retail services;
- the regulation of international carriers in Australia;
- the regulation of number portability;
- the regulation of interconnection standards; and
- the arbitration of disputes relating to these issues.
The commission exercises significant power in the telecommunications industry due, in part, to the penalties which it may impose for a breach of the competition rules (ie, up to A$10 million per breach, plus A$1 million per day of the breach).
Declaration
A 'declaration' is a determination by the commission under Part XIC of the Trade Practices Act that a particular carriage service is to be made accessible to all carriage service providers. The effect of a declaration is that new entrants to the market are able to access existing telecommunications services to provide solutions to their customers. Declarations are intended to accelerate the promotion of a competitive market by lessening the need for new entrants to build and invest in their own infrastructure.
A service may be declared by the commission only after extensive public consultation or upon recommendation by the Telecommunications Access Forum (an industry body). The commission must also consider (i) whether a declaration will be in the long-term interests of the community, and (ii) whether it will encourage the efficient use of infrastructure and promote 'any-to-any' connectivity. However, declarations have received some criticism on the basis that they will ultimately hinder the long-term interests of the community by decreasing the incentives for new entrants to develop new technologies and to enhance the existing infrastructure.
All services that have been declared to date have resulted from commission determinations. These services include:
- the unconditioned local loop service (ie, the use of unconditioned, or unimproved, copper wires between the premises of an end user and the wire's terminating point);
- local public switched telephone networks;
- integrated service digital network services;
- digital data access services; and
- domestic transmission capacity services.
Once a service has been declared, the access seeker and the access provider are required to negotiate standard access obligations, or the terms and conditions on which access will be provided. Alternatively, the access provider may seek to have an undertaking with respect to access rights and obligations approved by the commission. Failing an agreement between the parties or the approval of an undertaking by the commission, the matter will be referred to the commission for arbitration. Two undertakings have been provided to the commission by Telstra for approval, both of which were rejected. Fifty matters have been referred to the commission for arbitration, 30 of which are active.
A review of Parts XIB and XIC of the Trade Practices Act is being undertaken by the Productivity Commission. The purpose of the review is to assess:
- the status of competition in the telecommunications market;
- the impact new technologies will have on the market; and
- the corresponding impact on the community.
The scope of the review includes an assessment of interconnection and access, preselection of carriage providers and number portability. The Productivity Commission is required to report its findings to the government by July 2001.
Telecommunications Industry Ombudsman
The Telecommunications Industry Ombudsman is an independent dispute resolution body for the resolution of complaints from residential and small business customers. Under the Telcos Act, all carriers and eligible carriage service providers are required to enter into the ombudsman's scheme. Members fund the scheme in proportion to the number and complexity of complaints made against them. The ombudsman also has authority to investigate complaints concerning internet service providers.
The Universal Service Obligation (USO) regime was established under the Telecommunications (Consumer Protection and Service Standards) Act 1999. It is designed to ensure that all Australians, irrespective of their location, have reasonable access on an equitable basis to standard telephone services, payphones, prescribed carriage services and digital data services. The key aspects of the USO are the provision of untimed local calls and compliance with the Customer Service Guarantee.
Telstra has responsibility for the provision of the USO on a national basis. As Telstra's standard rates are price-controlled, compliance with the USO in high-cost areas (eg, remote regions of Australia) creates a cost burden for Telstra. This burden is shared by other carriers who are required to participate in the funding of the scheme.
Changes to the USO were introduced this year pursuant to the Telecommunications (Consumer and Protection Service Standards) Amendment Bill (2) 2000. The major amendment contained in the bill is the option for carriers or carriage service providers other than Telstra to be nominated, or to nominate themselves, as the universal service provider for a particular region. This amendment is directed at allowing or requiring service providers to fulfil the USO in regions where they are able to do so at a lower cost than Telstra. Any new USO providers will receive government subsidies for their participation in the scheme. Telstra will remain the USO provider for all service areas until another carrier is nominated.
The Customer Service Guarantee requires telecommunications service providers to comply with certain basic standards in relation to residential and small business consumers. The objective of the guarantee is to encourage improvements in customer service by requiring carriage service providers to pay compensation to consumers if basic service levels are not met. The standards dealt with by the guarantee primarily relate to the connection of telephone services and the repair of faults. Compensation is payable for each working day of delay or where a service provider fails to attend an appointment with a customer. The maximum compensation payable under the scheme is A$25,000. The guarantee does not apply to mobile services or to customer equipment.
Mobile number portability refers to the ability of mobile telephone customers to change service providers without being required to change their mobile telephone number.
The Australian Communications Authority has set March 31 2001 as the earliest practicable date for the implementation of mobile number portability.
The authority is now working with the Australian Communications Industry Forum to select the technical model to be used by service providers to implement mobile number portability and a network dial plan for the network architecture. The ACIF is also developing an industry code on portability operational processes and procedures.
A public education programme dealing with the closure of analogue telephony services in Australia began in 1996. The first phase of the closures began in December 1999 in most metropolitan and some regional areas. The final phase began on October 3 2000. In preparation for the closures, Telstra was required to roll out its code division multiple access network in order to meet its licence requirement to operate digital mobile networks, which provide approximately the same coverage as its analogue network in non-metropolitan areas.
The broadcasting legislative scheme is primarily concerned with the regulation of content. The backbone of the scheme is the Broadcasting Services Act (BSA).
The objectives of the BSA include:
- to promote diverse radio and television programming throughout Australia;
- to encourage diverse, Australian ownership of the more influential broadcasting services;
- to promote the development of Australian cultural diversity and identity through broadcasting services; and
- to protect children from inappropriate content.
To achieve these objectives, the BSA contains three distinct regulatory schemes:
- the regulation of the delivery and content of broadcasting services;
- the regulation of the content of online services; and
- the regulation of the delivery and content of datacasting.
Delivery and content of broadcasting
Broadcasting is defined in the BSA to include the delivery of television and radio programmes, whether that delivery uses the radio-frequency spectrum, cable, optical fibre, satellite or any other means. It does not include:
- services that provide data or text only, with or without still images;
- services that make programmes available on demand on a point-to-point basis, including a dial-up service; or
- services that the minister determines not to fall within this definition.
The minister made a determination under the BSA, effective from September 24 2000, that internet services do not fall within the definition of broadcasting. Accordingly, internet services are not subject to the more onerous regulatory requirements of, for example, free-to-air television.
Content of online services
The regulation of online services deals with the protection of children from inappropriate and offensive content. Codes of practice developed by the internet industry may be approved by, and registered with, the Australian Broadcasting Authority. Three codes, developed by the Internet Industry Association and the Internet Content Hosts, have been registered to date.
Delivery and content of datacasting
The delivery and content of datacasting is the subject of the Broadcasting Services Amendment (Digital Television and Datacasting) Act 2000, which came into effect this year. This act defines a 'datacasting service' as that which delivers content in the form of text, data, speech, music, sounds, visual images, or any other form or combination of the above, where that delivery uses the broadcasting services bands. This definition means that transmissions of data by television broadcasters using the excess capacity on their digital channels, or transmissions on any additional digital television channels that the broadcasting authority may make available, will be classified as datacasting. The strict delineation of broadcasting and datacasting has been criticized for (i) failing to take into account the convergence of the relevant technologies, and (ii) the creation of artificial legal distinctions as a result.
Pursuant to the act, a person wishing to provide datacasting services is required to hold two licences: (i) a transmitter licence, which is governed by the radiocommunications regulatory requirements, and (ii) a datacasting licence pursuant to the BSA. The act also provides for:
- limitations on the ownership and control of datacasting transmitter licences;
- mandatory standards and industry codes of practice governing content on datacasting services; and
- an enforcement scheme for ensuring compliance with licensing conditions on content.
The act also contains strict limitations on the transmission of certain genres of programming and the provision of audio content. These restrictions will apply until December 31 2006. Specifically, datacasters are prohibited from transmitting drama, current affairs, sports, music, lifestyle programmes, documentaries, children's entertainment, comedy or a combination of the above. However, extracts of these genres that are not fully self-contained and are no more than 10 minutes in length are permissible.
The policy behind the restrictions on datacasting is the perceived need to protect broadcasters from the provision of services that are competitive with traditional broadcasting. In the government's view, broadcasters require this protection due to the significant costs that they incur when complying with the digital broadcasting requirements.
Digital television
The Television Broadcasting Services (Digital Conversion) Act 1998 requires broadcasters to commence the transmission of content in a digital format, in addition to an analogue format, on January 1 2001 in metropolitan areas. In the following three years, digital transmissions will be phased in across the country. In order to broadcast in both analogue and digital formats, broadcasters have been allocated additional spectrum, free of charge, for a period of eight years. At the end of this period, analogue broadcasting is intended to be terminated and broadcasters will be required to return any excess spectrum. In the interim, any spectrum provided to broadcasters that is not required for broadcasting may be used by the broadcasters, at a charge, for datacasting.
At the same time as the introduction of digital television, broadcasters will be required to phase in the transmission of high definition television. By January 1 2003, all networks operating in metropolitan areas will be required to broadcast at least 20 hours of high definition television each week.
The government's push for digital television has received considerable criticism as a result of the proven unpopularity of high definition television in other jurisdictions. Its introduction has also been criticized because of the large volume of spectrum required to transmit in a high definition format and the scarcity of spectrum available.
Australian Broadcasting Authority
The Australian Broadcasting Authority was established under the BSA. It is the regulatory authority responsible for the administration of the BSA. In particular, its functions include:
- planning the availability of broadcasting band segments;
- allocating broadcasting, subscription television and radio licences;
- monitoring compliance with licence conditions;
- developing standards as to content (including conducting research into community views);
- assisting the television, radio and internet industries to develop codes of practice, and registering those codes; and
- monitoring compliance with the ownership provisions and cross-media rules contained in the BSA.
Over the last year and a half, the authority has also been involved in developing plans for the implementation of digital radio services, due to commence on January 1 2001.
The challenge for the legislature in the coming years will be to keep pace with technological advancements and to institute appropriate regulation, without hindering development. It is also likely that there will be a greater degree of regional and international cooperation. This is exemplified by the Telecommunications Mutual Recognition Agreement, entered into by Australia, Hong Kong, Singapore and Taipei earlier this year, in relation to the cross-approval of telecommunications products.
Australia has a vibrant and growing communications sector. The introduction of competition has meant lower prices and an expanded range of services to consumers. Participants in the sector in Australia are capable players on the global stage.
For further information on this topic please contact Angela Lenn or Chris Shine at Blake Dawson Waldron by telephone (+61 2 9258 6942) by fax (+61 2 9258 6999 ) or by email ([email protected] or [email protected]).
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