Bills Digest No. 72 1996-97 Radiocommunications Amendment Bill 1996


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WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest was available from 25 January 1997

CONTENTS

Passage History

Radiocommunications Amendment Bill 1996

Date Introduced: 5 December 1996
House: Representatives
Portfolio: Communications and the Arts
Commencement: Royal Assent

Purpose

The Bill amends the Radiocommunications Act 1992 to introduce increased competition in radiocommunications and to enhance relevant management and sale of the radiocommunications spectrum (the range of frequencies within which radiocommunications are capable of being made).

Background

This Bill is part of the major package of telecommunications legislation which has been introduced into Parliament to allow for the post-1997 telecommunications regime in Australia. Essentially, the Bills in the package will provide for the establishment of a new competitive telecommunications regime beginning on 1 July 1997 in place of the current duopoly.

A more detailed background and overview of the package of Bills is found in the Bills Digest to the key piece of legislation in the package, the Telecommunications Bill 1996.

The Spectrum Management Agency (SMA) is a Commonwealth statutory agency within the portfolio of Communications and Arts. It was established by the Radiocommunications Act 1992 (the Principal Act). The primary function of SMA is to manage and allow access to the radiofrequency spectrum. Technically, the 'spectrum' is the range of frequencies used in radiocommunications. In such a vast continent as Australia, radio-based communications are essential for industry, safety and

telecommunications, as well as providing important cultural and recreational services. Australia depends upon effective and efficient access to, and management of, the spectrum. Australia's ready acceptance of the technology and the convenience of mobile cellular telephones and digital cordless services is a clear reminder of how relevant radiocommunications are to the everyday life of most Australians.

At present, SMA has about 120,000 clients who hold some 202,000 licences which authorise access to the spectrum. (1) As part of the proposed post-1997 changes in regulation of telecommunications in Australia, SMA will merge with the telecommunications regulator, AUSTEL, to form the proposed Australian Communications Authority (ACA).

In the 1995-96 financial year, SMA had total actual appropriations of $36,931,000 and total actual revenue of $107,754,000. SMA has a staffing level of around 380. (2)

Australia is moving rapidly to allow greater competition in telecommunications-based industries. Part of this process is to allow purchase of the right to utilise radiofrequencies within the spectrum, even while the frequency is being progressively vacated by a current user. This Bill will allow encumbered parts of the spectrum to be sold in advance to enable investors the opportunity of reducing the time taken to equip, establish and utilise the radiofrequency. Existing users will also be able to enter into commercial arrangements with new owners of that part of the spectrum for continued use, subject to technical compatibility of transmitters and related equipment.

Sale of the spectrum will be by public auction. Licensed use of that part of the spectrum will be available for up to 15 years. The initial allocation and licensing issue process will expressly fall within section 50 of the Trade Practices Act 1974. That section prohibits acquisitions that would result in a substantial lessening of competition. In addition, the Bill will allow the Minister to set pro-competitive limits to provide some entry for new entrants.

The SMA also has an important role in setting technical standards for radio-related devices capable of emitting electrical interference which affects radiocommunications. These standards are known as the electromagnetic compatibility (EMC) standards. The Bill will expand SMA's coverage beyond radiocommunications devices to non-radiocommunications devices, such as computers, navigation equipment and certain specialised industrial equipment, capable of causing interference to radiocommunications. In addition, health and safety provisions will also enable SMA to include relevant standards to protect the health and safety of persons operating, working on or using radiocommunications services.

Main Provisions

Reader's Note: The proposed amendments are included in Schedule 1 to the Bill. The terminology to be used therefore is 'Item' in the Schedule in lieu of 'Clause' in the Bill. </ ul>

Items 1 to 8 in Schedule 1 simply deal with additions and modifications to definitions in the Principal Act.

Item 11 contains proposed additions to section 36 of the Principal Act. Section 36 falls within Part 2.2 - Conversion Plans and Marketing Plans of the Principal Act. A Marketing Plan is issued by SMA and it sets out precise descriptions of the spectrum lots that can be combined to form spectrum licences. The Conversion Plan sets out the procedures to be followed by SMA in converting particular apparatus licences in the designated bands to spectrum licences. Spectrum licensing is the new, more flexible form of radiocommunications that confers a form of property right over the spectrum. Licensees have the flexibility to change their equipment or other aspect of their spectrum use, subject to compliance with licence conditions. Licensees may trade licences and aggregate or sub-divide licences to form bigger or smaller blocks of spectrum space. (3)Pursuant to section 36, the Minister may issue a notice to SMA designating a specified part of the spectrum to be allocated for the purpose of issuing spectrum licences. This designation process, however, must now recognise that under a new Part 3.6 Re-allocation of encumbered spectrum (proposed new sections 153A to 153Q) - see Item 46 - parts of the spectrum may be re-allocated by declaration even though they are currently occupied by holders of an apparatus licence. The re-allocation is made in advance to enable the new owners of that part of the spectrum to prepare for operating their radiocommunications systems.

The proposed new subsections 36(6), 36(7) and 36(8) preclude the Minister from issuing a section 36 designation while a proposed new Part 3.6 re-allocation declaration is in force. The proposed new subsections are aimed at preventing overlap in the utilisation of the spectrum.

Item 14 adds a proposed new section 39A which addresses the consequence of the new form of declaration of a re-allocation of parts of the spectrum. The existing section 36 designation process brings with it a requirement for a Marketing Plan (see existing section 39). Since the new Part 3.6 is proposed to be added by the Bill (see Item 46), this will preclude the requirements specified in existing section 36, including the preparation of the Marketing Plan. Consequently, a proposed new section 39A is added to require the SMA to prepare an equivalent Marketing Plan in association with the new re-allocation of encumbered spectrum.

Item 21 is a key provision in that it allows the Minister to direct the SMA to impose limits on what may be allocated to persons seeking licences to use the spectrum. The purpose of the limits is to promote competition or to avoid adverse effects on competition. The proposed addition subsections to existing section 60 in the Principal Act will allow the SMA to provide information to the Australian Competition and Consumer Commission to ensure compliance with section 50 of the Trade Practices Act 1974 (prohibitions on acquisitions that would result in a substantial lessening of competition).

Digest Comment: Directions by the Minister to SMA in relation to the exercise of power to determine procedures imposing limits must be published in the Gazette. Under the separate Legislative Instruments Bill 1996 (now before the Senate) such a direction would probably be deemed to be a disallowable instrument. If, hypothetically, the Legislative Instruments Bill 1996 was not passed into law, then a Ministerial direction under the proposed amendments in this Radiocommunications Amendment Bill 1996 would not constitute a disallowable instrument. </ ul>

Item 22 is a practical mechanism to enable the SMA to defer the issue of the actual licence to a new licensee pending the clearance of that part of the spectrum by an existing user. This mechanism allows the new licensee (who is given an allocation on the spectrum) to take full benefit of the time period attaching to licences rather than have the licence issued immediately and then mark time while the frequency is being cleared (i.e. the new licence is issued when the new licensee is actually ready to start transmitting on the radiofrequency).

Item 23 is a small but important provision. It extends the duration of spectrum licenses from 10 years to 15 years. The extension in time is said to be to allow investors a more attractive investment in terms of utilising the frequency. In turn, it is assumed that the extension in time will also be reflected in higher revenue to the Government when it auctions allocations on the spectrum.

Item 25 inserts a new section 68A - Authorisation under spectrum licence is to be treated as acquisition of asset, in the Principal Act. This is a deeming provision which deems a spectrum licence to be the acquisition of an asset. This simply removes any doubt that such licences are assets for the purpose of the restrictive trade practices provisions of the Trade Practices Act 1974. Consequently, acquisitions that would substantially lessen competition, divestiture orders, and authorisations by the ACCC (where what would otherwise be an anti-competitive acquisition has a positive public benefit which outweighs the detrimental effect of any lessening of competition) apply to spectrum licences.

These provisions should also be read in conjunction with Item 28 which inserts a new Subdivision D - Rules about section 50 and related provisions of the Trade Practices Act, into Division 1 of the Principal Act, which will also include a proposed new section 71A.

Item 35 is similar in effect to Item 21 and it empowers the Minister to issue written directions to SMA about limits on the allocation and issue of an apparatus licence (see section 106 of the Principal Act), as distinct from a spectrum licence. Again, the purpose for setting limits is for competition policy reasons.

Digest Comment : Same comment as made under Item 21, above. </ ul>

Item 42. Section 114 of the Principal Act allows the licensee of an apparatus licence to authorise a third party to operate radiocommunications devices under the licence. Item 42 adds a proposed new section 114A which removes any doubt that the Trade Practices Act 1974 will apply to the authorisation of a third party, as if that party had acquired an asset from the apparatus licensee.

Item 46 is a key provision in the Bill. It adds a proposed new Part 3.6 - Re-allocation of Encumbered Spectrum. The operation of the proposed new part has been outlined in the comments on Item 11, above. This is the heart of the Bill and it allows the re-allocation of parts of the spectrum while those parts may still be occupied by the holder of an existing licence. Essentially, it allows the use of lead time to enable a purchaser of that allocated part of the spectrum to equip, establish and be ready to operate (or in circumstances allow joint operation), pending the issue of the actual new spectrum licence. Item 46 adds proposed new sections 153A to 153Q to the Principal Act.

Digest Comment: Spectrum re-allocation declarations made by the Minister are a disallowable instrument (see proposed new subsection 153D(3) contained in Item 46 the Bill

This re-allocation of the encumbered spectrum will also impact on the 900 MHz [megahertz] Band Plan which is contained in Statutory Rules 1992 No. 47. The 820 - 960 Mhz band in the spectrum currently supports a variety of radiocommunications services, including analogue AMPS mobile phone services ('AMPS' means 'Advanced Mobile Phone System'). The 900 MHz Band Plan is already operating and its aim includes the progressive transition of AMPS mobile phone systems to digital cellular telephone services which use GSM technology ('GSM' means ' Global System for Mobile Communications'). The principal date for the completion of the transition from analogue to digital cellar telephones is 1 January 2000. The Explanatory Memorandum to the Bill (at page 20) indicates that the Statutory Rule may be amended to make the cessation dates for analogue phones earlier than that currently specified in Table 4 of the 900 MHz Band Plan. </ ul>

Item 47 is a commendable addition to the Principal Act. It inserts a proposed new paragraph (f) into section 155. This proposed new paragraph adds a further criterion to the standards and other technical regulation by SMA, to include protecting the health and safety of persons who operate, maintain or use radiocommunications equipment.

Item 50 recognises the constitutional limits of Commonwealth power in making laws with respect to, primarily, section 51(v) of the Constitution (i.e. the power to make laws with respect to 'Postal, telegraphic, telephonic, and other like services'). Certain industrial equipment, computers and navigation equipment can interfere with radiocommunications because they may not be devices which are electromagnetically compatible with radiocommunications (the EMC standard). Section 157 is an existing offence provision and it imposes a penalty for using a non-standard transmitter. The proposed amendment broadens the class of 'transmitters', to include devices which fall within the requirement for electromagnetic compatibility but confines the offences to the limits of Commonwealth power (e.g. trade and commerce, broadcasting services, defence, supply of goods to the Commonwealth, navigational light beacons, corporations, banking and insurance). Items 52 and 53 achieve the same purpose in relation to possession of a non-standard device. Likewise, Item 60 covers the supply of non-standard devices. The broader description 'devices' is now used in lieu of 'transmitter'.

Item 63 adds proposed paragraphs 162(e) and 162(f) to the Principal Act to enable the SMA to make standards concerning electromagnetic compatibility (EMC standards) and health and safety standards.

Item 65 exempts the SMA from public consultation in making standards in cases of urgency where the subject matter of the new standard is a health and safety issue.

Items 80, 81 and 82 are a precautionary constitutional measure and allow severance from the statute of the proposed new provisions dealing with offences for sale of non-standard devices which do not have the specified labels or certificates of compliance (relating to electromagnetic compatibility). Severance would be relevant if a court held that the new offence provisions on EMCs (electromagnetic compatibility) exceeded Commonwealth power. A clean severance would allow the remainder (and residual effect) of the statute (applying to transmitters and receivers) to continue to operate. (see Explanatory Memorandum to the Bill - page 31).

Item 84 adds a new function to SMA (see section 233 of the Principal Act) to enable SMA to undertake activities related to radiocommunications on a commercial basis, but not to the detriment of its primary functions (see Item 85).

Digest Comment: Regard should also be had to Item 89 which amends existing section 293 of the Principal Act. When the SMA is levying a charge for its primary activities that charge must be reasonable and not amount to a tax. Basically, this means it has to be a cost-recovery administrative charge and not a compulsory collection of revenue for a public purpose. The exception to this is when SMA engages in the new radiocommunications-related commercial activity. In those circumstances, the SMA can charge a full commercial rate. </ ul>

Items 92, 93 and 94 preserve the operation of any existing determinations made under the Principal Act.

Endnotes

  1. See Annual Report 1995-96, Spectrum Management Agency, Australian Government Publishing Service, Canberra, 1996.
  2. Ibid: 7
  3. Ibid: 41.

Contact Officer and Copyright Details

Brendan Bailey (06 2772434)
22 January 1997
Bills Digest Service
Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Research Service, Commonwealth of Australia
Last updated: 20 January 1997.

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