Telstra's carrier licence conditions
Conduct of the inquiry
On 27 June 2013, the Senate referred the following matter to the
Environment and Communications References Committee (the committee) for inquiry
and report by
19 July 2013:
All matters relevant to the impacts of imposing on Telstra
Corporation Limited a carrier licence condition that would require it to
produce printed and online national number directories within Australia.
In accordance with usual practice, the committee wrote to stakeholders
inviting submissions by 4 July 2013. Details of the inquiry were also made available
on the committee's website at www.aph.gov.au/senate_ec.
The committee received eight submissions which are listed at Appendix 1.
No public hearing was held for the inquiry. The committee thanks those
organisations that made submissions to its inquiry.
The Australian Communications and Media Authority (ACMA) administers the
regime that licenses telecommunications carriers.
Owners of a network unit used to supply carriage services to the public are
generally required to hold a carrier licence.
Division 3 of Part 3 of the Telecommunications Act 1997 (the Act)
provides for the imposition of licence conditions on telecommunication
carriers. Section 63 of the Act provides that a carrier licence may be subject
to any conditions declared by the minister administering the Act including:
- conditions in addition to those referred to under sections 61 and
62 of the Act, applying to all carrier licences; and
- conditions of specific carrier licences.
Pursuant to subsection 63(3) of the Act, Telstra Corporation Limited
(Telstra) is subject to the additional conditions of its carrier licence
(Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997). Clause
9 of the Declaration requires Telstra to produce an alphabetical public number
directory annually, in volumes by geographic area.
The Department of Broadband, Communications and the Digital Economy
(DBCDE) advised the committee that Telstra fulfils the obligations under Clause
9 of its carrier licence condition through the production and distribution of
the White Pages directory.
DBCDE further explained that there is no obligation for Telstra to provide
online telephone number directories. Telstra's licence conditions also do not
cover the production of the Yellow Pages directory which Telstra produces 'on
the basis of its own commercial decisions'.
In February 2013 Sensis, the wholly owned subsidiary of Telstra which
produces the White Pages and the Yellow Pages in Australia, announced that 'as
many as 698 positions could go, more than half of which would be in back-office
roles that would be sent offshore'.
It is this announcement by Sensis that forms the basis of the committee's
inquiry into Telstra's carrier licence conditions.
Discussion of key issues
Submissions from a number of stakeholders supported the imposition of a
new carrier licence condition on Telstra to require it to produce printed and
online national number directories within Australia. Concerns were raised,
however, in respect of how such an obligation would interact with Australia's
international trade commitments.
Support for a new licence condition
Submitters identified Telstra as holding a 'special and historic' place
in Australia's history and expressed concern that, in the absence of a new
carrier licence condition, offshoring in the telecommunication industry would
lead to job losses, affect the quality of directories and put information
security at risk.
The Australian Manufacturing Workers Union (AMWU) commented that it was aware
of anecdotal information 'showing that language and cultural barriers have
contributed to mistakes in copy and advertisements and notices published with
mistakes which sit for the life of the directory'.
The Printing Industries Association of Australia (PIAA) raised similar
In addition to concerns regarding quality, the Community and Public
Sector Union (CPSU) suggested that there would be 'disquiet about privacy' if production
of Telstra's directories was taken offshore.
The PIAA also raised this matter as a risk associated with offshoring
The transfer of Telstra's directory operations also
understandably raises concerns and issues about offshore production. These
include the risk of exposing private information on Australian citizens which
Telstra holds, risk to intellectual property, risk of security breaches and
data theft. Both offshore locations [Philippines and India] have high levels of
poverty which could tempt the data handlers to engage in data theft and thus
compromise the security and privacy aspects of the data.
The CPSU suggested that '[o]nly by ensuring work is done in Australia
can users and customers be certain that their data will be secure and protected
by Australia's regulatory system'.
The Communication Workers Union (CWU)
raised concerns about loss of jobs and skills. While the CWU acknowledged that
it was 'hard to see why Telstra should be subject to such a requirement when no
such legal restrictions on offshoring have...been placed on other Australian
companies, including Telstra's competitors', it supported the imposition of a
new licence condition.
The CWU advised the committee that, in its view, imposing an 'Australian made'
condition on directories will not in itself stem the flow of skilled work, but
it would 'draw a visible line in the sand'.
Submitters also expressed the view that offshoring was not in the national
In response to the concerns raised, Telstra explained to the committee
that Clause 9 of its carrier licence 'substantially reflects the equivalent
licence condition that formed part of the original licence granted to Telstra
in 1991 when it was known as the Australian and Overseas Telecommunications
Telstra noted that the 'original and continuing purpose of this obligation was
to ensure that people with a telephone service have access to information about
how to contact other people with a telephone service, thus enhancing overall
and that such a change would be both inconsistent with the original intent of
the licence condition and unnecessarily onerous.
Telstra contended that the imposition of the mooted new condition
represented a 'significant extension' of the scope of the current licence in
...first, it would add a requirement for Telstra to produce
online directories; and second, it potentially requires onshore production of
all national number directories produced by Telstra in print or online,
including those directories that it produces commercially and independently of
the current licence condition applicable to Telstra.
Telstra explained that the extension of the scope of the licence would
increase its costs in an increasingly competitive global market
and stated that, as the amendment would not apply to competing directories or
'other commercial services in telecommunications, utilities or banking produced
partly offshore', competition would be distorted and the higher cost structure
would undermine its ability to meet its existing directory licence conditions
and compete in the market.
DBCDE informed the committee that the direction of regulatory policy for
the telecommunications industry 'has been to gradually reduce the number of
obligations placed on Telstra in areas where there is now a competitive
DBCDE therefore noted that:
...it would be important to consider the intended scope of the
proposal and whether it would regulate products that are not currently
regulated or required by telecommunications legislation, but are provided by
Telstra on the basis of its own commercial decisions.
In its submission, DBCDE commented that the imposition on Telstra of a
licence condition requiring it to produce its directories in Australia may have
'implications associated with Australia's trade obligations' and advised the
committee to seek advice from the Department of Foreign Affairs and Trade
DFAT informed the committee that the proposed condition could affect
'trade in services', which is broadly defined under the World Trade
Organisation General Agreement on Trade in Services (GATS) and Australia's free
trade agreements (FTAs).
DFAT explained that Australia has made specific commitments on a variety of
service sectors under the GATS and FTAs:
Two important commitments made in the GATS and Australia's
FTAs are to allow access to the Australian market (market access), and not to
discriminate against like services and services suppliers of other parties
(national treatment), in certain sectors.
DFAT therefore advised that a relevant consideration when determining if
such a condition (requiring the local production of national number
directories) was in breach of Australia's international trade commitments would
be 'whether Australia has market access and national treatment obligations in
respect of the relevant service sectors and if so, to whom'.
The committee was informed that Australia has undertaken obligations with
respect to e-commerce, and has made commitments on 'printing and publishing
services' but that the service sector(s) affected by the proposed measure would
'depend on the scope of the actual measure'.
Telstra echoed the concerns of DFAT that, in its view, a licence
condition requiring the production of directories within Australia would
- violate Australia's national treatment obligations
under WTO GATS Article XVII because it reduces the competitive opportunities
available in Australia to offshore suppliers of many of the services needed to
produce the directories, e.g. data processing and advertising services. While
certain exceptions are permitted under GATS, those exceptions are unlikely to
be available to Australia in this case; and
- violate Australia's national treatment obligations under some of its
bilateral agreements, for example Article 4 in Chapter 7 of the Singapore
Australia FTA (the Trade in Services chapter) would apply to printing services
that may be capable of being provided by Singaporean suppliers.
Telstra further explained that:
...printing and publishing services are not specifically listed
in Australia’s commitments to the GATS, they are covered by the national
treatment obligation in several of Australia's bilateral trade agreements,
including those with Singapore, the United States, New Zealand, and Chile.
The committee shares the concerns of submitters for local jobs and
acknowledges that offshoring the production of directories may lead to the loss
of jobs and skills in Australia.
The committee notes, however, the importance of Australia's
international trade commitments to the country's continued participation in a
global economy and therefore considers that the concerns raised by the
Department of Foreign Affairs and Trade are paramount in the consideration of
any proposed new carrier licence condition for Telstra or other participants in
the telecommunication industry. In addition, the committee refers to the
direction of regulatory policy for the telecommunication industry which 'has
been to gradually reduce the number of obligations placed on Telstra in areas
where there is now a competitive market'.
In giving consideration to Australia’s international trade obligations
and the fact that as a private company Telstra (or Sensis) should, as far as
possible, be able to make commercial decisions about their operations (even
where such operations are required of them by government), the committee is not
convinced of the need to amend Telstra’s licence conditions at present.
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