Consideration of the Telstra (Dilution of Public Ownership) Bill 1996



The Universal Service Obligation (USO) provides funding of cross-subsidies for the provision of a standard telephone service to the people of Australia. Telecommunications carriers contribute to the USO from pro-rata levies. Consumers have voiced their concerns that guaranteed services under the USO —access to untimed local calls, 24 hour access to the telephone network, emergency number, operator assistance, and unique numbers—will diminish if Telstra is privatised. Consumers have also raised concerns on broader issues of consumer protection and fear the emergence of a 'profits before service' culture. The proposed Customer Service Guarantee is an implicit admission that privatisation will not deliver satisfactory consumer outcomes. Reliance upon codes of practice in the post-1997 regulatory environment offers consumers little assurance. The Committee is not convinced that the Government will deliver on its promise to establish a 'world class consumer framework'.

This chapter contains references to technical telecommunication expressions. An overview of relevant technologies and services referred to in this chapter is found in Appendix 7.


6.1 Many individuals and groups who made submissions to the Committee were particularly concerned that the Bill would not adequately protect consumers. [1]

Specific concerns included:

The Universal Service Obligation

6.2 Telstra has the ultimate responsibility for providing a basic telecommunications service throughout Australia. This is known as the Universal Service Obligation. The Minister was reported to have said on 22 August 1996, that he considered the Universal Service Obligation to be 'a minor issue'. [2] However, it was a key concern of an overwhelming number of witnesses that if Telstra was privatised the Universal Service Obligation would be undermined. The Committee believes that such fears are well founded for reasons discussed below.

6.3 The Universal Service Obligation, defined in subsection 288 (1) of the Telecommunications Act, ensures:

6.4 The Telecommunications Act provides that the USO should be fulfilled as 'efficiently and economically as practicable'; and

6.5 Part 13 of the Telecommunications Act provides accordingly for the assessment, collection, recovery and distribution of the levy imposed by the Telecommunications (Universal Service Levy) Act 1991.

6.6 Section 288 (2), ensures that the Government may, through the Minister, determine that it is part of the Universal Service Obligation to supply, install and maintain payphones in specified locations in Australia. There are currently 84 000 payphones in Australia. [3]

6.7 The Universal Service Obligation is currently monitored by the Australian Telecommunications Authority (AUSTEL). AUSTEL is expected to merge with the Spectrum Management Agency in July 1997 to become the Australian Communications Authority. [4]


The Standard Telephone Service

6.8 The standard telephone service is a critical component of the Universal Service Obligation. It defines the minimum standard of telephony for all Australians. To assist with interpreting the definition of the Universal Service Obligation in the Act, AUSTEL has developed a description of what it expects Telstra to supply as 'standard' in a telephone service. This document is known as AUSTEL's 'View'. The current AUSTEL View contains the requirement that all Australians have:

6.9 The definition of the standard telephone service is under consideration by the Standard Telephone Service Review Group. [5] The Review Group is not due to report to the Minister for Communications and the Arts until 29 November 1996.

6.10 Telecommunications user groups, telecommunications specialists, consumer groups and carriers, while welcoming retention of the Universal Service Obligation, have expressed concern that they are not in a position to assess the full impact of privatisation on consumers, as they do not know what the Review Group will recommend nor whether its recommendations will be implemented.

6.11 Many witnesses who supported privatisation argued that the universal service arrangements discussed above would be unaffected by privatisation of Telstra. These submissions ignore the effect of the repeal of section 9 of the Telecommunications Act.

6.12 Section 9 of the Telecommunications Act says that the Minister may, after consultation with the Board, give Telstra such written directions in relation to the exercise of the powers of Telstra as appear to the Minister to be necessary in the public interest. Some witnesses in favour of privatisation commented that this power was not relevant to AUSTEL's administration of the universal service obligation under the Telecommunications Act. These witnesses also made the point that the section had never been used.

6.13 The Committee does not accept that section 9 is irrelevant to the universal service obligation. The only limitation on the Minister's power of direction is in subsection 9(2) (refer Chapter 3) which says that the Minister must not give a direction in relation to the amounts to be charged for work done, or services, goods or information supplied, by Telstra. Otherwise, the Minister may direct Telstra in relation to any exercise of its powers whatsoever, provided the Minister considers the direction necessary in the public interest. The fact that the power of direction has never been formally used to ensure universal access to a particular service is irrelevant.

6.14 The task of redefining the universal service obligation and devising an appropriate enforcement mechanism is a difficult and important one. The Minister's Standard Telephone Service Review Group faces a complex set of technical, social, economic and regulatory issues. Most consumer organisations support an upgraded definition. The crucial questions are how and when widespread access to broadband services should be made available, and what should happen in the meantime. As noted previously, there are widely varying views about these matters, and many of the key industry players have not yet expressed a clear view on these issues.

6.15 The Committee accepted Professor Gillard's evidence that demand for emerging services is uncertain:

The Committee supported the concept that funding for consumer research be part of broader telecommunications research, and agreed that the Government cannot ignore the question of how short-term policy can best facilitate long-term goals in an uncertain technological environment. In a country as large and sparsely populated as Australia, where the communications system plays such a central role in economic and social development, it is particularly important for the Government to take a central role in balancing the economic costs of accelerated deployment of broadband services against the social costs of delay. If we ignore the opportunities offered by broadband services, we risk being left behind as other countries introduce new services and make themselves more competitive.

6.16 Business Week summed up the policy questions as follows:

6.17 Another leading commentator has noted that:

6.18 The Committee endorses the conclusion of the Broadband Services Expert Group in its Final report, Networking Australia's Future, that:

6.19 The Committee notes the useful analysis of these policy issues in Dr Roger Buckeridge's report Rural Australia Online, and its companion report by Mr Jim Groves, Policy Issues in Putting Rural Australia Online. [10] The authors note that an obvious question to be answered by anyone advocating an upgraded universal service obligation is 'why should the competitiveness of non-rural industries be hampered more than it is now by the provision of a cross-subsidy to the rural sector?' They note this question must be answered by demonstrating the existence of 'market failures' and 'externalities'. A 'market failure' is where a well-designed policy intervention can produce a better outcome than will be the case with the untrammelled operation of market forces; 'externalities' arise when the benefits (or costs) of an activity flow beyond the immediate decision-maker, who therefore faces a distorted set of incentives from society's broader point of view. For intervention to be justified, it must be shown that, in the practical world, the benefits of the intervention exceed the costs.

6.20 Dr Buckeridge and Mr Groves point out that the new electronic information systems have important synergies with education and training concerns, with significant potential to assist improvements in access to education and training. They also note that the new systems can, for example, provide access to information of value to farm management. From society's point of view, they argue, a particularly prominent benefit of this would be in the environment area, as improved farm practices can be expected to lead to a more ecologically sustainable farm sector. In addition, there would be direct benefits to governments through the exploitation of more efficient channels for information flows between government agencies and their customers.

6.21 The Committee agrees that benefits such as these could well provide an even greater justification for intervention than was the case for the existing universal service obligation. This justification clearly goes beyond traditional arguments about equity of access.

6.22 The Committee notes Dr Buckeridge's recommendation that:

6.23 Most telecommunications users groups recommend the adoption of a 64 kbps service. The Committee accepts that the early specification of the standard telephone service as having a 64 kbps capability would revolutionise communications capability across Australia. Such a capability is the core component of the national telecommunications network being installed by Telstra under its Future Mode of Operations program. [12] This would provide high speed facsimile and data transmission, Internet access, base quality video conferencing and voice telephony. (For a brief analysis of bandwidth, networks and service quality, see Explanatory Notes, Appendix 7).

RECOMMENDATION 14: The Committee recommends the Standard Telephone Service Review Group consider an immediate upgrade of the standard telephone service to a 64 kbps service.


6.24 Given the rapid changes in technology which are occurring, the Committee also considers it crucial that the Telecommunications Act be amended to ensure that the definition of the Universal Service Obligation is regularly reviewed. Failure to regularly upgrade the Universal Service Obligation to keep up with changing technologies will result in Australia's consumers being denied continuing improvements to telecommunication services.

RECOMMENDATION 15: The Committee recommends regular reviews of the Universal Service Obligation be guaranteed in legislation.


6.25 The Committee welcomes the review of the standard telephone service definition announced by the Minister on 10 July 1996. However, the Review Group cannot be expected to solve, in just a few months, the fundamental dilemma that demand for new communications services is uncertain, as is the precise nature of technological change, and the social implications of new communications. As noted by the Broadband Services Expert Group in its December 1994 Final Report, Australia needs a strategy for dealing with the dilemma, and a central element of that strategy must be a managed evolutionary approach:

6.26 This is a period of great opportunities to build a fairer, wealthier, better educated and better informed nation. Government must take the lead in implementing a national strategy for the adoption of the new information and communications technologies and services. The ability to take such a lead is far greater while Telstra remains in public ownership and the Government is able to direct Telstra to make investment decisions which may not be justified on purely commercial criteria. The Government may decide to accept a sub-optimal rate of return on its investment in order to promote other social and economic objectives, such as the provision of services to rural and remote areas.

6.27 As noted by the Communications, Electrical and Plumbing Union (CEPU) in its submission, the trade-off between lower returns and other greater social benefits is irrelevant under public ownership, provided the benefits accrue to the community as a whole. But the character of this equation changes radically under private ownership, which introduces a fundamental tension between profit-maximisation and broader social goals.

6.28 The Government argues that the ongoing provision of the Universal Service Obligation is guaranteed by legislation. Mr Paul Rizzo, Telstra's Group Managing Director of Finance and Administration, outlined Telstra's position and indicated that, privatised or not, Telstra looked to government legislation to define consumer safeguards and universal service obligations. In Telstra's view:

6.29 Mr Rizzo acknowledged the need to protect consumers' interests and stated:

6.30 The Committee noted, however, that Telstra is already advocating a less onerous Universal Service Obligation involving targeted rather than universal service. Telstra's submission says:

6.31 When questioned on the issue, Mr Graeme Ward, Telstra's Group Director, Regulatory and External Affairs, suggested that governments look at targeted assistance for 'certain areas of the population'. [17]

6.32 The pressure to dilute the Universal Service Obligation would be exacerbated by partial privatisation. The Committee notes that it is the right of private shareholders to expect the Telstra management and Board to focus their efforts upon the objective of profit maximisation and to lobby the Government to ensure any impediments to this aim are removed. Removal of the constraints imposed by the Universal Service Obligation would clearly be a high priority and thereby place its ongoing provision in jeopardy in the long term.

6.33 The Committee believes that it is the right of the majority shareholder — the Australian community — to expect the Government as their representative to ensure Telstra also pursue social objectives. The power of the Government to ensure that Telstra continue to pursue social objectives will be seriously eroded, if not entirely removed, by the removal of the Minister's power to direct Telstra in the public interest. This inherent tension introduced by partial privatisation is impossible to resolve.

6.34 As the CEPU submission pointed out, market forces alone have never been adequate to create a reliable, ubiquitous, integrated network such as is needed to underpin the universal delivery of 'plain old telephone services' (POTS), let alone the capabilities required to provide the more advanced services now being developed. The achievement of such social goals has always required government intervention.

6.35 The Committee considers that the lack of any detailed explanation from any witness as to how the Universal Service Obligation will be protected if Telstra is privatised is, in itself, sufficient reason to recommend that Telstra continue in full public ownership.


Consumer protection for residents in rural and remote regions

6.36 Equity of access, and whether the USO adequately covers the emerging and developing needs of the rural sector, and regional and remote Australia, were raised by a number of witnesses at hearings and in submissions. At the hearing held in Perth, Mrs Ann Lewis, State President, National Committee for Australian Women in Agriculture, made the point that, for rural people, the tyranny of distance remained very much part of daily life. She suggested that the 'most obvious way of minimising that [distance] is with high standards of communications' and pointed out that many services taken for granted in metropolitan areas were not available to people at many rural exchanges. She referred to the following services unavailable to such subscribers, namely: [18]

6.37 Mrs Lewis voiced her concerns over the costs of access to rural and regional subscribers and the lack of research into the use of telecommunications by rural and remote Australians: [19]

6.38 Mrs Lewis suggested, referring to term of reference (h) that Telstra needed to look closely at the untimed local component of the USO. Access to doctors, accountants, lawyers or any other business contacts via telephone from rural areas was often beyond the range of local calls. Although she was reminded that guaranteed universal service obligation in the Bill reference to equity of access, [21] Mrs Lewis reminded the Committee that in remote and rural regions, consumers saw no 'universal' services provided:

6.39 Mr John Rice of Queensland University of Technology, commented that the Government should:

6.40 These arguments confirm the need for an immediate upgrade of the Universal Service Obligation, and regular reviews as recommended by the Committee. The Committee believes this can only be guaranteed if Telstra remains in full public ownership and the power of the Minister to direct Telstra in the public interest is retained.

RECOMMENDATION 16: The Committee recommends the provision of high quality telecommunications services to rural and remote areas be made available through a publicly-owned Telstra as a high priority.


Consumers with special needs

6.41 Ms Harlow of AUSTEL raised the issue of the need to recognise the special needs of some groups who are not identified in the Bill. Ms Harlow referred specifically to educational institutions and people with disabilities:

6.42 A similar point was raised by the Tasmanian Consumers' Association in their submission relating to the Ministerial Discussion Paper (May 1996), and the USO provisions of the Bill. Ms Cora Trevarthen, President of the Tasmanian Consumers' Association, indicated her concern for consumers with disabilities. In her submission, she wrote:

6.43 Consumers have not been reassured by the Government's promise to continue targeted assistance for low-income earners and those with special telecommunications needs. Consumers are concerned that future social policy may result in the dilution or removal of measures such as targeted assistance for low income earners, consumers with special needs and the elderly.

RECOMMENDATION 17: The Committee recommends provision of new technologies to people with special needs be included as part of the Universal Service Obligation.


Possible loopholes in the Bill

6.44 The Committee notes that under new Part 2C of the Bill, cl. 8CM 'Re-affirmation of universal service obligation', telecommunications carriers are required to carry out the universal service obligation described in section 288 of the Telecommunications Act 'as efficiently and economically as practicable'. [26]

6.45 While this wording exists in the current legislation, the Committee considers that private shareholders may seek to exploit possible loopholes such as this in pursuit of profit maximisation. Under full public ownership there is an implicit understanding that management and the Board will abide by the spirit of the law and not simply its letter. For example, it may be possible to reduce obligations under the legislation on the basis that provision of certain services to remote areas of Australia is unjustified on the basis of 'efficiency and economy'. Bearing in mind a company's corporate obligation to return profits to shareholders, excessive costs may be grounds for a telecommunications carrier to seek suspension of the obligation.

6.46 Clause 8CM (1)(c) states that 'losses that result from supplying loss-making services in the course of fulfilling the universal service obligation should be shared among carriers on an equitable basis …' While clause (1)(d) states that losses as determined 'should be open to scrutiny by those carriers, and by the public', this is qualified by the proviso that this information should be provided 'without undue damage to a carrier's interests being disclosed by the disclosure of confidential commercial information'.

6.47 The wording of these clauses may effectively subvert the Universal Service Obligation over time, and, in limiting scrutiny under the guise of 'commercial in confidence' information, has the potential to limit the extent of carriers' accountability to the public.


Funding of the Universal Service Obligation

6.48 Opponents of the privatisation of Telstra argue that, regardless of any immediate safeguards, it will be very difficult to maintain the cross-subsidies which underpin the Universal Service Obligation in a deregulated telecommunications market. [27] Privatisation would exacerbate this difficulty.

6.49 The Committee noted that the most enthusiastic advocates of privatisation recommended that the Universal Service Obligation should be funded from consolidated revenue. For example, Telstra suggested in its submission that in the post July 1997 arrangements, the Universal Service Obligation could be transferred to 'an on-Budget provision'. [28]

6.50 The Committee is concerned that if funding of the Universal Service Obligation was drawn from consolidated revenue, over time budgetary pressures will see the value of the Universal Service Obligation eroded. Figures provided to the Parliament by Telstra indicate that the NUSC [Net Universal Service Cost] for 1993-4 was in the region of $226 million. [29] These figures, shown in Appendix 8, reveal the cross-subsidies in each Federal Electorate.

6.51 If the Government decides to upgrade the definition of the standard telephone service, this figure would increase substantially. Such expenditure would immediately become the focus of Government's seeking budgetary cutbacks.

RECOMMENDATION 18: The Committee recommends the Universal Service Obligation continue to be funded by the carriers rather than from consolidated revenue.


6.52 Finally, the Committee notes that the current Minister, Senator Alston, has in the past written that:

6.53 As the Minister has expressed these views in the past, the Committee considers that consumers are right to be sceptical about his current assurances that he is totally committed to the concept of universal service and its ongoing upgrade.


Consumer Protection and the Customer Service Guarantee

6.54 The Government has sought to allay concerns about the outcomes of privatisation on consumers by introducing the Customer Service Guarantee. The Committee accepts the submission that this initiative itself amounts to a tacit admission that market forces act as no guarantor of quality in the telecommunications sphere. [31]

6.55 The Committee, in principle, supports the provision of a Customer Service Guarantee in legislation. However, the Committee notes that many witnesses expressed grave concerns about the scope and form of the proposed Customer Service Guarantee scheme. The Committee considered that the legislation required substantial strengthening and clarification before being enacted.

6.56 The Customer Service Guarantee will establish mandatory performance standards for carriers in a number of areas of service delivery, primarily related to the time taken for connecting telecommunications services and the period for rectifying faults and service difficulties. Failure to meet these standards will incur a financial penalty of up to $3 000.

6.57 The scheme enables the issue of an evidentiary certificate which will be prima facie evidence of a contravention of a performance standard, a function to be performed by the Telecommunications Industry Ombudsman if he or she accepts the function, and, if not, by AUSTEL.The submission prepared by the Telecommunications Industry Ombudsman implies that the Ombudsman is prepared to undertake the function of issuing evidentiary certificates.

6.59 It is expected that carriers will voluntarily compensate consumers for any failure to meet service standards, but ultimately, any penalty will only be enforceable through the courts.

6.60 One concern about the Customer Service Guarantee was that the Bill did not give sufficient emphasis to what should be the primary obligation of a carrier to resolve a customer's complaint about a breach of a performance standard instance. [32] Sub-Clause 87F (4) provides that the liability of a carrier for a breach of a performance standard may be discharged by giving the customer a credit in an account with the carrier, or in any other manner agreed between the carrier and the customer. In this regard, the Telecommunications Industry Ombudsman recommended that should be given greater prominence as an entirely separate clause.

6.61 Mr Pinnock, the Telecommunications Industry Ombudsman, also noted that the Bill:

6.62 In particular, the Telecommunications Industry Ombudsman was concerned that the Bill does not make it clear that the right of a customer to sue a carrier for damages under clause 87F for breach of a performance standard is intended as a weapon of last resort. Mr Pinnock noted that few consumers would either be interested in, or have the resources to contemplate, litigation whether in a consumer claims tribunal or in any other forum.

6.63 Similarly, Mr Pinnock noted that the Bill did not emphasise that the right of the TIO to issue an evidentiary certificate under Clause 87H was intended as a 'reserve' power. [34]

6.64 The TIO recommended that a new sub-Clause be added to Clause 87H (Evidentiary certificate issued by the Telecommunications Industry Ombudsman) as follows:

6.65 The Committee notes the TIO's assertion that Clause 87J of the Bill (Waiver of Guarantee of Service), was questionable and that in its present form it might lead to pressure being exerted on consumers to forego their rights in order to obtain cheaper services. [36]

6.66 A major criticism made by the TIO concerned the way in which the Customer Service Guarantee was expressed in the Bill. In its present wording it failed to emphasise that it remained the responsibility of the carriers to resolve consumer complaints in the first instance, rather than relying upon consumers having to resort to proceedings in a court of competent jurisdiction for the recovery of damages. [37]

6.67 This point was also raised by Consumers' Telecommunications Network witness, Ms Helen Campbell, in evidence in relation to evidentiary certificates. [38] Ms Campbell pointed out that consumers could resort to the Federal Court if carriers such as Telstra failed to fulfil contractual and service obligations, but few customers were prepared to undertake such proceedings, especially when relatively small sums were involved. Ms Campbell stated to the Committee that:

6.68 Ms Campbell emphasised that, although the Telecommunications Industry Ombudsman provided consumer protections, the concern was that the Bill did not provide 'an accessible enforcement mechanism', and that the Telecommunications Industry Ombudsman did not have 'a comprehensive coverage of the field': [40]

6.69 CTN also noted that the Customer Service Guarantee did not provide any mechanism for ongoing consultation with consumers, nor for any monitoring of consumer impacts of the less regulated aspects of the telecommunications industry. [42]

6.70 CTN noted that the Customer Service Guarantee only applied to carriers, while in the post-1997 deregulated market most consumers would be dealing with service providers who were not covered in the Bill.

6.71 Mr Pinnock referred specifically to consumers' ability to gain full protection under the proposed legislation. Mr Pinnock stated in his submission:

6.72 Mr Pinnock referred to the 'compliance model' proposed in the Government's discussion paper Post 1997 telecommunications legislation [44] and stressed the need for legislation to set out a specific service provider rule requiring carriage service providers to be 'participants in the TIO scheme, rather than merely having to comply with the Scheme' . [45]

6.73 The TIO argued that there are benefits to be gained from the registration of service providers with the regulator. [46]

RECOMMENDATION 19: The Committee recommends mandatory registration of service providers with the regulator be introduced as part of the post-1997 environment.


6.74 CTN believes that the Customer Service Guarantee should be more comprehensive, covering network upgrades, network congestion, transmission and other quality issues. [47]

6.75 In a series of recommendations, CTN has recommended that a proper framework of consumer protection be established before a decision is made about the privatisation of Telstra; that the legislation provide for consumer participation in the Telecommunications Access Forum; and that legislation provide for consumer consultation at all stages of development and review of codes.

6.76 The Communications Law Centre considered that the proposed Customer Service Guarantee would provide inadequate safeguards if Telstra were privatised. The Centre's submission argued the legislation, 'does not appear to cover indicative performance standards set by AUSTEL under section 38(2)(b) of the Telecommunications Act 1991'. [48] The Communications Law Centre submitted that:

6.77 The possibility of tardiness or inaction in upgrading the Customer Service Guarantee, without the guarantee of regular review to incorporate further enhancements in the future, has been highlighted as a weakness in the legislation.

6.78 The Australian Telecommunications Users Group (ATUG) recognises positive steps in the proposed legislation covering consumer protections and the Customer Service Guarantee, but cautioned that consumer protections in the proposed legislation were 'a first step'.

6.79 Ms Sue Harlow, a member of AUSTEL, stated in evidence that AUSTEL 'is strongly supportive of a scheme of customer service guarantees.' Referring to the Bill, however, she noted that the legislation was imprecise:

6.80 The Australian Consumers' Association (ACA) recommended that customer service guarantees should be extended to include performance categories covering 'network performance, congestion, signal quality, connection reliability and ... billing accuracy. [51]

6.81 The ACA also recommended that the Customer Service Guarantee should incorporate privacy provisions, and that membership to the Telecommunications Industry Ombudsman Scheme be made mandatory for carriers and service providers. [52]

RECOMMENDATION 20: The Committee recommends the Government confirm that critical issues of consumer concern, especially privacy, be handled through legislation and not through codes of practice.


6.82 In conclusion, the Committee believes the Government undertook inadequate consultation in the formulation of the proposed Customer Service Guarantee. This is reflected in the concerns brought to the attention of the Committee by all major consumer groups. The TIO noted with regret the lack of consultation between the Department of Communications and the Arts and the office of the Telecommunications Industry Ombudsman when the Department was drawing up the Bill. He stated that consultation was 'minimal':

RECOMMENDATION 21: The Committee recommends prior to enacting legislation to introduce the Customer Service Guarantee, the Government should establish a working party including representatives of each of the carriers, the Telecommunications Industry Ombudsman, AUSTEL, Australian Telecommunications User Group, Consumers' Telecommunications Network, the Australian Consumers' Association and the Communications Law Centre, for the purpose of formulating more satisfactory legislative provisions concerning the Customer Service Guarantee. The working party should include the following in its considerations:


Consumer Protection Safeguards in the Post 1997 Regulatory Regime

6.83 The Government has foreshadowed that consumer safeguards in the post- 1997 regulatory regime will depend heavily on the use of codes of practice developed by industry. Compliance with these codes of practice is to be based on industry self regulation.

6.84 The discussion on the use of these codes of practice in the Government's May 1996 discussion paper is sketchy. The Government has indicated that mandatory standards-making powers would be used for 'matters that the Government considers clearly require attention' while industry-developed codes could deal with other 'important, but less critical issues'. The discussion paper does not indicate precisely what it means by 'less critical issues'. Consumer fears have been heightened by rumours that matters such as privacy will be handled within codes of practice. It is not clear how many codes of practice will exist, what their subject matter will include, how they will be monitored, nor whether consumer groups will have any input.

6.85 Ms Cora Trevarthen, speaking on behalf of the Tasmanian Consumer's Association, indicated that consumer protections should be mandatory requirements and not open to qualifications by carriers.

6.86 The Australian Consumers' Association (ACA) suggested that in order to protect the best interests of consumers, there be direct consumer representation on Telstra's Board. This measure would ensure accountability and allow consumer participation in the process of 'policy settings, including access arrangements, regulation of anti-competitive conduct and arrangements for participating in co-regulatory mechanisms for code setting'. [55]

6.87 The ACA noted the negative aspects of the proposed consumer protection safeguards, particularly in relation to subordinate legislative instruments. While the proposed regulatory framework might be 'adaptable and responsive to consumers needs and demands ... it leaves important detail to the vagaries of progress, subject to delay, uncertainty and disagreement between the players, regulators and other stakeholders'. [56] The ACA pointed to recent experience of problems in the mobile phone market.

6.88 The Committee noted that AUSTEL also strongly voiced a preference for a mandatory consumer protection regime:

RECOMMENDATION 22: The Committee recommends codes of practice for consumer protection be mandatory for all carriers and service providers.


6.89 In conclusion, it was clear from submissions and evidence received that consumers and consumer representative groups, as well as the current and future regulatory bodies, viewed the proposed legislation as having distinct weaknesses in the arena of consumer protection safeguards.

RECOMMENDATION 23: The Committee recommends legislation be drafted to provide for consumer representation on a full voting basis, at all stages of development of codes of practice.

RECOMMENDATION 24: The Committee recommends time limits be clearly set out for the development of codes of practice. These time limits should allow for adequate public input and consumer consultation. As a minimum, all codes should be finalised and approved by AUSTEL by 1 July 1997. Otherwise, AUSTEL should be empowered to immediately intervene and develop codes.



[1] Key groups that made major submissions and gave evidence on consumer protection were:

Australian Competition and Consumer Commission, Submission No.266, Vol.9.

Australian Consumers Association, Submission No.340, Vol.13.

Australian Council of Trade Unions, Submission No.127, Vol.3.

Australian Telecommunications Authority (AUSTEL), Submission No.201, Vol.7.

Australian Telecommunications Users' Group, Submission No.202, Vol.8.

Centre for Social and Welfare Research, Submission No.302, Vol.11.

Communications Law Centre , Submission No.343, Vol.13.

Communications, Electrical and Plumbing Union (CEPU)/

Community and Public Sector Union (CPSU), Submission No.296, Vol.10.

Consumers' Telecommunications Network, Submission No.200, Vol.7.

National Committee for Australian Women in Agriculture, Submission No.264, Vol.9.

Service Providers Action Network (SPAN), Submission No.313, Vol.12.

Tasmanian Consumers' Association, Submission No.363, Vol.14.

Telecommunications Industry Ombudsman, Submission No.135, Vol.4.

Telecommunications Needs Research Group, Submission No.362, Vol.14.

Women's Economic Think Tank and National Women's Media Centre, Submission No.308, Vol.11.

[2] 'Harradine wants more cash for Tasmania in Telstra deal', Canberra Times, Thursday, 22 August 1996.

[3] Telecommunications Strategies Report, P.Budde Communications P/L, Sydney, 1996-97.

[4] The Australian Communications Authority Bill 1996 (discussed in Chapter 2), is to be introduced into the Senate for passage in the 1996 Spring sitting. According to the Government, passage of the Bill will 'enable participants in the telecommunications industry to plan their investments, develop codes of practice, access codes and undertakings (dealt with by the Trade Practices Amendment (Telecommunications) Bill 1996) and make other appropriate arrangements'. Statement of Reasons for the Senate, Senator the Hon Richard Alston, Minister for Communications and the Arts.

[5] The Standard Telephone Service Review Group is to review whether the definition of the Standard Telephone Service (STS) mandated under the universal service arrangements should be upgraded to accommodate new technologies and minimum service levels. The objective of the Review is to determine whether recent and emerging developments in telecommunications technology, or increased demand for more advanced telecommunications services in the Australian community, warrant a change in the level of service mandated under the Universal Service Obligation.

[6] Professor Patricia Gillard, Department of Communication Studies, and Director, Telecommunications Needs Group, RMIT, Submission No.362, Vol.15, p.2866.

[7] Business Week, 16 September 1991, cited by Henry Geller, 'Fiber Optics: An Opportunity for New Policy?' A Report of the Annenberg Washington Program, Communications Policy Studies, Northwestern University, p.4, (n.d.)

[8] Business Week, 16 September 1991, cited by Henry Geller, 'Fiber Optics: An Opportunity for New Policy?' A Report of the Annenberg Washington Program, Communications Policy Studies, Northwestern University, p.5.

[9] Networking Australia's Future, Final Report of the Broadband Services Expert Group, December 1994, p.iv.

[10] Rural Industries Research and Development Corporation, May 1996.

[11] Rural Industries Research and Development Corporation, May 1996, p.9.

[12] Mr A. Horsley, Australian Telecommunications Users' Group, Submission No.202, Vol.8, p.1490.

[13] Networking Australia's Future, Final Report of the Broadband Services Expert Group, December 1994, p.ix.

[14] Mr P.Rizzo, Group Managing Director, Telstra, Official Hansard Report, 3 July 1996, p.102.

[15] Mr P.Rizzo, Telstra Corporation Limited, Official Hansard Report, 3 July 1996, p.103.

[16] Mr P.Rizzo, Telstra Corporation Limited, Submission No.189 Vol.7, p.1320-1321.

[17] Mr G. Ward, Group Director, Regulatory and External Affairs,Telstra, Official Hansard Report, 3 July 1996, p.114.

[18] Mrs A. Lewis, National Committee for Australian Women in Agriculture, Official Hansard Report, 4 July 1996, p.301.

[19] See also Professor P. Gillard, Official Hansard Report, 30 July 1996, passim.

[20] Mrs A. Lewis, National Committee for Australian Women in Agriculture, Official Hansard Report, 4 July 1996, p.302.

[21] Senator W. O'Chee (QLD, NAT), Official Hansard Report, 4 July 1996, p.303.

[22] Mrs A. Lewis, National Committee for Australian Women in Agriculture, Official Hansard Report, 4 July 1996, p.304.

[23] Mr J. Rice, Official Hansard Report, 11 July 1996, p.410.

[24] Ms S. Harlow, AUSTEL, Official Hansard Report, 30 July 1996, p.959.

[25] Ms C. Trevarthen, President, Tasmanian Consumers' Association, Submission No 363, Vol.15, p.2877.

[26] Telstra (Dilution of Public Ownership) Bill 1996, p.48.

[27] A. Brown, Should Telstra be Privatised? School of Economics, Griffith University, Working Paper, No.8 (February 1996), cited in Bills Digest No.72, 1995-6, Parliamentary Research Service, Department of the Parliamentary Library, Canberra, p.7.

[28] Mr P.Rizzo, Group Managing Director,Telstra Corporation, Submission No.189, Vol.7, p.1321.

[29] Answer. House of Representatives, Question on Notice (No.2757), from Mr Mark Latham, MP, (ALP) re: Telecommunications Cross Subsidy in each Federal Electorate.

[30] Senator R. Alston, 'Time For Some Real Competition: Is Telecom's Universal Service Obligation Still Relevant?' in M. Armstrong, (ed.) Telecommunications Law: Australian Perspectives Melbourne: Media Arm, 1990.

[31] Communications, Electrical & Plumbing Union, Submission No.296, Vol.10, p.1884.

[32] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135 Vol.4, p.816.

[33] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.816.

[34] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.816.

[35] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.817.

[36] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.817.

[37] Mr J. Pinnock, Telecommunications Industry Ombudsman, Official Hansard Report, 3 July 1996, p.230.

[38] Ms H. Campbell, Consumers Telecommunications Network, Official Hansard Report, 12 July 1996, p.514.

[39] Ms H. Campbell, Consumers Telecommunications Network, Official Hansard Report, 12 July 1996, p.508.

[40] Ms H. Campbell, Consumers Telecommunications Network, Official Hansard Report, 12 July 1996, pp.514-515.

[41] Ms H. Campbell, Consumers Telecommunications Network, Official Hansard Report, 12 July 1996, p.514.

[42] CTN Newsletter, Issue 18, June 1996, p.12.

[43] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.814.

[44] Senator The Hon R. Alston, Minister for Communications and the Arts Telecommunications Working Forum, Discussion Paper Post 1997 Telecommunications Legislation, 16 May 1996, p.22.

[45] Mr J. Pinnock, Telecommunications Industry Ombudsman, Submission No.135, Vol.4, p.814.

[46] Mr J. Pinnock, Official Hansard Report, 3 July 1996, p.231.

[47] Ms H. Campbell, Consumers Telecommunications Network, Submission No.200 Vol.7, pp.1410-1411.

[48] Mr J. Given, Communications Law Centre, Submission No.343 Vol.13, pp.2622-2623.

[49] Mr J. Given, Communications Law Centre, Submission No.343 Vol.13p.2623.

[50] Ms S. Harlow, AUSTEL, Official Hansard Report, 30 July 1996, p.959-960.

[51] Australian Consumers Association, Official Hansard Report, 12 July 1996, pp.537-538.

[52] Australian Consumers Association, Official Hansard Report, 12 July 1996, p.538.

[53] Mr J. Pinnock, Telecommunications Industry Ombudsman, Official Hansard Report, 3 July 1996, p.229.

[54] Ms C. Trevarthen,Tasmanian Consumers' Association, Official Hansard Report, 30 July 1996, p.948.

[55] Mr B. Melville, Australian Consumers' Association, Submission No.340, Vol.13, p.2517-2518.

[56] Mr B. Melville, Australian Consumers' Association, Submission No.340, Vol.13, p.2518.

[57] Ms S. Harlow, AUSTEL, Submission No.201, Vol.7, p.1466.