On 10 May 2000, the Senate referred the
Telecommunications (Consumer Protection and Service Standards) Amendment Bill
(No.1) 2000 to the Senate Environment, Communications, Information
Technology and the Arts Legislation Committee, (Selection of Bills Committee
Report No 6 of 2000). The Committee was required to report to the Senate by 19
The Telecommunications (Consumer Protection and
Service Standards) Amendment Bill (No.1) 2000 amends Part 2 of the Telecommunications
(Consumer Protection and Service Standards) Act 1999, the part of the Act
that establishes the universal service regime for telecommunications. The
universal service obligation (USO) ensures that the standard telephone service
(ie. voice telephony), payphone and other prescribed services are reasonably
accessible to all people in Australia on an equitable basis, wherever they
reside or carry on business. The complementary digital data service obligation
(DDSO) underpins access on request to a 64kbps (or comparable) data service. 
The Explanatory Memorandum to the
Telecommunications (Consumer Protection and Service Standards) Amendment Bill
(No.1) 2000 states that the purpose of the Bill is to:
- provide greater advance certainty for industry
in relation to USO costs;
- provide greater certainty for prospective
tenderers in the Extended Zones Tender about the regulatory environment in
which they would be operating should they win the Tender;
- provide the Government with greater
administrative flexibility in the context of the Tender and the operation of
the USO regime generally; and
- to facilitate greater competition in the supply
of services under the Digital Data service Obligation, by reducing regulatory
Telstra is currently the only universal service
provider, a role that it is required by law, to undertake. Telstra’s USO costs
for 1997/98, 1998/99 and 1999/2000 were capped by Parliament and a review of
USO arrangements was undertaken in 1999. The Bill amends section 57 of the
current Act to enable the Minister to make a written determination specifying
an amount that is to be the USO cost or a method for working out the USO cost
for a specified person, or for each person in a specified class, for a
specified financial year. In order to provide longer-term certainty, the
Minister’s determination will be able to encompass up to three successive
The Explanatory Memorandum states that the Minister would generally seek the
advice of the Australian Communications Authority before making such a
As part of the sale of the second tranche of
Telstra in 1998, Parliament allocated $150 million (referred to as a “Social
Bonus”) to provide untimed local calls in remote Australia. In accordance with
decisions announced by the government on 23 March 2000, the Bill amends the Act
to give the successful tenderer for the provision of untimed local call to a
particular region, the certainty that it will become the regional universal
service provider (USP).
Other amendments seek to provide prospective
tenderers in the Extended Zones tender ongoing access to information necessary
to fulfil their obligations as a USP and greater certainty about the regulatory
environment in which they would be operating should they be successful. The
Explanatory Memorandum to the Bill gives further details in relation to the
In his second reading speech, the Minister
flagged that a second Telecommunications (Consumer Protection and Service
Standards) Bill (Part 2) dealing with USO matters will be introduced at a later
date. More substantive than the Bill under consideration, the second Bill will
seek to implement all elements of the Government’s USO package announced on 23
The Committee’s inquiry
The Committee advertised its inquiry in each
State capital city newspaper as well as in The Weekend Australian and The
Australian Financial Review. Details of the inquiry were also placed on the
Committee’s homepage on the Internet. The Committee received 4 submissions, 3
of which went to the core of the issues addressed in the Bill. After careful
deliberations, the Committee decided to prepare its report to the Senate on the
basis of written submissions only without holding a public hearing. All the
submissions received are publicly available through the Committee Secretariat.
A list of the submissions is at Appendix 1.
One of the submissions received was a
complaint about Telstra’s level of service in Telstra’s Call
Centres and specifically in relation to a new phone connection in Margate,
Tasmania. It was not directly related to the Bill.
In its submission, Telstra argues that the
stated policy of the Government in relation to universal service provision and
the remote Australia untimed local call tender “has not been adequately given
effect to in the drafting of the Bill”.
In particular, Telstra argues that other
carriers and the community as a whole would have to bear higher Net Universal
Service Costs (NUSC) because under the Bill, Telstra’s status as a national
universal service provider (USP) will not be affected by another carrier
winning the tender to become the new regional USP. Telstra would be obliged to
maintain its network (as a USP) even if it were not the successful tenderer. In its supplementary submission
to the Committee, the Department of Communications, Information Technology and
the Arts (DCITA) stated:
The Department ‘s legal advice is that this interpretation of
the Bill is incorrect
As a result of the operation of s.21(30 of the Act, the
declaration of a new RUSP would remove Telstra’s obligation in relation to the
region covered by the RUSP declaration. This is irrespective of whether the
declaration takes place via the proposed deemed declaration through the untimed
local call agreement or through direct declaration.
In its submission to the Committee the CEPU also
expresses concern that the NUS costs are likely to rise as a result of the
proposed new framework.
Determination of Net Costs of a Universal Service Provider
In relation to item 70 of the Bill, the power
for the Minister to determine the Net Universal Service Cost (NUSC) of a
Universal Service Provider, the Communications, Electrical and Plumbing Union
(CEPU) called for greater transparency in the cost assessment methodology and
In the Union’s view, if the Minister is to be empowered to make
NUSC determinations, it should be upon the recommendation from the ACA
(Australian Communications Authority). If the ACA recommendation is not
accepted, the Minister should be obliged to state the basis for any adjustments
to the ACA estimate.
At an absolute minimum, the Minister should be required to make
public the basis of any universal service cost assessment. 
For its part, Telstra called for the Ministerial
power of determination to be conferred by amending section 57 of the Act to be
limited so that:
the Minister must be satisfied, after reasonable inquiry, that
the figure he determines is a reasonable estimate of the figure that would be
derived by application of a methodology set out in the Act or, alternatively,
another methodology declared by the Minister under a disallowable instrument.
The Department of Communications, Information
Technology and the Arts stressed in its submission to the inquiry that in
determining the USO costs:
The Minister would obtain the advice of the ACA ...
...Prior to making a determination the Minister will be able to
seek the advice of the ACA and consider any other matter that is relevant. 
In its supplementary submission, DCITA pointed
The Government has already asked the ACA to provide
forward-looking estimates of the USO costs as the basis for the Minister’s
Both Telstra and the CEPU expressed concerns
about proposed new sections 20(2A) and 26(A(2A), which provide that, in making
USP declarations, “the Minister is not limited to considering only the persons
suitability to provide the services that must be provided to fulfil the
universal service obligation”.
Explaining its concern with the breadth of the
powers conferred on the Minister under the Bill and in particular with those
powers relating to determining USO and DDSO providers, the CEPU stated that
”clear public policy criteria need to be specified to guide the process of USP
Telstra’s position was that:
There should be appropriate limitations on the discretion
conferred on a Minister in the making of such declarations.
The CEPU has a particular concern about the
Minister’s power to choose a Digital Data Service Obligation provider, “without
reference to even the most broad criteria” and calls for greater transparency
in this process.
Compulsory information provision
Telstra expressed its concern at proposed new
sections 24A and 26F (items 19 and 49 of the Bill) which in its view, give
Extensive powers to require the production of commercially
valuable, sensitive and unnecessary information from former USPs.
Telstra is concerned that the powers conferred on carrier competitors
are far wider than they reasonably ought or need to be.
Telstra is seeking amendments that would, among
other things, limit incoming providers to require:
the production of only that information that is ‘reasonably
necessary to enable” the incoming provider to do those things that it is
“required to do as a USP;...
and it is calling for:
either the Minister or the ACA (to be) given an unequivocal
power to declare that information sought is not required to be provided, either
because the request is unreasonable or because access to the information sought
is not necessary to honour a USP obligation.
In its submission, the Department of
Communications, Information Technology and the Arts explained that USPs cannot
simply ask for any information they may feel like having:
Information requested must assist the new USP to do something
required (eg service customers) or permitted (eg to claim costs)
under Part 2 (ie. the universal service regime)...
The Minister’s ability to determine information to be relevant
is designed to facilitate the prompt resolution of any disputes.
In its supplementary submission , DCITA agreed
that the Bill provides the incoming USPs with access to a wide-range of
information but explained:
The proposed provisions are far-reaching, but it is appropriate
given the importance of the information to the maintenance of universal service
in regional Australia, and Telstra’s past reluctance to provide information.
Having considered the Bill and the issues raised
in the submissions it has received, the Committee makes the following
The Committee recommends that the Bill be passed.
Senator Alan Eggleston
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