Chapter 2 - ACMA and the regulatory framework
Much work is needed to flesh out the policy framework for
communications to provide clear direction to the newly integrated regulator.
Integration of the regulators offers an opportunity to assess the entire regulatory
system for communications, to ensure it is well suited to the future
development of a dynamic sector incorporating broadcasting, telecommunications
and audiovisual production.
The regulation of Australian communications is
complex, and has been subject to considerable reform over the last decade. There are eight pieces
of legislation that regulate the communications industry:
- Australian Communications Authority Act
- Telecommunications Act 1997;
- Telecommunications (Consumer Protection and
- Radiocommunications Act 1992;
- Spam Act 2003;
- Broadcasting Services Act 1992;
- Trade Practices Act 1974 (TPA);
- Prices Surveillance Act 1983.
regulatory powers are shared between six different regulatory bodies:
Broadcasting Authority (ABA);
Communications Authority (ACA);
Competition and Consumer Commission (ACCC);
Communications Industry Forum (ACIF);
of Communications, IT and the Arts;
Industry Ombudsman (TIO).
Act 1997 (TA) developed a framework with greater emphasis on
self-regulation. The ACA has responsibility for technical matters on
telecommunications, and the ACCC has responsibility for competition issues.
Industry self-regulatory bodies, particularly ACIF, play a key role on the
development of codes of practice for telecommunications. Industry participants, independent communications
experts, and consumer groups have argued to this inquiry that the current
communications regulatory environment is inadequate because:
remains a lack of competition in communications, especially telecommunications;
and regional areas do not have universal access to telecommunications;
regulation has failed to meet the needs of consumers;
often lack the teeth or resources to enforce behavioural change;
regime is too fragmented to deal with issues arising from the convergence of
technology. For example, there is regulatory uncertainty that surrounds content
services on mobile devices.
Budde submitted that due to a lack of strong
government policy and focus for telecommunications regulation the current
regulatory regime is fragmented and problematic. He argued that 'the regulatory
structure in our country is a hodgepodge.'
The Committee heard that since the introduction of the Telecommunications Act 1997, the
regulation of telecommunications has occurred in a fragmented manner:
As a consequence of the market realities, telecommunication policies
have consisted largely of a number of reactive, haphazard, stop-gap decisions,
in an endeavour to overcome the many problems generated by the self regulatory
The establishment of a new regulatory authority is seen
by the Government and ALP and many in industry and the wider community as a
first step in addressing inadequacies in communications regulation. This
chapter sets out the current key features of the communications regulatory
environment and outlines the developments leading up to the ACMA proposal. It
discusses evidence to the Committee about the creation of a new authority and
presents the Committee's conclusions in regard to the need for a new regulatory
Current institutional arrangement
In previous reports
this Committee has provided a detailed overview of the history of
communications regulation in this country. The Committee, therefore, will not
repeat that discussion; rather, the functions and structure of each of the
agencies involved in the current regulatory framework are outlined briefly
Australian Communication Authority
The Australian Communications Authority (ACA) is a
government regulator of consumer and technical issues for radiocommunications
Established in July 1997 under the Australian Communications Authority Act 1997, (by a merger of
AUSTEL and SMA), the ACA exercises powers under the Telecommunications Act 1997, the Telecommunications (Consumer Protection and Service Standards) Act 1999,
the Radiocommunications Act 1992, the
Spam Act 2003, and other related
The ACA works with the communications industry to
achieve active self-regulation, while ensuring industry compliance with licence
conditions, codes and standards and monitoring the effect of regulations to
ensure they are responsive to the community's needs.
Under TA, the ACA may require an industry body to
develop a code or standard, and registers these once developed, or it imposes
its own standards and monitors the effectiveness of these codes and standards.
The radiocommunications regulatory role of the ACA involves the allocation of
licences, preparation of spectrum plans, marketing of spectrum and management
of interference. Its powers allow it to set standards, including health and
safety standards for transmission.
Funded through the federal Budget, the ACA collects
substantial revenue on behalf of the Commonwealth. Revenue is collected through
telecommunications carrier and radiocommunications licence fees and charges, as
well as through charges on telecommunications numbers, which generate $60
million a year. The ACA also collects revenue from price-based allocation of
spectrum. More than $3 billion dollars
has been raised through auctions of spectrum licences since 1997.
The main functions of the ACA are to:
- Represent Australia in international regulation
- Manage access to the radiofrequency spectrum
through radiocommunications licensing
- Resolve competing demands for spectrum through
price-based allocation methods
- Investigate and help in resolving
- License telecommunications carriers and ensure
compliance with licence conditions and carriage service provider rules
- Regulate industry compliance with mandatory
standards and voluntary codes of practice
- Administer legislative provisions relating to
powers and immunities of carriers in constructing telecommunications facilities
- Monitor compliance with consumer safeguards and
- Report on telecommunications industry
- Administer the Telecommunications Numbering Plan
- Inform industry and consumers about
- Regulate transmission of unsolicited electronic
The ACA has a full-time Chair and Deputy Chair, and
between one and three full-time or part-time members, appointed for terms of up
to five years. The ACA is currently made up of the Acting Chairman, the Acting
Deputy Chairman, a full-time Member, a part-time Member and Acting Associate
Member. Day-to-day business at the ACA is managed by an executive team -
currently the Chairman, the Deputy Chairman, the full-time Acting Member, two
Senior Executive Managers and nine Executive Managers.
The ACA employs around 440 staff in offices across Australia. It has central offices in Canberra
and Melbourne, and
regional offices and operations centres around Australia.
Regional offices provide access to the radiofrequency spectrum through
licensing and frequency assignment services, and undertake interference
investigations and audits to ensure compliance with regulatory requirements.
The ACA has powers to conduct public inquiries and
investigations into carriage services, content services and any matter relevant
to the ACA's functions and powers as contained in sections 486-7 and 508-10 of
Australian Broadcasting Authority
The Australian Broadcasting Authority (ABA) is an
independent statutory authority constituted under Part 12 of the Broadcasting Services Act 1992 and
responsible, through the Minister for Communications, Information Technology
and the Arts, to Parliament. The Broadcasting Services Act defines the
role of the regulatory authority, gives the ABA
a range of powers and functions, and sets out explicit policy objectives. The
objectives include the desirability of program diversity, limits on
concentration of ownership and foreign control of the mass media and the need
for media to help foster an Australian cultural identity, report news fairly
and respect community standards.
The Broadcasting Services Act provides for the
appointment of a Chairperson, a Deputy Chairperson and at least one, but not
more than five, other Members who may be full-time or part-time. The Members of
the ABA are appointed by the
Governor-General for periods of up to five years and are eligible for
reappointment on one occasion only. The Minister may appoint persons to be
Associate Members of the ABA,
either generally or for particular investigations or hearings.
The ABA's main
functions are to:
- plan the availability of segments of the
broadcasting services bands for analog and digital broadcasting
- allocate, renew, suspend and cancel commercial
and community broadcasting and narrowcasting licences, and collect any fees
payable for those licences
- formulate and vary commercial and national
television digital conversion schemes and approve the implementation plans for
digital conversion for commercial television broadcasters
- oversee compliance with the BSA and other
regulations, including program standards about Australian content and
- investigate complaints that the BSA or a
mandatory condition or standard has been breached
- register and keep under review codes of practice
relating to content and complaints handling for broadcasting and online content
undertake reviews, surveys and research on the performance
of broadcasters, programming
- matters, technological advances and service trends
in the broadcasting industry, and other broadcasting issues.
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission
(ACCC) is an independent statutory authority formed in 1995 to administer the Trade Practices Act 1974 (TPA) and the Prices Surveillance Act 1983. The ACCC
has a Chairman, a Deputy Chair, five full-time Commissioners and several
associate and ex-officio members and a Chief Executive Officer. Appointments to
the ACCC involve participation by Commonwealth, state and territory
The ACCC administers the economic and competition
aspects of telecommunications regulations, having taken these functions over from
the former industry-specific regulator, AUSTEL, in 1997. It is the only
national agency dealing generally with competition matters and the only agency
with responsibility for enforcing the TPA and the state/territory application
legislation. The ACCC outlined its powers in its submission:
The current regulatory regime was introduced with the
deregulation of the telecommunications sector in 1997. Changes to the Trade Practices Act 1974 (TPA)
saw the introduction of the telecommunications-specific access regime (Part
XIC) and anti-competitive conduct provisisons (Part XIB). These provisions apply in addition to the
general access and competition provisions that apply to the economy more
broadly, as contained in Parts IIIA and IV of the TPA respectively.
The ACCC promotes competition and fair trade in the
market place and regulates national infrastructure services. Its primary
responsibility is to ensure that individuals and businesses comply with the
Commonwealth competition, fair trading and consumer protection laws.
Competition regulation is primarily under the TPA. Part
XIB of the TPA provides mechanisms to address breaches of the
telecommunications-specific ‘competition rule’. Under the rule, a carrier or
carriage service provider must not engage in anti-competitive conduct. A carrier or carriage service provider is
said to have engaged in anti-competitive conduct if it has a substantial degree
of market power in a telecommunications market and takes advantage of that
power with the effect, or likely effect, of substantially lessening
competition. In comparison, the general anti-competitive provisions in Part IV
of the TPA have a higher purpose threshold.
However, as the ACCC submitted:
In introducing the telecommunications-specific regime, the Government
considered that total reliance on the general provisions in Parts IIIA and IV
of the TPA would not achieve its objectives as, among other things :
is a complex, horizontally and vertically integrated industry;
cross-subsidies by the incumbent from non-competitive markets to markets in
which competition exists or is emerging is a particular threat to the
establishment of a competitive environment;
- due to the fast
pace of change in the industry and the volatile state of the industry,
anti-competitive behaviour can cause particularly rapid damage to competition;
- there is
considerable scope for the incumbent to engage in anti-competitive conduct
because competitors in downstream markets depend on access to networks or
facilities controlled by the incumbent.
The ACCC is of the view that the significance of these factors
has not diminished over the time that the telecommunications-specific regime
has been in place.
ACIF is an industry owned, resourced and operated
company established to implement and manage communications self-regulation
Established as the peak self-regulatory body of the communications industry it
has primary responsibility for the development of consumer codes, operational
codes and technical standards. The ACIF was incorporated as a company of
limited guarantee in June 1997.
ACIF's main functions include:
- the timely delivery of Standards, Codes and
other documents to support competition and protect consumers;
- driving widespread compliance; and
- the provision of facilitation, coordination and
implementation services to enable the cooperative resolution of strategic and
ACIF comprises a Board, an Advisory Assembly standing
Reference Panels, task specific Working Committees, Industry Facilitation
Groups, Consumer Advisory Bodies, and a small Executive. It is the
communications industry’s peak body, leading the delivery of best practice in
industry self-regulation. Membership of the ACIF is open to all participants in
the communications industry, with fees assessed with regard to industry
category and annual revenue. The ACA must be satisfied that ACIF represents all
sections of the communications industry and consults all interested parties
when developing codes and standards.
Telecommunications Industry Ombudsman (TIO)
The Telecommunications Industry Ombudsman was
established in 1993 to provide free and independent alternative dispute
resolution scheme for small business and residential consumers in Australia
who have a complaint about their telephone or Internet service.
The role and powers of the TIO are set out in Part 6 of
the Telecommunications (Consumer
Protection and Service Standards) Act 1999. Its Constitution and Memorandum
and Articles of Association govern the TIO's operations. It is administer by a
Council and Board (appointed by and from industry, with the exception of an
independent director) and managed by an independent Ombudsman.
The Council is comprised of five TIO member representatives
and five consumer representatives, with an independent Chairman. While the
Ombudsman has responsibility for the day to day operations of the scheme, the
Council provides advice to the Ombudsman on policy and procedural matters.
The TIO is an industry-funded scheme, deriving its
income solely from members who are charged fees for complaint resolution
services provided by the TIO. Members consist of telecommunications carriers,
telephone carriage providers and Internet Service Providers (ISPs). A member is
only charged complaint handling fees if the TIO receives a complaint from one
of its customers. Therefore, the funding system acts as an incentive for
members to keep TIO investigations to a minimum by developing and maintaining
effective complaint handling and customer service procedures.
The TIO has the authority to make Binding Decisions (up
to the value of $10,000) that are legally binding upon the telecommunications
company, and Recommendations (up to the value of $50,000). The TIO also has the
power to exercise its discretion not to investigate a case further if it is of
the view that all relevant facts in the matter have been considered.
The TIO can only investigate a complaint if:
- The consumer has given the service provider a
reasonable opportunity to address the complaint;
- The complaint is made within 12 months of the
consumer becoming aware of the circumstances surrounding the complaint. The
time limit may be extended by a further 12 months in certain cases;
- Legal proceedings have not commenced;
- The complainant was resident in Australia at the
time that the circumstances surrounding the event occurred;
- The complaint is made in good faith; and
- The complaint type is within the TIO’s
jurisdiction (set out below)
The TIO has jurisdiction to investigate complaints
- The standard telephone service;
- Mobile services;
- Internet access;
- Delays in telephone connections;
- Printed and electronic White Pages;
- Fault repair;
- Land access; and
- Breaches of the Customer Service Guarantee and
industry Codes of Practice.
In 2000 the Productivity Commission conducted a major
review of broadcasting with a view to improving competition, efficiency and
consumers' interests in broadcasting services.
The review referred to 'a degree of overlap' between the functions of the ABA
and the ACA, and noted that 'a single spectrum manager would remove these
overlaps' and improve efficiency in spectrum management. However, the Commission concluded that
while combining the two bodies might lead to some administrative efficiencies,
there would be drawbacks if a single body were required 'to pursue multiple and
sometimes conflicting objectives'. The Commission concluded that 'social and
cultural objectives are better pursued independently, by an organisation
separate from that which allocates spectrum'.
In August 2002, the Department of Communications,
Information Technology and the Arts (DCITA) released a discussion paper on
spectrum management. The paper
focussed in particular on whether changes in the roles and responsibilities of
the ACA and the ABA would be likely
to lead to efficiencies or other improvements. Submissions from both the ABA
and the ACA supported a merger of the two bodies. Specifically, the paper
sought industry and public views on three institutional reform options:
a) creation of a
single agency with responsibility for broadcasting, telecommunications,
radiocommunications and online regulation
b) transfer of the ABA’s
spectrum planning, licence allocation and enforcement functions to the ACA
c) transfer of the ABA’s
broadcasting spectrum planning functions to the ACA.
Following this process, the Government determined that
the only viable alternative to retaining the existing regulators as separate
entities was the merging of the ACA and ABA into a single organisation with
responsibility for broadcasting, telecommunications, radiocommunications and
online regulation (option (a) above).
In August 2003, DCITA released a further discussion
paper, focussing on the key issues
that would need to be addressed if the two bodies were merged. The discussion
paper specifically ruled out any proposal to assume the ACCC's responsibility
for competition regulation.
The Australian Communications and Media Authority
On 11 May 2004,
in association with the 2004–05 Budget, the Government announced its intention
to merge the two bodies, to create a new communications and media regulator
called the Australian Communications and Media Authority (ACMA). It was argued that the creation of
ACMA would have few implications for industry and the community, as there was
no changes to the existing regulatory and spectrum planning frameworks for
telecommunications and broadcasting. ACMA would retain the existing offices of
the ACA and ABA throughout Australia,
although it was proposed that some functions may be co-located over time.
It was proposed that in establishing ACMA the existing
responsibilities of the ACA and the ABA
regulating broadcasting, online content, radiocommunications and
telecommunications be placed within a single regulator, thus enabling a
coordinated regulatory response to converging technologies and services in
areas as diverse as spectrum management and content regulation. Additionally,
the ACA argued that the single regulator would also be better placed to respond
to the statutory reviews of digital television required in 2004 and 2005 under
the Broadcasting Services Act 1992.
In his second reading speech for the main Bill,
The Hon. Peter McGauran outlined the need for establishing ACMA:
The formation of ACMA is in response to convergence within the
communications industry.... New regulatory structures are required to deal with
these changes. It is becoming increasingly difficult for two separate
regulators, one of which is primarily focused on infrastructure and carriage
issues, to provide a holistic response to convergence. The establishment of
ACMA will enable a coordinated regulatory response to converging technologies
and services. The new authority will be better placed to take a strategic view
of wider convergence issues.
The establishment of the new authority had in principle
support from the ALP. Labor's Stephen Smith MP argued:
Labor supports this legislation as a necessary first step in
addressing the increasing regulatory problems posed by the emergence of
convergent technologies. It is the first step towards addressing this issue – a
much delayed one at that, but in the final analysis it is a step in the right
An outline of the main provisions of the ten bills
which establish the ACMA and make consequential changes to existing legislation
is provided in Chapter 3.
Technological convergence was argued by the government
as being a key factor in the establishment of the ACMA. Similarly, Telstra submitted
the importance in addressing issues of technological convergence:
Telstra understands that the policy motivation for the merger is
to respond to technological convergence within the communications industry.
Telstra agrees with the Explanatory Memorandum to the ACMA Bill that digital
technologies are reshaping traditional telecommunications and broadcasting
industry sectors by allowing new types of devices and services, necessitating a
Telstra supports the merger of the ACA and ABA.
Greater coordination at the institutional level is a legitimate first step
towards addressing technological convergence.
Telstra noted in their submission that the term
'convergence' is generally taken as referring to the ability of different media
to be provided over essentially the same type of digital platform. They
illustrated this by the diagram in Figure 1 below.
Figure 1: Conceptual illustration of
convergence over the last 25 years
In evidence the Australian Consumers Association
outlined the significance of technological convergence in a digital
Perhaps the most important change is the end of technological
imperatives to vertically integrate the method of delivery and the form of
content. In a fully digital world, this association is weakened or breaks down
completely. A newspaper masthead could
migrate to the Net – no printing press there.
Voice could be carried over data channels over pay-TV cables, bypassing
traditional exchanges. The Internet
could deliver TV over the copper pair cables in homes currently used for voice
– no need for radio frequency transmission.
On the other hand mobile telephone data spectrum can be used for digital
TV or radio.
The Committee was told that the new generation of
mobile phones which offer Internet and SMS was an illustration of convergence
and the regulatory challenges this poses, as the ACA had traditionally dealt
with SMS issues, whilst the ABA had
dealt with Internet and content issues.
The Committee notes that convergence which is argued by
the Government as being a key factor in establishing ACMA is not a new trend.
The Australian Consumers Association, Charles
Britton told the Committee that problems
posed by convergent technologies have been know for 10 to 15 years now.
Internationally, Governments of other countries have attempted to address this
issue for over half a decade. The Singaporean government established the merger
regulator Infocom Development Agency (IDA) in 1999, similarly, the UK
government established Ofcom in 1999.
Around the world, more and more media and
communications regulators are moving towards convergent organisational
structures, though with differing interpretations of what constitutes
“convergent”. The FCC in the USA and the CRTC in Canada have been convergent for many years. Italy, Switzerland, Ghana, South
Africa have set
up convergent regulators in more recent years.
late move towards a converged regulator has resulted in reactive and
superficial administrative response to converged technologies which are already
available. It was submitted that:
In our view Australia
has erred on the side of delay, and the changes proposed in the creation of
ACMA are belated and do not sufficiently address the imperatives in the
marketplace. The issues related to this dilemma have emerged particularly in
the realms of media ownership, access to infrastructure resources at reasonable
prices, the reverse problem of access to content by competing carriers,
technical standards and consumer protection rules, complaints handling, and
The delay in responding to converging technologies has
led to both gaps and duplication in regulation and regulatory responsibility.
These are discussed in more detail in Chapter 5.
Evidence to the Committee indicates that there was
approval for the establishment of the new authority from the telecommunications
industry. Many witnesses were critical of the current regulatory landscape
which was argued to be complex and unfocused. Therefore, ACMA was seen as a
streamlining of regulatory processes and was in keeping with current
The plethora of regulators we now have, is becoming increasingly
difficult to maintain. The necessary focus is lacking, as well as, perhaps even
more importantly, the necessary power to act decisively on the many contentious
political and commercial issues the industry is facing. The trend around the
globe is to bring the various regulatory authorities together under one
umbrella. If it were vested with the appropriate powers, such a body would be
able to regulate the rapidly converging industries.
AAPT noted that 'the merger of the ACA and ABA
is an important step in improving the Australian communications regulatory
regime.' Optus argued:
Optus supports the merger of the Australian Communications
Authority (ACA) and the Australian Broadcasting Authority (ABA) as put into
effect via the ACMA Bill 2004. We consider that an integrated structure will
allow emerging issues (including in respect of internet regulations and mobile
content) to be optimally addressed in a manner which avoids jurisdictional
overlap and associated inefficiencies and regulatory uncertainty.
Support for the authority was more fragmented within
the broadcasting sector.  The Screen Producers Association of
Australia, the Australian Film
Commission, and the Media
Entertainment and Arts Alliance, all
supported the proposed merger providing that the social and cultural objectives
of broadcasting regulation were maintained. The Committee heard that the
has the potential to bring cohesion and certainty to the
convergence of telecommunications technology with traditional broadcasting
However, in contrast the ABC raised its concerns about
the proposed merger:
The Corporation has consistently maintained that such a merger
is unnecessary. It believes that the current regime operates very effectively,
providing audiences across Australia with diverse and high quality broadcasting
services, and it is unclear whether there is any advantage to be gained from
However, the ABC has also argued that if such a merger is to
occur, it should be administrative only and not be accompanied by an alteration
of the regulatory frameworks governing broadcasting and radiocommunications.
The Committee supports the establishment of ACMA and
acknowledges that it is a necessary first step in reforming current regulatory
inadequacies. However, the merging of two regulators with differing cultures
and responsibilities without any review of their underlying powers and
responsibilities will do little to improve the regulatory environment. The
Committee is concerned that serious shortcomings with the current regulatory
arrangements have not been addressed in the ACMA bill and examines these in subsequent
chapters. It is of the view that the foundation of the ACMA represents an
opportunity to update and improve the regulatory arrangements for
communications and media, meeting the challenges of technological change,
infrastructure investment, consumer protection and cultural diversity in a
competitive, commercial environment. That the Government has chosen an
administrative merger rather than a more wide ranging modernisation of the
regulatory arrangements is a lost opportunity for Australia.