Commonwealth Numbered Regulations - Explanatory Statements

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TELECOMMUNICATIONS (ARBITRATION) REGULATIONS 1997 NO. 350

EXPLANATORY STATEMENT

Statutory Rules 1997 No. 350

Issued by the Authority of the Minister for Communications, the Information Economy and the Arts

Telecommunications Act 1997

Telecommunications (Arbitration) Regulations

Subsection 594(1) of the Telecommunications Act 1997 (the Act) provides that the GovernorGeneral may make regulations for the purposes of the Act.

Subsection 594(2) provides that the regulations may prescribe penalties, not exceeding 10 penalty units, for offences against the regulations.

A number of provisions of the Act require a person to supply a service, or provide access to a network, facility, information or other matter to a third party on such terms and conditions as are agreed between them or, failing agreement, determined by an arbitrator appointed by the parties or, if the parties cannot agree on the appointment of an arbitrator, the Australian Competition and Consumer Commission (ACCC). In each case there is provision for the regulations to "make provision for and in relation to the conduct of an arbitration".

The relevant provisions of the Act and the matters with which they deal are as follows:

*       subsection 267(3) relating to access to emergency call services

*       subsection 269(3) relating to access to controlled carriage services. networks or facilities for the purpose of providing emergency call services

*       subsection 335(5) relating to supply of carriage services for defence purposes

*       subsection 351(3) relating to provision of pre-selection

*       subsection 462(3) relating to provision of number portability

*       subclause 18(2), Schedule 1 relating to access to supplementary facilities

*       subclause 27(2), Schedule 1 relating to access to network information

*       subclause 29(5), Schedule 1 relating to consultation on reconfiguration of networks

*       subclause 36(4), Schedule 1 relating to access to telecommunications transmission towers and underground facilities

*       subclause 5(3), Schedule 2 relating to provision of operator services

*       subclause 8(3), Schedule 2 relating to provision of directory assistance services.

The purpose of the Telecommunications (Arbitration) Regulations (the Regulations) is to establish a framework of rules and procedures in relation to the notification of disputes to the ACCC and the conduct of an arbitration by the ACCC. These rules and procedures are based on relevant provisions of the Trade Practices Act 1974 (the Trade Practices Act), particularly Division 8 of Part XIC of that Act, and the Trade Practices Regulations, as amended by the Trade Practices Regulations (Amendment) (see minute 26 of 1997). Division 8 of Part XIC of the Trade Practices Act and the Trade Practices Regulations set out rules and procedures in relation to the notification of telecommunications access disputes to the ACCC under Part 39C and the arbitration by the ACCC of such disputes. The accompanying regulations adopt these rules and procedures, with certain modifications, for the purposes of the arbitration of disputes under the Telecommunications Act.

The rules and procedures do not apply where the parties agree to appoint an arbitrator other than the ACCC or to resolve their dispute by means other than arbitration.

The Regulations are in four Parts, entitled "Preliminary", "Notification of disputes", "Arbitration", and "Arbitration hearings".

Regulation 14 and regulations 21 to 26 set out penalties that apply for contravention of these regulations. In each case the penalty is 10 penalty units, which is the maximum penalty for offences against regulations made under the Act, under subsection 594(2) of the Act.

Details of the accompanying regulations are as follows:

Regulation 1 (Citation)

Regulation 1 provides for the Regulations to be cited as the Telecommunications (Arbitration) Regulations. The

Regulations commence on Gazettal.

Regulation 2 (Definitions)

Regulation 2 includes key definitions for the Regulations.

is defined broadly for the purpose of the Regulations, to encompass each of the matters that are required to be provided by a service provider under the relevant provisions of the Act.

"Service seeker" is defined as a person or body who is seeking to make or vary an agreement under which he, she or it would be provided with a service, or a person or body whose service provider has changed or proposes to change the terms and conditions on which a service is provided.

Regulation 3 (Notification of disputes)

Regulation 3 is based on section 152CM of the Trade Practices Act and regulation 6C of the Trade Practices Regulations.

Subregulation 3(1) makes it clear that if a service provider and service seeker cannot agree on terms and conditions of access to a service under a relevant provision of the Act, either party may notify the ACCC of the dispute in writing.

Subregulation 3(2) provides examples of disputes. A dispute may exist in relation to price, or the method of ascertaining prices at which the service is to be provided, or whether a previous determination ought to be varied. These are examples only and do not limit the types of disputes which may be notified to the ACCC.

Subregulation 3(3) requires the party notifying the ACCC of the existence of a dispute (ie either the service provider or the service seeker) to provide the ACCC with preliminary information relevant to the dispute. The information required relates to procedural matters and the matters which the ACCC must consider in conducting an access arbitration. It will assist the ACCC in commencing its consideration of the relevant issues and allow the ACCC to ascertain any other persons who might want to become parties to the arbitration.,

Subregulation 3(4) provides that once it is given written notification, the ACCC must give written notice of the dispute to:

*       the service provider, if it was the service seeker which notified the dispute;

*       the service seeker, if it was the service provider which notified the dispute;

*       if the ACCC is of the opinion that the resolution of the dispute may involve requiring another person to do something, that person: and

*       any other person the ACCC believes might want to be a party to the arbitration.

The ACCC may come to the opinion that the resolution of a dispute may involve requiring another person to do something where the service provider is not in a position to comply with that requirement. For example, where the service provider is not the owner of the network unit, it may not be in a position to comply with any request for consultation on proposed modifications to the network as required under clause 29 of Schedule 1 to the Act. The ACCC may form the view that the owner of a network unit might want to become a party to an arbitration irrespective of whether the service provider is in a position to comply with the terms and conditions of its determination.

Regulation 4 (Withdrawal of notices)

Regulation 4 is based on section 152CN of the Trade Practices Act and regulation 6D of the Trade Practices Regulations.

Subregulation 4(1) provides tat notice of a dispute may be withdrawn by the service seeker or the service provider, where they were the person who originally notified the ACCC of the dispute. at any time before the ACCC makes a determination.

The service seeker may also withdraw the service provider's notice at any time after the ACCC issues a draft determination but prior to the issuing of a final determination. This will enable, for example, a service seeker who is unwilling to be bound by the terms and conditions included in a draft determination to withdraw the notice and avoid the possibility of being bound by those

Subregulation 4(2) provides that the service seeker may not withdrawn the service provider's notice if the dispute is about a variation of an existing determination. This is to ensure that a service seeker is not able to frustrate a service provider's attempts to vary the terms and conditions of an existing determination.

Subregulation 4(3) provides that the withdrawal of a notice of a dispute must be in writing and contain the name of the person withdrawing the notice, a short description of the matter to which the notice relates and the specific paragraph or subparagraph of subregulation 4(1) under which the service provider or the service seeker is ,withdrawing the notice.

Subregulation 4(4) provides that if the service seeker is the person withdrawing the notice of a dispute, he or she must give a copy of the withdrawal notice to the service provider. If the service provider is the person withdrawing the notice of dispute, he or she must give a copy of the withdrawal notice to the service seeker. In each case, the copy must be given to the relevant person at the same time it is provided to the ACCC.

Subregulation 4(5) provides that the withdrawal of a notice of a dispute is taken to, occur on the date that the ACCC receives its withdrawal notice.

Subregulation 4(6) requires the ACCC to give a copy of the withdrawal notice to any person to whom it gave notice of the dispute under subregulation 33(4), other than the person who notified withdrawal of the dispute.

Regulation 5 (Parties to arbitration)

Regulation 5 is based on section 152C0 of the Trade Practices Act. It identifies who the parties to an arbitration are. It allows the ACCC to join a person to the proceedings where either the ACCC is of the opinion that the resolution of the dispute may involve that person doing something or where the person applies in writing to join the dispute and the ACCC is satisfied that the person has a sufficient interest in the proceedings. See the explanation of subregulation 3(4) for an example of the circumstances where a third person may be required to become a party.

Regulation 6 (Constitution of ACCC for conduct of arbitration)

Regulation 6 provides that when conducting an arbitration of a dispute the ACCC is to be constituted by one member or three members of the ACCC. Each relevant provision of the Act provides for the ACCC to be constituted by a single member, or a specified number of members, of the ACCC. If the Chairperson of the ACCC is a member, he or she must preside at the arbitration. If the Chairperson is not a member, he or she must nominate a member to preside.

Regulation 7 (Determination of questions)

Regulation 7 is based on section 152CY of the Trade Practices Act. This regulation provides that questions before the ACCC are to be resolved according to the opinion of a majority of the members of the ACCC when the ACCC is constituted by three members.

Regulation 8 (Matters that ACCC must take into account)

This regulation is based in part on section 152CR of the Trade Practices Act. This regulation sets out matters the ACCC must take into account when making a determination about terms and conditions of provision of a service. These matters, which are intended to be of equal importance, are:

*       the legitimate business interests of the parties, and their investment in facilities used to supply the relevant service;

*       the interests of all persons who have rights to use the service;

*       the direct costs of providing access to the service;

*       the operational and technical conditions necessary for the safe and reliable operation of a telecommunications network or facilities used to supply carriage services;

*       the economically efficient operation of a carriage service, a telecommunications network or a facility; and

*       promotion of the long-term interests of end-users of carriage services or of services supplied by means of carriage services.

Subregulation 8(2) provides that the ACCC must, when considering whether a determination will promote the long-term interests of end-users, have regard to the same matters as if the determination were made under Part XIC of the Trade Practices Act. Under section 152AB of the Trade Practices Act, the ACCC must, when determining whether a particular thing promotes the long-term interests of end-users, have regard to the extent to which that thing is likely to result in the achievement of the following objectives:

*       promoting competition in markets for carriage services or services provided by means of carriage services;

*       achieving any-to-any connectivity in relation to carriage services that involve communication between end-users; and

*       encouraging the economically efficient use of, and economically efficient investment in, the infrastructure by which carriage services and services provided by means of carriage services are supplied.

Subregulation 8(3) provides that in making a determination the ACCC may also consider any other matter it thinks relevant.

Regulation 9 (Determinations)

Regulation 9 is based on subsections 152CP(1), (4) and (5) of the Trade Practices Act

Subregulation 9(1) provides that the ACCC must give a draft determination to the parties before making its final determination.

Subregulation 9(2) provides that unless a notice of dispute is withdrawn under proposed regulation 4 or unless the arbitration is terminated under proposed regulation 10, the ACCC must make a written determination on access by the service seeker to the service and give a copy of the determination to all parties to the arbitration. The determination must include reasons for making the determination in that form.

Regulation 10 (ACCC may terminate arbitration in certain cases)

Regulation 10 is based on section 152CS of the Trade Practices Act. The regulation provides that the ACCC may terminate an arbitration if the ACCC thinks that:

*       notification of a dispute was vexatious;

*        the subject matter of the dispute is trivial, misconceived or lacking in substance;

*       a party to the arbitration has not engaged in negotiations in good faith; or

*       access to the service that is the subject of the dispute should continue to be governed by an existing arrangement.

Subregulation 10(2) enables the ACCC to terminate an arbitration if it relates to a dispute about an existing determination and the ACCC thinks there is no sufficient reason why the existing determination should not continue to have effect.

Regulation 11 (ACCC may direct parties to engage in negotiations in good faith)

Regulation 11 is based on section 152CT of the Trade Practices Act.

Subregulation 11 (1) provides that the ACCC, if it has reason to suspect that a person who is or was a party to the arbitration of a dispute has not negotiated or is not negotiating in good faith, may give the person a procedural direction requiring the person to do, or refrain from doing, a specified act or thing relating to the conduct of those negotiations. The giving of the direction must be for the purpose of facilitating those negotiations.

Subregulation 11(2) provides that the ACCC must have regard to any guidelines in force under subsection 152CT(6) of the Trade Practices Act, to the extent that they are relevant, and any other relevant matters when deciding when it win use the directions power in subregulation 11(1).

Subregulation 11 (3) provides that it is an offence, punishable on conviction by 10 penalty units. to contravene a direction made under subregulation 11 (1).

Subregulation 11 (4) provides a list of examples of the types of directions which might be issued. It is not intended that this power enable the ACCC to direct a party as to the outcomes it wishes to see from commercial negotiations; rather, the directions power is intended to remove obstacles from the resumption of negotiations in good faith (by, for example, addressing information assymetries or removing unreasonable conditions which the party is imposing for its participation in negotiations).

Regulation 12 (Evidence on oath or affirmation)

Regulation 12 is based on subsection 152DD(1) of the Trade Practices Act.

Subregulation 12(1) enables the ACCC to take evidence on oath for an arbitration. Subregulation 12(2) provides that the oath may be administered by a member of the ACCC determined under subregulation 6(1).

Regulation 13 (Parties may request ACCC to treat material as confidential)

Regulation 13 is based on section 152DK of the Trade Practices Act It sets out procedures for protecting the commercial confidentiality of documents, and the powers of the ACCC in relation to confidential documents.

Regulation 14 (Other ACCC powers)

Regulation 14 is based in part on section 152DC of the Trade Practices Act. It sets out particular powers of the ACCC for the purpose of arbitrating a dispute.

Subregulation 14(1) provides that the ACCC may refer any matter to an expert and accept the expert's view as evidence; give an oral or written order to persons not to divulge or communicate, without the ACCC's permission, specified information which was given to the person during the course of an arbitration; and &c all such directions or do all things necessary for the speedy hearing and determination of the dispute.

Subregulation 14(2) provides that the ACCC's powers under regulation 14(1) have effect subject to any other provision of these regulations.

Subregulation 14(3) provides that a person who contravenes a direction under paragraph 14(1)(b) or (c) is guilty of an offence, punishable on conviction by 10 penalty units.

Regulation 15 (Parties to pay costs of arbitration)

Regulation 15 provides that the ACCC may charge for and apportion its costs incurred in holding an arbitration among the parties.

Regulation 16 (ACCC May conduct arbitration hearings)

Regulation 16 is also based in part on section 152DC of the Trade Practices Act. It provides for the ACCC to conduct arbitration hearings and sets out rules for such hearings.

Subregulation 16(1) provides that the ACCC may conduct an arbitration hearing at any place and time and may hear disputes in the absence of a person summoned to appear at the hearing.

Subregulation 16(2) provides that the ACCC's powers under subregulation 16(1) have effect subject to any other provision of these regulations.

Regulation 17 (Summons)

Regulation 17 sets out the powers of the ACCC to summons witnesses for arbitration hearings. It is based on subsection 152DD(2) of the Trade Practices Act and regulation 6E of the Trade Practices Regulations.

Subregulation 17(1) provides that the member of the ACCC who is presiding at an arbitration hearing may summons a person to attend the hearing and require the person to produce documents referred to in the summons.

Subregulation 17(2) provides that the form of the summons must be in accordance with the form set out in the Schedule.

Subregulation 17(3) requires a summons to be served on a person by delivering a copy of the summons to the person directly and showing the original of the summons to the person when the copy is delivered to the person.

Regulation 18 (Arbitration hearings to be in private)

Regulation 18 is based on section 152CZ of the Trade Practices Act.

Subregulations 18(1) and (2) provide that hearings of an arbitration are to be held in private unless the parties agree to public hearings.

Subregulations 18(3) and (4) provide that the presiding member of the ACCC may give written directions as to the persons who may be present at a private hearing, having regard to the wishes of the parties and the need for commercial confidentiality.

Regulation 19 (Right to representation)

Regulation 19, which is based on section 152DA of the Trade Practices Act, allows parties to the dispute to appear either in person or be represented by someone else.

Regulation 20 (Hearing procedures)

Regulation 20 is based on. section 152DB of the Trade Practices Act. It sets out the procedures of the ACCC for arbitration hearings.

Subregulations 20(1) and 20(4) provide that the ACCC is riot bound by technicalities, legal forms and rules of evidence when bearing a dispute; and bearings should be conducted in a speedy manner, having regard to matters affecting resolution of the dispute, and may be conducted by telephone, closed circuit television or any other means of communication.

Subregulation 20(2) provides that the ACCC may determine the length of time reasonably necessary for the parties to fairly and adequately present their cases and may require that the cases be presented within that length of time.

Subregulation 20(3) provides that the ACCC may require that evidence or argument be presented in writing and may decide those matters on which it will require oral evidence or argument.

Regulation 21 (Failure to attend as witness)

Regulation 21 is based on section 152DE of the Trade Practices Act. It provides that a summonsed witness must attend as required by the summons unless excused or released by an ACCC member unless the witness has a reasonable excuse for not doing so. Contravention of this provision is punishable on conviction by 10 penalty units.

Regulation 22 (Failure to answer questions etc)

Regulation 22 is based on section 152DF of the Trade Practices Act.

Subregulation 22(1) provides that a witness must not, without reasonable excuse, refuse or fail to:

* be sworn or make an affirmation;

* answer ACCC questions; or

* produce documents required by a summons.

Contravention of this provision is punishable on conviction by 10 penalty points.

Under subregulation 2.2(2), an individual can refuse to answer a question or produce a document on the ground that the answer or production of the document may tend to incriminate him or her, or expose him or her to a criminal penalty.

Regulation 23 (Giving false or misleading evidence orally)

Regulation 23 is based on section 152DG of the Trade Practices Act. It provides that it is an offence for a person to knowingly give evidence that is false or misleading in a material particular. Contravention of this provision is punishable on conviction by 10 penalty points.

Regulation 24 (Provision of false or misleading documents prohibited)

Regulation 24 is based on section 152DH of the Trade Practices Act. It provides that a person complying with a summons under regulation 17 must not produce a document that, to the knowledge of the person, is false or misleading in a material particular, unless it is accompanied by a statement detailing the false or misleading nature of the document. Contravention of this provision is punishable on conviction by 10 penalty points.

Regulation 25 (Intimidation etc)

Regulation 25 is based on section 152DI of the Trade Practices Act. It establishes as an offence intimidation of witnesses (or proposed witnesses) and persons who produce (or who propose to produce) documents to the ACCC for the purposes of an arbitration. Contravention of this provision is punishable on conviction by 10 penalty, points.

Regulation 26 (Disturbing an arbitration hearing etc)

Regulation 26 is based on section 152DJ of the Trade Practices Act. Regulation 26 provides that it is an offence for a person, in relation to an arbitration of a dispute, to insult or disturb a member of the ACCC, interrupt and arbitration hearing, use insulting language towards a member of the ACCC or create a disturbance or take part in the creation or continuation of a disturbance in a place where the ACCC is holding an arbitration hearing. Contravention of this provision is punishable on conviction by 10 penalty points.

REGULATION IMPACT STATEMENT

TELECOMMUNICATIONS (ARBITRATION) REGULATIONS

1. Problem Identification

A. Background

A number of provisions of the Telecommunications Act 1997 ("the Telecommunications Act") require a person to supply a service, or provide access to a network, facility, information or other matter to a third party on such terms and conditions as are agreed between them or, failing agreement, determined by an arbitrator appointed by the parties or, if the parties cannot agree on the appointment of an arbitrator, the Australian Competition and Consumer Commission (ACCC). In each case there is provision for the regulations to "make provision for and in relation to the conduct of an arbitration".

The relevant sections and the matters with which they deal are as follows:

*       subsection 267(3) relating to access to emergency call services

*        subsection 269(3) relating to access to controlled carriage services, networks or facilities for the purpose of providing emergency call services

*        subsection 335(5) relating to supply of carriage services for defence purposes

*       subsection 351(3) relating to provision of pre-selection

*       subsection 462(3) relating to provision of number portability

*        subclause 18(2), Schedule 1 relating to access to supplementary facilities

*       subclause 27(2). Schedule 1 relating to access to network information

*        subclause 29(5), Schedule 1 relating to consultation about reconfiguration of networks

*       subclause 36(4), Schedule 1 relating to access to telecommunications transmission towers and underground facilities subclause 5(3), Schedule 2 relating to provision of operator services subclause 8(3 )), Schedule 2 relating to provision of directory assistance services.

The Telecommunications (Arbitration) Regulations establish a framework of rules and procedures in relation to the notification of disputes to the ACCC and the conduct of an arbitration by the ACCC.

These rules and procedures are based on relevant provisions of the Trade Practices Act 1974, particularly Division 8 of Part XIC of that Act, and the Trade Practices Regulations. as recently amended by the Trade Practices Regulations (Amendment). Division 8 of Part XIC of the Trade Practices Act and the Trade Practices Regulations set out rules and procedures in relation to the notification of telecommunications access disputes to the ACCC under Part XIC and the arbitration by the ACCC of such disputes. These rules and procedures are appropriate, with certain modifications, to disputes under the Telecommunications Act.

The rules and procedures do not apply where the parties agree to appoint an arbitrator other than the ACCC.

Of the Regulations, only Regulations 8 and 15 require the preparation of a Regulation Impact Statement, having regard to the relevant Government requirements, as regulation having a direct impact on business and not being subject to 'exceptions'. Regulation 8 sets out the matters that the ACCC must take into account when making a determination on terms and conditions of access to the relevant service, network, facility, information or other matter, under the relevant provisions of the Telecommunications Act. Regulation 15 enables the ACCC to recover costs of conducting an arbitration from the parties involved.

B. Problem

Proposed regulation 8: ACCC arbitrations - matters for consideration

If the ACCC, in acting as an arbitrator, is not limited by any consideration that it must take into account in determining a dispute, it may lead to uncertainty within the industry as to the relevant factors in a dispute and to inconsistency in decision making.

To the extent that the ACCC is required to arbitrate disputes under the relevant provisions of the Telecommunications Act. it must adopt a consistent approach. particularly in relation to the matters to which it has regard. and its approach should also be consistent with the approach it adopts when arbitrating access disputes under Part XIC of the Trade Practices Act. Generally, the ACCC should have regard to the same types of matters. to the extent that they are relevant, when arbitrating disputes under the Telecommunications Act and the Trade Practices Act. Some disputes, for example those relating to pre-selection would be capable of being arbitrated under either legislation.

For industry certainty. it is important that the ACCC's approach to the determination of disputes be made known to industry participants at an early stage. so that the parties to a dispute are in a position to assess whether to seek ACCC arbitration or to seek to resolve their dispute in other ways.

Proposed regulation 15: ACCC arbitrations - charges

The ACCC should be able to recover its costs in the determination of a dispute and the recovery of costs should be fair and equitable.

In the absence of legislation, the ACCC does not have the power to recover the costs of an arbitration that it conducts under the Telecommunications Act from the parties to the arbitration. It has this power in respect of arbitrations conducted under Part XIC of the Trade Practices Act, by virtue of section 152DM of the Act.

Under section 15 of the Telecommunications (Carrier Licence Charges) Act 1997, costs incurred each year by the ACCC in undertaking its functions under Part W of the Trade Practices Act may be recovered from licensed carriers by means of annual charges. However, reliance on the licence charges to recover costs of arbitrations would not be economically efficient, as costs would not be fully recovered from the parties responsible, on a user-pays basis. For example, non carrier carriage service providers would make no contribution to the costs incurred by the ACCC. Failure to charge parties to an arbitration the full costs of the, arbitration may lead to unnecessary use of the ACCC's arbitration services.

2. Specification of desired objectives

The objective in relation to proposed regulation 8 is to ensure that the ACCC adopts a consistent approach to arbitrations which is fair to all parties and that this approach is well known to industry participants.

The objective in relation to proposed regulation 15 is to enable the ACCC to recover its costs in the determination of disputes under the Act and to ensure that the recovery of costs is fair and equitable.

3. Identification of options

In relation to Regulation 8, the options are:

(a)       take no specific action:

(b)        rely on broad guidelines prepared by the ACCC for consideration of access matters; or

(c)       make regulations.

Market based instruments. standards. information strategies and other regulatory mechanisms listed in the Office of Regulation Review's "Guidelines for Commonwealth Regulation Impact Statements" do not appear to be relevant in dealing with the identified problems.

Option (a) involves reliance on market processes, in conjunction with existing law.

It is possible that the ACCC would have regard to similar matters to those specified in section 152CR of the Trade Practices Act in the absence of a legislative requirement. The Explanatory Memorandum relating to most of the provisions specified in the "Introduction" above notes that it is expected that the ACCC will have regard to the types of issues it is required to consider in arbitrating disputes under proposed Part XIC of the Trade Practices Act ... and would follow similar procedures".

However, the matters specified in that section are not all relevant to a determination under the Telecommunications Act, and there may be differences of opinion about the extent to which they should apply. Regulation 8 does not include the matter specified in paragraph 152CR(1)(e) of the Trade Practices Act, as no explicit provision is made under the relevant provisions of the Telecommunications Act for a service provider to be required to extend or enhance capacity in order the provide the service.

Option (b) would involve having the ACCC prepare broad operating guidelines indicating the manner in which it proposes to approach consideration of appropriate terms and conditions when arbitrating disputes. This option gives the ACCC more discretion than option (c) on the manner in which it conducts arbitrations, ie the matters to which it has regard.

In relation to Regulation 15, the options are..

(a)       take no specific action;

(b)       make regulations.

If no action is taken in relation to making provision for the ACCC to charge parties to recover the costs of an arbitration that it conducts under the Telecommunications Act, these costs will be recovered by means of the annual carrier licence charge.

4. Impact Analysis

Regulation 8: ACCC arbitrations - matters for consideration

Option (a) has the fundamental disadvantage, when compared with options (b) and (c) that the ACCC may not adopt a consistent approach in relation to the matters to which it has regard when determining disputes. The ACCC's decision making would lack transparency and industry would not be able to approach arbitrations with requisite certainty. Inconsistency may be apparent both in relation to determinations made under different provisions of the Telecommunications Act. and determinations made under different legislation.

Inconsistency between determinations made under the Telecommunications Act and Part XIC of the Trade Practices Act may lead to industry participants "shopping" for the most attractive arbitration arrangements for a dispute that may be considered under either legislation.

Option (b) would lead to greater consistency. transparency and certainty than option (a). However. the greater discretion available to the ACCC may give rise to unacceptable inconsistency and industry uncertainty compared with option (c).

Option (c) was the mechanism considered appropriate by the Parliament when it passed the provisions specified in the "Problem Identification" section above.

The advantages of this option are that all rules and procedures in relation to the notification of a dispute to the ACCC and the conduct of an arbitration by the ACCC are set out in one place, for easy reference by industry participants.

Regulation 15: ACCC arbitration - charges

Option (a) has the disadvantage that the parties responsible for occasioning costs are not charged directly for those costs, leading to potential distortion of incentives to seek arbitration. The ACCC's costs of conducting arbitrations would be recovered from carriers via the annual carrier licence charge. This would be inequitable as costs may be occasioned by disputes involving non-carrier carriage service providers, defence authorities or other persons. In addition, contributions to the annual carrier licence charge are based on the carriers' shares of eligible revenue, which may bear no relation to the occasioning of costs incurred by the ACCC when arbitrating disputes.

Option (b) has the advantage that the ACCC's costs in conducting arbitrations may be apportioned on a "user-pays" basis and are therefore more equitable.

Impact group identification

Regulation 8 will benefit all industry participants by reducing uncertainty. and promoting a consistent approach to the determination of disputes across the industry.

The persons most likely to benefit from Regulation 15 are carriers, to the extent that annual licence charges will be reduced in total by the amount recovered directly from parties to arbitrations. The extent of any saving will depend on carriers' contributions to licence charges and the costs of arbitrations to which they are party.

Under proposed amendments to the Trade Practices Regulations. the ACCC is able to require a notifier of an access dispute under Part XIC of the Trade Practices Act to pay a pre-hearing fee of $ 10 000 unless the dispute is in respect of an existing determination, when the fee is $2 000. The ACCC can also charge a fee of $4 000 per day or part of a day in respect of arbitrations hearings it conducts, to be apportioned between the parties appearing at the bearing on that day. These fees may indicate the general level of fees that may apply for similar services under the Telecommunications Act.

However there may be systematic differences in the constitution of the ACCC for the purposes of arbitrations under the two Acts and disputes are more likely to be of a minor nature under the Telecommunications Act. Consequently. Regulation 15 does not specify the costs to be charged for arbitrating disputes under the Telecommunications Act. The ACCC is able to charge within a structure that recognises less costly disputes.

Regulation 15 will clearly have an impact on the ACCC's ability to recover costs from parties responsible for their occasioning, on a "user pays" basis. Consumers of telecommunications services may also be affected by the passing on of arbitration costs by carriage service providers.

5. Consultation statement

Written submissions were invited on 17 July 1997 from about 52 organisations on an exposure draft of the Telecommunications (Arbitration) Regulations and commentary. with an invitation to comment within a period of 14 days. The organisations consulted included:

*       suppliers of telecommunications services and equipment suppliers

*       industry organisations

*       consumer organisations

*       the Telecommunications Industry Ombudsman

*       the Privacy Commissioner

*       regulatory authorities

*       law enforcement and national security agencies

*       emergency service organisations

*       applied telecommunications research organisations

*       relevant Commonwealth Government Departments

*       law firms

A list of organisations consulted is at Attachment 1.

Submissions were received from 7 organisations. A list of those organisations is at Attachment 2.

None of the submissions opposed the making of regulations setting out matters to which the ACCC must have regard in making a determination or enabling the ACCC to recover costs of arbitrations from the parties involved. Submissions focussed on the need to insert additional regulations dealing with procedures for ACCC arbitrations. based on provisions in Part XIC of the Trade Practices Act, to ensure that the ACCC has adequate powers to conduct arbitrations under the Telecommunications Act. The carriers' submissions also focussed on means for increasing the consistency and certainty of ACCC arbitrations. Optus' submission also raised whether it was appropriate that the regulations apply to arbitration of disputes under section 462(3) of the Act, relating to number portability. In the view of the Department of Communications and the Arts', there must be provision for such disputes to be arbitrated according to the same rules and procedures as for other disputes under the Telecommunications Act.

6. Recommended option

Option (c), the making of regulations, is the preferred option for ensuring that the ACCC adopts a consistent approach in arbitrating disputes.

Option (b), the making of regulations, is also the preferred approach to ensure that the ACCC is able to recover its costs in arbitrating disputes and that the apportionment of these costs is fair and equitable.

7. Strategy to implement and review preferred option

Regulations 8 and 15 will be subject to regular review. Regulations 8 and 15 and the other new regulations made under this instrument will be re-examined prior to 1 July 2002, to review consistency with current policy and to review the necessity of regulation.

Carriers or carriage service providers may seek a variation to the regulations at any time should circumstances in the industry change in such a manner as to warrant a reconsideration of the requirements.

Attachment 1

ORGANISATIONS CONSULTED

Telstra Corporation

Optus Communications

Vodafone

Service Providers' Action Network

Australian Telecommunications Users Group

Internet Industry Association of Australia

AAP Telecommunications

Pacific Star Communications

BT Asia Pacific

AT&T Communications Services

Global 1

Hutchison Telecommunications

Primus Axicorp

PanAmSat

Iridium

Avirnex Communications

Northgate Communications

Macquarie Corporate Telecommunications

United Energy

IBM Australia

Business Council of Australia

AEEMA

AIIA

Ericsson Australia

Motorola

Access Cable Television Lid

FOXTEL

SETEL

Australian Consumers* Association

Consumers' Telecommunications Network

Communications Law Centre

Australian Competition and Consumer Commission

Australian Broadcasting Authority

Australian Communications Authority

Privacy Commission

Telecommunications Industry Ombudsman

Professor Bob Baxt, Arthur Robinson and Hedderkkicks

CIRCIT

Department of Prime Minister and Cabinet

Department of Finance

Department of Treasury

Office of Regulation Review

Bureau of Emergency Services Telecommunications

National Exchange of Police Information

Queensland Police

Northern Territory Police

Deakin, Graham and James

Clayton Utz

Blake, Dawson and Waldron

Gilbert and Tobin

Law Council of Australia

Attachment 2

SUBMISSIONS RECEIVED

Telstra Corporation

Optus Communications

Vodafone

Australian Competition and Consumer Commission

Australian Broadcasting Authority

Office of Regulation Review

Privacy Commission

ATTACHMENT C

OPTIONS FOR "FILLING THE GAPS" IN MOBILE COVERAGE

Rollout Commitments

Vodafone

The Network Development Deed required Vodafone to provide by 31 December 1996, Class H coverage (ie means a balanced path for 8Watt vehicle mounted mobile telephone) to Australia in which not less than 80% of the Australian population reside.

In December 1996, Vodafone reported the GSM cellular network covers approximately 87% of where the population of Australia reside.

Vodafone continued to expand its network during the 31 December 1996 to 30 June 1997 period, and reported increasing its number of operational base stations from 840 to 930 in this time.

Optus

The Network Development Deed requires Optus to make GSM services available to at least 80% of the population by the year end 1997.

Reporting on 31 January 1997 Optus advised it was then offering GSM services to 88.1% of the population and anticipated to cover 89.3% by June 1997, ie it had already exceeded its obligation for the provision of GSM services as quoted above. In its report on progress against the Deed (January 1997) Optus stated:

In October 1996, Optus announced plans to invest $300 million expanding its digital mobile phone network coverage to equal the analogue mobile phone network's 91% coverage of the Australian population by the end of 1997. The planned investment comprises: a $65 million investment in expanding Optus mobile digital coverage from 86% of the Australian population to 91%; as well as another $235 million cash injection into the infrastructure supporting the company's GSM network. This will allow Optus to increase the capacity of its mobile network to support market growth up to the year 2000."

Telstra

Telstra does not have a formal Network Rollout Deed with the Commonwealth as those quoted above for Optus and Vodafone. Many of Telstra's commitments are set out in its Future Mode of Operation document (FMO).

Telstra issued a Media Release on 6 October 1997 in which it announced.. "Telstra MobileNet Digital is now available to over 94% of all Australians and covers more than 400,000 square kilometres, confirming it as Australia's biggest digital cellular network. The analogue mobile phone network is available to 93.8% of the. population."

Note: Information legal advice suggests that imposition of new rollout commitments, in addition to those already met, could prompt legal challenges from the carriers under s.70 agreements.

1999 Review

The Minister's Media Release of 21 October 1996 states:

"The AMPS phaseout has particular implications for certain rural mobile phone users. In some locations AMPS coverage extends further from transmitters (base stations) than GSM coverage. Accordingly, there are a small number of rural phone users (estimated at less than 20,000) who currently receive an AMPS service but would not necessarily be within the radius of GSM coverage.

To address this situation so that current mobile phone users are not disadvantaged, the Government will retain some AMPS spectrum in each existing rural planned service area until there is alternative technology for the delivery of mobile telephony with a reasonably equivalent quality of service and breadth of coverage available in that planned service area.

I have obtained the in principle consent of Optus, Vodaphone and Telstra to this aspect of the ANTS phaseout. They recognise that it will not materially affect their GSM business, because it applies to only a small number of people in rural areas well away from the big cities.

The Government will arrange for a review of rural planned service areas to be conducted in 1999. This review will determine which areas receive mobile telephone coverage from an alternative technology (such as GSM, or another technology if available by then) which is reasonably equivalent to (or better than) the quality of service and breadth of coverage provided in that area by AMPS.

In these rural areas, the AMPS phaseout will go ahead. But in areas which the review shows do not have such coverage from an alternative technology, the AMPS spectrum will be retained. (any such retention of spectrum in specific rural areas will operate as a qualification of withdrawal of the last 2 x 5 MHz of spectrum on 31 December 1999.)"

There are two points to be aware of in relation to the above announcement:

*       there is no official definition of the term "rural planned service area" (for example it is not clear whether "fortuitous" coverage would be recognised)

*       the carrier agreement referred to above relates to retention of spectrum, however, there is no commitment to provision of service on that spectrum.

What might be done to extend mobile coverage?

Individual carriers to extend mobile coverage (by another technology) to match AMPS coverage.

Carriers to cooperate to extend mobile coverage (by another technology) to match AMPS coverage

- by site/infrastructure sharing?

- by agreeing to extend coverage at selected sites (ie each carrier undertaking responsibility for one-third of affected sites)?

Recognition of emerging technology (eg LE0s) as providing reasonably equivalent coverage to AMPS

-        although consideration may need to be given to the issue of reasonable price to the end-user.

Measures for implementing extended coverage requirements


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