Explanatory Statement
AUSTRALIAN COMMUNICATIONS and MEDIA AUTHORITY (Advice about Universal Service Subsidies) Direction (No. 1) 2008
Issued by the authority of the Minister for Broadband, Communications and the Digital Economy
Purpose
The Australian Communications and Media Authority (Advice about Universal Service Subsidies) Direction (No. 1) 2008 (the Direction) is made by the Minister for Broadband, Communications, and the Digital Economy (the Minister) to the Australian Communications and Media Authority (ACMA) pursuant to subsection 16A(1) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act). The Direction requires ACMA to provide advice on whether the Minister should make a Determination setting the universal service subsidy at particular amounts for particular universal service areas for the period of the 2008-09 financial year. The universal service subsidy amounts referred to in the Direction relate to the universal service obligations indicated in paragraph 9(1)(a) and (b) of the Act.
ACMA must provide its advice to the Minister within 90 days of the commencement of the Direction.
Background
Part 2 of the Act sets out the universal service regime, which includes the universal service obligation (USO). Subsection 9(1) relevantly provides that the USO includes an obligation to ensure that:
- standard telephone services are reasonably accessible to all people in Australia on an equitable basis wherever they reside or carry on business (paragraph 9(1)(a)); and
- payphones are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business (paragraph 9(1)(b)).
Division 9 of Part 2 of the Act provides for the determination of the universal service subsidy (or subsidies).
Under section 16 of the Act, the Minister is required to determine in writing the universal service subsidies before the end of a relevant claim period and to ensure that there is a subsidy for each universal service area in respect of each service obligation (that is, the provision of standard telephone services and the provision of payphones).
Three types of universal service areas currently exist and are contemplated by the Direction:
- the contestable area, which is an area (determined under the Contestable Service Obligations Determination (No. 1) 2001) where the provision of the universal services referred to in subsection 9(1)(a) and (b) of the Act is open to competition,
- the Extended Zones area, which is an area (notified in the Notice of the Primary Universal Service Provider for the Extended Zones of Australia) where the provision of the universal services referred to in subsection 9(1)(a) and (b) of the Act is provided by Telstra as the primary universal service provider, and,
- the default area, which pursuant to subsection 9G(3) of the Act is the residual areas of Australia which are not covered by a determination made under subsection 9G(1) of the Act.
Section 16A of the Act further requires the Minister to direct ACMA to provide advice on a proposed determination or variation to be made under section 16 (unless a proposed variation is of a minor technical nature).
The Direction requires ACMA to provide advice pursuant to section 16A for the 2008-09 financial year claim period in contemplation of a Determination being made pursuant to section 16 for the 2008-09 financial year. The claim periods in relevant previous USO Determinations (that is the Universal Service Subsidies
(2005-06, 2006-07, 2007-08 Contestable Areas) Determination (No. 1) 2005, the Universal Service Subsidies (2005-06, 2006-07, 2007-08 Extended Zones) Determination (No. 1) 2005 and the Universal Service Subsidies (2005-06, 2006-07, 2007-08 Default Area) Determination (No. 1) 2005) were for three financial years and expire on 30 June 2008. It is considered desirable that a new Determination be in place either before or as soon as possible after the expiry of these previous Determinations.
The Department of Broadband, Communications and the Digital Economy (the Department) is currently undertaking a comprehensive review of the USO which includes consideration of:
- universal service costing and funding mechanisms,
- changes in technology and in the Australian telecommunications marketplace, and
- how the universal service should be provided in the future.
The Government has also invited industry and public interest groups to provide submissions on regulatory issues associated with the National Broadband Network. The submissions will be made available to National Broadband Network proponents to assist in the development of proposals. The Panel of Experts appointed to assess National Broadband Network proposals will also be able to consider these submissions before making its recommendation to Government. It is likely that some submissions will raise issues relevant to the USO. Proposals lodged in response to the Government’s National Broadband Network Request for Proposal are expected to specify proposed universal service arrangements.
Rather than pre-empt the outcome of the review and consideration of regulatory issues associated with the National Broadband Network process and the outcome of the National Broadband Network competitive assessment process it is considered appropriate that, as an interim measure, the level of universal service subsidy in regards to paragraphs 9(1)(a) and (b) of the Act be maintained at the same levels in the 2008-09 financial year as they were in the 2007-08 financial year.
To this end, subclause 4(2) nominates a proposed total amount for the USO subsidy in respect to the combined universal service subsidy referred to in paragraphs 9(1)(a) and (b) for the relevant claim period and seeks ACMA’s advice about setting the total universal service subsidy at that amount. Likewise, subclauses 4(3) through 4(7) of the Direction nominate individual amounts for the universal service obligations referred to in paragraphs 9(1)(a) and (b) in respect of each universal service area for the relevant claim period and seeks ACMA’s advice in relation to those amounts. The amounts nominated in subclauses 4(2) through to (7) are the same amounts as set by the relevant previous USO Determinations for the 2007/08 claim period.
The Direction also requires that in providing its advice, ACMA must have regard to the objects of Part 2 of the Act, the length of the relevant claim period compared to the aggregate length of the claim periods in previous USO Determinations and the universal service review currently being conducted. It is intended that these subclauses highlight the interim and short term nature of the Determination that is proposed by the Direction.
Further, ACMA is able to provide advice about other matters it considers relevant.
Given that the contemplated universal service subsidy levels are intended to be an interim measure, it is not anticipated that ACMA will find it necessary to conduct extensive industry consultation. To this end, in framing its advice, ACMA is given discretion as to the conduct of any consultation it considers appropriate.
The Direction is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Notes on clauses
Clause 1 provides for the citation of the Direction.
Clause 2 provides that the Direction will be registered on the Federal Register of Legislative Instruments and will take effect on the day after its registration.
Clause 3 defines the terms to be used throughout the Direction.
Clause 4 requires ACMA to provide the Minister with advice on whether the Minister should make a Determination setting the universal service subsidy at nominated amounts.
Paragraph 4(1)(a) requires that ACMA provide advice pursuant to the Direction within 90 days of its commencement in order to provide industry with some certainty about financial obligations relating to the 2008-09 Universal Service Subsidy.
Paragraph 4(1)(b) instructs ACMA to assume, for the purposes of the advice, that the current statutory arrangements for the fulfilment of the USO will continue in the 2008-09 claim period.
The matters provided for in paragraph 4(1)(c) highlight the interim nature of the Direction. In particular, sub-paragraph 4(1)(c)(iii) (which requires ACMA to have regard to the fact that the Department is conducting a review of the USO) is intended to emphasise that the Determination contemplated by the Direction will be a short-term interim measure.
Subclause 4(2) requires ACMA to advise whether the Minister should make a Determination about whether the aggregate level of the universal service subsidy referred to by paragraph 9(1)(a) and (b) of the Act for the 2008-09 financial year should be set at $145,076,237. This amount was the same as the amount set by the relevant previous USO Determinations for the 2007-08 financial year.
Subclauses 4(3) through (7) direct ACMA to advise whether the Minister should make a Determination about setting the universal service subsidy at specified amounts for the service obligations referred to by paragraph 9(1)(a) and (b) of the Act in respect to the contestable area, the Extended Zones area, and the default area. These amounts are the same as the amounts set by the relevant previous USO Determinations for those areas for the 2007-08 financial year.
Paragraph 4(8)(a) provides that, before providing its advice, ACMA may consult with affected persons as it considers appropriate. Given the interim nature of the direction it is not contemplated that ACMA will need to conduct extensive industry consultations.
Paragraph 4(8)(b) clarifies for the avoidance of doubt that ACMA is not prevented from providing advice about other matters it considers relevant.
Consultation
ACMA has been consulted in relation to the making of this Direction.
As the Direction only contemplates that ACMA will provide advice to the Minister, no further consultation was deemed necessary. Broader consultation with parties that may be potentially affected has not been undertaken, since it is open to ACMA to undertake industry consultation before advising the Minister. However, as noted above, given the limited and interim nature of the Determination envisaged by this Direction it is not anticipated that ACMA will need to conduct detailed industry consultations in preparing its advice.