EXPLANATORY STATEMENT

Telecommunications Act 1997

Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (Amendment No. 2 of 2002)

Issued by the authority of the Minister for Communications, Information Technology and the Arts

OVERVIEW

The Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (Amendment No. 2 of 2002) (the Amending Declaration) amends the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (the 1997 Declaration).  The Amending Declaration removes existing requirements under subclause 11(2) of the 1997 Declaration and imposes other requirements in relation to the offering of products and arrangements for low-income customers, having an approved marketing plan for these products and arrangements, and the maintenance and resourcing of a new Low-income Measures Assessment Committee.

Legislative basis

Section 52 of the Telecommunications Act 1997 (the Telecommunications Act) provides for the licensing of carriers (generally persons who own specified infrastructure facilities known as network units) to supply telecommunications services to the Australian public.  Section 63 of the Telecommunications Act empowers the Minister to impose licence conditions on a carrier licence.

This Declaration has been made under subsection 63(5) of the Telecommunications Act.  Subsection 63(5) enables the Minister, by written instrument to vary an instrument made under subsection 63(3) of Telecommunications Act.  Subsection 63(3) enables the Minister to impose licence conditions on a particular licence prior to its grant.

Licence conditions have been imposed on Telstra in the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 in reliance upon subsection 63(3) of the Telecommunications Act.  The 1997 Declaration was gazetted on 30 June 1997 and has been amended by subsequent declarations.

Section 64 of the Telecommunications Act requires the Minister to cause to be given to the holder of a licence on which a licence condition is to be imposed a written notice setting out a draft version of the instrument and inviting the holder to make submissions to the Minister on the draft.  The Minister must allow the holder at least 30 days to make the submissions and must consider any submissions received within the time allowed.

The Minister provided the licensee with a copy of the draft Amending Declaration on 27 May 2002, inviting submissions by 26 June 2002.  Telstra wrote to the Minister on 31 May indicating its agreement to the Amending Declaration, subject to minor drafting changes, which were incorporated.  Further minor drafting changes were subsequently made, in consultation with Telstra.

Under subsection 63(13) of the Telecommunications Act, the Amending Declaration is a disallowable instrument for the purposes of the Acts Interpretation Act 1901. 

The legislative instrument requiring Telstra to obtain the ACCC’s consent to a line rental increase for residential customers is the Telstra Carrier Charges—Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2002.

Policy background

On 23 April 2002 the Minister for Communications, Information Technology and the Arts (the Minister) announced new price control arrangements to apply to Telstra from 1 July 2002.  As part of those arrangements, the Minister announced that Telstra would be required to obtain ACCC consent to an increase in a line rental charge for residential customers.  ACCC consent was to be contingent on Telstra complying with new conditions to be applied to its carrier licence, requiring Telstra to:

• provide, and actively market, products and arrangements for low-income consumers; and

• maintain and resource a new Low-income Measures Assessment Committee (LIMAC), comprising representatives from welfare organisations and responsible for reporting annually to the Government on the effectiveness of the low-income package and Telstra’s marketing of the package.

NOTES ON CLAUSES

Clause 1 – Name of Declaration

Clause 1 provides that the name of the Amending Declaration is the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (Amendment No. 2 of 2002).

Clause 2 – Commencement

Clause 2 provides that the Amending Declaration commences on gazettal.

Clause 3 – Amendment of the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997

Clause 3 provides that Schedule 1 to the Amending Declaration amends the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (the 1997 Declaration). 

SCHEDULE 1 – Amendments

Item 1 – Clause 3, definition of public payphone

Item 1 substitutes a new definition of ‘public payphone’ in clause 3 of the 1997 Declaration to make it clear that a public payphone includes a payphone located in a prison, correctional centre, detention centre or similar facility.

Item 2 - omission of subclause 11(2)

Subclause 11(2) of the 1997 Declaration requires Telstra to charge a customer at least $30 less for annual charges for the standard telephone service where it does not provide a rental handset and at least $43 less for a new service connection where it does not supply a rental handset.  These requirements were originally imposed in 1991 when competition was introduced in the supply of the first telephone.  The subclause is no longer required to encourage such competition and it has had the unintended effect of imposing a floor on prices for rental handsets, effectively preventing Telstra from providing handsets free of charge or at discounted prices. 

Item 3 - insert new clause 22

Item 3 inserts a new clause 22, entitled ‘Low-income measures’. 

Subclause 22(1) provides that, by 1 July 2002, Telstra must offer, or have a plan for offering, products and arrangements to low-income customers that has been endorsed by low-income consumer advocacy groups and notified in writing to the Australian Communications Authority (ACA).  Subclause 22(2) provides that the plan for offering products and arrangements not offered to low-income customers from 1 July 2002 must include details of dates by which they will be so offered. 

Telstra announced the development of its ‘Access for Everyone’ package of products and arrangements on 23 April 2002.  The products and arrangements were to be phased in from 1 July 2002.  Prior to this announcement a number of low-income consumer advocacy groups, including the Australian Council of Social Service, Jobs Australia, the Australian Federation of Homelessness Organisations, The Smith Family and The Salvation Army wrote to Telstra or the Government, providing endorsements of the package.

Telstra has subsequently conducted further consultations with low-income consumer advocacy groups on the products and arrangements and the implementation timetable, and obtained further endorsements. 

Subclause 22(3) provides that Telstra must comply with the low-income package as in force or existing from time to time.  Telstra must accordingly continue to offer the products and arrangements as notified to the ACA, and must adhere to the implementation timetable it has notified to the ACA.

Subclause 22(4) provides that Telstra must maintain and adequately resource a Low-income Measures Assessment Committee (LIMAC), comprising representatives of such organisations as are approved by the Minister in writing from time to time.  On 27 May 2002, the Minister approved the following organisations having representatives on LIMAC: the Commonwealth Department of Family and Community Services; the Australian Council of Social Service; The Salvation Army; The Smith Family; Jobs Australia Limited; the Council on the Ageing (Australia); Anglicare Australia; and the Australian Federation of Homelessness Organisations.  LIMAC held its first meeting on 3 June 2002.

Subclause 22(5) provides that LIMAC will be responsible for:

• assessing proposed changes to the low-income package or to the marketing plan (as set out in subclause 22(6)) for the package; and

• reporting annually to the Minister on the effectiveness of the low-income package and of its marketing by Telstra.

Subclause 22(6) provides that, from 1 July 2002, Telstra must have in place a marketing plan for making low-income consumers aware of the low-income package, which has been approved by LIMAC. 

Subclause 22(7) provides that Telstra must seek and consider the views of LIMAC before making any significant change to the low-income package.  The Note provides that the intention is for Telstra to be able to make minor, non-substantive changes to the low-income package, such as minor editorial or typographical corrections, without having to seek and consider LIMAC’s views.

Subclause 22(8) provides that Telstra must, where it makes a significant change to the low-income package, give the ACA a revised version of the low-income package incorporating the change.  This will ensure that the ACA has details of the low-income package as existing from time to time, in order to ensure compliance under subclause 22(3).