EXPLANATORY STATEMENT
Issued by the Australian Competition and Consumer Commission
Model Non-price Terms & Conditions Determination 2008
Trade Practices Act 1974
Legislative Provisions
Section 152AQB of the Trade Practices Act 1974 (TPA) requires the Australian Competition and Consumer Commission (the ACCC) to make a written determination setting out model terms and conditions relating to access to core services. For the purposes of section 152AQB, the core services are specified in subsection 152AQB(1) as follows:
- the Domestic PSTN Originating Access Service (as described in the relevant declaration);
- the Domestic PSTN Terminating Access Service (as described in the relevant declaration);
- the Unconditioned Local Loop Service (as described in the relevant declaration);
- the Local Carriage Service (as described in the relevant declaration); and
- a declared service specified in the regulations.
To date, no declared service has been specified in the Trade Practices Regulations 1974 as being a core service.
Before making a determination, subsection 152AQB(5) requires the ACCC to publish a draft of the determination and invite people to make submissions on the draft determination. The ACCC is also required to consult with the Australian Communications and Media Authority (ACMA) pursuant to 152AQB(6), prior to the making of a final determination.
Once a final determination is made, the ACCC must publish it in accordance with subsection 152AQB(7) of the TPA. Publication can be in such a manner as the ACCC considers appropriate, including in electronic form.
Under subsection 152AQB(8), a determination made under section 152AQB in relation to a particular core service will remain in force for a period of five years, unless sooner revoked. Further, under subsection 152AQB(9), the ACCC must have regard to a determination made under section 152AQB if it is required to arbitrate an access dispute in relation to a core service covered by the determination.
Purpose
The purpose of the Model Non-Price Terms and Conditions Determination 2008 is to provide greater certainty to industry and encourage industry to resolve access issues more quickly, as well as reducing the potential for regulatory gaming. The clauses contained in the Determination are intended to directly assist parties to reach commercial agreement on terms and conditions of access, or to submit access undertakings, thus providing more timely access for access seekers to core fixed line services.
While the model terms and conditions clauses are non-binding, they are intended to provide clear guidance on the ACCC’s views as to what would constitute fair terms and conditions of access. In addition, if an access dispute is notified to the ACCC concerning a core service, regard would be had to the model terms and conditions in making a determination in the arbitration of that dispute, and hence it is likely that such a determination would generally reflect the position that had been adopted in the model terms and conditions.
It should be noted that any arbitral determination will depend upon the particular circumstances of the dispute. Accordingly, there remains the potential for an arbitral determination to depart from the model terms and conditions clauses set out in this Determination in arbitrating access disputes.
Consequently, the model terms and conditions provide industry with an up-front view of the likely approach that the ACCC would take to a particular issue in arbitration, thereby assisting the parties to reach commercial agreement on access or to submit undertakings.
The model non-price terms and conditions that are addressed by the ACCC in this Determination are not intended to be exhaustive. The Explanatory Memorandum to the Telecommunications Competition Act 2002 stated that the government’s intention when introducing section 152AQB of the TPA was that:
…the model terms and conditions will not need to be comprehensive; the ACCC will be able to publish any or all of the model terms and conditions relating to a core service”.[1]
On this basis, the ACCC has only included in the Determination those terms and conditions of access that are currently problematic, and/or on which service providers sought ACCC guidance when the initial (2003) model terms were developed. The ACCC also considers that it should focus on terms and conditions of access that may be expected to have a material bearing on a service provider’s business and hence the range, quality and price of services offered to end-users. The ACCC considers that the approach adopted in the Determination will best meet the overall objective of Part XIC of the TPA as set out in 152AB; promoting the Long-Term Interests of End-Users (LTIE).
The Explanatory Memorandum to the Telecommunications Competition Act 2002 also provided that model terms and conditions were intended to reflect the ACCC’s views as to what would represent ‘fair’ terms and conditions of access.[2]
In the ACCC’s view, the concept of ‘fair’ as used in the context of model terms and conditions means that they be equitable and strike an appropriate balance of the rights and interests of the various parties in obtaining access to and use of telecommunications services.
The ACCC considers that ‘fair’ model terms and conditions would be consistent with the reasonableness criteria contained in section 152AH of the TPA, and promote the LTIE as that term is used in section 152AB of the TPA.
For instance, fairness will generally involve finding an appropriate balance between the rights and interests of the access provider and access seeker. This would in effect mean taking account of the legitimate business interests of the access provider and interests of an access seeker to use the core service as required under the reasonableness criteria. This in turn should translate into an approach that promotes the LTIE by fostering competition and encouraging the economically efficient use of telecommunications services.
Although there is no express requirement for it to do so, the ACCC believes model non-price terms and conditions should also represent what would be considered “reasonable” terms and conditions of access. Section 152AH of the TPA contains criteria by which to determine whether particular terms and conditions are reasonable. This is because model terms and conditions are intended to guide access negotiations by providing an indication of the position the ACCC might adopt in an arbitration. Whether the ACCC is assessing an undertaking or arbitrating a dispute, the ACCC is required to have regard to the “reasonableness” criteria pursuant to sections 152BV and 152CR of the TPA. The ACCC considers it is therefore appropriate to have regard to these same criteria in making model terms and conditions.
The ACCC has selected particular terms and conditions of access for inclusion in the Determination by reviewing the terms and conditions of access which:
- an access provider has addressed in access undertakings proposed for a core service;
- have been previously notified under section 152CM of the TPA as in dispute; and/or,
- industry identified as important to address when consulted on the model non‑price terms and conditions in 2003 and again in 2008 in respect of this Determination.
The non-price terms and conditions that are included in this Determination are as follows:
- Billing and Notifications;
- Creditworthiness and Security;
- Liability (Risk Allocation) provisions;
- General Dispute Resolution procedures;
- Confidentiality provisions;
- Communications with End-Users;
- Network Modernisation and Upgrade provisions;
- Suspension and Termination;
- Changes to Operating Manuals;
- ULLS Ordering and Provisioning processes; and
- Facilities Access.
Many of these terms and conditions of access were included in the 2003 determination. However, the model non-price terms and conditions for issues such as Network Modernisation and Upgrades differ more substantially to what was specified in the 2003 determination. In addition, the terms and conditions relating to Changes to Operating Manuals, ULLS Ordering and Provisioning processes, and Facilities Access are new developments.
This Determination does not address price-related terms. This reflects the ACCC’s view that, since the time that the 2003 determination was made, the ACCC has commenced providing guidance on appropriate price terms for the core services in determinations it has made under section 152AQA of the TPA. This guidance is in the form of pricing principles and, in respect of the ULLS and LCS, a schedule of indicative prices.
Although the ACCC could address price-related terms and conditions in this Determination pursuant to 152AQB of the Act, in the current circumstances the ACCC considers there would be little benefit from doing so. Further, should it be considered necessary to revise or augment its already published views regarding price-related terms, the ACCC at this time considers that this should be done by way of instruments made under section 152AQA of the TPA.
Background
In 1997, an access regime for telecommunications was established in order to promote the LTIE of telephone services by promoting competition through connectivity of any user to any other user no matter whose infrastructure is utilised for that purpose.
This access regime was implemented by the Trade Practices Amendment (Telecommunications) Act 1997 which amended the TPA and inserted Part XIC into the TPA. Under Part XIC of the TPA, the ACCC is responsible for implementing and enforcing the access regime for telecommunications, and has been given several powers in order to fulfil this regulatory role. Principally, the ACCC has been given the power to:
- declare carriage services and related services, which makes carriers and carriage service providers of those services subject to the standard access obligations relating to those services;
- make orders exempting carriers or carriage service providers of declared services, or services that may become declared services, from standard access obligations;
- accept or reject access undertakings or variations of access undertakings from carriers or carriage service providers of declared services, and
- arbitrate disputes between access seekers and access providers about the terms and conditions of access to declared services.
On 19 December 2002, the Telecommunications Competition Act 2002 came into effect which made amendments to Parts XIB and XIC of the TPA. Amongst the package of reforms was a new regulatory requirement concerning the establishment of model terms and conditions relating to access to core telecommunications services. Relevantly, these amendments required the ACCC, pursuant to section 152AQB of the TPA, to publish written determinations concerning non-binding model price and non-price terms and conditions of access for each of the core telecommunications services specified under subsection 152AQB(1).
The Commission made and published a model non-price terms and conditions determination and accompanying report in October 2003. In preparing those model terms and conditions, the ACCC considered industry views on the non-price terms and conditions that should be addressed, and the form that those model terms and conditions should take.
Once made, the 2003 model non-price terms and conditions determination remained in force for a period of five years. The Model Non-Price Terms and Conditions Determination 2008 revokes the 2003 determination.
Regulation Impact Statement
The ACCC consulted with the Office of Best Practice Regulation (OBPR) at both the pre–public consultation and post–public consultation stages (OBPR Ref No. 9903). OBPR advised the ACCC that a Regulation Impact Statement is not required for the Determination.
Consultation
Subsection 152AQB(2) of the TPA requires the ACCC to make a written determination setting out model terms and conditions of access for each of the core services specified under subsection 152AQB(1). Under subsection 152AQB(5) of the TPA, prior to making this determination, the ACCC must publish a draft of the determination and invite people to make submissions on the draft determination.
The ACCC published a draft of this Determination on 18 September 2008 on its website, and called for submissions to be provided by 9 October 2008. In addition, the ACCC wrote to parties currently involved in arbitration processes before the ACCC to inform them of this public consultation process.
The ACCC received three submissions in relation to the published draft and has taken these submissions into account in making the Determination.
Pursuant to subsection 152AQB(6), the ACMA was also consulted before this Determination was made.
Notes on sections of the Determination
Section 1 – Name of Determination
Section 1 provides that the name of the Determination is the Model Non-Price Terms & Conditions Determination 2008.
Section 2 – Commencement and Duration
Section 2 provides that the Determination commences on the day it is made. Once made the Determination remains in forces for a period of five years beginning on the day on which it is made unless it is sooner revoked.
Section 3 – Revocation
Section 3 makes it clear that this Determination revokes the Model Non‑Price Terms and Conditions Final Determination made in October 2003 is revoked.
Section 4 – Model Non-Price Terms and Conditions
Section 4 sets out the model non-price terms and conditions. An explanation of each of the clauses is given below.
A. Billing and Notifications
‘Billing and notifications’ terms concern how an access provider may bill for core services, and the process by which an access seeker can lodge a billing dispute.
B. Creditworthiness and Security
‘Creditworthiness’ terms concern the access provider’s rights to make enquiries of the access seeker’s ability to pay for core services, and require that security be provided.
C. Liability (Risk Allocation) Provisions
Liability provisions concern who should be responsible for damage to property or personal injury, i.e., to make repairs and/or compensate parties that have suffered loss. These provisions can also set caps on liability, and require parties to limit their losses to the extent they are able.
D. General Dispute Resolution Procedures
The general dispute resolution procedures establish how disputes should be managed including the timeframes that should apply. General dispute resolution procedures facilitate the resolution of disputes in an expeditious manner without the need to resort to legal proceedings. These procedures also provide necessary support to other terms and conditions of access.
E. Confidentiality Provisions
The Confidentiality provisions guard against confidential information that is used or obtained in the course of providing access being used to the other party’s detriment. An example of confidential information is the identity or other details of the service provider’s end-user customers.
F. Communications with End-Users
These provisions concern when and how a service provider can communicate with an end-user of the other party. These provisions limit service providers from engaging in aggressive marketing strategies, and provide greater assurance to access seekers that the access provider will not use its control over the network to ‘win back’ end-user customers. For instance, they provide assurance that the access provider will not use interactions with an access seeker’s end-user customers when fixing faults or connecting services for marketing purposes.
G. Network Modernisation and Upgrade Provisions
These provisions concern how Major Network Modernisation and Upgrades that affect core services are to be undertaken, and address matters such as notice requirements and consultation. Examples of a Major network modernisation and upgrade is the relocation of exchanges/nodes or altering the deployment class of equipment that the network will support.
The provisions are not intended to apply to emergency works, planned network upgrades that have little potential to materially disrupt other service providers’ services, or a network modernisation or upgrade that is undertaken as part of a coordinated program of capital works that extends across exchange service areas. An example of the latter exception is an upgrade to the National Broadband Network.
H. Suspension and Termination
These provisions concern the circumstances in which an access provider may suspend or terminate a service of an access seeker, including timeframes for an access seeker to rectify their conduct. Provision is also made for when an access seeker can terminate an agreement.
I. Changes to Operating Manuals
These terms concern the access provider’s right to make amendments to its operational manuals, such as its ordering and provisioning manual, including circumstances in which the agreement of an access seeker will not be required.
J. Ordering and Provisioning
These provisions supplement existing ULLS ordering and provisioning processes, including the Telstra Managed Network Migration process and various processes that industry has developed. They address limits on the use of existing processes, as well as requiring additional ordering and provisioning processes to be supported.
K. Facilities Access
‘Facilities access’ terms and conditions set out how an access seeker can access Telstra facilities in order to acquire a core service, and interconnect its own equipment in order to supply services to end-users. Of the core services, ‘facilities access’ terms and conditions are relevant to the ULLS and, to a lesser extent, PSTN OTA services.
The relevant facilities could include distribution frames, space at or adjacent to the exchange (internal or external to existing buildings) in which to install the equipment to be interconnected and ancillary facilities, such as power plant, security and air-conditioning. Designated space in a Telstra exchange for access seeker use is referred to as TEBA space.
L. Interpretation & Definitions
Clause L provides the definitions relevant to the Determination and the interpretation of the model non-price terms and conditions clauses.
Annexure 1
Annexure 1 of the model non-price terms and conditions clauses provides for a standard confidentiality undertaking form that is to be used in regard to clause E. This confidentiality undertaking may be amended according to the needs of the parties.
Annexure 2
Annexure 2 of the model non-price terms and conditions clauses sets out the iVULL process relevant to clause J.
[1] Explanatory Memorandum, Telecommunications Competition Bill 2002, p.39.
[2] ibid.