EXPLANATORY STATEMENT
RULES OF CONDUCT ABOUT DEALINGS WITH INTERNATIONAL TELECOMMUNICATIONS OPERATIONS
Issued by the Authority of the Minister for Communications and the Arts
The Rules of Conduct are intended to promote fair competition in the supply of carriage services between Australia and places outside of Australia. As a result, during the preparation of the Rules of Conduct consideration has been given to the ACCC’s powers under the Trade Practices Act 1974 as amended.
Section 367 of the Telecommunications Act 1997 (the Act) provides for the Minister to make Rules of Conduct about dealings by carriers and carriage service providers with international telecommunications operators.
‘International telecommunications operator’ is defined in subsection 367(6) of the Act to mean a person who carries on activities outside Australia that involve the supply of a carriage service specified in paragraph 16(1)(b) or (c) of the Act; or the supply of goods or services for use in connection with the supply of such a carriage service; or the installation of, maintenance of, operation of or provision of access to a telecommunications network or a facility where the network or facility is used to supply such a carriage service.
Under section 369 of the Act, the Rules of Conduct bind carriers and carriage service providers. Section 368 of the Act gives the ACCC the specific function of administering the Rules of Conduct. Section 371 of the Act enables the ACCC to carry out an investigation of a contravention of Rules of Conduct in force under section 367.
Subsection 367(4) of the Act makes the Rules of Conduct a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. This means that the Rules must be published in the Commonwealth Gazette and tabled in Parliament. The Rules will be subject to Parliamentary disallowance.
Section 367 was included in the Act to deal with the risks that may arise because of the potential for telecommunications businesses based in other countries to behave anticompetitively in relation to Australia’s liberal market. The rules cannot directly regulate the behaviour of international telecommunications operators, as their activities are not within Australian jurisdiction. Accordingly, the Rules of Conduct apply to carriers and carriage service providers operating in Australia in their dealings with international telecommunications operators. The object of the Rules is to ensure that carriers and carriage service providers use all reasonable endeavours, in their dealings with international telecommunications operators, to prevent, mitigate or remedy unacceptable conduct engaged in by the international telecommunications operators.
Under section 367 of the Act, an international telecommunications operator engages in unacceptable conduct if one of three situations occur.
First, under paragraph 367(1)(a), an international telecommunications operator engages in unacceptable conduct if the operator uses, in a manner that is, or is likely to be, contrary to the national interest, the operator’s power in a market for: carriage services; goods or services for use in connection with the supply of carriage services; or the installation of, maintenance of, or provision of access to telecommunications networks or facilities.
References to the ‘national interest’ are references to Australia’s national interest. The ‘power in a market’ refers to commercial power in a market in Australia or any other country.
Second, under paragraph 367(1)(b), an international telecommunications operator engages in unacceptable conduct if the operator uses, in a manner that is, or is likely to be, contrary to the national interest any legal rights or legal status that the operator has because of foreign laws that relate to: carriage services; goods or services for use in connection with the supply of carriage services; or the installation or, maintenance of, or provision of access to, telecommunications networks or facilities.
Third, under paragraph 367(1)(c), an international telecommunications operator engages in unacceptable conduct if the operator engages in any other conduct that is, or is likely to be, contrary to the national interest.
A key example of an operator engaging in unacceptable conduct could be where an Australian-based affiliate of a major supplier of telecommunications services is effectively given substantially discriminatory prices for terminating outgoing traffic from Australia to that foreign operator.
The ACCC will administer the Rules fully consistently with Australia’s international obligations, including those under the World Trade Organisation (WTO). These WTO obligations include the General Agreement on Trade in Services (GATS) and the 15 February 1997 Agreement on Basic Telecommunications. These provide inter alia for transparency and non-discrimination in application of government measures. It is expected that the ACCC will liaise closely with the Department of Foreign Affairs and Trade in applying these Rules of Conduct.
Essentially, the Rules of Conduct carry forward similar provisions under the Telecommunications Act 1991, replacing the following four instruments made under that Act, which will be repealed from 1 July 1997:
- the Telecommunications International Code of Practice dated 12 October 1992
- the Telecommunications (International Code of Practice) Direction No. 1 of 1992 dated 12 October 1992
- the International Service Providers Class Licence (AUSTEL No. 1 of 1992, Issue No. 2) dated June 1994
- the Telecommunications (Eligible International Services) Direction No. 1 of 1991 dated 22 November 1991.
Details of Clauses
Clause 1 provides for the citation of the Rules of Conduct.
Clause 2 provides for the commencement of the Rules of Conduct on 1 July 1997.
Clause 3 defines terms used in the Rules of Conduct, including “agreement”, “international service” and “operator”.
“Operator” is defined to mean an international telecommunications operator, that is, a person falling within the terms of subsection 367(6) of the Act. Other terms used in the Rules will bear the same meaning as in the Act. For example, the circumstances in which an international telecommunications operator will be taken to engage in unacceptable conduct are set out in subsection 367(1) of the Act.
Clause 4 sets out the objects of the Rules of Conduct to be:
- to ensure that carriers and carriage service providers use all reasonable endeavours, in their dealings with international telecommunications operators, to prevent, mitigate or remedy unacceptable conduct engaged in by the operators; and
- to enable the ACCC to take appropriate action if international telecommunications operators engage in unacceptable conduct or carriers or carriage service providers contravene the Rules of Conduct.
Clause 5 provides that a carrier or carriage service provider must use all reasonable endeavours, in their dealings with an international telecommunications operator, to prevent, mitigate or remedy unacceptable conduct engaged in by the operator.
Clause 6 provides that a carrier or carriage service provider must on request provide the ACCC with information about any agreement entered into by the carrier or carriage service provider about charges in connection with an international service or about telecommunications traffic. This information must be provided in the form and in the period specified by the ACCC. The ACCC may use the information only for the purpose of investigating a contravention by the carrier or provider of the Rules of Conduct.
Clause 7 gives the ACCC the power to make information available to the public, or one or more carriers, or one or more carriage service providers if, in the opinion of the ACCC, the disclosure of the information would promote the fair and efficient operation of a market or would otherwise be in the national interest. In administering this clause the ACCC would be expected to take into account the relevant commercial interests of the parties involved.
Clause 8 gives the ACCC the power to direct a carrier or a carriage service provider to make an agreement with an international telecommunications operator on specific charges; or on the allocation of all or part of the international telecommunications operator’s traffic with the carrier or carriage service provider; or to act in its dealings with an international telecommunications operator in a particular manner to prevent, mitigate or remedy unacceptable conduct engaged in by the operator. As a result of subsection 367(3) of the Act, the ACCC will be required to consult with the ACA before giving a direction under Clause 7.
Clause 9 provides that carriers and carriage service providers must, as far as practicable, take certain action to comply with a direction by the ACCC where the ACCC: investigates a contravention of the Rules of Conduct; considers that dealings between the carriers and carriage service provider and an international telecommunications operator will have the effect of allowing the operator to engage in unacceptable conduct; and gives the carrier or carriage service provider a direction under clause 7.
Clause 10 gives the ACCC the power to make a written determination of a legislative character where the determination imposes requirements, prohibitions or restrictions on carriers and/or carriage service providers with a view to preventing, mitigating or remedying unacceptable conduct engaged in by operators. Before making such a determination, the ACCC must consult with the ACA (subsection 367(3) of the Act). A determination under clause 10 is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901. This means that the determination must be published in the Commonwealth Gazette and tabled in Parliament. The determination is subject to Parliamentary disallowance.