EXPLANATORY STATEMENT
TELECOMMUNICATIONS (CUSTOMER SERVICE GUARANTEE) DIRECTION NO. 1 OF 1999 (AMENDMENT NO. 1 OF 2003)
TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) ACT 1999
Under section 115 of the Telecommunications (Consumer Protection and Service Standards) Act 1999, the Australian Communications Authority (ACA) may, if directed to do so by the Minister, make performance standards to be complied with by carriage service providers in relation to customer service.
On 7 July 2000, the Telecommunications (Customer Service Guarantee) Standard 2000 (No. 2), was gazetted. This instrument was made by the ACA in accordance with a direction made by the Minister [the Telecommunications (Customer Service Guarantee) Direction No. 1 of 1999 (‘the 1999 Direction’)] and sets out performance standards to be met by carriage service providers in relation to customer service.
The Government established the Telecommunications Service Inquiry (TSI) in March 2000 to examine the adequacy of telecommunications services in metropolitan, regional, rural and remote Australia. The TSI reported to the Government on 30 September 2000.
Recommendations 5 and 13 of the TSI were that:
- The Customer Service Guarantee performance standards be amended to apply only to universal service providers. [Recommendation 5]
- The ACA be required to review the operation of the Customer Service Guarantee performance standards in a multi-carrier, multi-platform environment to determine whether existing, common standards remain appropriate. In particular, the standards applying where no infrastructure is readily available should be reviewed to ensure the sources of consumer frustration are reduced and appropriate incentives put in place to encourage effective capacity planning. [Recommendation 13]
In its response to these recommendations, the Government asked the ACA to conduct a review of the future operation of the Customer Service Guarantee performance standards in a multi-carrier, multi-platform environment. The ACA provided its report, Review of the Telecommunications Customer Service Guarantee Arrangements, on 21 December 2001. While recommending that the performance standards continue to apply to all carriers, the ACA suggested that a number of variations be made to the performance standards to promote competition and streamline procedures. The Government accepted the ACA’s recommendation that the performance standards continue to apply to all carriers and this was announced by the Minister on 29 July 2002. The Minister also agreed to some of the variations recommended in the ACA’s report.
The Telecommunications (Customer Service Guarantee) Direction No. 1 of 1999 (Amendment No. 1 of 2003) (‘the amending Direction’) gives effect to a number of these variations. Other recommendations which have been accepted by the Minister may be implemented by the ACA pursuant to its powers contained in section 120 of the Telecommunications (Consumer Protection and Service Standards) Act 1999, and in accordance with directions already in force under the 1999 Direction.
As part of the Government’s response to the death of Sam Boulding in Kergunyah, Victoria, the ACA was asked to investigate circumstances surrounding the inoperability of the telephone service supplied to the Boulding family home by Telstra in January and February 2002. Recommendation 9 of the ACA’s subsequent report, Investigation into the provision and maintenance of telephone services to the Boulding family in Kergunyah, north-eastern Victoria, was to improve Telstra’s arrangements for claiming exemptions from compliance with the performance standards by more clearly defining the circumstances in which an exemption due to circumstances beyond Telstra’s control may be claimed. This recommendation was implemented by a licence condition imposed on Telstra in May 2002 (Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (Amendment No. 1 of 2002)). In order to maintain industry equity, the amending Direction clarifies the circumstances in which an exemption from the performance standards may be claimed by any carriage service provider in circumstances beyond the control of that carriage service provider.
LEGISLATIVE BASIS
The amending Direction is made under:
- section 124 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (‘the Act’); and
- subsection 33(3) of the Acts Interpretation Act 1901.
Section 124 of the Act empowers the Minister to give the ACA written directions about the exercise of its powers under Part 5 of the Act, relating to the performance standards. Under subsection 125(3), if the Minister varies a direction made under section 124, the ACA must either vary the standard in force under section 115 of the Act (the performance standards) so that the standard complies with the varied direction; or revoke the standard and determine a new standard that complies with the varied direction.
Subsection 33(3) of the Acts Interpretation Act provides that where an Act confers a power to make an instrument, the power shall, unless the contrary intention appears, be construed as including a power ‘exercisable in the like manner and subject to the like conditions (if any)’ to amend or vary such an instrument. The 1999 Direction is a disallowable instrument under subsection 124(4) of the Act. The effect of subsection 33(3) of the Acts Interpretation Act is that the Minister can amend or vary the 1999 Direction in writing by disallowable instrument.
NOTES ON THE CLAUSES
Name of Direction
Clause 1 provides that the name of the amending Direction is the Telecommunications (Customer Service Guarantee) Direction No. 1 of 1999 (Amendment No. 1 of 2003).
Commencement
Clause 2 provides that the amending Direction commences on gazettal.
Variation
Clause 3 provides that the 1999 Direction, which was notified in the Gazette on 4 January 2000 and varied by the Telecommunications (Customer Service Guarantee) Direction No. 1 of 1999 (Amendment No. 1 of 2001), notified in the Gazette on 5 September 2001, is further varied as set out in Schedule 1 to the amending Direction.
SCHEDULE 1 - Amendments
Item 1, definition of enhanced call handling feature
Item 1 amends the definition of ‘enhanced call handling feature’ in clause 4 of the 1999 Direction to limit the definition to any feature (listed in paragraphs (a) to (f) of the definition) that is activated by a carriage service provider. The amended definition limits the application of the performance standards in respect of enhanced call handling features (such as call waiting and calling number display) to those features that are activated by a carriage service provider, such as exchange based activation.
Where a customer of a carriage service provider can activate an enhanced call handling feature from their telephone handset or customer equipment, the performance standards will not apply. As a result, carriage service providers will not be liable for penalties under the performance standards for delays in these situations.
If a customer is unable to activate an enhanced call handling feature due to a fault in the exchange such that the carriage service provider needs to take action to activate the features, the performance standards will continue to apply.
Item 2, insertion of clause 19A
Item 2 inserts clause 19A into the 1999 Direction to provide that the performance standards must contain provisions to enable the ACA to grant a carriage service provider a temporary exemption from compliance with the performance standards. The aim of the temporary exemption scheme under this clause is to mitigate negative impacts for both industry members and consumers of a general application of the performance standards. In its report reviewing the operation of the Customer Service Guarantee performance standards, the ACA identified the general application of performance standards as: a potential barrier to entry into the fixed phone market; possibly raising the costs of competing in the market; and potentially reducing the effects of recognised consumer benefits derived from competition, such as price, quality, choice and innovation. To address these concerns, the temporary exemption scheme contained in clause 19A has been devised to facilitate competition in the market by enabling a provider with a small share of the market for service covered by the performance standards (CSG services) in a geographic area to apply to the ACA for a temporary exemption from complying with performance standards in that area.
Subclause 19A(1) provides that the performance standards must provide that, if an application is made by or on behalf of a carriage service provider, the ACA may grant the provider a temporary exemption from compliance with the performance standards, subject to other conditions specified in clause 19A. An exemption application need not be made by the carriage service provider concerned, but may be made, for example, by an agent of the carriage service provider who is properly authorised to do so. A carriage service provider who supplies, or proposes to supply, services covered by the performance standards, may apply for an exemption (see section 87 of the Telecommunications Act 1997 which provides that a person may be a carriage service provider if that person proposes to supply or arrange to be supplied a listed carriage service to the public).
Subclause 19A(2) provides that the performance standards must set out a number of requirements which an application for a temporary exemption must satisfy. The performance standards must provide for an application to be in writing (paragraph 19A(2)(a)), and to include a description of the geographic area for which the exemption is sought (paragraph 19A(2)(b)). The area for which an exemption may be sought is not restricted, and it is possible for a carriage service provider to apply for an exemption in relation to a large geographic area (for example, a State or Territory), or conversely in relation to a small geographic area (for example, a local government area). In deciding to apply for a temporary exemption in a particular geographic area, carriage service providers will need to consider, in relation to the whole of the relevant geographic area, their ability to satisfy the ACA of the matters provided for by subclause 19A(5).
Paragraph 19A(2)(c) provides that the performance standards must provide for the period of time for which an exemption is sought to be included in the application. Subclause 19A(7) provides that the performance standards must provide that the grant of an exemption may not be for a period in excess of 5 years. Therefore applicants are expected to nominate a period which does not exceed 5 years as part of their application. Paragraphs 19A(2)(d) and (e) require the performance standards to require an application to include details of the number of CSG services supplied by the carriage service provider in the geographic area nominated and the number expected to be supplied in that area at the end of the exemption period. Paragraph 19A(2)(f) provides for the performance standards to allow the ACA to nominate additional matters which must be included in an application.
Subclause 19A(3) provides that the performance standards must require a temporary exemption issued by the ACA to be in writing, to include a description of the geographic area for which the exemption is granted, and to specify the period of time for which the exemption is granted. Paragraph 19A(3)(d) provides that the performance standards must provide that the ACA may include such terms and conditions for the exemption, including in relation to its cessation, as it considers appropriate. For example, the ACA may consider it appropriate to include as a condition of a temporary exemption that the exemption will cease or must be reviewed if the carriage service provider becomes a primary universal service provider in the area for which the exemption has been granted.
The performance standards must provide that temporary exemptions granted by the ACA may only have effect prospectively and will not affect any right, obligation or liability acquired, accrued or incurred under the performance standards or agreements in force before the exemption takes effect (subclause 19A(4)). This means that a carriage service provider will still be subject to the performance standards in respect of its existing customers at the time the exemption is granted. Also, if an existing customer has waived their entitlement to expect performance in accordance with the performance standards in exchange for advantages such as cheaper phone calls, a temporary exemption subsequently granted to the carriage service provider will have no effect on that arrangement.
Subclause 19A(5) provides that the performance standards must provide that if the ACA is satisfied that the criteria set out in paragraphs 19A(5)(a) to (c) have been met, the ACA will grant a temporary exemption to a carriage service provider. The onus of satisfying the criteria is on the carriage service provider, who will need to demonstrate that it meets each of the criteria to the satisfaction of the ACA. If an applicant fails to satisfy one or more of the specified criteria, the ACA will not be able to grant an exemption.
The first criterion to be provided for by the performance standards is that the carriage service provider is not a primary universal service provider (paragraph 19A(5)(a)). The reason for this is that primary universal service providers, as carriers of last resort under the universal service obligation, should, at a minimum, be subject to the same performance requirements as the rest of industry for CSG services.
Paragraph 19A(5)(b) provides that the performance standards must provide that the carriage service provider demonstrate that it has a small share in the market for CSG services in the geographic area for which it is seeking the exemption. The temporary exemption will not be granted to a carriage service provider holding a moderate or large share in the market for CSG services in a particular geographic area. The term ‘small share of the market’ has not been defined and would have its commonly accepted meaning. This criterion is intended to provide the ACA a degree of latitude in determining whether a particular applicant is eligible to be considered for an exemption. This flexibility is considered necessary to respond to the potentially wide range of circumstances in which it may be reasonable to consider an exemption.
In interpreting this criterion it is intended that the ACA should have regard to the overall objective of the exemption scheme to minimise barriers to entering the market for CSG services and to promote consumer benefits derived from competition.
Paragraph 19A(5)(c) provides that the performance standards must provide that a carriage service provider demonstrate to the ACA’s satisfaction that the exemption is likely to result in a net benefit to end-users in the geographic area for which the exemption is sought. It is important that a temporary exemption would have a positive effect for end-users and not be used to reduce compliance costs if there are no countervailing benefits for the community. The assessment of net benefit extends to all end-users, not simply those who may be potential customers.
Subclause 19A(6) provides that the performance standards must provide for a number of matters to which the ACA must have regard in considering whether the requirement in paragraph 19A(5)(c) has been satisfied. These include: the extent to which the exemption would lower the cost of entering or competing in the market for CSG services in the area for which the exemption is sought (paragraph 19A(6)(a)); the likelihood that the exemption would promote sustainable competition (paragraph 19A(6)(b)); and the likelihood that an exemption would result in service improvements for end-users (for example price, quality, choice and innovation) (paragraph 19A(6)(c)). The performance standards must also require the ACA to consider the number of CSG services likely to be affected by the exemption (paragraph 19A(6)(d)) and the estimated proportion of the CSG market that would be likely to be affected by the exemption (paragraphs 19A(6)(e) and (f)).
The matters to be considered by the ACA are not exhaustive and the performance standards must also provide for the ACA to take into account such other matters as it considers relevant (paragraph 19A(6)(h)).
The performance standards must provide for temporary exemptions to be granted for a maximum of 5 years (subclause 19A(7)). Notwithstanding that an application has been made for a particular period, the ACA may grant an exemption for a lesser period if it considers this is appropriate. For example, the ACA’s consideration of the net benefit to end-users (which the performance standards must require in accordance with paragraph 19A(5)(c)) may affect the period of time for which an exemption is granted.
Subclause 19A(8) provides that the performance standards must provide that if a temporary exemption has been granted by the ACA, the exemption may be renewed for an additional period of up to 5 years. Paragraph 19A(8)(a) requires the performance standards to provide that a renewal application can be made by or on behalf of the carriage service provider to whom the exemption was granted, and paragraph 19A(8)(b) requires the performance standards to provide that applications for renewal must satisfy all requirements of an original application under the clause.
Subclause 19A(9) provides that a process to notify prospective customers of a carriage service provider that a temporary exemption has been granted, and the resultant implications of that exemption, must be specified in the performance standards. While it is important that prospective customers of a carriage service provider are advised of any temporary exemptions in place to assist those consumers in making an informed decision when choosing a carriage service provider, this process should not be unduly burdensome on the carriage service provider. Subclause 19A(10) provides that the performance standards must provide that it is a condition of all temporary exemptions granted by the ACA that the notification requirements in the performance standards (as provided for by subclause 19A(9)) are complied with.
Item 3 – insertion of subclause 17(11)
Clause 17 of the 1999 Direction provides that the performance standards must exempt a carriage service provider from compliance with the performance standards to the extent that non-compliance is due to circumstances beyond the control of the carriage service provider. For example, carriage service providers may claim exemptions from compliance with the performance standards for natural disasters or extreme weather conditions that cause significant outages of services and restrict rectification or connection activities. Such exemptions do not exempt the service provider from compliance with the performance standards completely; they merely allow providers to extend the maximum timeframes prescribed in the performance standards to the extent necessary because of the disruption.
The 1999 Direction does not provide for the performance standards to provide specific limitations on the circumstances in which an exemption due to circumstances beyond a carriage service provider’s control may be claimed.
Item 3 amends the 1999 Direction by inserting a new subclause 17(11). Subclause 17(11) clarifies that the performance standards must provide that a carriage service provider may only claim an exemption from compliance with the performance standards due to circumstances beyond the carriage service provider’s control for areas that are either affected by the cause of the disruption or affected by the need to move staff or equipment from another associated area to attend the disrupted area.
For example, if flooding caused such a number of phone faults in Town A that a carriage service provider could not fix all the faults within the timeframes required by the performance standards, the carriage service provider may claim an exemption under the performance standards from complying with timeframes for Town A. If the problem was extensive, the provider may need to call on its technicians from Town B to help fix the faults. This may cause otherwise routine repairs in Town B to be delayed, because its technicians are helping in Town A. Item 3 clarifies that the performance standards must provide that, in such situations, a provider may claim an exemption from the standards for both Town A and Town B.