Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2005 (No. 1)

EXPLANATORY STATEMENT

Issued by the authority of the Australian Communications Authority (‘ACA’)

Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2005 (No. 1)

Telecommunications Act 1997

STATUTORY BASIS

Under section 463 of the Telecommunications Act 1997 (the Act), the Australian Communications Authority (ACA) may, by written instrument, determine an allocation system for allocating specified numbers to carriage service providers (CSPs). 

Subsection 463(6) of the Act requires that any such allocation system must provide for the successful applicant for a particular number, and the amount paid for the number, to be determined by reference to the results of a tender process, a public auction or another process. 

The purpose of the Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2005 (No. 1) (the public determination) is to determine an allocation system for allocating specified freephone and local rate numbers (FLRNs), through which the successful applicant for a particular number and the amount paid for the number, is determined through a public auction process.

BACKGROUND

Introduction

On 13 May 2003, the Minister for Communications, Information Technology and the Arts announced the government’s intention to fund the development by the ACA of a web-based system for allocating FLRNs and preferential access arrangements for charities.   

Freephone numbers are 10-digit numbers beginning with 1800.  Calls made to freephone numbers are free to end-users, as all associated call charges are borne by the receiver of the call.  Local rate numbers are 10-digit numbers beginning with 1300, or six-digit numbers beginning with 13.  The charges for calls made to local rate numbers are shared between the person who makes the call (to a maximum of the amount chargeable for a local call) and the person who receives the call (who pays the remaining charge).  (Although note that call charge costs may be higher from mobile phones or pay phones).

FLRNs may be highly valued as marketing tools, especially in cases where a number is memorable by virtue of a repeating pattern of digits or corresponds to a meaningful phoneword, which is derived from the alphabetical keypad translation of the number.  In addition, FLRNs may encourage calls through the reduced or free call cost.

Under section 455 of the Act, the ACA is required to create a Numbering Plan which, among other things, may set rules relating to the allocation of numbers.  Under the Numbering Plan, numbers are allocated to carriage service providers (CSPs) who then issue numbers to customers.  Prior to May 2003, FLRNs were allocated to CSPs on behalf of the ACA by an industry organisation called Industry Number Management Services Ltd (INMS) on a ‘first-come, first-served’ administrative basis.  To obtain a specific FLRN, customers were required to approach a CSP, who, having established that the number is available for allocation, arranges to be allocated the number and then issues it to the customer. 

New allocation arrangements

In May 2002, the ACA reported to the Minister for Communications, Information Technology and the Arts that the ‘first-come, first-served’ arrangements may not represent the most efficient means of allocating these potentially valuable numbers. 

The ACA’s report suggested that an auction-based approach may provide a more equitable and efficient means of allocating FLRNs.  The report further suggested that a public auction conducted by the ACA, in which the person who successfully bids for the number is assured of the right to be issued the number (and thereby obtains the rights of use in relation to the number), would allow any person with an interest in a specific number to seek it.  It would also provide a reasonable financial return to the community for a limited public resource.  The report also suggested that a web-based auction system would represent the most efficient means of conducting such an auction.

In his response to the ACA in August 2002, the Minister acknowledged the ACA proposal to proceed to develop a web-based public auction system for the allocation of FLRNs.  The Minister also requested that the ACA give consideration to the inclusion within the auction system of separate preferential access arrangements for deserving welfare organisations.  The purpose of the separate arrangements for welfare organisations would be to address the potential inequities associated with a market-based allocation system in which deserving welfare organisations, as non-commercial entities, would be forced to compete for numbers on a financial basis with commercial entities.

The ACA has developed two determinations that set out the new arrangements for allocating FLRNs by public auction and single sealed bid auction for eligible charities, respectively.  Since the implementation of these arrangements, the ACA has made a number of minor amendments to the determinations to improve the operational efficiency of allocating FLRNs by auction.  The determinations which set out the arrangements for the allocation of specified FLRNs are:

• the public determination, which sets out the public auction process to allocate FLRNs (the subject of this explanatory statement); and
• the Telecommunications (Freephone and Local Rate Numbers – Charities) Determination 2005 (No.1) (the charities determination), which sets out the single, sealed bid auction process to allocate FLRNs to ‘eligible charities’. 

Key elements of the public auction process

Under the public auction process a person will first need to register as a user of the ACA’s auction website.  Having registered, the person would then need to jointly apply with a registered CSP to the ACA or its delegate for the specific number it is interested in.  Joint application is necessary because, under subsection 463(6) of the Act, a number may only be allocated to a CSP that has applied for the number.  That is, the Act does not provide for a number to be issued directly by the ACA to an end-user of the number, it requires that a number be issued to the end-user via allocation to a CSP.

However, a joint application is not required where the person interested in a specific number is a registered CSP.  In this instance, the application would be lodged by the registered CSP as user.   

Any person with a valid application for a specific number would be able to give a ‘participation notice’ to trigger the scheduling of an auction day for the number and set the opening bid (which may be the amount of the reserve price set by the ACA, or greater).  An auction for the number would then take place on the scheduled auction day and any person with a valid application for the number would be able to bid for the number. 

After the successful bidder has paid the amount of the winning bid, the CSP who was the joint applicant with the successful bidder is allocated the number, and the successful bidder is entitled to be issued the number and obtains the rights of use in relation to the number.  The rights of use that will be conferred on a person who has been issued an auctioned number are set out in the Numbering Plan as varied by the Telecommunications Numbering Plan Variation 2004 (No. 1) and the Telecommunications Numbering Plan Variation 2004 (No. 5). 

Key elements of the charities auction process

The objective of the charities auction process is to establish an allocation process that:

• provides preferential arrangements for ‘deserving welfare organisations’ to access FLRNs that are of strategic relevance to their work (so that, as discussed above, such organisations are not unfairly disadvantaged when bidding against commercial organisations in the public auction process); and
• balances the need to provide preferential arrangements for ‘deserving welfare organisations’ with the broader objective of optimising allocative efficiency for FLRNs.

Under the preferential access arrangements, ‘eligible charities’ will be able to access FLRNs under a separate set of arrangements before the main auction commences.  An ‘eligible charity’ means a charity that has been endorsed as an income tax exempt charitable entity  under the Income Tax Assessment Act 1997.   

Once the public auction process commences, an eligible charity will only be able to access a specific number under the preferential arrangements if it gives the first participation notice in relation to that number.  If an organisation other than an eligible charity gives a participation notice first, the charity will be required to compete for the number with commercial organisations in the public auction process.

Under the preferential access arrangements, if only one charity gives a participation notice in relation to a particular number within the specified notification period that charity will be able to obtain the rights of use in relation to the number by paying a minimal reserve price (set by the ACA).  If more than one charity gives a participation notice in relation to a particular number, the charity that obtains the rights of use will be decided by a single, sealed bid auction process, conducted on a nominated day. 

Charities will only be able to obtain the rights of use for numbers that can be related directly via a phoneword to their name, a registered trade mark, registered business name or objects contained in their constituting documents.  Further, an eligible charity will only be able to subsequently trade a number obtained through the preferential access arrangements to another eligible charity that can also demonstrate a direct relationship to the number. 

Administrative allocation process

While the new public auction system will be used to allocate specifically requested FLRNs, customers who do not have a preference for a particular number will still be able to obtain FLRNs from the limited pool of non-patterned numbers through an administrative process, similar to the transitional allocation arrangements introduced following the Minister’s announcement in May 2003.  Under these arrangements, the pool of 600,000 FLRNs previously available to CSPs (excluding numbers identified as having patterned or phoneword value were made inaccessible) was used to source a maximum working supply of approximately 10,200 numbers.  As demand dictates (i.e. when the supply of numbers drops below a specified threshold, say 75%) the reduced pool is periodically topped-up from the pool of 600,000 available numbers (excluding numbers identified as having patterned or phoneword value).

INMS charges CSPs for allocation of FLRNs using this system based on cost recovery.  Under the new allocation arrangements, customers are still be able to obtain numbers from the reduced pool at low cost, although they have a very limited choice, compared to the auction system. 

When a service associated with an administratively allocated FLRN is cancelled, the FLRN returns to the pool of numbers declared available for allocation by auction.  It can only be allocated administratively again if it is randomly selected to top up the reduced pool of numbers available for administrative allocation only.

Rights to use numbers obtained at auction

It is proposed that the new public auction system will provide people who obtain rights of use to a number at auction or via the preferential access arrangements for charities with enhanced rights of use in relation to the number, relative to the rights of use that were provided to a person who was issued a number prior to the new arrangements or under the proposed administrative allocation system.

The enhanced rights of use are set out in the Numbering Plan and entitle the ROU-holder to:

• trade the rights of use to another person or organisation;
• ask the CSP that has been allocated the number to surrender the number (at which time the number would enter a three year quarantine period and be unable to be reallocated to a CSP, except at the request of the rights of use holder);
• relinquish all rights of use in relation to the number;
• retain the rights of use while having no active service in place on the number for a period of three years.  If a service has not been activated on the number for a continuous period of three years the rights to use the number will be cancelled;
• ask any CSP to retrieve the number if it has been surrendered; and
• disconnect an active service on the number at any time.

The ROU-holder will be able to trade the rights of use in relation to a number, even if the number has been surrendered and is in quarantine.  For example, the rights of use in relation to the number could be sold, licensed or leased.  However, it will not be possible for a person’s rights of use to be provided as security for a loan.  If a loan is required to finance the purchase of a number at auction, alternative arrangements (e.g. personal guarantees or the provision of other assets as security) may be required.

Consultation

The ACA has undertaken substantial consultation about the auction system for allocating FLRNs over the past 18 months.  This has included consultation on two previous versions of both determinations with key government stakeholders, the Australian Competition and Consumer Commission (ACCC) and the general public, as required under the Act.  Targeted consultation with organisations likely to be affected by the proposal such as CSPs, INMS, various business associations, charities and community sector organisations has also been undertaken.

During the first five months of experience with the smartnumbers™ auction system, a number of administrative changes have been identified that would improve and clarify the operation of the auction system.  Consultation in relation to this determination was conducted in accordance with section 464 of the Act, which requires a 30-day public consultation period.  A notice was placed in the The Australian newspaper on 4 December 2004 inviting public comment by 28 January 2005.  The draft determination was also published on the ACA website along with a ‘Request for Public Comment’ document explaining why it was being made and outlining the changes between this and earlier versions of the determination.  The ACA also circulated the draft determination to major industry members who have been particularly active in the auction system.  Two submissions were received in relation to the draft determination.

The ACCC was consulted as required under section 463 of the Act and has advised by email that it has no comment on this determination.

NOTES ON SECTIONS

Part 1 – Introduction

Section 1.1 – Name of determination

Section 1.1 provides that the name of the determination is the Telecommunications (Freephone and Local Rate Numbers) Determination 2005 (No. 1). 

Section 1.2 – Commencement

Section 1.2 provides that the determination commences on the day after it is registered.

Section 1.3 – Purpose and application of determination

Section 1.3 states the purpose of the determination and the circumstances in which it does not apply.

This section provides that the purpose of the determination is to set out the procedures for allocating FLRNs by an ascending bid auction process.  It also provides that the determination does not apply to:

• the allocation of a number for emergency purposes as set out in section 3.75T of the Numbering Plan (section 3.75T of the Numbering Plan would empower the ACA to temporarily allocate to a CSP a number that would otherwise be available for auction under the public determination or the charities determination in cases where the number is required as the result of an emergency situation); or
• the allocation of a number under the charities determination.

Section 1.4 – Definitions

Section 1.4 defines words and expressions used in the determination and provides that:

• a reference to time is a reference to that time in Victoria;
• a reference to the time an act is done is either:

­     in the case of an action done using the information technology system used to facilitate the operation of the auction website, the time that the system records the act as being done; or

­     in any other case, the time the ACA records the act as being done; and

• a reference to an amount of money is a reference to that amount in Australian currency.

This section also provides that any non-whole number, and any number with a five in the first decimal place, that is worked out in accordance with the determination is to be rounded up to the nearest whole number. 

Section 1.5 – Approval of forms

Section 1.5 provides that the ACA must, in writing, approve a number of documents that will be required for use as part of the procedures set out in the determination.  The documents that the ACA is required to approve are:

• a registration application form (see section 2.2);
• an allocation application form (see section 2.3); and
• a participation notice (see section 2.8).

This section also provides that the ACA may approve more than one version of each document. 

Section 1.6 – Auction manager

Section 1.6 provides that the ACA may, in writing, appoint an ‘auction manager’ to manage an auction conducted under the determination. 

Section 1.7 – Ways in which the ACA gives information

Section 1.7 provides that the ACA may give any information in relation to any matter covered by the determination:  

• by placing the information on the auction website;
• by facsimile; or
• electronically (‘electronically’ is defined in section 1.4 of the determination as meaning using guided and/or unguided electromagnetic energy, other than facsimile). 

In practice, it is anticipated that in most cases the information provided to auction participants by the ACA or its delegates will be provided via the auction website, often supplemented by email.

Section 1.8 – Method of payment of moneys to the ACA

Section 1.8 sets out rules regarding the payment of moneys that are due to the ACA under the determination. 

Payments due to the ACA under the determination may be one or more of the following:

• a registration fee may be imposed under subsection 2.2(3)—if so, that fee must be paid by a person before they can be registered to participate in the auction process;
• an application fee may be imposed under subsection 2.4(1)—if so, that fee must be paid before an allocation application made by a CSP, jointly on behalf of the person who wishes to obtain the rights of use to a number, can be considered valid; or

• an amount imposed under subsection 4.2(1)—that is, the amount of the highest bid in an auction, which must be paid by the successful bidder within 30 days of the close of the auction.

This section states that all monies must be paid in Australian currency by the date required.  The section also provides that if payment is due by a specific date, it is sufficient if, by that date:

• For cheque or cash – payment is received by the ACA by the specified date;
• For BPay and other payments – payment is received into the ACA’s bank account nominated by the ACA for that purpose; or
• For additional payment methods notified on the auction website – payment is received when the payment reaches the nominated account.

This section further states that a payment will not be taken to have been made to the ACA unless the full amount of the payment (allowing for any applicable bank fees or charges, and any Government duties or other imposts) is received by the ACA.

Part 2 – Preparing for the Auction

Section 2.1 – Unique identifiers and fees

Section 2.1 provides for the ACA to:

• issue and revoke ‘unique identifiers’ for use by registered CSPs and registered persons to access the auction website;
• set the amount of a registration fee (if any); and
• set the amount of an application fee (if any).

This section provides for a ‘unique identifier’ to be:

• a username and password issued by the ACA;
• an electronic certificate or signature issued by the ACA; or
• any other means of secure identification issued by the ACA. 

This section states that the requirement for the ACA to allot a registered CSP with a unique identifier does not apply in cases where the CSP has previously been done so within the preferential allocation process for charities set out in the charities determination.

In practice, it is expected that:

• for registered persons, the unique identifier will be a username and password; and
• for registered CSPs, the unique identifier will be an electronic certificate.

This section also states that if the ACA has set the amount of the registration fee and/or the application fee, it must publish each amount on the auction website.  While this section provides for the ACA to set these fees, it is possible that one or both types of fee will not be imposed (i.e. that people may be able to either register or make an application, or both, without charge). 

Section 2.2 – Registration

Section 2.2 provides for any person, including a CSP, who is interested in participating in the auction process to apply to the ACA to be registered.  This section also sets out the requirements that apply to such applications and the entitlements of a person who has successfully registered.

A person who has successfully registered under section 2.2 is known as a ‘registered person.’  As a registered person, a person is able to access the auction website using a unique identifier and proceed to the next stage in the auction process, which is to lodge a joint application, under section 2.3, with a CSP of their choice for the allocation a particular number.

This section states that a registration application must be made electronically; using a registration application form approved by the ACA under section 1.5 and the auction website.

This section also states that, once a person has made a registration application that meets the above requirements, the person will be given a unique identifier by the ACA, which the person may use to access the auction website (unless the person has previously been given a unique identifier under the preferential allocation arrangements for charities set out in the charities determination). 

A new application for registration is required to be made by a registered person if that person wishes to change the name in which they have applied for or have been granted registration.  This requirement ensures that registrants cannot change their name during the auction process, thereby enabling bidder identity to be as transparent as possible.

Section 2.3 – Allocation Applications

Section 2.3 provides for a registered person to apply, jointly with a registered CSP of their choice, for the CSP to be allocated a particular number or numbers.  This section also sets out the requirements that apply to such applications and the arrangements by which a CSP may make an application in cases where the CSP wishes to obtain the rights of use to a number itself.

The requirement for registered users to make their allocation applications jointly with a registered CSP is necessary because, under subsection 463(6) of the Act, a number may only be allocated to a CSP that has applied for the number.  That is, the Act does not provide for a number to be issued directly by the ACA to an end-user of the number. 

Section 2.3 states that an allocation application must:

• be lodged by the CSP with whom the registered person is jointly making the application;
• be made electronically, using an application form approved by the ACA under section 1.5 and the auction website; and
• be made with reference to the CSP’s unique identifier and the registered person’s unique identifier.

This section also states that, in cases where a CSP wishes to obtain the rights of use to a number for itself:

• an allocation application made by a registered CSP need not be made jointly with another registered CSP (in which case, the CSP is effectively making the application as both a registered CSP and a registered person); but
• an allocation application made by an unregistered CSP must be made jointly with a registered CSP.

Under this section, the ACA has the discretion to cancel an application if it is satisfied that it is appropriate to do so.  The ACA envisages that this discretion will generally be used where an application has been lodged in error (for example, an incorrect number) or where there has been a significant, unforeseen change in an applicant’s circumstances (for example, serious illness).   

Section 2.4 – Valid applications

Section 2.4 sets out the circumstances in which an allocation application made under section 2.3 is taken to be a ‘valid application’.  An allocation application is a valid application if:

• it was made in accordance with the requirements set out in section 2.3; and
• payment of any application fee set by the ACA under section 2.1 has been received by the ACA.

Section 2.4 also sets out the ACA’s obligation to issue a receipt to the registered person showing the date of the application and each number in the valid application.

A registered person with a valid application is entitled to:

• use the valid application for a period of 12 months from the date of the receipt (the application period);
• initiate the auction process for any available number listed in the application by giving the ACA a participation notice under section 2.8, at any time within 12 months from the date of the valid application (as recorded on the receipt provided to the person by the ACA); and
• bid at auction for any number listed in the valid application.

This section states that an application is no longer valid if the 12 month application period has ended or the registered CSP with whom the application was jointly made withdraws the application under section 2.6.

Section 2.5 – Changes during the application period

Section 2.5 sets out restrictions on the changes that a person may make to an application they have made under section 2.3. 

Section 2.5 states that if, during the period in which an application is valid, the person in whose name the application was made wishes to change the name in which the application was made, or the number in respect of which they made the application, they will need to make a new application under section 2.3.  A registered person may change their contact details and password (if any) under subsection 2.2(4).    

Section 2.6 – Withdrawing application

Section 2.6 provides that a joint applicant may, at any time before the relevant registered person has given a participation notice for a particular FLRN, apply to the ACA for cancellation of the application under section 2.3(7).

Section 2.7 – CSP ceases to be registered

Section 2.7 sets out the rules that apply in cases where a registered CSP which is a party to a joint application ceases to be registered.

This section states that if the CSP ceases to be registered before the registered person who is the other party to the joint application has:

• given a first participation notice; or
• made a bid at auction, in respect of a number listed in the application;

the application is no longer a valid application and the registered person must make another application under section 2.3.

This section also states that if the CSP ceases to be registered after the registered person has:

• given a first participation notice; or
• made a bid at auction, in respect of a number listed in the application;

the application will continue to be a valid application and the person may continue to participate in the auction process.  However, if the person subsequently wins the auction process, he or she must make arrangements for another registered CSP to be allocated the number on his or her behalf within 14 days of the close of the auction.  A failure on the person’s part to make such arrangements would constitute a default under section 4.4, and the person would be subject to the consequences set out in that section.

Section 2.8 – Participation notice

Section 2.8 provides for a registered person with a valid application to give the ACA a participation notice for a number listed in the application.  This section also sets out rules about:

• when a participation notice may be given;
• the items of information that must be included in a participation notice;
• the means by which a participation notice must be given; and
• the circumstances in which a participation notice will be rejected.

The primary function of a participation notice is to indicate that a person wishes for an auction day to be scheduled for a particular number.  When a first participation notice is given for a number, the auction day for that number is scheduled in accordance with section 3.1.  (The full effects of a participation notice are set out in section 2.9, below.)

Section 2.8 states that a participation notice may be given at any time before the auction starts, as determined under subsection 3.2(1).  It also states that a separate participation notice must be given for each number the person wishes to take to auction.

This section also states that a participation notice must:

• state the number that the person wishes to take to auction;
• if the person wishes for his or her first bid to be greater than the reserve price, state the amount of his or her first bid; and
• be given to the ACA electronically, using the form approved by the ACA under section 1.5 and the auction website.

This section states that a participation notice will be rejected if:

• the person’s application has ceased to be a valid application (this may occur through any of the circumstances listed in subsection 2.4(4)); or
• a participation notice has been given for the number under the preferential allocation process for charities (the procedures for the preferential allocation process for charities are set out in the charities determination); or
• it is for a number that the ACA has directed registered CSPs to be only available for application for administrative allocation.

2.9 – Effect of participation notice

Section 2.9 sets out the effects of a participation notice given by a person under section 2.8.

Because the primary function of a participation notice is to trigger the scheduling of an auction day for a number, only the first notice given for any one number has an effect.  That is, after an auction day has been scheduled for the number as a result of the first notice, any subsequent notices are effectively redundant. 

Any person who has a valid application for the number may still bid for the number at auction. 

This section states that the first participation notice for a number:

• entitles the person who gave the notice to bid for the number at auction;
• will trigger the scheduling of an auction day for the number on the date fixed under section 3.1; and
• will set the first bid for the number at auction (either at the reserve price, or, if the person has stated an amount in his or her participation notice that is greater than the reserve price, at that higher amount).

Section 2.10 – Reserve prices and increments

Section 2.10 provides for the ACA to periodically set the reserve price and minimum bid increment applicable to each number to be auctioned.  This section also sets out rules about the way in which the ACA must set, and make known, these amounts.

This section states that:

• the ACA must periodically set the reserve price and minimum bid increment applicable to each number that is available for auction;
• once set by the ACA, the amounts must be notified on the auction website at least 10 working days before the start of the auction of the number, as determined under subsection 3.2(1); and
• the reserve price and minimum bid increment applicable to a number are those that had been set by the ACA and notified on the auction website at the date on which the first participation notice was given for the number.

2.11 – Auction days

Section 2.11 provides for the ACA to periodically set auction days.  It also sets out rules about how the ACA must make known the auction days it sets.

Numbers that are the subject of a participation notice (i.e. those numbers for which a person has expressed a wish to take to auction) will be auctioned in batches on pre-scheduled auction days.   

This section states that the ACA must periodically:

• schedule a day as an auction day; and
• publicise the scheduled day on the auction website at least 10 working days before the scheduled day.

As a minimum, it is expected that the ACA will schedule for auction days to occur on a regular basis, such as on a particular day each month.

Section 2.12 – Auction limits

Section 2.12 provides for the ACA to periodically limit the quantity of numbers that may be auctioned on a particular day.

This section states that the ACA may periodically:

• limit the quantity of numbers that may be auctioned on a particular auction day; and
• publicise this limit on the auction website at least 10 working days before the auction day to which the limit will apply.

Part 3 – Auctions

Section 3.1 – Auction

Section 3.1 provides that the day on which a number is to be auctioned is the next auction day after the first participation notice is given for the number under section 2.8.  This section also sets a minimum period, after the notice is given, that must pass before an auction can occur and sets out the arrangements that apply in cases where the maximum quantity of numbers that may be auctioned on a particular auction day (as set under section 2.12) has already been reached. 

This section states that if a person gives a participation notice for a number, the auction of the number will be held on the next auction day set by the ACA under section 2.11 that is at least 10 days after the date on which the notice was given.  The ACA believes that a 10 day period is sufficient to provide people with reasonable time to make arrangements to bid for a number, without causing undue delay to those who are interested in having an auction occur as quickly as possible.

This section also states that, if the maximum quantity of numbers that may be auctioned on a particular auction day (as set under section 2.12) has already been reached, the ACA may:

• auction the number on the next auction day;
• decide on an alternative auction day for the remaining numbers; and
• publicise these decisions on the auction website at least three working days before the first auction day.

Section 3.2 – Period of auction

Section 3.2 sets out rules about when an auction starts and closes.

This section sets out that an auction will run for at least one day, and will commence at 11 am on the auction day determined under section 3.1.  On that day, bidding will be open between the hours of 11 am and 4 pm.  If a bid is made after 3 pm, the auction will end for the day at 4 pm and recommence at 11 am on the following working day (i.e. on ‘day two’). 

If no bids are made between 11 am and 12 pm on day two, the auction will close at 12 pm on day two.  If a bid is made between 11 am and 12 pm on day two, the auction will remain open until the next full chronological hour (e.g. until 1 pm), and so on. 

If, on day two, a bid is made after 3 pm, the auction ends for the day at 4 pm, and recommences at 11 am on the following working day.  This cycle will continue until a winning bid is determined, at which time the auction will close.

Section 3.3 – How to take part in the auction

Section 3.3 provides that all bidding in an auction under the determination must be conducted electronically using the auction website.

Section 3.4 – Bidding

Section 3.4 sets out the requirements that a bid must meet in order to have effect.  It provides that a registered person with a valid application may make a bid for a number listed in the application, regardless of whether it has given a participation notice in respect of the number.

This section states that a starting bid must either be equal to the reserve price, or a higher amount specified by a person in their participation notice.

This section further states that all other bids must be made using the bidder’s unique identifier, and be at least one minimum bid increment (as set under section 2.10) above the existing highest bid.

Section 3.4 states that a bid that does not meet the above requirements is of no effect.

Section 3.5 – Automatic re-bidding

Section 3.5 provides that the ACA may make provisions on the auction website for bidders to make automatic re-bids in auctions conducted under the determination, and sets out requirements that must be met by any such provisions. 

In an automatic re-bid process, a bidder specifies the maximum amount he or she is willing to bid for an item.  Bids are then automatically made on the bidder’s behalf, in accordance with any applicable bidding rules (such as minimum bid increments), up to, but not exceeding that maximum amount. 

Section 3.5 states that if such a facility is available, a person who wishes to make automatic re-bids must inform the ACA of his or her wish to do so, and the maximum amount he or she is prepared to bid. 

This section states that within any automatic re-bid provisions made by the ACA:

• a person who wishes to make automatic re-bids must inform the ACA of his or her wish to do so, and the maximum amount he or she is willing to bid;
• each automatic re-bid will be one minimum bid increment (as set under section 2.10) above the existing highest bid; and
• the automatic re-bids must cease if the amount of the next automatic bid would exceed the maximum amount that the bidder has advised the ACA he or she is willing to bid.

Section 3.6 – No withdrawal of bids

Section 3.6 provides that once a person has made a bid, he or she may not withdraw that bid.

Section 3.7 – Revocation or suspension of registration or participation in auction

Section 3.7 provides that the ACA may suspend a person’s registration and/or exclude them from participating in an auction if the person has been the successful bidder at another auction, but has not paid the amount of their successful bid in accordance with sections 4.2 and 4.3.

Under this section, the ACA may also revoke a person’s registration, and/or exclude them from participating in an auction if the person has made a false statement to the ACA:

• within their application for registration;
• within their application for allocation; 
• within their participation notice; or
• in connection with an auction.

For the purposes of section 3.7, a ‘false statement,’ has the meaning given in subsection 136(1) of the Criminal Code Act 1995.

Section 3.7 also gives the ACA the power to exclude a registered person from participating in any or all future auctions where the ACA is reasonably satisfied in all the circumstances that a person is likely to engage in conduct that is prejudicial to the efficient and fair operation of the auction process.  This provision has been broadened to enable the ACA to take appropriate action where a registered person may have previously been engaged in unsatisfactory conduct, which could include but is not limited to disguising their true identity.

Section 3.7 states that if the ACA takes action under this section, it must inform the affected person of its reason for doing so.  Under section 5.1, a decision by the ACA to take action under section 3.7 may be appealed to the Administrative Appeals Tribunal.

Section 3.8 – Suspension or cancellation of auction

Section 3.8 provides for the ACA to suspend or cancel an auction under certain circumstances.  This section also sets out rules about the time at which a suspended auction will resume, and what happens to a number that was the subject of a cancelled auction. 

This states that the ACA may suspend or cancel an auction:

• if it has excluded or suspended a person from participating in an auction under section 3.7;
• because of a technical failure in the auction website or the auction system; or
• because of an event beyond the control of the ACA;
• to give the ACA time to investigate an irregularity in the auction; or
• if it is satisfied that in the circumstances it is appropriate to do so.

This section states that in cases where an auction has been suspended:

• the ACA may either resume the auction from the last valid bid, or cancel the auction;
• if the suspension was because of the exclusion or suspension of a person under section 3.7, the auction may resume at the point immediately prior to the excluded or suspended person’s first bid;
• if the suspension was because of a technical failure in the auction website, the auction may resume:

­     when the technical failure is fixed; and

­     from the last valid bid recorded on the auction system; and

• the auction may not resume until at least one full working day after the ACA has told all auction participants of the date and time when the auction is to resume.

This section also states that in the event that the ACA resumes an auction from the last valid bid, and no further bids are made, the person who made the last valid bid will be able to either:

• confirm their bid; or
• apply to the ACA for the auction to be cancelled, stating in writing, the reasons why this should happen — on receiving such an application, the ACA may, having given regard to relevant circumstances, then decide to cancel the auction.

This section states that if an auction is cancelled, the ACA may make the number that was being auctioned available again for allocation by auction.

This section does not require the ACA to consider whether it will exercise its power to suspend or cancel an auction.

Decisions made by the ACA under this section are reviewable by the Administrative Appeals Tribunal in accordance with section 5.1.

Subsections (11), (12) and (13) provide a mechanism for dealing with instances where the results of an auction have been irretrievably lost.  Where the results have been lost, but valid bid data is available, the auction will re-start at the last known valid bid.  Where there is no valid bid data available, the auction is taken not to have been held and the original participation notice is taken not to have been given.  In these circumstances, the number will be made available again for auction. 

Section 3.9 – Closing of an auction

Section 3.9 sets out rules by which to determine the time at which an auction is closed.  This section also provides for the closure of an auction to be publicised on the auction website, and states the effect of the closure of an auction.

This section states that an auction closes at the time determined under subsections 3.2(2) or 3.2(6).  The effect of these subsections is set out under section 3.2, above.

Under subsection 3.9(1), the ACA may close an auction at a particular time.  Before doing so, the ACA must give two days notification on the auction website of the closure. 

Section 3.9 states that no bids will be accepted after the auction has closed.

Section 3.10 – Successful bidder

Section 3.10 provides that the person who is the highest bidder for a number at the close of an auction is the successful bidder for the number.

Under section 4.9, subject to payment of the amount of the successful bid within 30 days of the close of the auction or within a further period under section 4.3, the successful bidder for a number has the right to be issued the number and thereby obtain the rights of use to the number.

Part 4 – After the auction

Section 4.1 – Eligible amount and successful applicant

Section 4.1 sets out:

• who, for the purposes of section 463(6) of the Act, is taken to be the ‘successful applicant for the allocation of a particular number’ (the successful applicant);’ and
• the amount that, for the purposes of section 463(6) of the Act, is taken to be the ‘eligible amount in relation to the allocation of that number’ (the eligible amount).

Section 4.1 states that the CSP, who was the joint applicant with the successful bidder at the auction of a number, is the successful applicant for the allocation of that number.

Section 4.1 also states that the amount of the highest bid in the auction of a number is the eligible amount in relation to the allocation of that number.

Section 4.2 – Payment of eligible amount

Section 4.2 sets out the period within which a successful bidder must pay its eligible amount (i.e. the amount of its successful bid) to the ACA, and the arrangements by which payment must be made.   

This section states that the successful bidder must pay the eligible amount to the ACA within 30 days of the close of the auction and the eligible amount must be paid in accordance with section 1.8, which sets out the method of payment of moneys to the ACA.

Section 4.2 also states the payment is made by the successful bidder on behalf of the CSP with whom they jointly applied for the number.  This is because, under section 463(6) of the Act, the allocation of a number under the auction system is dependent on the payment of the eligible amount.  Although, under section 4.9, the successful bidder is assured of the right to be issued the number, for this to occur, the number must first be allocated to the CSP.  It is therefore appropriate that the payment necessary for the allocation to occur should be made by the successful bidder on the CSP’s behalf. 

Section 4.3 – Successful bidder with unpaid eligible amount

Section 4.3 provides that if the eligible amount is not paid within 30 days of the close of the auction, the successful bidder may be given up to an additional 30 days to pay the winning bid amount.  The ACA has the discretion to reduce the number of additional days or treat the bidder as having ceased to be the successful bidder. In the latter case, the bidder would not be given any additional time to rectify the failure to pay.  The rules in relation to the time at which an auction is taken to have closed are set out in section 3.9.

Section 4.3 also provides that a successful bidder ceases to be the successful bidder and becomes the former successful bidder if:

• the bidder does not pay the eligible amount within the first period of 30 days under section 4.2;
• the bidder does not pay the eligible amount within the further period allowed by the ACA under sub-paragraph 4.3(1)(b)(i); or
• the ACA has decided under sub-paragraph 4.3(1)(b)(ii) to treat the bidder as having ceased to be the successful bidder.

Subsection (4) sets out the following consequences that will apply if a successful bidder becomes the former successful bidder in relation to a particular FLRN:

• the former successful bidder will not be entitled to the rights of use in relation to the FLRN;
• the former successful bidder’s CSP will not be entitled to the allocation of the FLRN;
• the FLRN becomes a defaulted FLRN; and
• the former successful bidder will be in default of its financial obligations to the ACA.

Section 4.4 – Successful bidder without a registered CSP

Section 4.4 states that if a successful bidder for a FLRN does not find another registered CSP within 14 days of the close of an auction as required by section 2.7(3), the bidder becomes the former successful bidder and the same consequences listed under subsection 4.3(4) apply to the bidder and the bidder’s CSP. 

Section 4.5 – Defaulted FLRN

Section 4.5 states that, if a FLRN becomes defaulted, the ACA may re-auction the defaulted FLRN or allocate the FLRN under the Numbering Plan either by administrative allocation or by the emergency allocation provisions.  This section does not apply any time limit, within which the ACA must act.

This section also includes an administrative provision in relation to determining the eligible amount for a defaulted FLRN for the purposes of section 463 of the Act and the new arrangements in sections 4.6 and 4.7 of this determination.  It states that if the ACA chooses to re-auction a defaulted FLRN, the eligible amount for that FLRN is the amount of the highest bid in the subsequent auction. 

Section 4.6 – Recovery of eligible amount

Section 4.6 puts arrangements in place for the recovery of an eligible amount in relation to a defaulted FLRN.  Section 4.6 states that any outstanding payment amount that has not been paid by a bidder in relation to a defaulted FLRN is a debt due to the Commonwealth that is recoverable by the ACA. 

This section provides that the debt due to the Commonwealth will be reduced by the amount the ACA receives as a result of a subsequent auction for that FLRN or an allocation of that FLRN under the Numbering Plan (either by administrative or emergency allocation).  If the ACA receives a payment from a subsequent successful bidder for an amount which is more that the initial winning bid, the debt to the Commonwealth in relation to the defaulted FLRN is zero. 

Section 4.7 – Refund to former successful bidder

Section 4.7 deals with the situation where the successful bidder in relation to an FLRN becomes the former successful bidder and has paid the eligible amount to the ACA.  This situation could arise if the successful bidder pays the eligible amount after the appropriate payment period or the bidder does not have a registered CSP in accordance with the Determination.

This section provides that the former successful bidder is entitled to a refund equal to the amount the ACA receives from the subsequent successful bidder for the subsequent allocation of the FLRN (whether the number is re-auctioned or allocated under the Numbering Plan either by administrative or emergency allocation).

Section 4.8 – Status of former successful bidder

Section 4.8 provides that, unless the ACA has taken action under section 3.7, a former successful bidder is not prevented from participating in subsequent auctions under this or the charities determination or being allocated a FLRN under the administrative or emergency allocation arrangements of the Numbering Plan.

Section 4.9 – Entitlements after payment of eligible amount

Section 4.9 sets out the entitlements of the successful bidder, and the CSP who was the joint applicant with the successful bidder, after the eligible amount (i.e. the amount of the successful bid) has been paid to the ACA.

This section states that, following payment of the eligible amount as required by subsection 4.2(1) or 4.3(3), the CSP has the right:

• to be allocated the number in accordance with section 3.75E of the Numbering Plan (this right also applies to a CSP who was obtained by the successful bidder pursuant to subsection 2.7(3)); and
• to have the number surrendered in cases where, in the application for the number, the CSP has indicated its intention for this to occur.

This section also states that, following payment of the eligible amount, the successful bidder has the right to be issued the number in accordance with section 3.75G of the Numbering Plan, and thereby acquire the rights of use in relation to the number in accordance with section 3.75E of the Numbering Plan.

The terms and conditions under which a service may be provided to the successful bidder by the CSP are the subject of commercial arrangements between those parties, and are beyond the scope of the determination.

Part 5 – Miscellaneous

Section 5.1 – Review of decisions

Section 5.1 provides for certain decisions made by the ACA to be appealed to the Administrative Appeals Tribunal (AAT).  This section also sets out the notification requirements that must be met by the ACA when such decisions have been made.

This section states that the following decisions may be subject to review by the AAT:

• a decision under section 2.3(7) by the ACA to cancel an application for allocation of a declared FLRN or several declared FLRNs;
• a decision under section 3.7 by the ACA to revoke or suspend a person’s registration or to exclude a bidder from participating in an auction;
• a decision under section 3.8 by the ACA to suspend or cancel an auction; or
• a decision under subparagraph 4.3(1)(b)(i) to specify a particular further period for payment of the winning bid amount or to treat the bidder as having ceased to be a successful bidder.

This section further states that if the ACA makes a decision listed above, the ACA must give electronic notice of the decision to a person whose interests are affected by the decision. 

Section 5.2 – Terms and conditions of use

Section 5.2 provides for the ACA to notify on the auction website terms and conditions in relation to certain aspects of the auction system, and to require a person to agree to the terms and conditions before participating in the auction process. 

This section states that the ACA may notify on the auction website, terms and conditions in relation to:

• use of the auction website; and
• the registration process; and
• the allocation application process; and
• participation in the auction process; and
• the payment of moneys; and
• the publication of the information set out in section 5.6; and
• the use of numbers allocated as a result of the auction process; and
• any other matter that the ACA considers appropriate for the operation of the auction system.

This section states that the ACA may require a person to agree to any such terms and conditions before using the auction website, the registration process or the application process.

This section states that the terms and conditions notified above must not be inconsistent with:

• the determination;
• the charities determination; or
• the Numbering Plan.

Section 5.3 – Liability of ACA

Section 5.3 provides that the ACA is not liable to pay damages or costs arising from an act or omission of any person in relation to the auction process set out in the determination.

Section 5.4 – Recovery of damages by ACA

Section 5.4 provides that this determination is made without an intention to affect any legal rights—any right of action or remedy—which the ACA has or may have against any person which arose or arises under statute, common law, equity or otherwise.

Section 5.5 – ACA may obtain information from applicants

Section 5.5 provides for the ACA to obtain information or documents from applicants.

This section states that, in cases where the ACA believes that an applicant possesses information or documents that may be relevant to the performance of any of the ACA’s functions under the determination, the ACA may, by written notice, require the applicant to provide the information and documents. 

This section also states that any such notice given by the ACA may specify the manner, form and time period in which the information or documents are required.   

Section 5.5 also states that if an applicant is given a notice by the ACA under this section, the applicant must comply with the requirements set out in the notice.

Section 5.6 – ACA may publish or release information

Section 5.6 enables the ACA to publish or release information which pertains to the auction process. 

This section states that the information that the ACA may publish or release includes, but is not limited to:

• the personal details of any auction participant, including registered charities, applicants and bidders;
• the amount of any bid;
• the time any bid is placed; and
• the time and manner of payment of the eligible amount.

This section states that the information may be published on the auction website or elsewhere.  

The ACA will only publish and release personal information where the person to whom the personal information relates has given informed consent.  That is, the terms and conditions set out by the ACA under section 5.2 will inform prospective auction participants that the types of personal information listed above may be made publicly available by the ACA.  Prospective participants would then be required to agree for this to occur before being able to participate in the auction process. 

Section 5.7 – Definitions for Division 2

Section 5.7 inserts the following two definitions for the purposes of Division 2 of the determination:

(i) “commencement day” means the date on which this Determination commences; and

(ii) “revoked Determination” means the Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2004 (No. 2). 

Section 5.8 – Revocation of the Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2004 (No. 2)

Section 5.8 provides that the Telecommunications (Freephone and Local Rate Numbers) Allocation Determination 2004 (No. 2) is revoked—this was the previous determination relating to the public auction system for allocating specified FLRNs.  This means that this determination has no effect because it is superseded by the determination to which this statement relates.

Section 5.9 – Certain allocations conducted under revoked determination

Section 5.9 provides that an allocation made by the ACA under section 4.5(b) of the revoked determination will be effective if it was allocated and the eligible amount paid for prior to the commencement day of this Determination. 

Section 5.10 – Savings – arrangements to be dealt with under revoked determination

Section 5.10 provides that in spite of the repeal of the old determination under section 5.8, the following provisions of the revoked determination will continue to have effect and will be taken to have occurred under the determination to which this statement relates:

• Part 3 of the revoked determination will apply to the conduct of any auction for which a valid participation notice had been lodged, but bidding had not closed, before the commencement day; and
• section 5.1 of the revoked determination will apply to a decision mentioned in 5.1 of the revoked determination that was made before the commencement day.

Section 5.11 – Transitional  - arrangements to be dealt with under this Determination

Section 5.11 sets out the transitional arrangements to facilitate the making and implementation of this determination.  The following arrangements will be taken to have been made under the determination to which this statement relates:  

• any arrangement made by the ACA relating to an auction made under the revoked determination where the auction had not been conducted before the commencement day;
• an application for registration or a registration that was granted under section 2.2 of the revoked determination where the auction or allocation to which the application relates had not been completed before the commencement day;
• notification by the ACA of a reserve price or a minimum bid increment under section 2.10 of the revoked determination where the auction or allocation to which the reserve price or minimum bid increment relates had not been conducted before the commencement day;
• the conduct of an auction for which arrangements were made under the revoked determination but had not commenced before the commencement day;
• Part 4 and Division 1 of Part 5 of this Determination will apply to an auction that commenced but was not completed before the commencement day; and
• Part 4 applies where an amount payable under the revoked determination had not been paid before the commencement day.