EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Communications, Information Technology and the Arts
Telecommunications Legislation Amendment (Competition and Consumer Issues)
Act 2005
Proclamation
Subsection 2(1) of the Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 (the Act) provides that the provisions in Schedule 11 to the Act commence on a day to be fixed by proclamation subject to the proviso that if any of the provisions do not commence within the period of 6 months beginning on the day on which the Act receives the Royal Assent, they shall commence on the first day after the end of that period.
The Act received the Royal Assent on 23 September 2005.
The purpose of the accompanying Proclamation is to fix 1 January 2006 as the day on which Schedule 11 to the Act commences.
Schedule 11 to the Act provides for the implementation of operational separation of Telstra Corporation Limited by way of a standard carrier licence condition through amendments to Schedule 1 to the Telecommunications Act 1997.
The aim of operational separation is to promote the principles of transparency and equivalence in relation to the supply by Telstra of wholesale and retail services. To achieve this aim, Item 7 of Schedule 11 to the Act inserts a new Part 8 of Schedule 1 to the Telecommunications Act. Schedule 1 to the Telecommunications Act specifies standard licence conditions that apply to telecommunications carriers. Part 8 of Schedule 1 to the Act provides for carrier licence conditions that apply specifically to Telstra and relate to operational separation. These conditions require Telstra to prepare, and to give to the Minister for Communications, Information Technology and the Arts (the Minister), a draft operational separation plan which must be directed towards the achievement of the aim and objects of Part 8, and which must deal with such matters as are specified by the Minister in a determination. Such a determination made by the Minister is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
One of the objects of Part 8 of Schedule 1 to the Telecommunications Act is to promote a principle of equivalence in relation to the supply by Telstra of “designated services” to Telstra’s wholesale customers, and Telstra’s retail business units. The Minister may specify, in a written determination, an eligible service that is a “designated service” for the purpose of this provision. A determination made by the Minister setting out the relevant eligible services is a legislative instrument for the purposes of the Legislative Instruments Act.
If the Minister approves the draft operational separation plan, it will become a final operational separation plan. If Telstra has contravened, or is contravening, a final operational separation plan, the Minister can require Telstra to prepare, and give to the Minister for approval, a draft rectification plan. If the Minister approves the draft rectification plan, it then becomes a final rectification plan. Telstra is required to comply with a final rectification plan.
Schedule 11 to the Act also makes amendments to the Telecommunications Act that enable the Australian Competition and Consumer Commission (ACCC), in addition to the Australian Communications and Media Authority (ACMA), to give Telstra a direction to comply with the rectification plan if Telstra has contravened, or is contravening, the rectification plan. Alternatively, or after having issued a remedial direction, the ACCC, the ACMA or the Minister would be able to commence proceedings in the Federal Court seeking recovery of a civil penalty in relation to Telstra’s failure to comply with a condition of its carrier licence.
A further amendment made by Schedule 11 to the Act requires the Minister to cause a review of the operation of Part 8 of Schedule 1 of the Telecommunications Act to be conducted before 1 July 2009. A report of the review must be tabled in both Houses of Parliament. At any time after the review is tabled in both Houses, the Minister may declare by written instrument that Part 8 of Schedule 1 to the Telecommunications Act ceases to have effect on a specified day.
Schedule 11 also amends Parts XIB and XIC of the Trade Practices Act 1974 to insert provisions that would require the ACCC, when performing its functions or exercising its powers under either Part XIB or XIC, to have regard to Telstra’s conduct engaged in order to comply with a final operational separation plan, to the extent that that conduct is relevant to the functions being performed or the power being exercised. These amendments would provide a linkage between the operational separation plan and Parts XIB and XIC where relevant.
The commencement of the provisions in Schedule 11 to the Act was delayed so that, relying on subsection 4(1) of the Acts Interpretation Act 1901, the necessary legislative instruments discussed above could be made before, and commence at the same time as, the provisions in Schedule 11 to the Act commence.
The accompanying Proclamation fixes 1 January 2006 as the day for the commencement of the provisions in Schedule 11 to the Act because it is anticipated that the necessary legislative instruments could be made by that date.
The accompanying Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act (see paragraph 6(e) of that Act), but is not subject to disallowance (see item 42 in the table in subsection 44(2) of that Act). Consultation was considered unnecessary due to the minor and machinery nature of the accompanying Proclamation (see paragraph 18(2)(a) of the Legislative Instruments Act).
Overview
The Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005, enacted by the Commonwealth Parliament, was introduced to address the need for greater transparency and equivalence in the provision of telecommunications services by Telstra Corporation Limited, Australia's leading telecommunications company. The Act was designed to foster a competitive market environment by ensuring fair and open access to Telstra's infrastructure and services. Its primary policy objective is to promote the principles of transparency and equivalence in Telstra's operations through the implementation of operational separation, as outlined in Schedule 11 to the Act. This schedule introduces amendments to the Telecommunications Act 1997, requiring Telstra to develop and adhere to operational separation plans, thereby enhancing the competitive landscape in the telecommunications sector. The Act also empowers the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA) to enforce compliance with these plans, ensuring that Telstra operates in a manner that is beneficial to both consumers and competitors.
Scope and Application
The Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 applies specifically to Telstra Corporation Limited, a major telecommunications carrier in Australia, and seeks to implement operational separation of its wholesale and retail services to promote transparency and equivalence in its service offerings. This Act, as amended by Schedule 11, imposes certain obligations on Telstra, such as the preparation and submission of an operational separation plan to the Minister for Communications, Information Technology and the Arts. If Telstra fails to comply with the approved plan, the Minister can require Telstra to prepare a rectification plan, which, if approved, Telstra must then follow. The Act also extends to the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA), which have the authority to direct Telstra to comply with the rectification plan or to seek civil penalties in the Federal Court for non-compliance. The Minister is required to review the operation of these provisions before 1 July 2009, and the review findings must be reported to and tabled in both Houses of Parliament. Additionally, the Act amends the Trade Practices Act 1974 to ensure that the ACCC considers Telstra's compliance conduct when performing relevant functions. The application of these provisions is national in scope, as they pertain to a Commonwealth Act.
Key Provisions
The main operative sections of the Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 are contained in Schedule 11, which introduces provisions for the operational separation of Telstra Corporation Limited (section 7). These provisions, which commence on 1 January 2006, mandate Telstra to submit a draft operational separation plan to the Minister for Communications, Information Technology and the Arts (section 7(1)(a)). This plan must be designed to achieve the aim of promoting transparency and equivalence in Telstra's supply of wholesale and retail services (section 7(1)(a)). The Minister, through a legislative instrument, can specify the matters that the draft plan must address (section 7(1)(b)). If approved, the draft plan becomes a final operational separation plan (section 7(2)). Additionally, the Minister must arrange for a review of the operation of these provisions by 1 July 2009, with a report tabled in both Houses of Parliament (section 7(3)). Following the review, the Minister may declare by written instrument that the provisions cease to have effect on a specified day (section 7(4)). The schedule also amends the Trade Practices Act 1974 to ensure the Australian Competition and Consumer Commission (ACCC) considers Telstra's compliance with the operational separation plan when exercising relevant functions (section 11).
The Act imposes several obligations on Telstra and the Minister. Telstra must prepare and submit a draft operational separation plan to the Minister, ensuring it aligns with the specified matters outlined by the Minister in a determination (section 7(1)(a)). If Telstra contravenes a final operational separation plan, the Minister can require Telstra to prepare a draft rectification plan, which, if approved, becomes a final rectification plan that Telstra must comply with (section 7(5)). Additionally, the Minister must conduct a review of the operational separation provisions by 1 July 2009 and table the review report in both Houses of Parliament (section 7(3)). The Minister also has the authority to declare, through written instrument, the cessation of the operational separation provisions on a specified day following the review (section 7(4)). Furthermore, the ACCC is required to consider Telstra's compliance with the operational separation plan when performing its functions under the Trade Practices Act 1974 (section 11).
The Act outlines several potential consequences for non-compliance. If Telstra contravenes or is contravening a final operational separation plan, the Minister can require Telstra to prepare a draft rectification plan (section 7(5)). The ACCC, the Australian Communications and Media Authority (ACMA), or the Minister can issue a direction to Telstra to comply with a rectification plan, and if Telstra fails to comply, these entities can seek recovery of a civil penalty in the Federal Court (section 7(6)). The Act does not specify maximum penalties for these breaches but indicates that civil penalties can be sought through the Federal Court. Additionally, the Minister's failure to conduct the required review by 1 July 2009 could result in the Minister being subject to parliamentary scrutiny and potential legislative consequences for not fulfilling this obligation.