Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005

EXPLANATORY STATEMENT

Telecommunications Act 1997

Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005

Issued by the authority of the Minister for Communications, Information Technology and the Arts

OVERVIEW

The Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005 (the Determination) is made by the Minister under paragraph 51(1)(d) of Schedule 1 to the Telecommunications Act 1997 (the Act).  The Determination specifies the requirements with which a draft or final operational separation plan under Part 8 of Schedule 1 to the Act must comply.

Background

Schedule 11 to the Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 (the T(CCI) Act) amends the Act to provide for the implementation of operational separation of Telstra by way of a standard carrier licence condition.  Schedule 11 to the T(CCI) Act commences on the earlier of Proclamation, or six months from Royal Assent (see item 13 in the table in subsection 2(1) of the T(CCI) Act).

On 15 December 2005, the Governor-General proclaimed 1 January 2006 as the date on which Schedule 11 to the T(CCI) Act commences.  The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA), and was registered on the Federal Register of Legislative Instruments on 20 December 2005.

Subsection 4(1) of the Acts Interpretation Act 1901 (AIA) provides that, where an Act (or part of an Act) confers power to make an instrument of a legislative character then, unless the contrary intention appears, the power may be exercised and anything may be done for the purpose of exercising the power or bringing the instrument into effect, before the Act (or that part of the Act) comes into effect.  Subsection 4(2A) of the AIA provides that, where an instrument is made under subsection 4(1), the instrument may provide that the instrument commences on a specified date that is not earlier than the date on which the Act (or the part of the Act) under which the instrument is made commences.  Relying on subsection 4(1) of the AIA, this Determination was made and will be registered on the Federal Register of Legislative Instruments prior to Schedule 11 of the T(CCI) Act commencing.  Consistent with subsection 4(2A) of the AIA, clause 2 of the Determination specifies that the Determination commences on 1 January 2006 – the same date that Schedule 11 to the T(CCI) Act commences.

The operational separation plan

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.  The objects of Part 8 of Schedule 1 to the Act, specified in subclause 48(2) of Schedule 1 to the Act, supplement this aim and include the object that Telstra have a final operational separation plan to achieve the aim and other objects of Part 8.

Clause 52 of Schedule 1 to the Act requires Telstra to give a draft operational separation plan to the Minister for Communications, Information Technology and the Arts (the Minister) within 90 days after the commencement of Part 8 of Schedule 1.  Part 8 of Schedule 1 will commence on 1 January 2006.  Once approved by the Minister, the draft plan will become the final operational separation plan.

Paragraphs 51(1)(a), (b) and (c) require that a draft or final operational separation plan must:

• be directed towards achieving the aim and objects of Part 8;
• contain provisions requiring Telstra to prepare, publish and provide to the Minister an annual compliance report; and
• contain provisions requiring Telstra to arrange for an annual independent audit of compliance and to publish and provide to the Minister the audit report.

In addition, paragraph 51(1)(d) provides that an operational separation plan must comply with such requirements as are specified by the Minister in a written determination (which is a legislative instrument for the purposes of the LIA).  Subclause 51(2) provides that a requirement included in a determination made under paragraph 51(1)(d) may deal with the manner in which a requirement in paragraph 51(1)(b) or (c) is to be met, but this does not limit the kinds of requirements that may be specified by the Minister under paragraph 51(1)(d).

The purpose of this Determination is to specify the requirements with which a draft or final operational separation plan (hereafter referred to as ‘the plan’) must comply.  The Determination requires Telstra to include in the plan provisions that relate to the following key elements of operational separation:

• the operational and organisational separation of Telstra;
• the provision of high quality wholesale services;
• equivalence of designated services in relation to both price and non-price terms and conditions; and
• demonstration of compliance with the plan.

These key elements of the plan are consistent with and support the achievement of the aims and other objects of Part 8 of Schedule 1, to which the Minister is to have regard in approving the plan or variation as provided for in clauses 54 and 56 of Schedule 1 to the Act.

Consultation undertaken in relation to the Determination

The Australian Competition and Consumer Commission (ACCC), the Competitive Carrier’s Coalition, Telstra, Optus, and AAPT were consulted about the Determination.  A draft of the Determination was also released for public comment in December 2005.

Notes on Clauses

Part 1 – Preliminary

Clause 1 – Name of Determination

Clause 1 provides that the Determination is the Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005.

Clause 2 – Commencement

Clause 2 provides that the Determination commences on 1 January 2006.

Clause 3 – Definitions

Clause 3 defines the terms used in the Determination.

A drafting note to clause 3 notes that several terms used in the Determination are defined in the Act, and have the same meaning in the Determination as they have in that Act.

Clause 4 – Interpretation

Clause 4 provides for the interpretation of particular terms used in the Determination.

Subclause 4(1) relates to the use of the term ‘business unit’.  This term is defined in clause 50 of Schedule 1 to the Act to mean a part of Telstra, and in subclause 4(1) is used to refer to the kinds of business units within Telstra, being the wholesale business unit, the retail business unit and the key network services business unit (these three types of business unit are also defined in clause 50 of Schedule 1).  Subclause 4(1) recognises that there may be more than one retail business unit, or wholesale business unit, or key network services business unit in existence at a particular time and, because references to particular kinds of business units are in the singular throughout the Determination, provides for the interpretation of the Determination in the event that there is more than one business unit of a particular kind in existence.

The effect of the subclause is that, where there is more than one business unit of a particular kind, a reference in the Determination to a business unit of that kind is to be taken to be a reference to the business units of that kind considered as a group (except where the contrary intention is expressed in a particular provision of the Determination – see for example paragraph 7(1)(b) of the Determination).  This means that where there is more than one wholesale business unit, for example, the requirements that the Determination imposes on the plan in relation to the wholesale business unit will apply to all the wholesale business units considered together.

Subclause 4(2) relates to the use of the term ‘notional contract’.  Clause 14 of the Determination provides that the plan must contain provisions that establish notional contracts between the key network services business unit and the retail business unit, and the key network services business unit and the wholesale business unit.  Subclause 4(2) provides that the term ‘notional contract’ is to be interpreted in accordance with clause 50C of Schedule 1 to the Act.  That clause provides that a notional contract between any of Telstra’s business units is to be treated as if it were an actual contract, and any terms and conditions in such a notional contract are to be treated as if they were actual terms and conditions (of an actual contract).  This reflects that the plan must require Telstra to comply with the commitments in the notional contracts (see paragraph 14(4)(c) of the Determination).

Part 2 – Requirements relating to the operational and organisational separation of Telstra

Part 2 of the Determination sets out the measures that must be included in the plan relating to the operational and organisational separation of Telstra into business units, and deals with the staffing of those business units and special requirements that are to apply to the wholesale business unit.

Paragraphs 48(2)(b) and (c) of Schedule 1 to the Act provide that the objects of Part 8 of Schedule 1 include:

• ensuring that Telstra maintains one or more wholesale business units, one or more retail business units, and one or more key network services business units; and
• to promote a substantial degree of organisational and operational separation between the wholesale business units (considered as a group), the retail business units (considered as a group) and the key network services business units (considered as a group).

The provisions of this part of the Determination support these objects of Part 8 of Schedule 1.

Clause 5 – Operational and organisational separation of Telstra into business units

Subclause 5(1) provides that the plan must contain provisions requiring Telstra to maintain one or more separate wholesale, retail and key network services business units.  These terms are defined in clause 50 of Schedule 1 to the Act.

Subclause 5(2) provides that the plan must contain provisions requiring Telstra to organise and operate the wholesale business unit, the retail business unit and the key network services business unit in such a way that each kind of business unit is substantially separate from the other kinds of business unit.

The requirements in clause 5, complemented by the requirements in clauses 6 and 7, seek to prevent the internal functions that Telstra’s wholesale customers rely upon, in order to compete effectively with Telstra, from being operated in a way that systematically advantages the operation of Telstra’s retail business.  Having such requirements in the plan will also enable the equivalence of Telstra’s supply of certain network-related services in connection with the supply of designated services to its wholesale customers and to its retail business units to be assessed.  These services are fault detection, handling and rectification and service activation and provisioning, which are provided by Telstra’s key network services business unit.

The requirements in clause 5 are not intended to prevent the continuation of processes or functions within Telstra’s business that are necessarily integrated.

Clause 6 – Staffing of business units

Clause 6 provides that the plan must contain provisions that require Telstra to establish largely separate staffing arrangements for each business unit.  The arrangements required by clause 6 are designed to protect confidential information about wholesale customers and restrict access to knowledge about business planning or processes within each business unit that relate to wholesale customers, so that this kind of information cannot be used to the detriment of wholesale customers or to provide an unfair advantage to a retail business unit.  These requirements are complemented by the requirements in clause 11 relating to the preparation of the Information Security Strategy.

The requirements in clause 6, complemented by the requirements in clauses 5 and 7, also seek to prevent the internal functions that Telstra’s wholesale customers rely upon, in order to compete effectively with Telstra, from being operated in a way that systematically advantages the operation of Telstra’s retail business.

The clause provides that the plan must contain provisions requiring Telstra to ensure that an employee who is engaged to work for either the wholesale business unit or the key network services business unit undertakes work principally for that business unit.  This implicitly acknowledges that the employee may undertake work for a business unit of a different kind, but that such work should only form a small part of that employee’s role.

The clause provides that the plan must contain provisions requiring Telstra to ensure that an employee of the retail business unit undertakes work principally for the retail business unit, and is not permitted to undertake any work for the wholesale business unit.  This means that an employee of the retail business unit may only undertake work for the retail business unit or the key network services business unit.  This requirement recognises that one of the most significant risks to the protection and appropriate use of confidential information relating to wholesale customers is staff from retail business units having access to wholesale customer information or being in a position to influence the operation of wholesale business units.  However, this requirement is not intended to prevent legitimate short-term secondments or transfers of staff as required.

Clause 7 – The wholesale business unit

Clause 7 specifies requirements that relate to the seniority of the manager of the wholesale business unit and the separate and secure operation of the wholesale business unit.  The requirements in clause 7, complemented by the requirements in clauses 5 and 6, seek to prevent the internal functions that Telstra’s wholesale customers rely upon, in order to compete effectively with Telstra, from being operated in a way that systematically advantages the operation of Telstra’s retail business.

Subclause 7(1) provides that the plan must include provisions requiring Telstra to ensure that the manager of the wholesale business unit will be of equivalent seniority to the manager of the retail business unit.  Where there is more than one retail business unit, and where the people who head up those business units are of different seniority, the plan must provide for the position of the person who is in charge of the wholesale business unit to be equivalent to the seniority of the most senior person who is in charge of a retail business unit.  The purpose of this requirement is to indicate and ensure that the wholesale business unit is of equal importance to the retail business unit in Telstra’s operations, and that the person who is in charge of the wholesale business unit has sufficient managerial authority to enable the objects and requirements of operational separation to be met.

The plan must also include provisions requiring Telstra to ensure that the staff of the wholesale business unit are located in premises that are secure and separate from the retail business unit, and that the staff of the retail business unit do not have unrestricted access to the premises of the wholesale business unit (subclause 7(2)).  The purpose of this requirement is to ensure that the plan will provide for the protection of information about wholesale customers.  The plan must require that members of staff from the retail business unit are only able to access the premises of the wholesale business unit if they are entering those premises for the purposes of meeting with a member of staff of the wholesale business unit, and provided that their entry onto those premises is authorised by a member of staff of the wholesale business unit and they are accompanied by a member of staff of the wholesale business unit (to the extent practicable) while they are in the wholesale business unit’s premises.

Subclause 7(3) makes it clear that the requirement for the staff of the retail business unit to be located in separate premises from the staff of the wholesale business unit does not mean that the two business units must be located in different buildings.  The plan could satisfy the requirements in paragraph 7(2)(a) by providing for the two business units to be located in different buildings but this is not required by that paragraph.  The requirement for separate premises could also be satisfied by the plan establishing access-controlled areas in the same building in a way that prevents unauthorised and unaccompanied entry into the wholesale business unit’s area by staff of the retail business unit.

Subclauses 7(4) and (5) require the plan to contain provisions that require Telstra to ensure that the wholesale business unit has principal control over and responsibility for marketing services, managing service delivery and negotiating supply contracts for wholesale customers, and that the retail business unit has no responsibility for doing any of these things (with respect to wholesale customers).  This is to ensure that the wholesale business unit is sufficiently resourced and maintained and has authority to deal with wholesale customers in relation to wholesale services (including negotiating supply contracts with wholesale customers), and that the retail business unit does not play a part in or influence dealings with wholesale customers.

Part 3 – Requirements relating to the provision of high quality wholesale services

Part 3 of the Determination sets out requirements with which the plan must comply relating to the provision of high quality wholesale services.

The requirements of Part 3, when reflected in the plan, will have the effect of requiring Telstra to establish and comply with a set of four strategies that collectively set compliance standards around key aspects of the provision of eligible services to wholesale customers.  The strategies will be written documents (separate to the plan itself) prepared by Telstra.  The requirements in Part 3 set out the matters that the plan must require each strategy to address.  Telstra will be able to include other matters in each of the strategies, as it sees fit.

Requiring the plan to provide for the preparation of strategies that cover the specified matters will ensure the best possible fit with Telstra’s existing operational practices and procedures, while still ensuring the plan effectively addresses the provision of high quality wholesale services.

Telstra is required to give a draft operational separation plan to the Minister within 90 days of the commencement of Part 8 Schedule 1 to the Act.  The requirements in Part 3 acknowledge that Telstra will require some additional time to develop and finalise the four strategies, and to implement changes to Telstra’s operational systems to ensure that Telstra complies with the strategies.  Part 3 therefore requires Telstra to prepare strategy documents, separate to the plan itself, to address the specified matters in relation to the provision of high quality wholesale services, and allows Telstra to specify the time by which it will prepare each of the strategies, and the time from which it will comply with each of the strategies.

Clause 8 – Preparation, publication and compliance with strategies

Subclause 8(1) provides that the plan must contain provisions requiring Telstra to prepare separate strategies relating to service quality, information equivalence, information security and customer responsiveness, that meet the requirements of clauses 9, 10, 11 and 12, respectively.

Subclause 8(2) provides that the plan must require Telstra, by a specified date, to give a copy of each strategy that it prepares to the Minister and to the ACCC and to publish each strategy on its website.  Telstra must also, from a specified date, comply with each strategy.

The effect of subclause 8(2) and paragraph 8(4)(a) is that the plan must require Telstra to nominate a date, for each of the four strategies specified in subclause 8(1), by which it will provide a copy of that strategy to the Minister and the ACCC and publish that strategy on its website.

The effect of subclause 8(3) and paragraph 8(4)(b) is that the plan must require Telstra to specify a date, for each of the four strategies specified in subclause 8(1), from which it will comply with that strategy.  That is, Telstra must specify when each strategy will ‘commence’, and must comply with the strategy from that date.  Any non-compliance with that strategy after that date would amount to non-compliance with the plan.  This means that, once a strategy has commenced, if Telstra fails to comply with that strategy, it would constitute a contravention of the final operational separation plan, and the Minister could direct Telstra, under clause 60 of Schedule 1 to the Act, to give the Minister a draft rectification plan relating to that contravention.

Subclause 8(5) clarifies that the date specified in the plan by which Telstra must give a copy of a strategy to the Minister and the ACCC and must publish the strategy on its website does not need to be the same as the date specified in the plan for the commencement of that strategy.  Subclause 8(5) recognises that once Telstra has finalised a strategy, it may still take some time for Telstra to arrange its operations such that it can ensure compliance with that strategy, and it therefore allows Telstra to specify a later date for compliance with the strategy in the plan so that it can make appropriate arrangements to commence complying with the strategy.

Clause 9 – Service Quality Strategy

The plan must include provisions requiring Telstra to prepare a Service Quality Strategy (SQS) that meets the requirements of clause 9 (subclause 8(1)).  Clause 9 sets out the purpose of the SQS, and specifies certain measures that must be included in that strategy.

Subclause 9(1) provides that the purpose of the SQS is to describe the measures that Telstra will put in place to ensure that the standard of service delivery of eligible services supplied to wholesale customers is equivalent to the standard of delivery of comparable eligible services provided to the retail business unit.

Subclause 9(2) requires the SQS to contain measures directed towards ensuring equivalence in the standard of billing and access to exchanges and other premises and facilities that is offered in relation to the supply of eligible services.  These matters are particularly relevant to ensuring that the supply of eligible services to wholesale customers is equivalent to the supply of eligible services to the retail business units.  The SQS may also address other aspects of the quality of eligible services (subclause 9(6)).

In relation to billing, the SQS must set out how Telstra will offer equivalent functionality to all wholesale customers as it provides to its retail business unit, in respect of the supply of call and data record information for the purpose of preparing bills to be issued to end-users (subclause 9(3)).  The SQS must address:

• the frequency, completeness and accuracy of the provision of call record information for eligible services offered to wholesale customers; and
• the billing information provided to the wholesale business unit.

From time to time, Telstra’s wholesale customers need to seek access to Telstra’s exchanges, and to other premises and facilities, for the purpose of maintaining or installing equipment.  The SQS must set out how Telstra will ensure that it provides wholesale customers with timely and effective access to exchanges and to other premises and facilities, where access is sought for the purpose of maintaining or installing equipment (subclause 9(4)).  In addition, the SQS must set out target timeframes for the provision of access to those exchanges, premises and facilities.

The SQS must set out key performance indicators (KPIs) that can be used to assess whether Telstra has offered equivalence with respect to billing and access to exchanges and other relevant premises (subclause 9(5)).  Telstra is required to set out how it will achieve and monitor compliance with the SQS in the Customer Responsiveness Strategy provided for by clause 12 and against which Telstra must report in its annual compliance report (see clause 15).

Clause 10 – Information Equivalence Strategy

The plan must include provisions requiring Telstra to prepare an Information Equivalence Strategy (IES) that meets the requirements of clause 10.  Clause 10 sets out the purpose of the IES, and provides for certain measures to be included in that strategy.

The purpose of the IES is to describe the measures that Telstra will implement to demonstrate that the information provided by the key network services or wholesale business units to wholesale customers about relevant changes to Telstra’s network is, to the extent possible, equivalent to that provided to the retail business unit.  It is recognised that in certain circumstances it will not be possible for Telstra to provide wholesale customers with the same information as is provided to the retail business unit.  Such circumstances could include where the retail business unit has been provided with confidential information relating to a third party.  Subclause 10(4) provides that ‘relevant change’ in clause 10 means a change relevant to the supply of eligible services to wholesale customers.  A possible change that Telstra does not decide to proceed with would not be considered relevant.

Subclause 10(2) specifies a number of matters that must be addressed in the IES.

The IES must include a description of how Telstra will keep its wholesale customers informed of relevant changes to its network functionality, network architecture, network capacity and operational support systems.  For example, the IES would be expected to describe how Telstra will notify and inform wholesale customers about technology developments which are relevant to the supply of eligible services to wholesale customers.

The IES must also identify the type of information that will be provided to wholesale customers, how that information will be provided to those customers, and target timeframes for the provision of that information.  The inclusion of a requirement for target timeframes for the provision of information is intended to signal that wholesale customers should be made aware of relevant network changes at the same time, or close to the same time, as the retail business unit is made aware of those changes.

It is also a requirement that the IES sets out a process to allow wholesale customers to forecast their network demand.  This process will enable wholesale customers to inform Telstra of its forecast for network demand, and will require Telstra to respond to the wholesale customer (within a period of time to be specified by Telstra in the IES for this purpose) indicating whether Telstra can meet that forecast demand.

The IES may address matters other than those specified in subclause 10(2) (subclause 10(3)).

Telstra is required to set out how it will achieve and monitor compliance with the IES in the Customer Responsiveness Strategy provided for by clause 12 and against which Telstra must report in its annual compliance report (see clause 15).

Clause 11 – Information Security Strategy

The plan must include provisions requiring Telstra to prepare an Information Security Strategy (ISS) that meets the requirements of clause 11 (subclause 8(1)).  Clause 11 sets out the purpose of the ISS, and provides for certain measures that must be included in that strategy.

Subclause 11(1) provides that the purpose of the ISS is to protect confidential information relating to Telstra’s wholesale customers.  Telstra’s wholesale business unit will, in the course of its dealings with wholesale customers, be provided with confidential information by a wholesale customer.  Telstra’s key network services business unit will also be provided with such confidential information from time to time.  Clause 11 requires the ISS to contain measures that seek to prevent that confidential information from being passed on to, or accessed by, the retail business unit.  This is necessary in order to prevent Telstra’s retail business unit from obtaining an unfair advantage over the wholesale customers.

Subclause 11(4) provides that certain types of information are taken to be included in the concept of ‘confidential information relating to a wholesale customer’, for the purposes of clause 11:

• information identifying a wholesale customer and/or an end-user that a wholesale customer provides eligible services to, where that information was provided to Telstra by the wholesale customer in connection with the supply of an eligible service by the wholesale business unit; and
• information derived from the above kind of information, whether or not in aggregate form, that would enable the identity of a wholesale customer and/or an end-user to whom a wholesale customer provides an eligible service to be ascertained.  However, information which could be derived from the first kind of information in an aggregated form which allowed the identity of a wholesale customer to be ascertained would not be considered confidential information where the information was aggregated on a national basis.  For example, information on the number of end-users across Australia of a particular wholesale customer for a particular eligible service would not be included in the concept of confidential information relating to a wholesale customer.

Subclause 11(4) is not intended to limit the kind of information that may be considered to be confidential information relating to a wholesale customer.  Any information that is confidential in nature and that relates to a wholesale customer would fall within this concept.

Subclause 11(2) specifies a number of matters that must be addressed in the ISS in relation to the disclosure of confidential information relating to a wholesale customer between Telstra’s business units, the disclosure of that information by an employee who has moved from one business unit to another, and the systems used for the storage and transfer of that information.

The ISS must address the disclosure by the wholesale business unit and the key network services business unit of confidential information relating to a wholesale customer.  Specifically, it must require Telstra to ensure that the wholesale business unit does not pass such information to the retail business unit, unless it is authorised to do so by the relevant wholesale customer and that it does not pass such information to the key network services business unit unless it is authorised to do so by the wholesale customer, or the disclosure is made on a ‘need-to-know basis’.  This term is defined in subclause 11(4) and means a principle or policy of disclosing such information as is necessary in order for a member of staff of the relevant business unit to perform his or her duties effectively.  Permitting disclosure on a need-to-know basis acknowledges that there may be occasions when there is a legitimate reason for the wholesale business unit to pass information on to the key network services business unit, and obtaining the permission of the wholesale customer would either be impractical or cumbersome.  In addition, the ISS must require the key network services business unit not to disclose confidential information relating to a wholesale customer to the retail business unit.

The ISS must also contain measures to ensure that former employees of the wholesale business unit who work for another business unit do not disclose or use confidential information relating to a wholesale customer which came into the person’s knowledge during their time as an employee of the wholesale business unit.

The ISS must also address security arrangements in relation to Telstra’s information systems.  It must provide that those information systems that Telstra uses to store and transfer confidential information relating to a wholesale customer must have security arrangements in place such that:

• a member of staff of the retail business unit cannot access the confidential information relating to a wholesale customer that is held by one of the other business units, unless that member of staff is authorised to access that information by that wholesale customer; and
• a member of staff of the key network services business unit cannot access the confidential information relating to a wholesale customer that is held by the wholesale business unit unless that member of staff is authorised to access that information by that wholesale customer, or on a need-to-know basis (the term need-to-know basis’ is defined in subclause 11(4)).

The ISS may address matters other than those specified in subclause 11(2) (subclause 11(3)).

Telstra must set out in its plan how it will achieve and measure compliance with the ISS and report on its progress in its annual compliance report (see part 5).

Clause 12 – Customer Responsiveness Strategy

The plan must include provisions requiring Telstra to prepare a Customer Responsiveness Strategy (CRS) that meets the requirements of clause 12 (subclause 8(1)).  Clause 12 sets out the purpose of the CRS, and provides for certain measures to be included in that strategy.

Subclause 12(1) provides that the purpose of the CRS is to describe the way Telstra will monitor compliance with the SQS and the IES (see above, clauses 9 and 10 respectively), to ensure that Telstra responds to complaints made by its wholesale customers, and to establish a process for resolving disputes with those customers.

Subclause 12(2) specifies a number of matters that must be addressed in the CRS: complaints management and service improvement, alternative dispute resolution, and the monitoring of compliance with the SQS and the IES.

In relation to complaints management and service improvement, subclause 12(3) provides that the CRS must describe a process by which Telstra will deal with day-to-day complaints by wholesale customers.  As part of that process, Telstra must ensure that it responds to wholesale customer complaints in a timely and effective way.  Subclause 12(3) also requires the CRS to set out a process by which Telstra will conduct regular reviews with wholesale customers about the quality of eligible services that Telstra supplies to them, and the management by Telstra of their complaints.  Subclause 12(4) expands on that process, and provides that it must enable wholesale customers to provide feedback to Telstra on how Telstra could improve the services it supplies to them, and how Telstra will ensure that it takes into consideration that feedback, in decisions on network and service upgrades or improvements.

In relation to alternative dispute resolution, the CRS must identify a process to provide binding dispute resolution in relation to technical or operational disputes between Telstra and its wholesale customers (subclause 12(5)).  The CRS must establish a process, or use an existing process, that can be nominated by either party to a dispute (i.e. Telstra or the relevant wholesale customer) as an alternative dispute resolution process (referred to as the ‘ADR process’ in clause 12).  The ADR process may be nominated by either party as an alternative to notifying a new dispute with the ACCC, or as an alternative to continuing the notification of a dispute where that dispute has previously been notified to the ACCC.

The CRS must permit either party to the dispute to suggest to the other party that the ADR process be used in the case of a particular dispute, and must permit the other party to the dispute to agree to the suggestion, or to refuse to take part.  The CRS must provide a means by which, if both parties agree to use the ADR process, the outcome of that process becomes binding on both parties.  The CRS could, for instance, provide that Telstra and a wholesale customer may enter into a legally enforceable contract to engage in an ADR process as opposed to notifying a dispute with the ACCC.  The outcome of that process would then be binding on the parties as a result of the contract.

Paragraph 48(5)(b) of Schedule 1 to the Act provides that, in determining the needs of Telstra’s wholesale customers (for the purposes of the object specified in paragraph 48(2)(d) of Schedule 1), regard must be had to the need for disputes between Telstra’s wholesale customers and Telstra about eligible services to be resolved in a fair and timely manner.  This requirement for the plan is intended to form one aspect of the way in which the plan will achieve this aspect of the object in paragraph 48(2)(d) relating to the needs of Telstra’s wholesale customers.

The CRS must also include measures relating to monitoring compliance with the SQS and IES (subclauses 12(6) and (7)).  The CRS must:

• set out how Telstra will ensure and monitor compliance with the SQS and the IES;
• ensure that Telstra identifies any failure to meet the obligations set out in the SQS, including the key performance indicators established under subclause 9(5) to assess whether Telstra has offered equivalence with respect to billing and access to exchanges and other relevant premises;
• ensure that Telstra identifies any failure to meet acceptable target timeframes in the IES for the provision of information to wholesale customers (see subparagraph 10(2)(b)(iii)) and documenting any wholesale customer complaints in respect of such failure; and
• the process for taking action as necessary to respond to complaints, including on a systemic basis where required, and recording the response.

The CRS may address other matters relating to equivalence in information provision (subclause 12(8))).

Part 4 – Requirements relating to equivalence of designated services

The purpose of the requirements in Part 4 is to ensure that the price and operational quality of designated services supplied to wholesale customers is equivalent to the price and operational quality of designated services supplied to the retail business unit.  A designated service is defined in clause 50C of Schedule 1 to the Act as an eligible service that has been specified in a written determination by the Minister under that clause.  The Minister is expected to make the Telecommunications (Operational Separation – Designated Services) Determination (No. 1) 2005 on the same day that this Determination is made.  The eligible services specified in that determination will be subject to the requirements in Part 4 because the equivalent supply of those services is of particular importance or concern to wholesale customers and they are important to the development of competition.

Clause 13 - Establishment of a Price Equivalence Framework relating to designated services

Clause 13 requires Telstra to set out in the plan how it will commit to establishing a Price Equivalence Framework (PEF) in relation to designated services.  The purpose of the PEF is to provide public assurance that Telstra is behaving legitimately in the pricing of eligible services supplied to retail customers (i.e. customers of the retail business unit), compared with the prices at which it provides designated services to wholesale customers (see subclause 13(2)).  The other purposes of the PEF are to provide increased certainty for Telstra that its pricing decisions do not contravene Part XIB of the Trade Practices Act 1974 (TPA) and improved information for the ACCC in the performance of its functions.

The requirements in clause 13 relating to the establishment of and compliance with the PEF are based on the underlying principles that the PEF:

• should seek to simplify and make more transparent the relationship between Telstra’s wholesale prices and the prices of its relevant retail services;
• should focus on services and markets where bottleneck characteristics and significant market power exist;
• recognises Telstra’s legitimate entitlement to benefit appropriately from any relevant efficiency advantages it may have;
• complements Part XIB of the TPA but does not duplicate, replace, limit or extend the substantive legal obligations imposed under Part XIB; and
• is consistent with the obligations on Telstra under Part XIB.

The plan must set out a work plan, including timeframes, for how Telstra will work with the ACCC and the Department of Communications, Information Technology and the Arts (the Department) to develop the PEF.  It is envisaged that the PEF will seek to achieve the following key outputs:

• a schedule of internal wholesale prices (IWPs) for designated services that will reflect the prices wholesale customers actually pay for designated services, adjusted to take account of Telstra’s relevant efficiencies; and
• a retail pricing tool (including audit processes) that will allow Telstra to use the IWPs and the retail pricing protocol (which is discussed below) with confidence.

It is envisaged that, as part of the process of implementing operational separation, which will include the development of the PEF, the ACCC will develop a retail pricing protocol that will assist the ACCC in interpreting IWPs and assessing anti-competitive behaviour under Part XIB of the TPA in relation to the pricing of retail services.

Telstra must report on its progress in implementing the work plan and achieving the proposed outcomes in its annual compliance report.  The plan must require Telstra to develop the PEF in consultation with the Department and the ACCC.

Clause 14 – Equivalent operational quality of designated services

Clause 14 requires the plan to include provisions that address and ensure equivalence in the operational quality of designated services supplied to its wholesale customers and retail business units.

Subclause 14(6) clarifies that in clause 14 the term ‘operational quality’ is to be interpreted as including technical quality.  This means that the operational quality of designated services encompasses both the technical aspects and functionality of those designated services, and the operational support elements involved in Telstra’s delivery of those services.

The two principal requirements that relate to the operational quality of designated services are at paragraphs 14(1)(a) and (b).

Paragraph 14(1)(a) requires the plan to include provisions setting out how Telstra will demonstrate that the operational quality of designated services supplied to wholesale customers is equivalent to the operational quality of designated services supplied to the retail business unit.

Subclause 14(3) specifies a number of matters that must be addressed in the plan for the purposes of the requirement of paragraph 14(1)(a):

• the plan must contain provisions that demonstrate how each of the strategies prepared by Telstra pursuant to Part 3 of this Determination will assist in ensuring that the operational quality of designated services supplied to wholesale customers is equivalent to the operational quality of designated services supplied to the retail business unit (see paragraph 14(3)(a));
• the plan must describe how service qualification provided to a wholesale customer in relation to the supply of a designated service is equivalent to the service qualification provided to the retail business unit in relation to the supply of that service.  In particular, the plan must describe how Telstra will ensure that the time it takes for a wholesale customer to be provided with initial advice that a designated service is capable of being supplied to it is equivalent to how quickly the retail business unit receives such advice (see paragraphs 14(3)(b) and (c));
• the plan must provide for Telstra to identify, within a timeframe specified by Telstra in the plan, key performance indicators that are relevant to the operational quality of each designated service and the standard of delivery of fault detection, handling and rectification, and service activation and provisioning, in relation to designated services (see paragraphs 14(3)(d) and (e)); and
• the plan must contain a strategy for measuring, on a regular basis to be specified in the plan, the equivalence of the operational quality of designated services (supplied to wholesale customers and the retail business unit) by reference to the key performance indicators identified for that service for the purposes of paragraph 14(3)(d) and the adequacy and timeliness of responses to complaints by wholesale customers about the operational quality of the supply of a designated service (see paragraphs 14(3)(f) and (g)).

Paragraph 14(1)(b) provides that the plan must contain provisions setting out how Telstra will establish notional contracts between the key network services business unit and the retail business unit, and between the key network services business unit and the wholesale business unit.  Subclause 4(2) provides that a reference to a notional contract is to be interpreted in accordance with clause 50C of Schedule 1 to the Act (see above).

The purpose of the notional contracts is twofold.  First, they are a means to achieve equivalence in the operational quality of the designated services that are supplied to wholesale customers and the retail business unit.  Secondly, they are a means of achieving equivalence in the standard of delivery of fault detection, handling and rectification, and of service activation and provisioning, in relation to designated services that are supplied to wholesale customers and to the retail business unit.

Subclause 14(4) specifies a number of matters that must be included in the plan for the purposes of addressing the requirement to establish notional contracts:

• the plan must contain provisions specifying the timeframes for Telstra to develop and implement the notional contracts (see paragraph 14(4)(a));
• the plan must identify the eligible services which the retail business unit supplies to end-users using designated services (i.e. the retail services it supplies to customers) which will be used to assess equivalence in the standard of delivery of fault detection, handling and rectification, and of service activation and provisioning, in relation to designated services supplied to wholesale customers (see paragraph 14(4)(b)).  This requirement recognises that equivalence in the supply of designated services to wholesale customers and Telstra’s retail business unit can only be assessed by reference to the standard of the delivery of services supplied to customers by the retail business unit.  For example, where Telstra supplies an unconditioned local loop service to a wholesale customer (which is specified as a designated service in the Telecommunications (Operational Separation – Designated Services) Determination (No. 1) 2005), the line rental component of a range of Telstra retail services supplied by the retail business unit may be specified in the plan, for the purpose of comparing rectification performance;
• each notional contract must include commitments that demonstrate equivalence in the operational quality of the designated services that are supplied to wholesale customers and the retail business unit, and in the standard of delivery of fault detection, handling and rectification, and of service activation and provisioning, in relation to designated services that are supplied to wholesale customers and the services that the retail business unit supplies to customers (which will be specified in the plan for the purposes of paragraph 14(4)(b)).  The plan must specify the commitments that Telstra will include in each notional contract for those purposes (see paragraph 14(4)(c)).  Subclause 14(5) provides that the plan must specify a commitment (that must be included in each notional contract) that Telstra will meet or exceed the key performance indicators identified for the purposes of paragraph 14(3)(d);
• the plan must contain provisions requiring Telstra to comply with those commitments, once the notional contracts are established (see paragraph 14(4)(d)); and
• the plan must specify any performance measures, other than the key performance indicators described in paragraph 14(3), that Telstra will use in order to report on its compliance with the commitments in the notional contracts (see paragraph 14(4)(e)).

The plan must contain provisions that require Telstra to publish on its website a copy of each of the notional contracts prepared by Telstra pursuant to paragraph 14(1)(b) (see subclause 14(2)).

Part 5 – Compliance and reporting requirements

Part 5 of the Determination sets out the provisions that must be included in the plan relating to Telstra’s compliance with the plan, reporting on compliance with the plan and the provision of information to the ACCC.

The requirements in Part 5 of the Determination include those that deal with the manner in which the requirements of paragraphs 51(1)(b) and (c) of Schedule 1 to the Act are to be met in the plan, and additional requirements for the purposes of paragraph 51(1)(d).  Paragraph 48(2)(f) of Schedule 1 to the Act provides that one of the objects of Part 8 of Schedule 1 is to ensure that Telstra has in place systems, procedures and processes that promote and facilitate compliance with the plan, and monitoring of and reporting on compliance with the plan, and audit of compliance with the plan.  The provisions of this part of the Determination support this object of Part 8 of Schedule 1.

Clause 15 – Compliance reporting

Clause 15 relates to the annual compliance report prepared by Telstra.  The annual compliance report is the report prepared by Telstra under paragraph 51(1)(b) of Schedule 1 to the Act (see the definition of ‘annual compliance report’ in clause 3 of the Determination).  Paragraph 51(1)(b) provides that the plan must contain provisions requiring Telstra, within a specified period after the end of each financial year, to prepare a report about the its compliance with the plan during that financial year, and to give the report to the Minister and make a copy of the report (or extracts from the report, see below) available on Telstra’s website.

The effect of subclause 15(1) is to specify 120 days as the period after the end of a financial year within which Telstra must provide the annual compliance report for that financial year to the Minister and must publish the report (or extracts from the report, see below) on its website.  Subclause 15(1) also requires Telstra, in addition to giving a copy of each annual compliance report it prepares to the Minister (as required by paragraph 51(1)(b) of Schedule 1 to the Act) to give an additional copy to the ACCC (within the same 120-day period after the end of a financial year).  This is to facilitate the ACCC’s role in monitoring Telstra’s compliance with the plan (see clauses 19 – 21).

Subparagraph 51(1)(b)(iii) of Schedule 1 to the Act provides that it is a requirement that a draft or final operational separation plan must contain provisions requiring Telstra to make a copy of the annual compliance report, or extracts from the report, available on Telstra’s Internet site.  This provision of the Act recognises that the annual compliance report may contain information that is commercially sensitive, and is not suitable for public release.  Subparagraph 15(1)(b)(ii) of the Determination deals with the manner in which this requirement is to be met, by providing that it is only where the Minister has agreed to the publication of only particular extracts from Telstra’s annual compliance report that Telstra may make available extracts from the report on its website.  Otherwise, Telstra must publish the full report on its website.  The purpose of this requirement for the plan is to ensure the effective operation of the reporting requirements specified in the Act, by providing the Minister with a role in considering a claim by Telstra that certain information in the annual compliance report is commercially sensitive and should not be publicly released.

Subclause 15(2) provides that the plan must require Telstra, in each annual compliance report it prepares, to address Telstra’s progress in implementing and operating in accordance with the plan.  Specifically, the annual compliance report must address:

• Telstra’s progress in developing, implementing and complying with notional contracts;
• Telstra’s performance in relation to meeting all obligations in the plan, including commitments contained in notional contracts;
• any areas of non-compliance with the plan and action taken to address non-compliance;
• complaints Telstra has received from wholesale customers;
• action taken by Telstra to respond to those complaints; and
• action taken by Telstra in relation to address any systemic problems in relation to its obligations under the plan.

Paragraph 14(3)(f) of the Determination provides that the plan must include a strategy for measuring, on a regular basis to be specified in the plan, equivalence of the operational quality of designated services supplied to wholesale customers and the retail business unit.  Each annual compliance report must address the results of the measurements taken in accordance with the requirements of that paragraph (see paragraph 15(2)(g)).

The annual compliance report must also address Telstra’s compliance with the Price Equivalence Framework.  Subclauses 13(1) and (4) of the Determination provide that the plan must include provisions requiring Telstra to establish a Price Equivalence Framework by 30 June 2006, and to comply with the Price Equivalence Framework from that date.   Since Telstra is not required to establish, or comply with, the Price Equivalence Framework before the end of the 2005-06 financial year (the year during which Telstra will prepare its draft operational separation plan), Telstra would not be able to report on its compliance with the Price Equivalence Framework for that financial year.  For this reason, paragraph 15(2)(h) specifies that the annual compliance report must only address Telstra’s compliance with the Price Equivalence Framework for the 2006-07 financial year, and for each subsequent financial year.

The annual compliance report must also deal with Telstra’s progress in complying with the ISS under clause 11, and the CRS under clause 12.  Subclause 8(3) provides that the plan must contain provisions requiring Telstra to comply with the ISS and the CRS.  The plan must also specify a date, with respect to both of these strategies, from which Telstra will comply with those strategies (paragraph 8(4)(b)).  Telstra will only be able to provide a meaningful report on its compliance with those strategies from the date on which it has undertaken to comply with those strategies.  For this reason, subclause 15(2)(i) will only require Telstra to address its compliance with the ISS in the report for the financial year during which the date specified by Telstra as the date from which it will comply with that strategy falls, and for each subsequent financial year.  Similarly, subparagraph 15(2)(j) will only require Telstra to address its compliance with the CRS in the report for the financial year during which the date specified by Telstra as the date from which it will comply with that strategy falls, and for each subsequent financial year.  Telstra will not be required to include in its annual compliance report details of its compliance with those strategies for each financial year until the respective strategy commences.

Clause 16 – Independent auditing

Clause 16 relates to the independent audit report commissioned by Telstra.  The independent audit report is the report of the independent audit arranged by Telstra in accordance with paragraph 51(1)(c) of Schedule 1 to the Act (see the definition of independent audit report in clause 3 of the Determination).  Paragraph 51(1)(c) provides that the plan must contain provisions requiring Telstra, within a specified period after the end of each financial year, to arrange for an independent audit of the extent to which Telstra complied with the plan during that year, and to obtain a report of that independent audit, and to give the report to the Minister and make a copy of the report (or extracts from the report, see below) available on Telstra’s website.

The effect of clause 16 is to specify 120 days as the period after the end of a financial year within which Telstra must provide the independent audit report for that financial year to the Minister and must publish the report (or extracts from the report, see below) on its website.  Subclause 16(1) also requires Telstra, in addition to giving a copy of each independent audit report it prepares to the Minister (as required by paragraph 51(1)(c) of Schedule 1 to the Act) to give an additional copy to the ACCC (within the same 120-day period after the end of a financial year).  This is to facilitate the ACCC’s role in monitoring Telstra’s compliance with the plan (see clauses 19 – 21).

Subparagraph 51(1)(c)(iii) of Schedule 1 to the Act provides that it is a requirement that a draft or final operational separation plan must contain provisions requiring Telstra to make a copy of the independent audit report, or extracts from the report, available on Telstra’s Internet site.  This provision of the Act takes account of the fact that the independent audit report may contain information that is commercially sensitive, and is not suitable for public release.  Subparagraph 16(b)(ii) of the Determination deals with the manner in which this requirement is to be met, by providing that it is only where the Minister has agreed to the publication of only particular extracts from Telstra’s independent audit report that Telstra may make available extracts from the report on its website.  Otherwise, Telstra must publish the full report on its website.  This provision of the Determination aims to ensure the effective operation of the requirements of the Act in relation to the independent audit of Telstra’s compliance with the plan, by providing the Minister with a role in considering a claim by Telstra that certain information in the independent audit report is commercially sensitive and should not be publicly released.

Clause 17 – Organisational arrangements associated with compliance

Clause 17 provides that the plan must contain provisions requiring Telstra to appoint an appropriately qualified person to a position within Telstra, (hereafter referred to in this Explanatory Statement for ease of reference and only by way of example of what the position might be called, as the ‘Director of Equivalence’).  The plan must require the position of Director of Equivalence to be responsible for monitoring and reporting on Telstra’s compliance with the plan, raising awareness among Telstra staff about the requirements of the plan and establishing and maintaining processes directed towards achieving compliance within Telstra with the plan (subclause 17(1)).

The plan must provide that the position of Director of Equivalence has certain duties that relate to Telstra’s implementation of and compliance with the requirements of the plan (subclause 17(2)):

• accepting, facilitating and responding to the ACCC’s requests for information;
• reporting to Telstra’s Chief Executive Officer, Board of Directors or a committee of the Board of Directors, on compliance with the Plan;
• developing and overseeing an internal education program on compliance;
• liaising with the external auditor responsible for the preparation of the independent audit report;
• monitoring the adequacy of processes for investigating and responding to complaints from wholesale customers; and
• monitoring implementation of measures to respond to any non-compliance with the plan.

The position of Director of Equivalence may also have duties other than those specified in subclause 17(2) (see subclause 17(4)).

Subclause 17(3) requires the plan to provide for the position of Director of Equivalence to be a central position within Telstra (in the sense that the Director of Equivalence is not to be employed within the wholesale business unit, retail business unit or key network service business unit), and to be sufficiently senior within Telstra’s management structure to enable the person holding the position to perform the duties as listed in subclause 17(2).

Clause 18 – Development of appropriate internal documents and programs

Clause 18 provides that the plan must contain provisions that require Telstra to develop and implement programs and policies to educate Telstra employees about the role and requirements of the plan and promote compliance with the plan.  It is anticipated that the Director of Equivalence (see clause 17) would be responsible for developing these documents and programs, which could include, for example:

• a code of conduct, including policies dealing with sanctions for breach by employees of the code of conduct;
• a guide for staff about the requirements of the plan;
• a performance incentive program, to encourage compliance within Telstra with the plan; and
• training seminars.

Clause 19 – Provision of information to the ACCC

Clause 19 provides that the plan must contain requirements for Telstra to give information to the ACCC, in the manner and form the ACCC requires and within the timeframes the ACCC specifies.  The requirement for Telstra to give information to the ACCC would only apply where the ACCC undertakes to notify the Minister of the making and details of its request for information.  This is intended to provide a mechanism to make the Minister aware of how many information requests the ACCC is giving to Telstra for the purposes of monitoring compliance with the plan.  In addition, in order for Telstra to be required to provide information to the ACCC, the ACCC must provide Telstra with a request in writing for information about any matter directly related to the final operational separation plan, and the ACCC must also provide Telstra with a written statement setting out the reasons why the ACCC believes the information is necessary to enable the ACCC to do one or more of the following:

• monitor Telstra’s implementation of the plan;
• investigate Telstra’s compliance with the plan where the ACCC has received a complaint from one of Telstra’s wholesale customers or where the ACCC has a reasonable basis to believe Telstra has breached, or may be in breach, of the plan;
• advise the Minister on Telstra’s annual compliance report;
• advise the Minister on Telstra’s independent audit report;
• provide advice to the Minister about any Telstra proposals to vary the final operational separation plan or a final rectification plan;
• assist in undertaking a review of the operational separation arrangements; or
• enforce any rectification plan that may be in place.

Clause 20 – Compilation and creation of documents for the ACCC

Clause 20 provides that the plan must contain requirements for Telstra to compile reports and documents and provide them to the ACCC, in the manner and form the ACCC requires and within the timeframes the ACCC specifies.  The requirement for Telstra to compile reports and documents and provide them to the ACCC would only apply where the ACCC undertakes to notify the Minister of the making and details of its request for Telstra to compile reports or documents and to provide the Minister with any written comments that Telstra provides to the ACCC about the likely costs of complying with the request.  This is intended to provide a mechanism to make the Minister aware of how many such requests the ACCC is making of Telstra for the purposes of monitoring compliance with the plan.

Telstra is only required to compile reports and documents and provide them to the ACCC if a number of conditions are met.  First, the ACCC must provide Telstra with a written request to compile reports or documents in relation to any matter directly related to the plan after it has provided Telstra with a draft request, sought Telstra’s comments about the costs that would be likely to be incurred by Telstra as a result of the request and had regard to those comments.  This provision recognises that information requested by the ACCC may result in a significant compliance cost to Telstra and allows that the ACCC has the necessary information to make its assessment of whether the likely benefit accruing from its request is reasonable and proportionate to the cost, as required by  paragraph 20(e).  Second, the information to be contained in the requested reports or documents must not be available in a suitably aggregated or disaggregated form.  The third and fourth conditions are that the ACCC must provide Telstra with two written statements.  The first written statement must attest that the cost of compiling the requested reports or documents is reasonable and proportional given the purpose of, and likely benefit accruing from, the ACCC’s request for information.  The second written statement must set out the reasons why the ACCC believes the information is necessary to enable the ACCC to do one or more of the following:

• monitor Telstra’s implementation of the plan;
• investigate Telstra’s compliance with the plan where the ACCC has received a complaint from one of Telstra’s wholesale customers or where the ACCC has a reasonable basis to believe Telstra has breached, or may be in breach, of the plan;
• advise the Minister on Telstra’s annual compliance report;
• advise the Minister on Telstra’s independent audit report;
• advice the Minister about any Telstra proposals to vary the final operational separation plan or a final rectification plan;
• assist in undertaking a review of the operational separation arrangements; or
• enforce any rectification plan that may be in place.

Clause 21 – Creation of records for the ACCC

Clause 21 provides that the plan must contain requirements for Telstra to create and retain records for the ACCC in the manner and form the ACCC requires and for the period the ACCC specifies.  The requirement for Telstra to create and retain records would only apply where the ACCC undertakes to notify the Minister of the making and details of its request for Telstra to create and retain records and to provide the Minister with any written comments that Telstra provides to the ACCC about the likely costs of complying with the request.  This is intended to provide a mechanism to make the Minister aware of how many such requests the ACCC is making of Telstra for the purposes of monitoring compliance with the plan.

Telstra is only required to create and retain records if a number of conditions are met.  First, the ACCC must provide Telstra with a written request to create and retain records in relation to any matter directly related to the plan after it has provided Telstra with a draft request, sought Telstra’s comments about the costs that would be likely to be incurred by Telstra as a result of the request and had regard to those comments.  This provision recognises that information requested by the ACCC may result in a significant compliance cost to Telstra and allows that the ACCC has the necessary information to make its assessment of whether the likely benefit accruing from its request is reasonable and proportionate to the cost, as required by  paragraph 21(d).  The second and third conditions are that the ACCC must provide Telstra with two written statements.  The first written statement must attest that the cost of creating and retaining the records is reasonable and proportional given the purpose of, and likely benefit accruing from, the ACCC’s request.  The second written statement must set out the reasons why the ACCC believes the records may become necessary to enable the ACCC to do one or more of the following:

• monitor Telstra’s implementation of the plan;
• investigate Telstra’s compliance with the plan;
• advise the Minister on Telstra’s annual compliance report;
• advise the Minister on Telstra’s independent audit report; or
• assist in undertaking a review of the operational separation arrangements.