Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998 1998 No. 180
EXPLANATORY STATEMENT
Statutory Rules 1998 No. 180
Issued by the Authority of the Minister for Communications, the Information Economy and the Arts
Telecommunications Act 1997
Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998
Section 594 of the Telecommunications Act 1997 (the Act) provides that the Governor-General may make regulations for the purposes the Act.
Section 147 of the Act provides that for the purposes of Part 7 of the Act, the eligible revenue of a participating carrier for a financial year is the amount that, under the regulations, is taken to be the eligible revenue of the carrier for the financial year.
The purpose of the accompanying Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998 (the accompanying Regulations) is to set out what is to be taken to be eligible revenue for the purposes of section 147 of the Act.
Part 7 of the Act establishes a USO regime. The USO regime works by defining a basket of services which must be accessible to all people in Australia, regardless of where they live or carry on business. These services are provided by one or more universal service providers (USPs). Universal service providers are eligible to claim for losses they incur in fulfilling the USO. These losses, the Net Universal Service Cost (NUSC), are funded by all carriers who are participating carriers for the purposes of the USO scheme.
'Eligible revenue' is a key concept in the operation of the USO regime and determines how much each participating carrier must contribute to the NUSC. Contributions to the NUSC are proportional to each participating carrier's share of total 'eligible revenue'. Thus if there are three participating carriers each with 'eligible revenue' of $5 billion, they would each pay a third of the NUSC.
'Eligible revenue' is also used in a similar manner under Part 7A of the Act to 'determine carriers' contributions to the funding of the National Relay Service used by the deaf and hearing impaired.
The Government's approach in developing the definition of 'eligible revenue' has been to develop a definition which broadly spreads the burden of USO contributions across the telecommunications industry, is transparent, makes use of readily accessible data, is administratively simple and competitively neutral, both between carriers and between carriers and non-carriers with whom they compete.
In summary, the accompanying Regulations will:
* define 'eligible revenue' as gross telecommunications sales revenue less certain specific or declared revenue streams and amounts equal to input payments paid to other carriers and other internal input amounts declared by the ACA;
* enable carriers that have the same ultimate Australian parent entity to make eligible revenue calculations on a group basis;
* address the possibility of avoidance by including in the calculation of eligible revenue the revenue of entities that are related to a carrier through accounting arrangements or because of declaration by the ACA and the value of a benefit or service declared by the ACA;
* assist carriers in calculating their eligible revenue by providing rules for the treatment of bundled revenue;
* enable the ACA to make declarations to fine tune the definition of eligible revenue in light of practical experience and to address conduct of carriers designed to minimise their 'eligible revenue' and thus USO contributions; and
* set out consultation and notification arrangements the ACA must follow in making declarations and provide that declarations of limited application (ie. not applying to all carriers) are subject to review by the Administrative Appeals Tribunal (AAT).
Subsection 589(2) of the Act specifically provides that an instrument, including regulations, under the Act may make provision in relation to a matter by applying, adopting or incorporating (with or without modifications) a matter contained in any other written instrument or writing whatever as in force or existing at a particular time, or as in force or existing from time to time, even if the other instrument does not yet exist when the instrument under the Act is made. It is intended to rely on this provision to enable the ACA to make declarations in relation to certain aspects of the eligible revenue definition under the accompanying Regulations.
Decisions of the ACA to make declarations of general application under the accompanying Regulations are not subject to review by the AAT. This is consistent with section 193 of the Act, under which the ACA assesses the carriers' eligible revenue for a financial year without: its assessment being subject to AAT review.
Details of the accompanying Regulations are set out in the Attachment, following the Regulation Impact Statement.
ATTACHMENT
TELECOMMUNICATIONS UNIVERSAL SERVICE OBLIGATION (ELIGIBLE REVENUE) REGULATIONS 1998
REGULATION IMPACT STATEMENT (RIS)
1. Identification of Issue
Part 7 of the Telecommunications Act 1997 (the Act) establishes a universal service obligation (USO) to ensure that all people in Australia, wherever they reside or carry on business, have reasonable access, on an equitable basis, to standard telephone services, payphones and prescribed carriage services. The cost of fulfilling the USO is funded by a levy on "participating" telecommunications carriers. All carriers are 11 participating carriers" unless otherwise exempted by regulations pursuant to s. 146 of the Act.
Each carrier's levy contribution to the cost of the USO is based on its share of total eligible revenue (s. 196). Under section 147 of the Act the "eligible revenue" of a participating carrier for a financial year is defined as "the amount that, under the regulations, is taken to be the eligible revenue of the carrier for the financial year". The issue addressed in this RIS is the appropriate definition of "eligible revenue".
Because the Act requires "eligible revenue" to be prescribed for the USO regime to work, the question for this RIS is not whether regulations are necessary but rather how 4t eligible revenue" should be defined in the regulations.
2. Objective
The basic objective in making any regulations is to provide a definition of "eligible revenue" and thereby provide a basis for determining carriers' USO contributions. "Eligible revenue" is intended to provide a measure of a carrier's business and through it, a means of determining the carrier's USO contribution. The definition of 14 eligible revenue" itself needs to meet a number of objectives. It must ensure USO funding is sustainable - for example, by spreading it over a wide revenue base - and is as equitable and competitively neutral for carriers as practicable. The Department agrees with the view widely put by industry that these objectives are probably best achieved by a value-added based approach and approximating such an approach is an objective of any regulation. At an administrative level, the definition should be transparent, administratively simple and make use of readily available data.
3. Options (regulatory and non-regulatory) for addressing the problem
Not making regulations is not a viable option. The Telecommunications Act clearly envisages that if there is more than one participating carrier they should all contribute to the USO. "Eligible revenue" is the default basis upon which those contributions are to be calculated.
Subsection 196(3) of the Act provides an alternative to using "eligible revenue" as the means by which carrier's contributions are calculated. Subsection 196(3) provides that the Minister may make a written determination specifying a method of ascertaining the contribution factor for the purposes of calculating USO contributions. Such a determination must have the written agreement of all carriers. This mechanism was incorporated into the Act to provide flexibility and is designed to provide an alternative to regulations prescribing "eligible revenue" where it is considered desirable. Notwithstanding this, regulations prescribing "eligible revenue" is the preferred policy approach and the intended default regulatory approach (Explanatory Memorandum to the Telecommunications Bill 1997, p. 122). Carriers have given no indication that they would prefer to use s. 196(3) rather than "eligible revenue". Use of the s.196(3) mechanism is not considered a viable option at this time.
Given the breadth of the "eligible revenue" head of power, a number of definitional approaches are conceivable within the regulations themselves.
Technically a self- or co-regulatory approach (eg. where carriers or industry as a whole determine the definition of eligible revenue, with or without Government consent) could be prescribed. This, however, is also not considered a viable option at this stage in the development of a competitive telecommunications industry. Because a sizeable levy is involved (historically around $250m) and equity needs to be ensured, the "eligible revenue" definition must be consistent across carriers. This cannot be guaranteed if carriers are allowed to determine their own "eligible revenue" definition. Moreover, given the magnitude of the USO cost - and thus contributions it is unlikely that carriers would arrive at a consensus definition.
Viable options for defining "eligible revenue" involve regulations prescribing a particular definition. The issue is, then, what that definition should be.
It is clear from the legislative background and context that the Parliament's intention was clearly that "eligible revenue" should be a revenue-based definition. This excludes definitions which may use other measures of carrier business such as the number of calls or number of traffic minutes carried.
Having settled on revenue, it-is necessary to determine what revenue should be counted, recognising that revenue has multiple dimensions and can be defined in various ways to achieve -or undermine - policy objectives - particularly those of sustainability, equity and competitive neutrality - noted above.
Consistent with the Government's USO policy and to give effect to objectives outlined in Section 2 of the RIS, the very large pool of revenue that could be considered in defining "eligible revenue" needs to be subject to some initial constraints.
First, "eligible revenue" should only include the sales revenue of d carrier, not its total revenue which includes dividends and asset sales. Total revenue does not give a realistic indication of the size of a business' telecommunications operations which, because the USO is a telecommunications-specific obligation, is the appropriate basis for USO contributions.
Second, "eligible revenue" should only include telecommunications sales revenue, that is , sales revenue earned in the telecommunications industry. This ties funding to the industry which is the immediate beneficiary of the USO and best placed to pass its costs onto end-users. It also ensures carriers are not levied and thus disadvantaged when competing with persons outside the telecommunications industry who are not subject to USO levy.
Third, "eligible revenue" should be telecommunications sales revenue earned in relation to the Australian marketplace. The USO is primarily of benefit to telecommunications users communicating in or to and from Australia. This constraint also ensures carriers are not levied and thus disadvantaged when competing in markets other than Australia and in which they may be subject to other USO and may be competing with persons not subject to Australian USO levy.
Fourth, "eligible revenue" should not generally include forms of telecommunications sales revenue which are earned in market sectors (eg. content services, equipment) where carriers are competing with non-carriers. If such revenue was subject to levy, carriers would be at a disadvantage in competing with these non-carriers.
Fifth, "eligible revenue" should be the total (wholesale and retail) telecommunications sales revenue of a participating carrier, rather than its wholesale revenue or its retail revenue. Total sales revenue is the fullest indication of a carrier's sales turnover. Moreover there are equity and practical problems with using only wholesale or retail revenue.
"Wholesale" supply is not yet a well-established concept in the telecommunications industry, for example, both retail and sub-retail services being supplied for resupply. In this context, industry has raised serious concerns about the feasibility of generating reliable wholesale data. More importantly, the use of wholesale revenue would lead to inequities if no provision was made for revenue from the "wholesale" supply of services within vertically integrated firms with retail operations. That is, the firms' wholesale revenue would not be truly indicative of its overall wholesale operation. This would tend to advantage vertically integrated carriers over wholesale-orientated carriers as much of their wholesale revenue would be embedded in their retail ,.revenue. Using wholesale revenue would also fail to tax the value added by a carrier at downstream stages of production.
Using only retail revenue would raise similar issues of inter-carrier equity. Counting only retail revenue would advantage wholesale-orientated, facilities-based carriers over retail-orientated, vertically integrated carriers and, in particular, resale-based carriers. This is because "eligible revenue" would exclude the large wholesale component of some carriers' revenue, shifting the burden of the USO levy to those carriers with only retail revenues. Vertically integrated carriers could also seek to avoid levy by establishing non-carrier retail operations. Where a carrier operating in the retail market was also dependent on the "wholesale" services of other carriers, it would, unless further steps were taken (see below), be paying levy on revenues which were effectively passed on to its wholesale suppliers.
Within the five constraints noted above, there are three main options for defining eligible revenue:
1. total (ie. wholesale and retail) telecommunications sales revenue;
2. total (ie. wholesale and retail) telecommunications sales revenue less interconnection payments; and
3. total (ie. wholesale and retail) telecommunications sales revenue less interconnection payments and network costs.
4. Impact analysis
The main parties that will be directly affected by the definition of "eligible revenue" are the participating telecommunications carriers (21 firms) and the ACA. The main parties that may be affected indirectly are parties related to participating carriers (in some instances their revenue will be counted as the eligible revenue of a carrier to discourage or address avoidance), service providers (the way eligible revenue is counted may affect how it is passed on by carriers to-service providers), consumers (in terms of preserving the USO, promoting competition and the passing on of USO costs) and the Australian Competition and Consumer Commission (which may need to consider any competitive implications of USO contributions, including how they might be passed onto to service providers).
Benefits and costs of options
The costs and benefits of the options outlined above can best be determined by considering the extent to which they achieve the objectives set out in Section 2 of the RIS. The primary objectives are to ensure USO funding is sustainable and as equitable and competitively neutral as practicable. (The consensus is that this can best be achieved through implementing a valueadded based arrangement.) The secondary objectives are that the definition should be transparent, administratively simple and make use of pre-existing data. Achievement of these objectives will largely be measurable through the likely impact on carriers of each option and the indirect effects on customers as mediated through carriers.
Option 1: Total telecommunications sales revenue
Using total telecommunications sales revenue would make "eligible revenue" transparent to carriers and the ACA and would be fairly simple for both to administer, enabling use to be made of pre-existing data. This would reduce compliance costs and promote carrier and community confidence in the overall assessment process.
Using total revenue, however, raises significant equity issues. First using total revenue, without deductions for payments to other carriers, leads to double counting of revenue, meaning some streams of revenue would carry more of the USO levy than other revenue streams. This would occur where carriers pay levy calculated on revenue received at the retail level and then again on the component of that retail revenue that is passed on to wholesale suppliers. The carrier earning the retail revenue is levied in relation to an amount of revenue that it does not actually retain but is passed on to another carrier. This has the effect that the "retail" carrier is liable for proportionally more levy and carry a greater share of the USO burden while the "wholesale" carrier is liable for proportionally less, competitively disadvantaging retail-based carriers.
2. Total revenue less interconnection payments to other carriers.
As with Option 1, using total revenue less input payments to other carriers would be fairly transparent to carriers and the ACA and would be fairly simple for both to administer, enabling the use of pre-existing data. Option 2 would be a little more complicated as the carriers would need to calculate their interconnection payments to other carriers and substantiate them. This is not a significant problem because carriers are able to readily identify such payments.
By allowing for the deduction of interconnection payments, the problem of double counting will be removed. Moreover, the levy calculation process will more closely approximate that of a value-added taxation approach. This is because "retail" carriers are subtracting a significant input cost and their eligible "revenue" would therefore be only the "value added" by them.
It could be argued, however, that if deductions are allowed for externally incurred input costs like interconnection, deductions should also be allowed for internal input costs such as infrastructure costs.
3. Total revenue less interconnection payments to other carriers and internal input costs
As with Option 1, using total revenue less interconnection payments and internal input payments as the definition of eligible revenue, would be fairly transparent to carriers and the ACA but more difficult to administer, possibly requiring the calculation of special data on internal input costs. The main difficulty with the approach would be ,appropriately defining deductible internal input costs and the quantification of those costs.
Theoretically, Option 3 would best ensure that the definition of "eligible revenue" approximates the objective of a value-added based definition. This definition would allow all carriers to eliminate their input costs allowing their USO contributions to be based on their "value-added".
This definition would see all carriers treated in the same manner legally improving the relative well-being of facilities-based carriers by treating their internal input costs, which are relatively more important to them, the same as interconnection input payments which are proportionally more important to resale-based carriers.
There are, however, a number of policy and practical difficulties with Option 3.
First, the problem of calculating infrastructure costs is more than a simple administrative problem. The most appropriate definition for internal infrastructure costs is difficult to determine and quantify. Unlike inter-carrier interconnection payments, such expenditure cannot be easily identified. Carrier infrastructure is established and enhanced over many years. The best annual proxy is likely to be the annual depreciation of infrastructure but this would not be transparent, easily calculated or necessarily fair to any carrier. The use of cost data in regulatory accounts has been proposed as an alternative, however this data would not be obtainable from publicly available financial statements, prepared in accordance with accounting standards and would be commercially sensitive.
Second, in light of the uncertainty as to how infrastructure costs might be defined, there must be concern about the uncertainty in the level of contributions that must result from using such a definition. Such uncertainty is not conducive to the stable and sustainable funding of the USO or competitive neutrality.
Third, if internal input costs are deductible, it will provide a slight reward to inefficient carriers who will be able to claim larger deductions than more efficient operators.
Fourth, carried to its extreme, the deductions for internal input costs could mean that some carriers (especially in their start-up phases) may earn zero or negative revenue and thus make no contribution to the USO. This is not consistent with Government policy on the funding of the USO, which envisages all carriers making a contribution to its cost.
Fifth, even if deductions where allowed for infrastructure costs, this would still not equate to a pure value-added model: * Such a model would generally presume that network equipment suppliers and other providers of similar inputs would also be subject to the tax which is not the case. That is, approximating a value-added tax scheme is desirable but within the context of the current legislation, it can only be an approximation, not a pure value-added scheme.
Sixth, to the extent that facilities-based carriers may incur a slightly greater liability if 'they are not allowed deductions, their control of infrastructure also means they are best placed to pass those costs on to other users than are resale-based carriers.
Regulatory context
The Commonwealth is solely responsible for legislation providing for universal service in telecommunications. Any regulation would not duplicate State regulation. Regulations will add to the overall regulatory burden on telecommunications carriers, however, the additional burden is not significant given the overall level of regulation in the industry and is justified in terms of safeguarding delivery of the US 0, which is a major community service obligation. Considerable efforts have been made to limit the regulatory burden on carriers (see implementation below) while safeguarding the public interest. In foreign jurisdictions (eg. USA, UK, France, Germany) a range of approaches, of similar complexity to those considered here, have been proposed.
Data sources and assumptions
The preceding discussion of the options is based on Departmental consideration of the "eligible revenue" question, consultation with industry, consideration of overseas developments in this area, a report prepared for the Department by consultants and discussions with a consultant contracted by the ACA to prepare the eligible revenue return form.
5. Consultation
The Department has sought the views of industry and the wider public on the definition of "eligible revenue" over an extended period, beginning with the inclusion of the concept in the exposure draft of the Telecommunications Bill 1996 in September 1996. In June 1997 the Department circulated a discussion paper on the "eligible revenue" definition to interested parties and in September 1997 convened an industry workshop and circulated a position paper. Some interested parties provided written comments in response to the Department's papers. The Department also contracted a consultant to provide economic advice on possible eligible revenue definitions. Further consultations were conducted with the ACA and ACCC.
On 17 April 1998 draft regulations defining "eligible revenue" were forwarded to participating carriers and other interested parties and published on the Internet for comment until 5 May 1998. Written comments were received from AAPT, Telstra, Optus, PanAmSat, Iridium, the ACA and Vodafone. Revised regulations were forwarded to the same parties and published on the Internet on 17 June 1998 for comment until 24 June 1998. In addition, the Department participated in, and was able to draw on, ACA consultations with industry on its draft eligible revenue return form.
To the extent they have participated in consultations, participating carriers have generally supported the objectives that should be pursued in defining eligible revenue and generally supportive of the approach that has been proposed. The major issue on which there is contention is whether internal infrastructure costs should be deductible, particularly where inter-carrier interconnection payments are deductible. Facilities based carriers, principally Telstra and Optus, support their deduction, while other carriers tend to oppose it. Other carriers' concerns largely relate to the inclusion of revenue from activities in which they specialise and implementation issues. Other parties have raised minor, largely administrative matters or been silent.
6. Conclusion and recommended option
Total revenue is an inappropriate definition because it involves the double counting of the wholesale component of revenue causing resale-based "retail" carriers to pay a disproportionately high share of the USO. It is also inappropriate from the perspective of a value-added based taxation approach in that it would not deduct an important input cost from the revenue of resale-based carriers. Total revenue less inter-carrier input payment addresses the double counting and value-added problems associated with simple total revenue, but it does not allow for the deduction of internal input costs. Total revenue less inter-carrier input payments and internal input payments would address double counting and best approximates a value-added based approach but raise definitional and implementation issues which in turn raise uncertainties about its practical effect on the industry.
On balance, Option 2 is the preferred option in that it addresses the clear inequity caused by the double-counting implicit in Option 1 and does not raise the difficulties and uncertainties of Option 3. In practice, the differences in USO contributions under Option 2 as opposed to Option 3, are likely to be comparatively slight. By way of compromise, there has been included in the scope of the accompanying regulations, by way of an ACA declaration, the ability to provide for the deduction of internal input costs should, after further consideration and experience with the proposed approach, such deductions become feasible.
7. Implementation and review
The preferred option, of defining eligible revenue as total revenue less inter-carrier interconnection payments, will be implemented in regulations as provided for under s.147 of the Act.
Consultation with participating carriers has shown industry fully understands the preferred option and the way it is to be implemented in regulations. Industry understanding has been helped by the ACA's development, in tandem with the regulations, of its eligible revenue return form.
Two important aspects of the implementation approach should be noted.
First, because using "eligible revenue" to determine USO contributions is a new approach, considerable effort has gone into giving the accompanying "eligible ,revenue" regulations the flexibility to adapt to various situations and circumstances. This, has been done by giving the ACA the ability to make a wide range of declarations about various elements of the "eligible revenue" definition. This will enable the ACA to fine tune the eligible revenue definition, within the parameters set by Government in the regulations in light of its experience.
Second, because "eligible revenue" is being used to determine USO contributions which are a tax, there is incentive for carriers to minimise their revenue and thus their contributions. To discourage and, if necessary, address this problem, the starting point for defining eligible revenue will be the consolidated annual financial statements of the ultimate reporting entity into which the carrier is consolidated. This means almost all relevant revenue will be captured from the start. From this amount, inappropriate revenue will be able to be deducted. This approach will also ensure reliable and comprehensive audit trails are maintained. The ACA will also be able to declare additional revenue streams where it is necessary to deal with avoidance strategies.
It is also worth noting that under the Act the ACA may specify the form of a return for "eligible revenue" and has considerable discretion in making a USO assessment to accept a statement in an eligible revenue return.
The accompanying regulations will require carriers to maintain comprehensive data, liaise with other parties within their corporate group and complete a detailed return. The burden of compliance with the regulations should not, however, be undue given the size of telecommunications carriers operations and their accounting expertise nor the importance of sustainable and equitable funding of the USO. Efforts have been made to reduce the compliance burden on carriers, for example, by making use of data used in statutory accounts, making deductions allowable rather than compulsory, allowing different accounting periods to be used and providing for rules for the treatment of bundled revenue. The ACA may also be able to use its declaration powers to reduce the burden on industry (eg. by reducing the circle of consolidated parties whose revenue is included in the return).
Given the newness of the approach the regulations are putting in place, the operation of the accompanying regulations will be closely monitored by the Department, the ACA and industry. Given the magnitude of the sums involved in USO contributions, industry monitoring of operation of the regulations is inevitable. Industry will be encouraged by the Department to draw any concerns to the attention of the. ACA or Department. The ACA will have close contact with industry in completing their eligible revenue returns, first due 28 September 1998, and each twelve months thereafter. This will mean annual industry scrutiny of the regulations. The ACA will be liaising with industry after the first lodgement period about its form of return and the Department will ask for information on the regulations to be passed back to it. Under s. 105 of the Act, the ACA is required to monitor and report each financial year on significant matters relating to the performance of carriers, including compliance with obligations under Part 7. This should provide scope for the ACA to report on problems with the accompanying "eligible revenue" regulations, particularly in relation carriers complying with their obligations.
Regulation 44 provides for the accompanying Regulations to cease effect after 5 USO assessment periods. This will require the Government to review the operation of the Regulations and decide on future arrangements by this date.
NOTES ON THE ACCOMPANYING REGULATIONS
Regulation 1 - Name of Regulations
Regulation 1 provides that the name of the accompanying Regulations is the Telecommunications Universal Service Obligation (Eligible Revenue) Regulations 1998.
Regulation 2 - Commencement
Regulation 2 provides that the accompanying Regulations commence on gazettal.
Regulation 3 - Definitions - the dictionary
Regulation 3 provides that the dictionary in the Schedule defines words and expressions used in the accompanying Regulations, including some words and expressions that are defined in the Telecommunications Act 1997 (the Act).
Regulation 4 - Universal service regime
Regulation 4 provides an explanation of the universal service regime which is established by Part 7 of the Act.
Regulation 5 - Purpose of eligible revenue
Regulation 5 provides that:
* eligible revenue is one factor to be taken into account when working out the universal service levy which supports the universal service regime; and
* the accompanying Regulations explain how to work out a participating carrier's eligible revenue for a financial year.
Regulation 5 also notes that eligible revenue is used to work out carriers' contributions to the National Relay Service used by the deaf and hearing impaired.
Section 191 of the Act requires participating carriers to lodge returns of eligible revenue. The accuracy and scrutiny of eligible revenue returns is safeguarded by the provisions of the Act itself. Under the Act:
* he ACA has the power to approve the form which an eligible revenue return is to have (s. 191(2));
* the ACA may require that that form provide for verification of the return by a statutory declaration (s.191(5));
* the return must be accompanied by a report by an approved auditor (s.191(6)); and
* in making an assessment the ACA may accept, either in whole or in part, a
statement in a return (s. 193(5)).
Regulation 6 - Purpose of Part 3
Regulation 6 provides that the purpose of Part 3 is to explain how two or more participating carriers that have the same ultimate Australian parent entity may make eligible revenue calculations under the accompanying Regulations.
Regulation 7 - Participating carriers with the same ultimate Australian parent entity
Regulation 7 provides that each carrier may make its calculation in accordance with the accompanying Regulations in its own right. However, carriers with the same ultimate Australian parent entity may make all the calculations required by the accompanying Regulations on a group basis.
Under Schedule 1 to the accompanying Regulations, where carriers have the same ultimate Australian parent entity, the starting point for calculating eligible revenue is the consolidated financial statements of the parent entity. Using consolidated financial statements reduces opportunities for minimising 'eligible revenue', allows for the elimination of payments between carriers within a corporate group and provides for a more comprehensive audit trail. Using consolidated financial statements also makes it desirable, however, to allow carriers to make some calculations on a group basis. Regulation 40 provides for the attribution of eligible revenue to individual participating carriers where eligible revenue is being worked out by the carrier as a member of the group.
Regulation 8 - Purpose [of Part 4]
Regulation 8 provides that starting point for calculating g carrier's eligible revenue is its gross telecommunications sales revenue. It further provides that the purpose of Part 4 of the accompanying Regulations is to explain how to work out gross telecommunications sales revenue.
Regulation 9 - Working out gross telecommunications sales revenue
Regulation 9 provides that gross telecommunications sales revenue is worked out using the four steps in Schedule 1.
Under Step 1 of Schedule 1, the starting point for determining gross ,telecommunications sales revenue is for the participating carrier to identify an the amount described as sales revenue in the financial statements relevant to the carriers' circumstances. Where a carrier's revenue is included in the financial statements of an ultimate Australian parent entity, its sales revenue is the amount described as sales revenue in the parent entity's audited annual consolidated financial statements or such an amount as is likely to be described as such when the entity's statements are prepared and audited (Sub-steps 1A and C). Where a carrier's revenue is not included in the audited annual financial statements of an ultimate Australian reporting entity, its sales revenue is the amount described as such in its own annual financial statements or likely to be described as such when its statements are prepared and audited (Sub-steps 1B and C). This establishes approaches for dealing with carriers that are members of a corporate group and those that are not.
This gives a broad base to eligible revenue and thus funding of the USO. This broad definitional starting point means there is less chance of appropriate revenue being accidentally omitted while enabling inappropriate revenue to be removed via the transparent deduction processes in Step 2 of Schedule 1 and Part 5 of the accompanying Regulations. The use of consolidated financial statements for carriers that are members of groups is designed to discourage and ultimately deal with tactics to minimise eligible revenue and thus USO contributions by capturing the revenue of consolidated entities and then putting the onus on the carrier to justify the exclusion of the revenue.
Step 1 covers situations where statements are prepared for financial years ending on 30 June and on other dates (Sub-steps 1C and D). In the latter case, the ACA may also declare that other financial statements are to be used as the starting point for gross telecommunications sales revenue. This enables the ACA to declare that other statements should be used should statements for years ending on dates other than 30 June provide inappropriate, for example, by significantly distorting USO contributions.
Step 2 of Schedule 1 allows a participating carrier to deduct from the sales revenue it has identified under Step 1 any amount that is earned from an activity outside the telecommunications industry. This enables the removal at a high level of revenue not earned in the telecommunications industry and which it is not considered appropriate to subject to USO levy. Such deductions are appropriate for two main reasons. Activities outside the telecommunications industry are not direct beneficiaries of the USO and in operating in such markets, carriers may be competing with firms not otherwise subject to the USO levy. Regulations 15-18 support the operation of Step 2.
Step 3 of Schedule 1 requires a participating carrier also to include in its gross telecommunications sales revenue other amounts that would reasonably be described as its sales revenue. This is designed to be a general safeguard to capture telecommunications sales revenue which might otherwise escape the levy net, for example, because it is somehow disguised in a carrier's annual financial statements. Step 3 will also ensure that the telecommunications sales revenue of a carrier that is a public body (see s.52 of the Act) and does not necessarily prepare financial statements of a kind referred to in Step 1 is also captured.
Step 4 of Schedule 1 provides for the inclusion in gross telecommunications sales revenue of additional amounts of revenue as defined in Part 3 of the accompanying Regulations, namely the revenue of a declared related party (Division 3) and declared revenue and the declared value of benefits or services (Division 4).
The use of revenue as the basis for determining USO contributions is new and untested in Australia and elsewhere in the world. Considerable discretion has therefore been given to the ACA through its declaration powers to adjust and fine tune the eligible revenue definition in the light of its practical experience. This discretion stems in part from the difficulty of foreseeing all the situations with which the accompanying Regulations may need to deal, particularly in such a rapidly changing industry as telecommunications . Another important consideration is the need for the ACA to be able to respond to attempts to improperly minimise eligible revenue and thus USO contributions - which as noted above may be considerable. Such regulatory flexibility is consistent with the general approach to regulation in the telecommunications industry.
Regulation 10 - Purpose of Division 3
Regulation 10 provides that Division 3 of Part 4 of the accompanying Regulations explains when to treat some or all of the telecommunications sales revenue of another entity as the carrier's revenue for the purposes of working out gross telecommunications sales revenue.
Regulation 11 - Declared related party
Regulation 11 provides that the ACA may declare one or more entities or one or more kinds of entities other than a consolidated related entity to be a declared related party of a carrier. The ability to capture the revenue of entities other than a participating carrier is designed to discourage, and ultimately deal with, carriers trying to minimise their eligible revenue, and thus levy payments, by diverting revenue to non-carrier associates. The telecommunications sales revenue of a declared related party is added to a carrier's gross telecommunications sales revenue under Step 4 of Schedule 1. The revenue of a consolidated related party (defined in the dictionary) is already included in the carrier's gross telecommunications sales revenue by virtue of the use of consolidated financial statements.
Regulation 12 - Declarations about declared related party
The general rule is that telecommunications sales revenue of a declared related party is part of the gross telecommunications sales revenue of the participating carrier for which the party is a declared related party (subregulation 12(1)).
The ACA may, however, make the following declarations in relation to the specific telecommunications sales revenue of the declared related party and the gross telecommunications sales revenue of the participating carrier to which it is related (subregulation 12(2)):
* that the related party's telecommunications sales revenue is not included (subregulation 12(3));
* that only a specified proportion of the related party's telecommunications sales revenue is included (subregulation 12(4)); and
* that only a proportion, worked out in a specified way, of the related person's telecommunications sales revenue is included (subregulation 12(5)).
Subregulations 12(6), (7) and (8) enable the ACA to declare that: .
* the value of a specified benefit or service of a declared related party;
* a specified proportion of the value of a benefit or service of a declared related party; or
* a proportion of the value of a benefit or service of a declared related party worked out in a specified way;
is telecommunications sales revenue and part of the carrier's gross telecommunications sales revenue.
Like regulation 20, this is intended to ensure that payments in kind can, if necessary, be dealt with as part of eligible revenue. This will assist in dealing with avoidance techniques, including transfer pricing.
Subregulation 12(9) provides that the ACA must also provide an explanation of how it worked out the value of any benefit or service or any proportion of revenue or value mentioned in a declaration under this regulation.
Regulation 13 - Bundled revenue of declared related party
Regulation 13 provides that to work out the telecommunications sales revenue of a declared related party it may be appropriate to separate the telecommunications sales revenue or a kind of telecommunications sales revenue of a declared related party bundled with other amounts earned by the declared related party. The regulation further provides what a carrier must do if it wishes to unbundle such revenue.
Regulation 14 - Declarations about bundled revenue of a declared related party
Subregulation 14(1) provides that the ACA may declare that a specified amount, or kind of amount, is bundled revenue of a declared related party.
Subregulation 14(2) provides that if the ACA makes a declaration, it must also declare that a specified amount or proportion of bundled revenue is the telecommunications sales revenue of the declared related party and is part of the gross telecommunications sales revenue of the relevant carrier; or that such an amount should be worked out in a certain way.
Subregulation 14(3) provides that the ACA must state how it worked out the value of a benefit or service included in the bundled revenue.
If there is no declaration under subregulation 14(1), then the ACA has the discretion to accept the unbundling of a declared related party's telecommunications sales revenue or reject it and require 100% inclusion of the bundled revenue. The possibility that the ACA may require 100% inclusion of bundled revenue provides a strong incentive for carriers to unbundle their revenue in a reasonable manner which the ACA is unlikely to object to, or seek from the ACA a declaration on how they should unbundle that revenue. A carrier is only guaranteed that its unbundling of revenue will be accepted if it is in accordance with an ACA declaration under subregulation 14(1).
Together, regulations 13 and 14 are intended to provide a regulatory means for the telecommunications sales revenue of a declared related party that is operationally bundled with other revenue to be identified and treated as gross telecommunications sales revenue and thus eligible revenue, without participating carriers necessarily incurring the burden of unbundling such revenue in an operational context.
Regulation 15 - Non-telecommunications sales revenue
Regulation 15 provides that to work out gross telecommunications revenue a carrier may identify and deduct from the sales revenue identified under Step 1 of Schedule 1 revenue earned from activities outside the telecommunications industry. The regulation supports Step 2 of Schedule 1.
Regulation 16 - Declarations about non-telecommunications sales revenue
Regulation 16 provides that the ACA may declare specified amounts or specified kinds of amounts of revenue to be non-telecommunications sales revenue.
Regulation 16 is intended to enable the ACA to provide certainty as to what constitutes nontelecommunications sales revenue and is therefore deductible under Step 2 of Schedule 1. ACA declarations under the regulation are intended to supplement Step 2. Claims for deductions under Step 2 are not intended to be contingent on the existence declarations under this regulation. A claimed deduction under Step 2 will only be guaranteed of acceptance, however, where it accords with an ACA declaration.
Regulation 17 - Deducting bundled [non-telecommunications sales] revenue
Regulation 17 provides that to work out an amount of non-telecommunications sales revenue to be deducted under Step 2 of Schedule 1 it may be appropriate to separate deductible nontelecommunications sales revenue or a kind of deductible non-telecommunications sales revenue bundled with other amounts. The regulation further ,provides what a carrier must do if it wishes to unbundle such revenue.
Regulation 18 - Declarations about deducting bundled non-telecommunications sales revenue
Regulation 18 provides that the ACA may make declarations as to how non-telecommunications sales revenue bundled with other revenue may be unbundled.
If there is no declaration under subregulation 18(1), then the ACA has the discretion to accept the unbundling of a carrier's non-telecommunications sales revenue or reject it. If the ACA rejects the proposed unbundling, the carrier will not be able to deduct such revenue from its gross telecommunications sales revenue. The possibility that the ACA may reject an unbundling of non-telecommunications sales revenue provides a strong incentive for carriers to unbundle such revenue in a reasonable manner which the ACA is unlikely to object to, or seek from the ACA a declaration on how they should unbundle that revenue. A carrier is only guaranteed that its unbundling of revenue will be accepted if it is in accordance with an ACA declaration under subregulation 18(1).
Like regulations 13 and 14, regulations 17 and 18 are intended to provide a regulatory means to simply separate bundled revenue without participating earners necessarily incurring the burden of unbundling such revenue in an operational context.
Regulation 19 - Declarations about revenue
Regulation 19 enables the ACA to declare specified amounts or specified kinds of amounts of revenue to be a participating carrier's gross telecommunications sales revenue.
Regulation 19 has two aims. First, it is intended to enable the ACA to provide certainty as to what is to be included in gross telecommunications sales revenue. Second, it is intended to enable the ACA to expand the range of revenue included in gross telecommunications sales revenue, where the ACA considers this is appropriate. The ACA may do this, for example, where it becomes clear that an appropriate revenue stream has not been captured under the other steps in Schedule 1. Before making a declaration under this regulation, the ACA is required to consult with carriers affected by any such declaration (see regulations 41 and 42). Declarations not of general application are subject to AAT review (regulation 43). Declarations of general application are not subject to AAT review consistent with Parliament's decision that ACA decisions on assessment and amended assessments under section 193 of the Act are not reviewable.
Regulation 20 - Declarations about value of benefit or service
Regulation 20 provides that the ACA may declare that the value of a specified benefit or service or specified kind of service or benefit is gross telecommunications sales revenue. This is to ensure that payments in kind that are made or received can, if necessary, be dealt with as part of eligible revenue. This will assist in dealing with avoidance techniques, including transfer pricing.
Regulation 20 also provides that where the ACA makes a declaration about the value of a specified benefit or service, it must also provide an explanation of how it worked out that value. This is a transparency mechanism. This mechanism applies throughout the accompanying Regulations where the ACA is determining value.
Regulation 21 -- Purpose [of Part 5]
Regulation 21 provides that the purpose of Part 5 of the accompanying Regulations is to work out how to make deductions from gross telecommunications sales revenue to
produce net telecommunications sales revenue.
Deductions of revenue amounts under Part 5 include any revenue of consolidated and declared related parties that may have been included in the carrier's gross telecommunications sales revenue under Part 4 of the accompanying Regulations.
Regulation 22 - Net telecommunications sales revenue
Regulation 22 provides that net telecommunications revenue is worked out using the steps in Schedule 2.
Under Schedule 2, Step 1 of calculating net telecommunications sales revenue is to add up all the allowable deductions that the participating carrier wishes to claim. These deductions are listed in Division 3 of Part 4 of the accompanying Regulations or are declared by the ACA under Division 5 of Part 4. Step 2 provides that these amounts may be subtracted from gross telecommunications revenue. Step 3 is the result of Steps 1 and 2 and is net telecommunications sales revenue.
Deductions from gross telecommunications sales revenue under Part 5 are designed to remove from the eligible revenue definition amounts that it would be inappropriate to subject to USO levy. The main reason such deductions are allowed is to ensure that carriers are not disadvantaged when competing with Persons not otherwise subject to the USO levy, for example, because they are non-carriers or carriers operating outside Australia. Other considerations are that revenue may be earned from activities which do not directly benefit from the USO (eg. the provision of content, operations outside Australia) or would involve a double levy (eg. levying USO payments).
Regulation 23 - Acts outside Australia
Regulation 23 provides that revenue earned from certain acts outside Australia may be deducted. The intention is to exempt revenue earned by carriers operating in markets overseas, whether directly or, as will generally be the case, through subsidiaries. Revenue from these operations should not be counted for Australian USO purposes.
Regulation 23 seeks to counter possible arguments about whether income earned from satellites in space or cables in international waters is earned 'outside Australia'. Revenue earned from such facilities should not be exempted unless it is earned in relation to operations in or between countries other than Australia. Revenue earned from supplying an international telecommunications service (listed carriage service) to or from Australia would not, however, generally be deductible (subregulation 23(2)).
Regulation 24 - Acts in Australia for services outside Australia
Regulation 24 provides for the deduction of revenue earned from acts carried out in Australia but done solely for the supply of a telecommunications (carriage) service originating and terminating outside Australia. The intention of this regulation is to allow the deduction of revenue earned from providing services between places outside Australia even though acts may be done in Australia. Such acts include, for example, providing transit, switching or management services in Australia. Such revenue is earned from providing services that do not directly benefit from the USO and which are supplied in an international market place where Australian-based carriers will be competing with carriers not subject to the Australian USO levy.
Regulation 25 - Selling customer equipment
Regulation 25 provides a deduction for revenue earned from selling customer equipment as defined in section 21 of the Act. It is not considered appropriate to levy revenue from a market segment that is so widely contested by persons other than carriers.
Regulation 26 - Levy credit balance
Regulation 26 provides a deduction in relation to payments of levy credit balance received by a participating carrier in the financial year for which eligible revenue is being calculated. Section 214 of the Act provides for payment of levy credit balance. Regulation 26 is intended to prevent levy being payable on what is in effect compensation for pre-existing USO losses.
Regulation 27 - Content services
Regulation 27 provides for a deduction in relation to revenue earned from the supply of content, including subscription television broadcasting programming. Revenue from content is not intended to be subject to the USO levy, given the focus of the USO on carriage services. In supplying content, carriers may also compete with a range of non-carriers not subject to the USO levy.
Unbundling provisions in regulations 31 and '32 will enable content revenue bundled with other telecommunications sales revenue to be dealt with without significantly adding to the regulatory burden of carriers. The ACA's ability to declare a value for benefits and services should also be useful where carriers provide carriage services to content providers for other than monetary returns.
Regulation 28 - Exempt base station
Regulation 28 provides for a deduction for an amount earned from the use of an exempt base station as defined in subsection 34(2) of the Act.. This exemption is intended to prevent revenue earned by any participating carrier or related party from the distribution of subscription or other broadcasting by microwave or other radiocommunications means being counted as eligible revenue. Such an outcome could result because such an activity falls within the definition of telecommunications industry in section 7 of the Act. The regulatory scheme of the Act, however, generally aims to exclude such terrestrial radiocommunications broadcasting activities from regulation.
Regulation 29- Suspension of deduction entitlements
Regulation 29 provides that the ACA may declare that one or more specified carriers are not entitled to deduct a specified amount or payment (ea. a USO payment under regulation 26) provided for under Division 3. The ACA's ability to make such declarations is intended to enable the ACA to restrict access to deductions where experience with the new regime shows they are inappropriate or are being abused. The ACA must consult with all carriers prior to making such a declaration of general application (see regulation 41).
Regulation 30 - ACA may declare deductible revenue
Regulation 30 provides that the ACA may declare that a specified amount or a specified kind of amount of gross telecommunications sales revenue may be deducted. As with ACA declarations in relation to gross telecommunications sales revenue under Part 3 of the accompanying Regulations, these declarations serve two purposes, to clarify what can be deducted, and extend the scope of allowable deductions. The declarations can relate to specific amounts (ie. $X) or kinds of amounts (eg. revenue from X). They can also relate to a specific person (ea.. carrier Z) or all or a class of carriers. Declarations of general application are not subject to AAT review.
Regulation 31 - Deducting bundled [deductible] revenue
Regulation 31 provides that to work out an amount to be deducted from a carrier's gross telecommunications sales revenue under Part 5 it may be appropriate to separate deductible revenue or a kind of deductible revenue bundled with other amounts. The regulation further provides what a carrier must do if it wishes to unbundle such revenue.
Regulation 32 - Declarations about deducting bundled [deductible] revenue
Regulation 32 provides that the ACA may make declarations as to how deductible revenue bundled with other revenue may be unbundled.
If there is no declaration under subregulation 32(1), then the ACA has the discretion to accept or reject the unbundling of a carrier's deductible revenue. If the ACA rejects the proposed unbundling, the carrier will not be able to deduct the proposed amount from its gross telecommunications sales revenue. The possibility that the ACA may reject an unbundling of deductible revenue provides a strong incentive for carriers to unbundle such revenue in a reasonable manner which the ACA is unlikely to object to, or seek from the ACA a declaration on how they should unbundle that revenue. A carrier is only guaranteed that its unbundling of revenue will be accepted if it is in accordance with an ACA declaration under subregulation 32(1).
Like regulations 13, 14, 17 and 18, regulations 3 1 and 32 are intended to provide a regulatory means to simply separate bundled revenue without participating carriers necessarily incurring the burden of unbundling such revenue in an operational context.
Regulation 33 - Purpose [of Part 6]
Regulation 33 provides that the purpose of Part 6 of the accompanying Regulations is to explain how to work out eligible revenue from net telecommunications sales revenue and summarises how this is to be done.
Regulation 34 - Eligible revenue
Regulation 34 provides that eligible revenue is worked out using the steps in Schedule
Step 1 of calculating eligible revenue is to add up all the input amounts mentioned in Part 6 that a participating carrier wishes to deduct from its net telecommunications sales revenue. These input amounts are defined in regulations 35-38.
Step 2 provides that the amount of these input amounts may be deducted from the carrier's net telecommunications sales revenue.
Step 3 provides that if calculations have been done on a group basis, the carrier identifies that amount of eligible revenue that is its own eligible revenue.
Step 4 provides that the result is the participating carrier's eligible revenue.
As with deductions from gross telecommunications sales revenue under Part 5, deductions of input amounts under Part 6 include input amounts of consolidated related parties and declared related parties; that is, entities whose revenue has been included in the participating carrier's gross telecommunications revenue under Part 4.
Regulation 35 - Input payments made to other carriers
Regulation 35 provides for the deduction from net telecommunications sales revenue of amounts equal to payments made by the paying carrier or a consolidated related party or declared related party to another carrier or its consolidated related parties or declared related parties, for acts done that allow the paying carrier or related party to provide their listed carriage services.
Subregulation 35(1) deals with situations where the payments are made by a carrier. Subregulation 35(2) deals with situations where the payments are made by a consolidated related party or a declared related party.
While these amounts are deductions like those under Part 5 of the accompanying Regulations, they are clearly different from the revenue streams deducted from gross telecommunications revenue because they are payments made by the revenue earner, rather than a form of income received by it. In addition, the rationale for their exclusion from the definition is very different to that for exempting particular revenue streams. For this reason these deductions are treated separately in Part 6 of the accompanying Regulations.
Input payments are to be deducted to ensure that carriers paying input payments are not levied disproportionately, given their input payments represent revenue actually passed on to their upstream suppliers. By deducting inter-carrier input payments from net telecommunications revenue, the accompanying Regulations aim to approximate a value-added tax regime.
Regulation 36 - Declarations about inter-carrier input payments
Regulation 36 provides that the ACA may declare a specified amount, or kind of amount, to be a deductible inter-carrier input payment. It is intended that inter-carrier input payments additional to those already provided for under regulation 35 should only be deducted when declared by the ACA. The declarations enable the scope of deductible input payments to be clarified and expanded as the ACA considers it appropriate.
Regulation 37 - Other input amounts
Regulation 37 provides that a participating carrier may deduct an amount from its net telecommunications revenue if it is an input amount declared by the ACA (under regulation 38).
Regulation 38 - Declarations about other input amounts
Regulation 38 provides that the ACA may declare that a specified cost or amount or a specified kind of cost or amount, other than an inter-carrier input amount (under regulations 35 and 36) is an input amount deductible under regulation 37.
Together, regulations 37 and 38 are intended to enable carriers, in calculating their eligible revenue, to deduct various declared input costs or amounts, other than inter-carrier payments. Such deductions could include the carriers' costs of providing its own services of a kind mentioned in regulation 35 or its own internal infrastructure costs. Such deductions are desirable to make the definition of eligible revenue better approximate a value-added based levy. Given the newness of using eligible revenue to determine USO contributions, there has been disagreement on what internal costs should be deductible, how they should be defined and how they should be calculated. In this context, the accompanying Regulations provide scope for such deductions to be provided for by ACA declaration if and when it becomes clear on how this can best be done.
Regulation 39 - Purpose [of Division 3 of Part 6]
Regulation 39 provides that Division J3 of Part 6 applies where the audited annual consolidated financial statements of an ultimate Australian parent entity includes the sales revenue of two or more participating carriers and a carrier is working out its eligible revenue as a member of a group as provided for under subregulation 7(2). Regulation 39 further provides that the Division explains how eligible revenue is attributed to individual carriers when it is being worked out on a group basis.
Regulation 40 - Attribution of group revenue
Regulation 40 provides that after working out eligible revenue on a group basis, each participating carrier must state how much of the eligible revenue is its own eligible revenue. The carrier must also state how much of the eligible revenue is the eligible revenue of other group members and how the amounts were worked out. These requirements are designed to provide transparency in the attribution of eligible revenue within a group. Attribution of individual eligible revenue is necessary as a result of using consolidated financial statements.
Subregulation 40(2) provides that the ACA may declare that the eligible revenue of a carrier is to be attributed in a certain way when it is being worked out by the carrier as a member of a group. This power is intended to enable the ACA to deal with circumstances where it considers the way revenue is being attributed is inappropriate, for example, because it favours a particular carrier in a group to the disadvantage of carriers outside the group.
Regulation 41 - Declarations of general application
Regulation 41 provides that in making a declaration of general application the ACA must satisfy a number of requirements. A declaration of general application is a declaration mentioned in Schedule 4 and is to apply to all carriers. The ACA must notify each carrier that it proposes to make the declaration and give each carrier 14 days to comment and make submissions. If the ACA makes a declaration it must notify all carriers that it has made the declaration and that the declaration is available from the ACA.
Regulation 42 - Other declarations
Regulation 42 provides that in making a declaration that is not a declaration of general application the ACA must satisfy a number of requirements. The ACA must notify each carrier to whom the declaration is to apply that it proposes to make the declaration and give each such carrier 14 days to comment and make submissions. The ACA also has a discretion to consult other carriers not affected by the proposed declaration. If the ACA makes a declaration it must notify all affected carriers that it has made the declaration and that the declaration is available from the ACA. Decisions set out in a declaration of limited application are subject to AAT review under regulation 43.
Regulation 43 - Review of decisions
Regulation 43 provides that application may be made to the AAT for review of a decision set out in a declaration that is not a declaration of general application. Such decisions are subject to review because, unlike declarations of general application, they affect the rights of specific carriers.
Regulation 44 - Operation of Regulations
Regulation 44 provides that the accompanying Regulations apply to working out eligible revenue for each financial year in the period starting on 1 July 1997 and ending on 30 June 2002; that is, to assessments over five financial years from 199798 to 2001-02.
Prior to the accompanying Regulations ceasing to have effect it is intended to review their operation. The definition of 'eligible revenue' applying to the assessment for Financial Year 2002-2003 will depend on the outcome of the review of the accompanying Regulations.
Dictionary
The dictionary defines words and expressions used in the accompanying Regulations and its operation is provided for in regulation 3.
Schedule 1 - Steps for working out a participating carrier's gross telecommunications sales revenue.
The purpose of Schedule 1 is explained in the explanation of regulation 9.
Schedule 2 - Steps for working out a participating carrier's net telecommunications sales revenue.
The purpose of Schedule 2 is explained in the explanation of regulation 22.
Schedule 3 - Steps for working out a participating carrier's eligible revenue
The purpose of Schedule 3 is explained in the explanation of regulation 34.
Schedule 4 - ACA decisions of general application
The purpose of Schedule 4 is explained in the explanation of regulation 41.