Telecommunications Universal Service Obligation (Payphone Performance Benchmarks) Instrument (No. 1) 2011

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Broadband, Communications

and the Digital Economy

Telecommunications (Consumer Protection and Service Standards) Act 1999

Telecommunications Universal Service Obligation

(Payphone Performance Benchmarks) Instrument (No. 1) 2011

Authority

Subsection 12EE(1) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (‘the Act’) provides that the Minister may, by legislative instrument, make a determination setting out standards (performance benchmarks) to be complied with by a primary universal service provider in relation to payphones and payphone carriage services.

Subsection 12EE(6) of the Act further provides that the Minister may, by legislative instrument, also set minimum benchmarks in relation to compliance by a primary universal service provider with a standard in force under subsection 12EE(1).

Purpose

The purpose of this Instrument is to establish payphone benchmark standards and minimum performance benchmarks regarding compliance with those benchmark standards. This Instrument sets out payphone benchmark standards relating to the rectification of a payphone or payphone carriage service fault or service difficulty, and minimum performance benchmarks to promote compliance with those benchmark standards. A primary universal service provider must meet or exceed the standards in enough instances to meet or exceed the performance benchmarks.

The benchmark standards set out in subsection 12EE(1) of the Act replicate the performance standards set out in s12ED(1) of the Act, but are subject to a different enforcement regime.  This Instrument works together with the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No. 1) 2011, made under subsection 12ED(1) of the Act, to set up the following regime in relation to the rectification of payphone faults:

• Performance standards in the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No. 1) 2011 set maximum timeframes for a primary universal service provider to rectify faults. The standards must be complied with and are subject to enforcement under the Act.

• Performance standards in this Instrument do not need to be complied with and are not subject to enforcement under the Act. However, minimum benchmarks apply to the performance standards in this instrument, and these benchmarks must be complied with. Failure to comply with the benchmarks could lead to enforcement action under the Act.

A single breach of a standard set out in the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No.1) 2011 could lead to a primary universal service provider receiving an infringement notice and fine under Part 31B of the Telecommunications Act 1997 (‘the Tel Act’). As a consequence, the performance standards in that determination are set at longer timeframes, because they take into account the variety of circumstances that may affect a provider and lead to delays in rectifying faults. By contrast, the payphone benchmark standard timeframes in this Instrument are much shorter, because the provider will not be subject to a penalty every time it does not comply. However, to encourage the provider to meet the shorter timeframes in the majority of cases, the benchmarks that apply to the performance standards in this instrument are subject to the infringement notice regime. Whilst the Tel Act provides for penalty amounts up to $1.98 million, a primary universal service provider could expect to receive a fine up to $990,000 if it does not meet or exceed the benchmarks.

This instrument is one of five payphone instruments that together form a package to clarify and strengthen payphone obligations. The other instruments are:

• the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No.1) 2011;
• the Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011;
• the Telecommunications Universal Service Obligation (Public Consultation on the Location or Removal of Payphones) Determination 2011; and
• the Telecommunications Universal Service Obligation (Payphone Complaint Rules) Determination 2011.

The instruments together respond to the long history of community dissatisfaction with the adequacy of arrangements for payphones in Australia, notably in relation to the processes for removing payphones and the time taken to repair them, especially in rural and remote areas. This particular instrument responds to community concerns by setting out benchmark standards and associated minimum benchmarks in relation to timeframes to rectify payphone faults. This Instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA - see paragraph 6(a) of the LIA). 

Consultation

The Department of Broadband, Communications and the Digital Economy issued a consultation paper on this and the four other proposed payphone instruments on 15 August 2011. Seven submissions were received, with most expressing overall support for the instruments. The Department also consulted directly with Telstra and the ACMA.

Regulatory Impact Statement

The regulatory impact statement and financial impact statement relating to this Instrument are set out in the explanatory statement to the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No.1) 2011.

Details of the accompanying Instrument are set out in the Attachment.

        ATTACHMENT

Details of the Telecommunications Universal Service Obligation

(Payphone Performance Benchmarks) Instrument (No. 1) 2011

Part 1   Preliminary

Part 1 is a preliminary section and includes details on when the Instrument commences and a definition of the key terms used in the Instrument.

Section 1 – Name of instrument

This section provides that the name of the Instrument is the Telecommunications Universal Service Obligation (Payphone Performance Benchmarks) Instrument (No.1) 2011.

Section 2 – Commencement

This section provides that the Instrument will commence on 1 January 2012.

Section 3 – Objects

This section sets out the objects of the Instrument, being to set out the standards to be complied with by a primary universal service provider in relation to various matters regarding payphones and to set minimum benchmarks in relation to compliance by a primary universal service provider with standards, as provided for by subsections 12EE(1) and 12EE(6) of the Act.

Section 4 – Definitions
 

This section sets out a definition of the key terms used in the Instrument.

The term Act is defined to mean the Telecommunications (Consumer Protection and Service Standards) Act 1999.

The term ACMA is defined to mean the Australian Communications and Media Authority.

The term fault or service difficulty is given the same meaning as that given by subsection 8(4) of the Instrument being a fault or condition which affects the useability of the payphone or payphone carriage service.

The term initial benchmark period is defined to mean the period beginning on          1 January 2012 and concluding at the end of 30 June 2012. 

The term major rural area is defined to mean an urban centre or other recognised community grouping with a population greater than 2,500 but less than 10,000 people. 

The term minor rural area is defined to mean an urban centre, locality or other recognised community grouping with a population greater than 200 but not more than 2,500 people.

The term payphone has the same meaning as in section 9C of the Act, being a fixed telephone which in order to make a telephone call requires payment (or another form of input such as a card, identification number or code).

The term payphone benchmark standards means the standards set out in section 7   of the Instrument relating to maximum timeframes by which a primary universal service provider must rectify a fault or service difficulty to a payphone or payphone carriage service.

The term payphone carriage service has the meaning given by subsection 5(2) of the Act being a carriage service supplied by means of a payphone.

The term primary universal service provider has the meaning given by section 12A of the Act, being the specified carrier or carriage service provider for a universal service area which is required, as part of its universal service obligation under section 9B(1)(b) of the Act, to ensure that payphones are reasonably accessible to all people in Australia on an equitable basis wherever they reside or carry on business. 

The term remote area is defined to mean a geographic area which is not an urban area, major rural area or minor rural area. 

The term rural area is defined to mean an area that is either a major rural area or a minor rural area.

The term subsequent benchmark period is defined to mean:

(a)   the financial year commencing on 1 July 2012; and

(b)   each later financial year.

The term universal service area is given the same meaning as that given by section 9G of the Act being an area which the Minister has determined is a universal service area in respect of one or more specified service obligations.

The term universal service obligation is given the same meaning as that given by section 9(1) of the Act being the obligation to ensure that all standard telephone services, payphone and prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.

The term urban area is defined to mean an urban centre with a population equal to or greater than 10,000 people.

The term urban centre is a reference to a geographic area defined as an urban centre in accordance with criteria used by the Australian Bureau of Statistics for the most recent Australian Census.

The term working day when used throughout the Instrument in reference to a location, means a day which is not a Saturday, Sunday or public holiday in the particular location.

A note is included to remind readers that there may be other words and expressions used in this Instrument which have the same meaning as in the Act

Section 5 – Application of this Instrument

This section provides that the Instrument applies with respect to a payphone that is situated (or proposed to be situated) at a site listed in the payphone register that a primary universal service provider is required to maintain under the Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011, and is provided in fulfilment of its USO under subsections 9(1)(b) and 9(2A) of the Act.
 

Under the Act, the universal service obligation includes the obligation to ensure that payphones are reasonably accessible to all people on an equitable basis, wherever they reside or carry on business. This obligation includes the obligation to supply, install and maintain payphones in Australia.

The Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011 is one of the five payphone instruments that form a part of this package, and sets out the obligation to keep a payphone register. Section 5 clarifies that, once a payphone is listed on the register, it becomes subject to all of the standards, rules or benchmarks set out in the instruments, including in relation to fault repair and removal.

As Telstra has been determined to be the primary universal service provider under section 12A of the Act, the benchmark standards outlined at Part 2 and the overall obligations under the determination will only apply to payphones supplied by Telstra in fulfilment of the USO. Consequently, this determination does not apply to payphones that are operated by other providers, such as the payphones operated by Tritel or blue phones in hotels, or the payphone carriage services that supply such phones.

The determination will also not apply to community phones in Indigenous communities which are supplied under separate government funding programs. Many of those phones are provided by providers other than Telstra. Where the phones are provided by Telstra, they are subject to contractual agreements in relation to supply, installation and maintenance, and it would therefore not be appropriate for this determination to apply.

Part 2 Payphone benchmark standards

Division 1 Compliance with payphone benchmark standards

Section 6 – Primary universal service provider must comply with standards

This section is similar to section 5 of the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No. 1) 2011.

This section specifies that compliance by a primary universal service provider with the payphone benchmark standards is mandatory unless a primary universal service provider is prevented from doing so under a Commonwealth, state or territory law or is unable to comply because of circumstances beyond its control.

Subsection 6(2) provides a non-exhaustive list of circumstances which may be considered beyond the control of the primary universal service provider, for the purposes of subsection 6(1)(b).  The circumstances listed at subparagraphs 6(2)(a)-(e) largely reflect (with appropriate modifications) the circumstances outlined in subsection 21(2) of the Telecommunications (Customer Service Guarantee) Standard 2011 (CSG Standard). 

The two examples at subparagraphs 6(2)(f) and (g) cover a situation where a payphone is rendered inoperable due to insufficient power supply; or where a facility or network used to supply the payphone has been interrupted in connection with the migration of services to the National Broadband Network.

The example at subparagraph 6(2)(h) recognises that an area affected by an event (such as, for example, those listed at subparagraphs 6(2)(b)-(d)) may require the movement of resources to that area and, as a consequence, a primary universal service provider may not be able to meet connection and/or repair timeframes in other non-affected areas.

Subsection 6(3) provides that a primary universal service provider is not exempt from compliance with a payphone performance benchmark standard unless it has procedures in place for the purpose of ensuring that it does not rely on the exemption in circumstances that are not beyond its control. This section is intended to ensure that a primary universal service provider has in place reasonable procedures to ensure it limits the extent to which circumstances beyond its control affect its ability to meet the payphone performance benchmark standard. This subsection 6(3) largely mirrors subsection 21(3) of the CSG Standard.

Subsection 6(4) provides a definition of the term, ‘public authority’ which is used in the circumstance described in paragraph 6(2)(d), namely, where a primary universal service provider is requested by a public authority to provide emergency communications services to assist in emergency action, and the provision of those services restricts connection to a specified service or rectification of a fault or service difficulty. Under the Telecommunications Act 1997 carriers and carriage service providers may be required, following a request from a public authority, to supply a carriage service for defence purposes or for the management of natural disasters.

Subsection 6(5) has been included to further clarify that a provider must comply with the performance benchmark standards from the time those circumstances which have prevented the provider from being able to comply with the standards have ceased.

Division 2   Payphone benchmark standards

Section 7 – Definition of payphone benchmark standards

This section defines payphone benchmark standards as being those performance standards set out in section 8 of the Instrument (see below).

Section 8 – Payphone benchmark standard – maximum timeframe to rectify a payphone or payphone carriage service fault or service difficulty

This section sets out the maximum timeframes for repair of a payphone or payphone carriage service fault or service difficulty for distinct geographic areas after a report of a fault or service difficulty has been received. They are:

• within one working day - where the payphone is situated in an urban area;
• two working days - where the payphone is situated in a rural area; and
• three working days - where the payphone is situated in a remote area.

These timeframes are the same as the fault rectification timeframes currently set out in Telstra’s Standard Marketing Plan. The timeframes work together with the fault rectification timeframes set out in the Telecommunications Universal Service Obligation (Payphone Performance Standards) Determination (No. 1) 2011. That instrument sets maximum timeframes for repairs that must be met by a primary universal service provider in each case. This Instrument sets shorter timeframes that must be met or exceeded in a specified number of instances as set out in section 9 (see below).

Subsection 8(3) works with subsection 8(2) to clarify that the commencement of the timeframe for fault rectification is taken to be the first occurrence of either of two possible occurrences. First, on the day after the primary universal service provider receives a report about the fault or service difficulty, or second, on the day after the primary universal service provider produces a report about the fault or service difficulty.

Subsection 8(4) clarifies that a report about a fault or service difficulty can include an automated or electronic report generated by the primary universal service provider, and not just a report provided by a potential user of a payphone.

Subsection 8(5) defines ‘fault or service difficulty’ and specifies that a fault or service difficulty is taken to be a fault or condition that affects the useability of the payphone or the payphone carriage service. Specific examples of situations which would constitute a fault or service difficulty are included, such as no dial or ring tone, the inability to make a call, excessive noise on the line which disrupts the communication or repeated cut-offs to the service.  This subsection also clarifies that the list is not exhaustive (i.e. other situations may arise which constitute a fault or service difficulty).

Subsection 8(6) provides that a fault or service difficulty does not extend to a non-critical fault. A non-critical fault is a fault which does not affect the useability of the payphone. Examples of non-critical faults are included. These include a flickering light in a phone box, damage to a payphone booth or damage where at least one calling mechanism is still operating and available to a user to make a call.

Subsections 8(7)-(8) clarify that a payphone or payphone carriage service will be considered to be useable where the phone or service is able to be operated by at least one calling mechanism. Five types of calling mechanisms are listed including coin, phonecard, credit card, operator assistance or reverse charge calling.

The effect of subsections 8(5)-(7) is to draw a clear distinction between the circumstances in which a payphone or payphone carriage service is useable and unuseable.

Subsection 8(9) states that where a report is provided on a non-working day or after 5.00pm on a working day, the report is deemed to be received on the next working day.

The primary universal service provider is required to comply with the performance benchmarks at section 9 that relate to the standards for maximum installation and fault repair timeframes set out at section 8.

Part 3 Payphone Performance Benchmarks  

Division 1 Performance benchmarks

Section 9 – Meaning of performance benchmark

Section 9 sets out the performance benchmarks to be met over the initial and subsequent benchmark periods of operation by distinct geographic area; namely, urban, rural and remote. A primary universal service provider must meet the performance benchmarks for the benchmark standards set out in section 8 (above) in relation to fault rectification or service difficulty timeframes as follows:

The initial benchmark period will be the period from 1 January 2012 to 30 June 2012, and each financial year thereafter will be a subsequent benchmark period. The performance benchmarks are based on the informal performance targets set by the ACMA that have been in operation since 2004. The ACMA performance targets are currently 80 per cent in all three geographic areas.

The effect of this provision is that it raises the performance target from 80 to 90 per cent for urban and major and minor rural areas. During the initial benchmark period, however, lower benchmarks for rural and remote areas apply to reflect the timeframe in which these instruments commence (i.e., 1 January 2012) which traditionally is the quarter most prone to extreme weather events, for example, severe storms and cyclones experienced by northern Australia and coastal areas during summer, which may thereby place greater pressure on a primary universal service provider’s resources and ability to respond sufficiently to meet repair and connection timeframes. Accordingly, the lower initial benchmarks are a one-off response to the unique situation created by commencement on 1 January 2012.

The lower performance benchmark for remote areas during subsequent benchmark periods reflects the difficulties Telstra may face in allocating resources to specific locations. Given the distances and amount of travel that may be involved, Telstra is considered to be unlikely to be able to meet a 90 per cent benchmark in remote areas without a significant increase in costs, which would flow through to other areas of its business and would ultimately be recovered from end-users.