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 Standards) Determination (No. 1) 2011

Authority

Subsection 12ED(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 standards) to be complied with by a primary universal service provider in relation to a range of payphone carriage services.

Performance standards may be made in relation to any or all of the following matters:

• the characteristics of a payphone carriage service;
• the supply, installation or maintenance of a payphone;
• the supply of a payphone carriage service;
• the reliability of a payphone or a payphone carriage service;
• the maximum period within which a primary universal service provider must rectify a fault or service difficulty to a payphone or a payphone carriage service following the making of a report about a fault or service difficulty;
• the handling of requests for the removal of a payphone; and
• any other matter concerning the supply, installation or maintenance of a payphone or the supply of a payphone carriage service.

Purpose

The purpose of this determination is to require a primary universal service provider, (currently Telstra), to comply with performance standards in respect of each payphone it provides in fulfilment of the Universal Service Obligation (USO) in relation to the supply, installation or maintenance of payphones across Australia on an equitable basis.

Background
 

Subsection 12ED(1) of the Act allows the Minister to make a determination setting out performance standards to be complied with by a primary universal service provider in relation to a range of matters relating to payphones and payphone carriage services. These include performance standards relating to the characteristics of a payphone; the supply, installation or maintenance of a payphone; and the maximum timeframes for rectifying faults or service difficulties once these have been reported.

This determination is enforceable under subsection 12ED(4) of the Act which requires a primary universal service provider to comply with a determination made under subsection 12ED(1). Therefore, a breach of any aspect of this determination is a breach of the Act, and consequently a breach of a carrier licence condition for which the standard enforcement provisions under the Telecommunications Act 1997 apply.

This determination is one of five payphone instruments that together form a package to clarify and strengthen a primary universal service provider’s obligations to consumers in relation to payphones. The other instruments are:

• the Telecommunications Universal Service Obligation (Payphone Performance Benchmarks) Instrument (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 service quality 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 clear performance standards in relation to the characteristics of payphones and payphone carriage services and maximum timeframes to install payphones and rectify faults. This Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA - see paragraph 6(a) of the LIA).

Regulation Impact Statement for consumer safeguards relating to payphone services

Background

The Government has released five draft legislative instruments relating to payphones. They are the:

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

The instruments would be made under sections 12ED, 12EE, 12EF, 12EG and 12EH of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act). These sections of the Act were inserted by the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Act 2010 (CCS Act), passed by the Australian Parliament in November 2010, which introduced legislative reforms to strengthen a range of telecommunications consumer safeguards.

The objectives of the CCS Act amendments were to:

• establish clearer requirements for the provision of the Universal Service Obligation (USO) in relation to standard telephone services and payphones;
• provide powers for the Minister for Broadband, Communications and the Digital Economy (the Minister) to make legislative instruments to enhance existing consumer safeguards, including the USO and the Customer Service Guarantee (CSG); and
• strengthen the powers of the regulator, the Australian Communications and Media Authority (ACMA) to enforce consumer safeguards by providing it with enhanced record-keeping powers and the ability to issue infringement notices for breaches of the Act and the Telecommunications Act 1997.

Problem identification

The Universal Service Obligation (USO) has the objective of ensuring that all people in Australia, wherever they reside or carry on business, have reasonable access on an equitable basis to standard telephone services. The USO also covers the provision of payphones to meet reasonable accessibility requirements. Payphones also provide a valuable service in terms of access to emergency ‘000’ services, particularly in areas where there is limited mobile phone coverage.

Section 12A of the Act allows the Minister to determine a primary universal service provider to provide USO services. Telstra is currently the primary universal service provider and, accordingly, must fulfil the requirements of the USO in relation to payphone supply, installation and repair. At 30 June 2010, there were 13 009 Telstra-operated payphones in urban areas, 5021 in rural areas and 987 in remote areas[1].

At present, Telstra sets out how it meets its USO payphone obligations in its universal service policy document and standard marketing plan (SMP).  Telstra’s key obligations under the SMP in relation to payphones fall into the areas of payphone installation, removal and repair.

Under the SMP, Telstra will aim to install a payphone within three months (of making an installation decision), where the proposed payphone site is readily accessible to necessary network infrastructure, such as main/distribution cables. If the proposed payphone site is not readily accessible to infrastructure, then the timeframe is three months (in an urban or major rural area), six months (in a minor rural area) and nine months (in a remote area).

Different timeframes for different geographical areas are also applied in the case of payphone fault repair. Under the SMP, a payphone fault must be repaired in one day in urban areas; in two days in major and minor rural areas and three days in remote areas.

Under the SMP, where there is more than one payphone at a particular site, Telstra may reduce the number of payphones at that site to a minimum of one. Where there is only one payphone at the site, Telstra may remove the payphone in accordance with certain criteria (for example, where the local community no longer wants the payphone, where there have been significant or sustained costs due to repeated misuse of, and damage to, the payphone, and where the health or safety of the public or Telstra staff is at high risk). Before removing a payphone facility Telstra will consult the local community, site owner and local Government authority.

The SMP sets out broad consultation requirements for payphone removal or installation, but the process is vague and unenforceable. Whilst it sets out general provisions for consultation, it does not provide for a well-articulated and understood approach by which affected consumers can have their concerns raised and formally factored in to Telstra’s decision-making. Significantly, the SMP arrangements do not provide for an explicit decision-review or complaint-handling process that would help to inform Telstra’s initial decisions on payphone siting, installation and removal. The ACMA does not have a role in relation to overturning Telstra decisions on payphone siting, installation or removal. The ACMA can receive complaints from the public regarding Telstra decisions; however, it can only assess whether or not Telstra has complied with its obligations as set out in the SMP. Under the SMP, people can also complain about a payphone removal decision to the Telecommunications Industry Ombudsman (TIO), but the TIO also does not have formal powers to intervene in payphone siting, installation and removal.

Telstra’s performance in meeting its SMP commitments has been subject to considerable criticism in recent years. Stakeholders have raised concerns that Telstra does not always meet the commitments it sets out in the SMP, notably in relation to rectifying faults to payphones in rural or remote areas of Australia. For example, payphones in non-metropolitan areas have a lower level of service (in terms of compliance with fault repair timeframes) compared to urban and rural areas. In 2009–10, Telstra met the ACMA’s informal 90 per cent payphone repair performance target only for urban areas (92.6 per cent completed within the one-day timeframe).  During the period, Telstra completed repairs within the two-day timeframe for rural areas 87 per cent of the time; and for the three-day timeframe in remote areas, only 65.4 per cent of the time.[2] For the most recent performance data, only 51 per cent of payphones were repaired within the three-day period in remote areas[3]. Table A below shows that for the past three periods, Telstra has consistently performed far below the ACMA’s informal performance target of 90 per cent in remote areas, and has not met the target for rural areas (although it has been reasonably close to the target).

Table A: Telstra payphone repair performance by area, 2007-08 to 2009-10

Source: ACMA reporting data for relevant periods. Figures may not add up to 100 per cent because of rounding.

There has, in fact, been a long history of concern with Telstra’s performance in repairing payphone faults. In its 2000 review, the then Australian Communications Authority (ACA) reported a general decline in repair performance.[4] Furthermore, in 2004 the ACA reported that Telstra’s payphone fault repair performance in remote Australia was poor.[5] In its report to Government in 2008, the Regional Telecommunications Independent Review Committee (RTIRC) noted that payphones were a valued service in regional areas but that they experienced greater ‘down-time’ than their urban counterparts.[6]

The ACMA has also shown that, where payphones are repaired outside the informal targets that currently apply, the majority are repaired within the next five working days. Performance in 2009-10 was better in urban areas (where about two-thirds of the payphones which were repaired late were repaired one working day late) and in rural areas (43 per cent). By contrast, in remote areas, 41 per cent of the payphones that were repaired late took more than six working days to repair. The majority of these were repaired within 20 working days, but some took several months and even up to a year to repair.[7]

These concerns, particularly in relation to Telstra’s fault repair performance in non-metropolitan areas, have prompted the need to explore options in which Telstra’s performance can be improved.

There has also been a long history of concern with the availability of payphones. In particular, Telstra’s practices in removing payphones, and the degree of consultation it undertakes when it does remove payphones, have been criticised. The ACMA has reported that the overall number of payphones operated by Telstra declined from 30,091 in June 2006 to 19,017 in June 2010; a 36.8 per cent reduction over the period.[8]

In 2006, Telstra announced that it would undertake a removal of up to 5,000 payphones during 2006-07. The Minister for Communications, Information Technology and the Arts at the time sought an agreement from Telstra to undertake consultation to minimise the impact of removals, including more active consultation with affected communities and formal responses to complaints received regarding removals. In its 2008 report, however, RTIRC found that Government intervention was required to provide an assurance of payphone availability and that consultation with communities in relation to the provision and removal of payphones required improvement. In public meetings undertaken by RTIRC, local councils stated that “the extent and level of public consultation by Telstra in determining payphone removal is grossly inadequate [and] Telstra’s review process does not provide sufficient consideration in respect of community needs to access to public telephones” [9]. In addition, RTIRC found that although Telstra consults on payphone removals in accordance with its SMP, its decisions can appear to be arbitrary and to ignore the interests of the local community. This has led to increasing community concern over Telstra’s procedures for installing and removing payphones.

The lack of a defined process to provide for a review of Telstra’s decisions in payphone siting and removals means that there is no clear accountability or transparency as to how Telstra weighs up commercial factors against any public interest arguments in relation to payphone siting and removals.

More recently, in 2009 as part of the consultation exercise that resulted in the drafting of the CCS Act, responses[10] from consumer and disability groups and state government to the Department’s discussion paper, National Broadband Network: Regulatory Reform for 21st Century Broadband, expressed a concern over payphone removals and the need for continued access to payphones. The WA Government submission argued that the ACMA should strengthen its current complaints resolution processes in relation to payphones and the SA Government submission argued that there continued to be community concerns regarding the removal of payphones in regional areas.

Submissions to the August 2011 discussion paper on these draft payphone instruments expressed concerns regarding payphone installation and repair, highlighting the importance of shorter timeframes and effective compliance by Telstra. This was particularly the case for respondents representing the interests of consumers in regional areas. Some respondents called for very strong regulation of payphones, with identical installation and repair timeframes in urban, rural and remote areas, and identical benchmarks in relation to these. The Government has considered this approach as option three in this Regulatory Impact Statement.

The wide geographical dispersion of payphones, in combination with the trend towards lower usage from a correspondingly lower number of potential users, is increasingly making payphones in non-metropolitan areas a loss-making undertaking for Telstra. To date, no other telecommunications carriers provide alternative public payphone services in rural or remote areas to compete against Telstra’s payphone network. Consequently, Telstra is not subject to the competitive pressures that might otherwise provide commercial incentives for Telstra to improve its payphone service to customers in regional, rural and remote areas.

A key issue is that the Government has not previously had the regulatory tools available to enforce the SMP.  The Government recognised this when it introduced the CCS Act into Parliament. 

The Explanatory Memorandum to the Bill noted that ‘current requirements imposed on the primary universal service provider (currently Telstra) are imprecise and difficult to enforce’[11]. The powers introduced through the CCS Act provided for the Minister to make determinations in relation to payphone performance standards and benchmarks, rules about the location of payphones, rules about the process for public consultation on the location or removal of payphones and rules about the process for resolving complaints about the locations or removal of payphones. Furthermore, as the Explanatory Memorandum noted, stronger enforcement powers would be available in relation to these Ministerial instruments. Breaches of the instruments would be breaches of the Act, and consequently breaches of a carrier licence condition for which the standard enforcement provisions under the Telecommunications Act 1997 apply.

The Regulatory Impact Statement (RIS) attached to the Explanatory Memorandum to the CCS Bill[12] dealt with the reasons why these powers needed to be introduced. The RIS to the CCS Bill noted that Telstra’s SMP provided inadequate enforcement, and therefore there was a need to introduce powers to make stronger regulatory standards that would be enforceable. The Regulatory Impact Statement stated that regulations should ‘clarify the obligations for both Telstra and consumers’ and, by specifying penalties, lead to a ‘marked increase in compliance’. During debate on the Bill, Government Senators made it clear that the Government’s intention was that the relevant instruments would be made once the Bill was passed.

Consequently, it is not proposed that this RIS will cover the same issues. The Parliament has already decided that the powers should be introduced and what they should target. Instead, this RIS will cover the way in which it is proposed the powers should be implemented at this time, noting that any instruments that are made at this time may need to be amended in the future to reflect changes in the market or regulatory settings. 

On 23 June 2011 the Australian Government announced a package of measures to ensure basic universal telecommunication service standards during and after the roll out of the National Broadband Network. The measures included the commitment to establish a new government entity, the Telecommunications Universal Service Management Agency (TUSMA) that will administer contracts and grants for universal service (including so that payphones continue to be reasonably accessible) and other public interest services such as the National Relay Service and to support emergency call handling arrangements. The measures also include an agreement with Telstra to provide universal service and other public interest telecommunications services for 20 years from 1 July 2012. Under the agreement, Telstra will continue to supply, install and maintain payphones for 20 years from 1 July 2012.

On 2 November 2011, the Government introduced three Bills into Parliament – the Telecommunications Universal Service Management Agency Bill 2011 (the TUSMA Bill), the Telecommunications (Industry Levy) Bill 2011 and the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011 (the Reform Bill). Under the TUSMA Bill, there will be powers for the Minister to make standards, rules or benchmarks that will apply to contracts administered by the Telecommunications Universal Service Management Agency (TUSMA). Contractors must comply with these standards. TUSMA will be responsible for the agreement with Telstra, announced on 23 June 2011, covering the supply of USO services (including payphones).

The Reform Bill proposes amendments to the Act to introduce a framework to enable the progressive lifting of the standard telephone service (STS) and payphones elements of the USO, where the Minister for Broadband, Communications and the Digital Economy is satisfied in each case that pre-conditions have been met. The Minister will make initial declarations in the period between and 18 and 23 months after commencement. This will enable the arrangements to be bedded down during a transition period and for the Minister to take into account Telstra’s regulatory and contract performance during this period. The Minister will have regard to contractual, regulatory performance and other relevant matters in making a declaration to remove STS or payphones USO regulation and the declarations will be subject to Parliamentary scrutiny and potential disallowance.

If the pre-conditions have been met for payphones, then this element of the USO will be removed on a single date in all areas of Australia. Once payphone regulation is lifted, provision of payphones will be covered by the contractual agreement between TUSMA and Telstra. However, the Government has announced, in the Explanatory Memorandum to the TUSMA Bill, that existing USO safeguards will form the basis of contract standards to be made by the Minister in relation to the provision of standard telephone services and payphones.[13]

It is important to stress that any future lifting of USO regulation would be subject to a number of factors that are currently uncertain. These include the passage of the TUSMA Bill and the Reform Bill, the pre-conditions for lifting regulation being met, and the approval of the Parliament for the relevant Ministerial instrument. Should these factors take place and USO payphone regulation be lifted, it is the Government’s intention that Telstra will remain subject to contract standards which will be largely based on the instruments that are the subject of this Regulatory Impact Statement.

Desired outcomes

The objectives of this proposal are twofold: (1), to establish regulatory settings that ensure payphones are provided and maintained so that consumers are reasonably able to access such services when required, including in times of emergency, and (2), to establish arrangements that provide for consumers to have adequate input into payphone siting and removal decisions and review and complaint-handling arrangements where such decisions may be disputed. Both outcomes are directly related to a need to improve Telstra’s payphone repair performance and the availability of payphones, especially in non-metropolitan areas where ACMA reporting has shown Telstra’s performance metrics to be consistently below acceptable levels. Improvements in Telstra’s connection and fault repair metrics, reflected in ACMA reporting, will be evidence that payphones are more available for use by the public in accordance with the universal access principles of the USO.

These objectives incorporate notions of equity to reflect that payphone provision and maintenance levels may be different in different geographical areas, where lower populations mean fewer consumers are affected in the event that a payphone is inoperative. Finally, the objectives recognise that many payphones, especially in rural and remote areas, are uneconomical to run. Accordingly, it is necessary to achieve a balance between the costs imposed on Telstra in providing loss-making services with the public welfare benefits provided by readily-accessible and reliable payphone services.

Options

Three options are assessed for the purpose of achieving the stated objective. These options are set out in detail in Table B. They are:

Option 1: Maintain the current payphone installation, repair and consultation requirements under Telstra’s SMP, on the basis that it is not appropriate to implement the powers provided by the Parliament in relation to the regulation of payphones at this time. This is effectively the ‘do nothing’ option. Adopting this option would impose zero additional cost on Telstra; however, improvements in the availability of payphone services in accordance with the objective of meeting the USO would not be achieved.

Option 2: Introduce instruments setting stronger standards and benchmarks for payphone performance (including fault repair and installation and removal), and setting out rules for public consultation by Telstra in relation to installations and removals and for handling complaints. These instruments would attempt to achieve a balance between promoting consumer welfare and recognising the costs and compliance burden to Telstra from stronger requirements. The instruments would, to a large extent, formalise the existing requirements of the SMP while strengthening fault repair, installation, consultation and complaints handling requirements. Furthermore, all obligations would be subject to oversight, compliance and enforcement action by the ACMA.

It is expected that Telstra would undertake a range of internal system and process changes to ensure it meets the requirements. Such changes are likely to include:

• promulgating information to technical and customer service staff to make them aware of the new requirements, in particular the financial risk of fines that may be imposed if connection and repair performance benchmarks are not met;
• altering technical staff work schedules to ensure sufficient staff are available for connection and repair jobs, particularly in non-metropolitan areas;
• enhancing supply and purchasing arrangements to ensure necessary spares and equipment are available to meet timely requests for connection and repair;
• establishing and undertaking notification requirements to ensure potentially-affected groups are made aware of payphone siting and removal proposals; and
• establishing formal complaint-handling arrangements, including creating of, and training staff in, complaint-handling instructions and procedures.

Option 3: Introduce instruments setting much stronger standards and benchmarks for payphone performance (including fault repair and installation and removal), and setting out rules for public consultation by Telstra in relation to installations and removals and for handling complaints. These instruments would set promoting consumer welfare above the costs and compliance burden to Telstra from stronger requirements. The instruments would extend the current requirements of the SMP and set stronger fault repair, installation, consultation and complaints handling requirements than option 2. They would thus represent a greater level of regulatory imposition on Telstra.

Similar to option 2, Telstra would incur additional costs in being required to undertake system and process changes to meet the requirements of option 3. Like option 2, the additional costs would result from:

• drafting and promulgating of information to relevant staff;
• training of staff, particularly those in technical and customer service roles;
• ensuring work schedules provide for sufficient technical staff to meet connection and repair timeframes;
• enhancing supply and inventory management arrangements to ensure timely availability of material and equipment for payphone connection and repair; and
• undertaking system and process changes to accept, manage, track and resolve complaints.

However, the difference in regulatory approach between option 2 and option 3 means those costs are likely to be appreciably higher in the case of option 3. Different (higher) cost aspects for option 3 include:

• no transitional arrangements in the form of compliance with lower connection and fault repair performance benchmarks for an initial six-month period;
• an increased choice for consumers of alternative languages to be provided for instruction purposes on payphones;
• no different (lower) performance standard or benchmarks based on geographic area; and
• ACMA review of payphone installation proposals in addition to payphone removals.

Option 1 maintains the status quo in which Telstra would continue to provide payphone services as the primary universal service provider in accordance with its obligations under the SMP. The ACMA would oversee Telstra’s performance, but the difficulties experienced with enforcing the SMP that were recognised by the Parliament when it passed the CCS Act would continue.

Option 2 would see clear performance standards set for Telstra’s payphones, with performance benchmarks in relation to fault repairs. The instruments would also set rules promoting clearer obligations that must be complied with by Telstra when installing or removing payphones, and stronger consultation requirements. Furthermore, the instruments would clarify the complaints handling process to be followed by Telstra when a payphone is removed. The instruments would, however, attempt to contain Telstra’s costs and compliance burden where possible, recognising that an increase in these will inevitably follow from strengthening payphone obligations. For example, the instruments would apply existing technical standards in relation to payphones, rather than requiring Telstra to invest in new equipment. Similarly, in setting maximum installation and repair timeframes, the instruments would, where appropriate, use existing SMP timeframes but make them clearly enforceable. The instruments would recognise that lower benchmarks and standard timeframes for installation could apply during the first six months the instruments are in operation, given that this period coincides with extreme seasonal weather events when there are likely to be many calls on Telstra’s maintenance personnel and resources. The instruments would also recognise that repairing payphones in remote areas may need to have a lower benchmark and a longer installation and fault repair timeframe than in urban or rural areas, given the relatively higher costs to Telstra in installing and maintaining payphones in non-metropolitan areas.

Option 3 would also see stronger and clearer standards, benchmarks or rules applied to Telstra’s payphones, but would not be as concerned with containing Telstra’s costs and compliance burden relative to option 2. Rather, greater weighting would be given to consumer benefit whilst placing a lower value on the costs imposed on Telstra to meet standards and benchmarks. For example, the instruments could require Telstra to invest in new equipment, and also determine that no transitional period to the standards and benchmarks arrangements should apply. Similarly, timeframes and benchmarks for remote areas would be set at the same levels as timeframes and benchmarks in urban and rural areas, regardless of the high cost/low return aspects relating to servicing minor rural and remote payphones. Finally, extensive consultation requirements could be imposed on Telstra whenever it installs or removes a payphone.

Under all three options, the powers conferred on the Minister under the Act only extend to setting standards, rules or benchmarks to be complied with by a primary universal service provider (i.e., Telstra). While there are other service providers in Australia that operate payphones (e.g. Tritel in metropolitan areas and certain providers of community phones in remote areas), these operators are not primary universal service providers and, accordingly, the instruments cannot apply to them.

These three options are the most realistic options at this time. Alternative options, for example using the regulatory powers in the Act to require Telstra to address payphone siting or improve the robustness of payphones in an effort to reduce the incidence of repairs, would be likely to have only a marginal impact on the incidence of payphone faults and would, of themselves, do nothing to lift Telstra’s performance in repairing payphones in remote areas. These alternative options would also have implications in terms of increased compliance costs to Telstra.

Table B: Payphone regulatory options: comparative aspects

Impact assessment

This section discusses the relative advantages and disadvantages of the three options and their impacts on stakeholders, namely Telstra as the current primary universal service provider and consumers as ultimate users and beneficiaries of payphones. Consumers may be further subdivided into sub-categories of people living in urban, rural or remote areas.

The criteria used in the assessment relate to the Government’s objectives of establishing clearer requirements in relation to payphones and ensuring that requirements are enforceable.

Under option 1 (the ‘do nothing’ option), there will be no change in Telstra’s current level of costs or compliance burdens.

Under option 2, Telstra will face some increased costs and compliance burdens. Increased costs would relate to the additional resourcing and effort required for Telstra to meet the installation and repair timeframe standards and benchmarks, especially in remote areas where it is well below the ACMA’s informal 90% performance target. Regarding metropolitan and rural areas, there is likely to be very little additional cost for Telstra because it is regularly very close to meeting or exceeding the informal 90% performance target set by the ACMA.

Telstra argued in its submission on the draft instruments that the instruments contain rules that expand upon the current commitments relating to the supply of payphones in the SMP, and that the instrument dealing with rules for public consultation will ‘significantly increase the level of consultation that must be undertaken by Telstra’. Telstra also argued it will need to implement a detailed system-based process with an enhanced reporting capability to ensure that maximum timeframes under the instruments are met. At present, Telstra regularly provides a range of management and reporting information to the ACMA on payphone fault repairs in geographical areas[14]. Telstra, however, did not quantify any possible additional compliance costs relating to reporting that it would incur, nor identify whether it would need to take on additional staff, or redeploy existing staff, and the possible costs involved.

Against these possible additional costs to Telstra, under its agreement with the government, from 1 July 2012 the TUSMA will pay Telstra $40 million per annum for the supply, installation and maintenance of payphones. Accordingly, Telstra’s additional costs will be offset by this funding contribution. This is a much greater sum than the approximately $13.8 million Telstra currently receives for the provision of payphone services as the primary universal service provider.

Under option 3, Telstra is likely to face increased costs to meet tighter remote area benchmarks and timeframes, principally relating to resourcing to allow the expeditious movement of repair staff and material. Again, in its response to the draft payphone instruments, Telstra did not identify nor quantify any possible increases that may result from meeting timeframe standards and benchmarks. Its system costs are likely to be one-off enhancements to existing management and reporting arrangements and therefore the same as under option 2.

Assessment of options

Option 1 – no change – leave Telstra’s obligations as set out under the SMP

Advantages:

• This option has the lowest cost impact on Telstra and also leaves its regulatory compliance burden unaltered.
• This option promotes self-regulation.

Disadvantages:

• The option does not address the low service quality that has been identified, over a number of years, under Telstra’s SMP. In particular, it does not provide a mechanism for ensuring Telstra improves its performance in meeting fault repair timeframes, and does not set clear criteria that Telstra must adhere to when it installs or removes a payphone.
• As a consequence, the option does not fully address consumer interests in lifting payphone fault repair standards, and in having clearer requirements around payphone installation and removal.
• The option would also limit the ACMA’s powers to prevent payphone removals, as those powers (under section 12EI of the Act) are invoked if there has been a breach of an instrument made under section 12EF or 12EG. If no instruments are made, the ACMA cannot prevent a removal.
• A lack of clear consultation requirements in the SMP creates an information asymmetry, leading to uncertainty on the part of consumers regarding the access and input they have to Telstra decision-making on payphone location and removals.

Whilst imposing no additional regulatory cost or burden on Telstra, continuing with the arrangements under the SMP is not sufficient to ensure improvements to payphone connections and fault repair performance as the SMP commitments are phrased as ‘best endeavours’ commitments – e.g., Telstra promises to repair payphones in urban areas in one day, but only has to use its best efforts to do so. Consequently, if it does not meet the timeframe it has not breached any commitment. The SMP also does not cover a number of standards set out in the payphone instruments proposed under Option 2 (e.g. complaints handling and detailed consultation over the removal of payphone) and also does not contain benchmark standards or performance benchmarks.

Option 2 – provide stronger and clearer standards, rules and benchmarks but base them on existing technical standards and timeframes in the SMP to limit the additional costs and compliance burden on Telstra

Advantages:

• This option provides clearer standards around:
  • the characteristics of payphones;
  • maximum timeframes for installing a payphone;
  • maximum timeframes to rectify faults;
  • benchmark timeframes for rectifying faults;
  • rules for areas or places where payphones should be located, and criteria that must be met if Telstra does not wish to install a payphone in such a place or area;
  • rules for removing payphones, and criteria that must be met before Telstra can remove a payphone;
  • rules for the public consultation that must be undertaken before installing or removing a payphone; and
  • rules for the process for handling complaints about payphone removals.
• Some standards will also be stronger than currently set out in the SMP. For example, at present benchmarks for meeting fault repair timeframes have been established as informal targets by the ACMA and are not enforceable. One of the instruments will establish enforceable benchmarks. Similarly, the SMP does not provide clear criteria that Telstra must consider when it removes or installs a payphone. The instruments will set out such criteria.
• All standards, rules or benchmarks will be enforceable, providing Telstra with a clearer incentive to meet them than is currently the case for the commitments in the SMP.
• By basing standards and timeframes on those set out in the SMP, Telstra’s actual costs and compliance burdens will be contained. In particular, timeframes for installing new payphones will be based on those set out in the SMP, and technical requirements will reflect existing standards and equipment that have been agreed by industry via the Communications Alliance Accessibility of Payphones Industry Guideline: G630:2006 [15].
• Where new requirements are introduced, such as new maximum fault repair timeframe standards and benchmarks, the instruments allow for longer timeframes during the first transitional period and for different timeframe standards and benchmarks to be set for urban, rural and remote areas. These also minimise the compliance costs Telstra faces while nonetheless promoting consumers’ interests in receiving more reliable payphone services.
• Establishing clear procedures for consumer consultation, review and complaint-handling will significantly address current problems of information asymmetry. Consumers will benefit from a clearly understood process that provides for input into payphone siting and removal decisions, and a review/complaint-handling process where decisions may be questioned. Specific criteria relating to who may be consulted and the form in which review and complaint requests are made, including timeframes, limit Telstra’s costs by ensuring only affected consumers have input to siting/removal decisions and eliminating the possibility of vexatious complaints.

Disadvantages:

• This option will require Telstra to enhance existing processes to improve its reporting and performance in repairing payphones. It will likely require Telstra to engage new staff or re-deploy or re-train current staff, and to undergo one-off management and reporting system enhancement costs.
• Consultation and review/complaint-handling processes will likely affect Telstra’s revenue, albeit to a small degree. Delays in installing a payphone may subsequently delay the commencement of a revenue stream from a profitable payphone. In contrast, delaying the removal of a non-profitable payphone subsequently prolongs the losses such a payphone incurs.

Option 3 – provide much stronger and clearer standards, rules and benchmarks, with a focus on maximising consumer welfare

Advantages:

• This option provides clearer standards around:
  • the characteristics of payphones;
  • maximum timeframes for installing a payphone;
  • maximum timeframes to rectify faults;
  • benchmark timeframes for rectifying faults;
  • rules for areas or places where payphones should be located, and criteria that must be met if Telstra does not wish to install a payphone in such a place or area;
  • rules for removing payphones, and criteria that must be met before Telstra can remove a payphone;
  • rules for the public consultation that must be undertaken before installing or removing a payphone; and
  • rules for the process for handling complaints about payphone removals.
• These standards would, in some cases, be stronger than under option 2. Telstra may be required to invest in new equipment (that provides functionality over and above existing equipment than is currently available, for example, to provide a broader range of languages for payphone instructions from which consumers, who use a language other than English, can choose) and may be required to consult more widely when it installs or removes a payphone, to include less-affected (but nevertheless, affected) consumers.
• All Australians, no matter where they live, would receive the same installation and fault repair timeframes, and Telstra would be required to meet the same fault repair benchmarks in all regions.
• All standards, rules or benchmarks will be enforceable, providing Telstra with a clearer incentive to meet them than is currently the case for the commitments in the SMP.
• More expansive consultation requirements and more in-depth review and complaint handling processes would likely result in increased payphone availability (through increasing the number of potentially-affected consumers consulted, likely leading to more installation requests and possibly reducing the scope for removals).

Disadvantages:

• This option would impose substantial increased compliance costs on Telstra. The level of resourcing required to meet the same fault repair timeframes in rural, remote and urban areas would likely require further investment by Telstra. Such costs would take the form of establishing or maintaining sufficient installation and maintenance resources and staffing to meet the rapid deployment required to meet timeframes in rural and remote areas. The ‘downtime’ and subsequent uneconomic use of labour and capital of underutilised resources imposes increased costs on Telstra. Allocating of increased costs amongst all its payphones could lead to increased prices for consumers overall[16] or a reduction in service standards and quality in other areas of its business.
• Requiring Telstra to invest in new equipment to provide enhanced (yet not necessarily critical) functionality would be a disproportionate response to the issue. Similarly, more extensive consultation and review-complaint-handling requirements would likely provide only marginal benefits in terms of meeting consumer demand for payphone services. Rather, such requirements would be onerous, and unnecessary, given that targeted consultation could deliver the same outcomes.

Consultation

On 15 August 2011 the government called for submissions on draft instruments. In total, seven submissions were received.

Overall, there was clear support in the submissions for clearer and stronger payphone standards and for these standards to be enforceable. Telstra submitted that the draft instruments, if made, would increase its costs and compliance burden; however, no quantitative information was provided in support of its claims. The Australian Communications Consumer Action Network argued that, for reasons of equality, much stronger standards should be imposed, including setting the same maximum repair timeframes and benchmarks for all areas of Australia, and the same installation timeframes for all areas (where there is no ready access to available infrastructure). ACCAN also submitted that Telstra should be required to notify the ACMA when circumstances beyond its control prevent it from complying with a standard. Furthermore, it argued that more extensive consultation requirements should be imposed.

The Centre for Appropriate Technology and the Central Land Council also queried setting the benchmark for meeting timeframes for repairing faults in remote areas at a level lower than the urban and rural benchmarks. Both also highlighted the importance of public payphones in areas where there is inadequate mobile phone coverage.

BoysTown highlighted the importance of payphone services to young people seeking help in times of crisis, and submitted that enhancing or at least maintaining current levels of community access to public payphones should take precedence above any commercial or business related factors.

The Queensland Government highlighted the social impact of decisions to remove payphones in areas where alternative telecommunications facilities are inadequate or costly, and submitted that this should be taken into account when payphones are removed. It also raised concerns regarding Telstra’s current performance in repairing payphones in rural and remote areas. The Queensland Government proposed that the maximum timeframes for installing new payphones, when there is no ready access to available infrastructure, should be four months in rural areas and six months in remote areas. This compares to timeframes of six months in rural areas and nine months in remote areas proposed in these draft instruments.

The government also considered advice from the ACMA on the draft instruments.

Conclusion

Option 1 imposes no new costs on Telstra, but does nothing to raise Telstra’s performance in repairing payphone faults (especially in rural or remote areas) and in providing greater clarity and certainty over when Telstra does or does not have to install a payphone and when it will be able to remove a payphone. It also would not strengthen the consultation requirements Telstra must comply with in installing or removing a payphone, and would not set out a clear process for addressing complaints about payphone removals. The Parliament of Australia, in conferring powers upon the Minister to make standards, rules or benchmarks in relation to payphones, has determined that the existing regulatory settings are inadequate and that they should be changed.

Option 3 would ensure that much stronger standards and rules are imposed on Telstra, including rules in relation to payphone installation and removal, consultation and complaints handling and payphone performance standards. All Australians would receive the same maximum timeframes for installing and repairing payphones, and Telstra would have to meet the same benchmarks in relation to fault repair timeframes. Accordingly, maximum repair timeframes could be set at (say) 10 days in all areas, but benchmark repair timeframes would be set at one day for urban, rural and remote area payphones. The draft instruments released in August 2011 proposed that the benchmark should be set (following a six month transitional period) at 90 per cent for urban and rural areas and 80 per cent for remote areas – in other words, Telstra must repair 80 per cent of payphone faults in remote areas within three days. Under option 3, Telstra would need to repair 90 per cent of payphone faults in remote areas within one day.

The problem with option 3 is that requiring Telstra to meet the same timeframes in all areas of the country disregards other factors, such as the nature of Australia’s geography, the dispersed nature of payphones in regional, rural and remote areas and the resource implications involved in maintaining such payphones. Timeframes for installing payphones, when new infrastructure is required, are higher in remote areas because it can take a longer period of time to build the additional infrastructure needed to power a payphone and support payphone carriage services. The government’s aim has been to set standards so that payphones are reasonably accessible throughout Australia, and then to require Telstra to improve its performance in repairing payphones. In proposing to set the benchmark at 80 per cent for remote areas, the government was attempting to impose a stronger standard on Telstra (which, as recent figures show, has been operating at a little over 60 per cent in terms of its performance in repairing payphones in remote areas[17]) and at the same time to limit the costs and compliance burden on Telstra. The lower benchmark compared to that applied to metropolitan and regional areas recognises that extreme or seasonal weather events could negatively impact Telstra’s ability to meet the higher benchmark figure in these areas. Imposing the same benchmark for remote areas could lead Telstra to devote considerable resourcing to payphones, which could raise costs for consumers overall (through allocating costs amongst all payphones) and/or lead to lower service quality in other areas of Telstra’s business. Given the declining usage of payphones and the increasing penetration of mobile phones, this option could be a disproportionate policy response.

Option 2 sets clearer and stronger requirements on Telstra in relation to payphone fault repairs, installation and removal, public consultation on removal and complaints handling. It will impose additional costs and compliance burdens of Telstra, some of which will be ongoing. However, by using, where feasible, the timeframes set out in the SMP, the option limits Telstra’s need to amend its existing processes and thereby increase costs. The key requirements that will lead to additional costs for Telstra are the new maximum repair timeframes and the obligation to meet or exceed benchmarks in relation to fault repair timeframes, as well as the more extensive public consultation requirements when Telstra installs or removes a payphone. These requirements have been targeted at the areas of Telstra’s performance which have caused the greatest concern in the past (i.e. lower service quality in rural and remote areas), and which are considered will best provide a consumer safety net.

Implementation of the preferred option

On balance, option 2 is preferred because it strikes the appropriate balance between providing stronger and clearer standards (particularly in areas experiencing lower service quality) whilst not significantly increasing compliance costs to Telstra. Option 2 will be implemented through legislative instruments made under sections 12ED, 12EE, 12EF, 12EG and 12EH of the Act. As legislative instruments, they will be subject to the requirements of the Legislative Instruments Act 2003, including future review.

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

ATTACHMENT

Details of the Telecommunications Universal Service Obligation

(Payphone Performance Standards) Determination (No. 1) 2011

Part 1   Preliminary

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

Section 1 – Name of instrument

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

Section 2 – Commencement

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

Section 3 – Definitions
 

This section sets out definitions 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 Act).

The term external plant facility is given the same definition as is given by subsection 4(1) of the Telecommunications (Customer Service Guarantee) Standard 2011. 

The term extreme weather conditions is defined to mean weather conditions that meet one or more of the criteria specified in Schedule 3 to the Telecommunications (Customer Service Guarantee) Standard 2011, such as large hail, flash flooding, and blizzards.

A note is included at the end of this definition to explain that subsection 589(2) of the Telecommunications Act 1997 (the Tel Act) provides that an instrument may make provision in relation to a matter by applying, adopting or incorporating a matter contained in another instrument.

The term fault or service difficulty is given the same meaning as that given by subsection 10(5) of the Determination, being a fault or condition which affects the useability of the payphone or payphone carriage service such as the absence of a dial or ring tone. 

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 of greater than 200 but not more than 2,500 people.

The term payphone performance standards is given the same meaning as that given by section 6 of this Determination, being the standards set out in sections 7, 8, 9 and 10 of the Determination, including standards applying in relation to the characteristics of a payphone carriage service; the supply of a payphone carriage service; and the reliability of a payphone carriage service – such as maximum timeframes for the supply, installation and maintenance of a payphone.

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 site is defined to mean a place or area which is no greater than 10 square metres.

The term teletypewriter is defined to mean a telephone typewriter which allows communication to be typed after the call is connected, enabling people with a hearing or speech impairment to use telecommunications equivalent to voice telephony.

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.

To the extent that the term working day is used in relation to a location, it is defined to mean a day which is not a Saturday, Sunday or public holiday in the location.

A note is provided at the end of the definitions to clarify that a number of expressions used in the determination are given the same meaning as are given to those terms under the Act.

Section 4 – Application of this Determination

This section provides that the determination applies to a payphone that is situated, or proposed to be situated, at a payphone site specified in the payphone register that is in force from time to time in accordance with Part 5 of the Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011, and provided, or proposed to be provided, in accordance with paragraph 9(1)(b) and subsection 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 4 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 is the declared primary universal service provider under section 12A of the Act, the performance 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 Performance standards

Division 1 Compliance with payphone performance standards

Section 5 – Primary universal service provider must comply with standards

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

Subsection 5(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 5(1)(b).  The circumstances listed at subparagraphs 5(2)(a)-(e) largely reflect (with suitable modification) the circumstances outlined in subsection 21(2) of the Telecommunications (Customer Service Guarantee) Standard 2011 (CSG Standard). 

The two examples at subparagraphs (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 is temporarily interrupted because it is being modified, maintained or upgraded in connection with the migration of services to the National Broadband Network.

The example at subparagraph 5(2)(h) recognises that an area affected by an event (such as, for example, those listed at subparagraphs 5(1)(b)-(d)) may require the movement of resources to that area and, as a consequence, a primary universal provider may not be able to meet connection and/or repair timeframes in other non-affected areas.

Subsection 5(3) provides that a primary universal service provider is not exempt from compliance with a payphone performance 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 affects its ability to meet the payphone performance standard. This subsection 5(3) largely mirrors subsection 21(3) of the CSG Standard.

Subsection 5(4) provides a definition of the term, ‘public authority’ which is used in the circumstance described in paragraph 5(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 Tel Act 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 5(5) has been included to clarify that a provider must comply with the performance standards from the time those circumstances which have prevented the provider from being able to comply with the standards no longer prevent compliance.

Division 2   Payphone performance standards

Section 6 – Definition of payphone performance standards

This section defines performance standards as being those performance standards set out in sections 7, 8, 9 and 10 of the Determination. These apply to a primary universal service provider in relation to the characteristics, supply and reliability of a payphone carriage service (section 7); the supply of payphones (section 8); the maximum timeframes for the supply, installation and maintenance of a payphone (section 9); and the rectification of a fault or service difficulty (section 10).

Section 7 – Payphone performance standard – characteristics, supply and reliability of payphone carriage services 

This section sets out the specific performance standards applying to a primary universal service provider in relation to the characteristics, supply and reliability of a payphone carriage service. Subsection 7(2) provides that, when in normal working order, a payphone carriage service must allow automated local and long-distance voice calls 24 hours a day, access to emergency services free of charge 24 hours a day and operator assistance. This section also specifies that these obligations apply even where a payphone is located at a site in which public access is not allowed 24 hours per day.

Subsection 7(2) also makes compliance with the Communications Alliance’s ‘Accessibility of Payphones Industry Guideline’ (and any replacement guidelines issued by the Alliance or a successor organisation) mandatory in relation to payphone carriage services supplied in fulfilment of the USO.

The section includes two notes. The first note is provided after paragraph 7(2)(d) to explain that subsection 589(2) of the Tel Act provides the legislative basis by which any guidelines replacing the Accessibility of Payphones Industry Guideline can be applied in future as a payphone performance standard.  

The second note makes it clear that a standard set out at section 7 does not apply in respect of a payphone or payphone carriage service that is, at the relevant time, experiencing a fault or service difficulty. Section 10 separately sets out standards which are to apply in relation to the rectification of a fault or service difficulty relating to a payphone or a payphone carriage service. Furthermore, ‘fault or service difficulty’ has the meaning given by subsection 10(5) of the Determination.

Section 8 – Payphone performance standard – supply of payphones

Section 8 establishes standards to apply to any new payphones supplied by Telstra after 1 January 2012 (when the determination commences). Telstra is the only primary universal service provider at the time of commencement. Like subsection 7(2), subsection 8(3) requires payphones to meet the Communications Alliance’s ‘Accessibility of Payphones Industry Guideline’, as well as requiring the phone to be able to be modified to include a teletypewriter (TTY) attachment and to provide operating instructions in three or more languages other than English.

Subsection 8(5) clarifies that unless Telstra has determined that, based on the needs of the community where it proposes to install a payphone, it would be more appropriate to select one or more other languages, then operating instructions must be provided in at least three of the following languages: Mandarin, French, Spanish or Japanese.  

Section 9 – Payphone performance standard – maximum timeframes for the    supply, installation and maintenance of a payphone

Subsection 9(1) provides that the performance standards specified under subsections 9(2) and 9(3) outlining maximum timeframes which must be met by a primary universal service provider apply equally to the supply, installation or maintenance of a payphone and to matters relating to these activities.

Subsection 9(2) provides for a maximum period of three months for a primary universal service provider to install a payphone which is required to be installed at a site or at a new location in compliance with the Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011.

For minor rural and remote areas, subsection 9(3) provides a longer period of time to install a payphone when the site is not readily accessible to telecommunications network infrastructure or there is insufficient network infrastructure capacity to enable service – being a maximum installation period of six months for minor rural areas and nine months for remote areas.

Subsections 9(4) and (5) set out, respectively, the circumstances by which a site will be considered to not be readily accessible to telephone network infrastructure or be considered to have insufficient network infrastructure capacity and therefore not be subject to the maximum three-month installation period.

Subsections 9(3)-(5) are based on Telstra’s Standard Marketing Plan, but restrict the circumstances under which a site is considered not readily accessible to telephone network infrastructure and make the obligations clearly enforceable.

There are two notes which accompany section 9. The first note reminds readers that the Telecommunications Universal Service Obligation (Location of Payphones) Determination 2011 makes rules about the location of payphones.  Note 2 reminds readers that the Telecommunications Universal Service Obligation (Public Consultation on the Location or Removal of Payphones) Determination 2011 makes rules concerning public consultation regarding the location of a payphone. 

Section 10 –  Payphone performance standard – maximum timeframe to rectify a payphone or payphone carriage service fault or service difficulty

This section provides for maximum time periods in which a primary universal service provider must rectify faults or service difficulties relating to a payphone or a payphone carriage service following a report of a fault or service difficulty.

The timeframes allowed (for periods other than the transition period) are set out in subsection 10(2) as follows:

• 10 working days for payphones located in urban areas;

• 15 working days for payphones located in major and minor rural areas; and
• 20 working days for payphones located in remote areas.

The effect of setting maximum timeframes for the rectification of faults under this section is that every instance of non-compliance with the timeframe would result in Telstra, as the universal service provider, being held liable for a penalty.

However, subsection 10(3) provides for a transitional period of 6 months (from the commencement of the instrument on 1 January 2012 until the end of that financial year on 30 June 2012) in which the fault rectification time periods are longer as follows:

• 15 working days for payphones located in urban areas;
• 20 working days for payphones located in major and minor rural areas
• 30 working days for payphones located in remote areas.

It is important to recognise that every time Telstra does not meet these performance standards, it could face a penalty through the infringement notice regime established under Part 31B of the Tel Act. As a consequence, the performance standard timeframes are longer than the current informal targets set by the Australian Communications and Media Authority (ACMA) of one day (for payphones located in urban areas), two days (for payphones located in rural areas) or three days (for payphones located in remote areas). These longer timeframes have been set because there may be circumstances in which Telstra cannot meet a shorter timeframe because, for example, of difficulties in finding appropriate resources. The performance standards attempt to set realistic maximum timeframes which Telstra can be expected to meet in all cases.

The longer timeframes for rectifying faults in rural or remote areas, in comparison with urban areas, reflect the possibility that Telstra may face difficulties in moving staff or resources to some locations.

The longer timeframes (for the transition period only) are proposed to provide Telstra with some time to adjust its processes and resource allocation.

Currently, Telstra meets the informal targets set by the ACMA in relation to the majority of payphones in urban or rural areas. It has regularly underperformed in remote areas, where it meets the timeframes in about 60 per cent of cases. The majority of the remote payphones which are not repaired within the target timeframes are then repaired by Telstra within the next 20 days, although in some cases longer periods of time can elapse. The performance standards set out in subsection 10(2) therefore attempt to raise Telstra’s performance in repairing payphones in remote areas, while nonetheless recognising that it can face resource difficulties and that longer timeframes than the current informal targets are therefore appropriate.

However, to encourage Telstra to rectify the majority of faults within the shorter timeframes currently set out in the ACMA’s informal targets, the Telecommunications Universal Service Obligation (Payphone Performance Benchmarks) Instrument (No. 1) 2011 sets out these same shorter timeframes as performance benchmarks which Telstra must meet in 90 per cent of cases (for urban and rural areas) and 80 per cent of cases (for remote areas), after an initial transition period (defined by subsection 10(3)). Failure to meet or exceed those performance benchmarks could expose Telstra to significant penalties under the infringement notice regime in Part 31B of the Tel Act. Consequently, the two instruments work together to ensure that the majority of payphones will be repaired within short timeframes, but that it is recognised that it will not be possible to meet those timeframes in every single case.

Subsection 10(4) works with subsection 10(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 10(5) 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 10(6) 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 10(7) 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 10(8)-(9) 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 10(6)-(8) is to draw a clear distinction between the circumstances in which a payphone or payphone carriage service is useable and unuseable.

Subsection 10(10) 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. 

[1] Communications Report, 2009–10, Australian Communications and Media Authority, 2010, p. 81

[2] Communications Report 2009-10, Australian Communications and media Authority, 2010, p.82

[3] Telecommunications performance data - March 2011 quarter, Australian Communications and Media Authority, 2011, p.21

[4] The Universal Service Obligation – Payphones. Special Report No. 5, March 2000, p.3

[5] Payphone Policy Review, Australian Communications Authority, 2004, p.2

[6] Framework for the Future, September 2008, Regional Telecommunications Independent Review Committee, p.207

[7] Communications Report 2009-10, Australian Communications and Media Authority, 2010, p.83; and data on the length of time to repair remote payphones provided by the ACMA

[8] Communications Report 2009-10, Australian Communications and Media Authority, 2010, p.80

[9] Framework for the Future, September 2008, Regional Telecommunications Independent Review Committee, p.207

[10] Available at: www.dbcde.gov.au/broadband/national_broadband_network/regulatory_reform_for_21st_century_broadband/national_broadband_network_regulatory_reform_for_21st_century_broadbandsubmissions

[11] Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, Explanatory Memorandum, p.6

[12] A copy of the RIS in the Explanatory Memorandum to the CCS Bill is available at www.comlaw.gov.au/Details/C2010B00242/Explanatory%20Memorandum/Text.

[13] Telecommunications Universal Service Management Agency Bill 2011, Explanatory Memorandum, p.7

[14] www.acma.gov.au/WEB/STANDARD/pc=PC_300423

[15] www.commsalliance.com.au/__data/assets/pdf_file/0015/2535/G630_2006.pdf

[16] Not including prices that are subject to price controls under the Telstra Carrier Charges—Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005

[17] Telecommunications Performance Bulletin 2010-11, Australian Communications and Media Authority, 2011, p.6