EXPLANATORY STATEMENT
Telecommunications (Consumer Protection and Service Standards) Act 1999
Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005
(Amendment No. 1 of 2009)
Issued by the authority of the Minister for Broadband, Communications and the Digital Economy
OVERVIEW
The Determination is made under the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act).
The Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
The Determination amends certain provisions of the Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005 (the Original Determination).
The purpose of this Amending Determination is to extend the expiry date of the price control arrangements under the Original Determination from 30 June 2009 to 30 June 2010. Similarly, the roll-over provisions under clause 30 are extended by a further 12 months, so that the relevant clauses continue to apply in the 2010/2011 financial year.
The period of the Determination is being extended to enable a detailed review of retail price controls to be undertaken. The commencement of this review was delayed pending the outcome of the National Broadband Network Request for Proposals process, given its potential significance for future retail pricing arrangements. The discussion paper on regulatory reform released on 7 April 2009 in conjunction with the National Broadband Network announcement seeks submissions on the appropriate framework for future retail price controls. Extending the Determination by 12 months is therefore appropriate to allow adequate time for submissions to be received and a thorough review to be carried out.
CONSULTATION
The amending instrument was published in draft form on 5 May 2009 on the website of the Department of Broadband, Communications and the Digital Economy. Submissions were invited from industry stakeholders, including Telstra and the ACCC, by 20 May 2009. Two submissions were received, both of which supported the proposed extension of the Original Determination.
NOTES ON CLAUSES
Clause 1 - Name of Determination
Clause 1 provides that the name of the Determination is the Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005 (Amendment No.1 of 2009).
Clause 2 - Commencement
Clause 2 provides that the Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
Clause 3 – Variation
Clause 3 provides that the Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005 (the Original Determination) is amended as set out in the Schedule to the Amending Determination.
Schedule – Amendments
Item 1 – Clause 3
Clause 3 of the Original Determination provides that, subject to clauses 23 and 30, the Determination expires at the end of 30 June 2009. In order to give effect to a 12-month extension to the Determination, Item 1 of the Amending Determination replaces the date reference of “30 June 2009” with the new date of “30 June 2010”. This will enable a detailed review of the price control arrangements (as outlined in the “Overview”) to be undertaken.
Item 2 – Paragraph 20(2)(c)
Clause 20 of the Original Determination provides Telstra with the option to defer exercising the price-cap for: (a) the first basket of services; or (b) the second basket of services; or (c) the third basket of services; or (d) the fourth basket of services.
Subclause (2) deals with when the election may be made. Item 2 of the Amending Determination will replace the reference of “2008/2009 financial year” with “2009/2010 financial year” to reflect the 12-month extension to the operation of the price controls.
Item 3 – Subclause 22(2)
Subclause 22(1) of the Original Determination provides that if Telstra reduces prices by more than required by a price-cap, the price-cap for the subsequent financial year will be correspondingly less for that item. No credit will apply, however, for price reductions exceeding the requirement in the 2008/2009 financial year (subclause 22(2)).
Item 3 of the Amending Determination will replace the reference of “2008/2009 financial year” in subclause 22(2) with “2009/2010 financial year” to reflect the 12-month extension to the operation of price controls.
Item 4 – Subclause 23(2)
Clause 23 of the Original Determination relates to the reconciliation of price movements above the set price cap. Subclause 23(2) provides that where the price movement for the first basket of services for the last price-cap year (2008/09) is greater than the price-cap for that year, and clauses 11, 12 and 13 of the Determination still apply, the price cap for the relevant basket in the financial year 2009/2010 is to be varied by the difference.
As Subclause 23(2) of the Original Determination contains multiple references to relevant dates, the entire subclause is, for clarity and ease of description, omitted and a new subclause, with updated date references, is inserted at Item 4 of the Amending Determination. This has the effect of updating date references in subclause 23(2). Specifically, all occurrences of “2009/2010 financial year” are replaced with “2010/2011 financial year”. Similarly, all references to “2008/2009 financial year” are updated to “2009/2010 financial year”. Apart from the date changes, the substantive provisions of this subclause remain unchanged.
Item 5 – Subclause 23(3)
As noted above, Clause 23 of the Original Determination relates to the reconciliation of price movements above the set price cap. Subclause 23(3) provides that where the price movement for the second, third or fourth basket of services for the last price-cap year (2008/09) is greater than the price-cap for that year, and clauses 11, 12 and 13 of the Determination still apply, the price cap for the relevant basket in the financial year 2009/2010 is to be varied by the difference.
As Subclauses 23(3) of the Original Determination contains multiple references to relevant dates, the entire subclause is, for clarity and ease of description, omitted and a new subclause, incorporating updated date references, is inserted at Item 5 of the Amending Determination. This has the effect of updating all date references in subclause 23(3). Specifically, all occurrences of “2009/2010 financial year” are replaced with “2010/2011 financial year”. Similarly, all references to “2008/2009 financial year” are updated to “2009/2010 financial year”. Apart from the date changes, the substantive provisions of this subclause remain unchanged.
Item 6 – Part 6 Title
Item 6 of the Amending Determination is a minor amendment to the title of Part 6 of the Original Determination. As the rollover provisions are being extended by further 12-months, it is necessary to change the date reference in the title to “2010/2011”.
Item 7 – Clause 30
In order to give effect to a 12-month extension to the rollover provisions in the Original Determination, Item 7 of the Amending Determination replaces the date reference of “2009/2010 financial year” with “2010/2011 financial year”.