EXPLANATORY STATEMENT
Issued by the Australian Competition and Consumer Commission
Class Determination No. 4 of 2008 in respect of DTCS
Trade Practices Act 1974
Legislative Provisions
Section 152AS of the Trade Practices Act 1974 (the TPA) provides that the Australian Competition and Consumer Commission (ACCC) may make, by written instrument, a class determination exempting each of the members of a specified class of carrier or of a specified class of carriage service provider from any or all of the standard access obligations (SAOs) referred to in section 152AR of the TPA.
A class determination under section 152AS of the TPA may be unconditional or subject to such conditions or limitations as are specified in the determination.
The ACCC must not make a class determination under section 152AS of the TPA unless the ACCC is satisfied that the making of the determination will promote the long-term interests of end-users of carriage services or of services supplied by means of carriage services (LTIE) as further defined in section 152AB of the TPA.
The instrument setting out the class determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Purpose
The purpose of the class determination is to promote the LTIE by exempting a class of telecommunications service providers from the SAOs that would otherwise apply to them if and when they supply a declared service.
Background
On 24 August 2007, Telstra lodged an application under section 152AT of the Trade Practices Act 1974 (Act) for an individual exemption from SAOs in relation to the supply of the DTCS on 20 capital-regional routes (First Application).
On 21 December 2007, Telstra lodged an additional four applications for individual exemption from the SAOs in relation to the supply of the DTCS (Second set of Applications) in terms of:
- inter-exchange transmission in 17 capital city exchange service areas (ESAs) for all declared bandwidths;
- tail-end transmission in 17 capital city ESAs for all declared bandwidths;
- inter-exchange transmission in 115 metropolitan ESAs or regional centre ESAs for all bandwidths; and
- tail-end transmission in 128 metropolitan ESAs for bandwidths up to 2 Mbps.
The DTCS is a generic symmetric transmission service used for the carriage of voice, data or other communications. The minimum bandwidth in the current declaration is 2 Mbps. Carriers/carriage service providers generally use the DTCS as a wholesale input to set up their own networks for aggregated voice or data channels, or for integrated data traffic (such as voice, video, and data).
The DTCS was deemed a declared service under section 152AL of the TPA on 30 June 1997. Declaration means that an access provider supplying the DTCS is subject to a number of SAOs pursuant to section 152AR of the TPA. Terms of access can be governed by commercial negotiation, the terms of an access undertaking or, in the absence of an accepted access undertaking, by ACCC determination in an access dispute.
The ACCC decided to consider whether a class exemption determination should be granted to members of a specified class of carrier or of a specified class of carriage service provider from any or all of the SAOs under section 152AR of the TPA in conjunction with its determination of whether to make the orders sought by Telstra in its First Application and Second set of Applications.
The ACCC has determined that making a class exemption under section 152AS of the TPA will be in the LTIE as it will promote facilities based competition in the capital-regional and inter-exchange transmission markets, with the flow-on competition benefits to downstream markets and end-users. The ACCC also considers that a class exemption of the same scope as the individual exemptions would promote more efficient use of and investment in infrastructure. The ACCC’s analysis of whether granting individual and class exemptions for the supply of the DTCS is in the LTIE can be found in the ACCC’s Final Decision on Telstra’s exemption applications for the DTCS on the ACCC’s website www.accc.gov.au.
In regard to the scope of the class exemption, the ACCC finds that it is in the LTIE to grant a class exemption from the SAOs as they relate to the supply of the DTCS on those capital-regional routes and in those ESAs to be subject to individual exemption orders which were made in response to Telstra’s First Application and Second set of Applications. These capital-regional routes and ESAs are listed in the Class Exemption Determination instrument.
The ACCC finds that the class exemption should commence on the same day as Telstra’s individual exemption orders. It would not be in the LTIE for the class exemption to commence any earlier than Telstra’s individual exemption orders because such an outcome would undermine the rationale for granting the exemptions (as incentives for access seekers to invest in their own infrastructure would be diminished because access seekers could enforce the SAOs against Telstra, but not other access seekers).
Regulation Impact Statement
The ACCC has determined that a Regulation Impact Statement is not required for this class determination, as the class determination does not have a significant impact on businesses or individuals.
Consultation
On 22 September 2008, the ACCC published a draft decision on Telstra’s First Application and Second set of Applications and a draft class determination for public comment. The instrument setting out the draft class determination was published as part of the draft decision on the ACCC’s website www.accc.gov.au and submissions from interested stakeholders were sought at that time. Interested stakeholders were asked to make submissions to the ACCC by 13 October 2008.
The ACCC did not receive any submissions commenting on the proposed class exemption.