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Client Update: Telecommunications law reform passed

2 December 2010

In brief: The new telecommunications law reform has passed the Senate, with amendments. The amendments do not change the legislation's essential thrust, but do increase the transparency and oversight of the structural separation process. Partner Ian McGill (view CV), Law Graduate Anna Payten and Summer Clerk Lucinda Clarke report on the Senate's changes.

Background

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 (the Bill) passed the Senate with amendments on 26 November 2010. The House of Representatives agreed to the Senate's amendments on 29 November 2010 and the Bill is now awaiting final assent. We recently reported on the legislation and noted that the Senate's response would determine the competitive dynamics and structure of the Australian telecommunications industry.

The Bill passed the Senate with crossbench support after the Federal Government struck a deal with independent Senator Nick Xenophon. However, given the structure of the current Senate, the passage of the full package of legislation enabling the national broadband network is not assured. (We will report separately on the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (National Broadband Network Measures – Access Arrangements) Bill 2010 introduced into the House of Representatives on 25 November.)

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Senate amendments

In total, 22 amendments were made by the Senate (and accepted by the House of Representatives) but they do not significantly alter the Bill's substance or effect.

The main implications of the amendments are enhanced focus on transparency, a mandated requirement to consider the national interest in the separation of Telstra, increased ministerial reporting and consultation requirements, and an overall heightened focus on implementing a transparent and accountable framework that will benefit the telecommunications industry.

The key amendments to the Bill are as follows:

  • The transparency of Telstra's supply of services to wholesale and retail customers is now relevant to the acceptance of a structural separation undertaking (SSU) by the ACCC.
  • Any SSU voluntarily provided by Telstra must not be accepted by the ACCC unless the ACCC is satisfied the SSU provides for transparency in relation to Telstra's supply of services to wholesale and retail customers.
  • In addition to the existing factors to which the ACCC must have regard when accepting an SSU from Telstra, the ACCC must now also consider the national interest in the structural reform of the telecommunications industry, as well as the impact of such reform on consumers and competition in the telecommunications market.
  • Where the Minister sets out or varies matters to which the ACCC must have regard in accepting an SSU or a variation of an SSU from Telstra, the Minister must now publish the matter on the Department's website and invite submissions within 14 days. The Minister must consider any submissions received.
  • In deciding whether to accept an undertaking or variation from Telstra in relation to hybrid fibre-coaxial networks or subscription television broadcasting licences, the ACCC must now have regard to any matters set out by the Minister and any other matters the ACCC considers relevant. Where the Minister sets out matters for this purpose, the Minister must follow the same notification process as outlined above.
  • In determining the principle of equivalence in relation to Telstra's supply of services to wholesale and retail customers, regard must now be had to the terms and conditions (particularly relating to pricing) on which Telstra supplies services to its wholesale customers in comparison to its retail customers.
  • Before making or varying a functional separation requirement determination, the Minister must now publish the matter on the Department's website and invite submissions within 14 days. The Minister must consider any submissions received. The Minister must also now give the ACCC a copy of the notice, seek advice from the ACCC about the notice and have regard to such advice.
  • The ACCC is now required to monitor and report to the Minister on breaches by Telstra of an SSU.
  • The Minister is now required to review the telecommunications access regime and related provisions before 30 June 2014, providing for public consultation in the process. The Minister must then prepare a report of the review and submit it to Parliament.

For further information, please contact:

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