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Tuesday, 28 November 2000
Page: 19985

Senator MARK BISHOP (10:22 PM) The Telecommunications Legislation Amendment Bill 2000 has been the subject of an inquiry by the Senate Environment, Communications, Information Technology and the Arts Legislation Committee. The minority report by ALP senators outlines areas of potential concern with the provisions of the bill that were raised during the inquiry process. Criticisms of the bill contained in submissions to the inquiry have been noted by Labor senators. Those criticisms relate to the following issues: (a) the bill does not address the issue of existing domain name registries being monopolies; (b) the bill does nothing to ensure competitive pricing; (c) competitive pressures will adequately regulate domain name allocation and naming policy, and consequently there is no need for this legislation; (d) the existence of the bill's safety net measures might undermine the cooperative self-regulatory process; (e) the role of the ACA in managing electronic addressing and the clarity with which the circumstances for invoking the safety net measures are defined.

I will discuss each of these criticisms in turn but, first, a brief description of the bill's provisions and the context of the bill's introduction is warranted. The bill provides safety net mechanisms for the management of electronic addressing through the Australian Communications Authority and the Australian Competition and Consumer Commission. These safety net mechanisms are designed to be invoked in the event that attempts at self-regulation prove ineffective in managing electronic addressing. The government has indicated that it favours industry self-regulation for the management of electronic addressing services, which includes domain name allocation. Consultative processes for the formulation of a self-regulatory regime are presently being undertaken by au Domain Administration or auDA, which is an industry self-regulatory body for the au namespace. It formed two panels to investigate self-regulatory approaches to competition issues and naming policy issues through industry and public consultative processes. However, attempts at industry self-regulation over the last few years have consistently broken down or failed for various reasons. The provisions of this bill are intended to operate in the case of continuing failure of self-regulatory processes.

In response to a question I asked at the public hearing of the committee, Melbourne IT indicated that it has paid auDA $659,000 this financial year, pursuant to an agreement signed on 12 July 2000. auDA has stated that this financial support will enable it to continue to carry out its policy development role, and to continue with the Competition Model Advisory Panel process to introduce competition in the provision of domain names in au. The opposition will continue to observe these processes and their outcomes with interest.

The safety net mechanisms in this bill have the wide support of industry and government. This was evident from the absence of industry objections to the bill when the inquiry was first advertised and the limited number of concerns expressed when the inquiry was subsequently readvertised and its time frame extended. The bill comprises two schedules which implement the safety net mechanisms. The first schedule specifies circumstances in which the ACCC or the ACA can intervene in the management of electronic addressing. The second schedule establishes an alternative mechanism by which the minister can give the ACA responsibility for managing a specified type of electronic addressing in consultation with the ACCC. This mechanism will only be invoked in exceptional circumstances where direct ACA management is the only viable alternative to management by a self-regulatory body.

I will turn now to criticism (a) of the bill raised during the committee inquiry. The criticism is that this bill does not overcome existing monopolies of domain name registries. The competition panel of auDA is presently working through competition issues so that they will be addressed by the self-regulatory scheme. It was argued that the legislation will not prevent anticompetitive conduct but that its existence could undermine the self-regulatory processes that ultimately aim to overcome such conduct. The effective monopolies of the existing domain name registries need to be addressed. A means by which there can be multiple registries for each of the domain name spaces needs to be established to allow a number of different companies to compete in the market. The wider competition policy in the United States, for example, allows many stakeholders to enter the market as a competitive domain name system. It was suggested to the committee that the US approach indicates that, at this stage, there are no operational threats to Internet domain name addressing which require—or justify—legislative intervention.

Turning to issue (b) identified during the inquiry: the criticism was that the bill does not resolve, nor does it seek to address, the issue of competitive pricing of domain names. There is a close connection between competitive pricing and competition between domain name registries. As I have already mentioned, each second-level domain in Australia is an effective monopoly. The committee was advised that competition in pricing is contingent on there being future competition between registries. According to Melbourne IT, the high price of registering domain names in Australia compared to US prices is a result of the complexity of Australian naming policy which requires a lot of manual administration. Thus, the complexity of the regulatory environment in terms of naming policy is determinative of the price to the extent that it impacts upon the cost of providing the service. Consequently, in the United States, where the system is fully automated and there is virtually no policy except that seven particular swearwords are unavailable, the cost ranges from as little as $5.99 into the hundreds of dollars. In Australia, retail prices are around $140. It is expected that the issue of competitive pricing will, to a large extent, be addressed by the implementation of a means for introducing competition to the provision of domain name services in Australia. The opposition will watch the development of this aspect of the regulatory scheme with interest.

The third criticism brought to the attention of the inquiry relates to the substance of domain name policies and competition issues. Industry favours the introduction of effective competition into the Australian market over regulatory policy for domain names which reflects that for business names. Ensuring there are multiple issuers of domain names and resultant competitive pressures is, according to industry, the more appropriate regulatory approach for domain names. Any analogy between company registration and domain name registration is considered inappropriate due to the global aspect of domain name policy. Domain name policy is not, however, a matter with which the bill is concerned. It will be an issue that the self-regulatory scheme will address based on the results of the relevant auDA panel investigations. Industry indicated support `for some degree of policy in' to promote consumer confidence when addressing companies in

Debate interrupted.

Senate adjourned at 10.30 p.m.