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Environment and Communications Legislation Committee
29/05/2013
Estimates
BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO
Australian Communications and Media Authority

Australian Communications and Media Authority

[21:49]

CHAIR: Mr Chapman, would like to make an opening statement.

Mr Chapman : No thank you.

Senator BIRMINGHAM: I want to get through a range of issues tonight so we will bolt through some of them quickly. Can ACMA provide a progress report on the development of the plan to transition wireless microphones out of the 700 megahertz band?

Ms Cahill : We have been working with the wireless microphone community since 2010 and the announcement of the realisation of the digital dividend. Since that time we have provided a raft of information in relation to the possibilities of use of the mobile digital dividend for wireless microphones. We have provided information on our website in relation to the progress report as well as an indicative channel plan, which gives an indication where the white space—which is how the wireless microphones are used—can be used into the future. We have also more recently updated a LIPD—low interference potential devices—class licence, which indicates how long wireless microphones can be used in the digital dividend spectrum. We have also indicated and provided links on our website to the department's website which provides the restacked timetable. We have been working very closely with the sector for two years and have provided advice and assistance.

We are also in the process of updating further information in relation to supply to the market of equipment. We will be requiring suppliers to provide information in relation to the availability of the equipment to be purchased and for how long it can be used in the digital dividend. There is a lot of information currently out there. We are very on-board in relation to providing the transition plan that was required by the committee recently.

Senator BIRMINGHAM: What is the budget for this transition plan?

Ms Cahill : The budget for the transition plan is that it will be absorbed within the current operating budget of the communications infrastructure division. We have not identified a separate budget. Through the course of our normal consultations and any major activity associated with spectrum refarming or changing is part of our ongoing activities.

Senator BIRMINGHAM: And you believe that communications with users of such services and equipment can be met within your existing arrangements?

Ms Cahill : We are being very innovative in our approach. One of the more recent innovations we have used is to use the eBay and Google ad words. If you type in 'wireless microphones' the first thing that comes up on the site is information about the ACMA's process and the use of those devices. They are very cost-effective means. Significant members of this community will reach through our website electronic means as well as direct mailouts to peak bodies. We feel that is sufficient.

Senator BIRMINGHAM: How, for example, would a typical school music teacher be advised that their equipment may need to be replaced?

Ms Cahill : The ACMA is going to produce a series of Q&As, which we will provide to the full raft of people who are actually captured and use wireless microphone. We will be doing major mailouts to school associations, parents and citizens associations, churches and other community groups. We also will be directing those people to our website as well as the website of the suppliers of wireless microphone equipment, who will be providing details on exactly where by state or by postcode wireless microphones can be used, which make and model can still be used in relation to the transition.

Senator BIRMINGHAM: What expertise will be made available to assist schools or anybody else to ensure that they have the right equipment and are able to operate on the right band for their devices?

Ms Cahill : We have been working closely with the suppliers of the equipment, so firstly those who will be supplying the equipment to the market will be required to provide information to new purchasers. We also encourage, as part of our mailout and web information, current users to deal with the suppliers or go to their peak group in the state who will provide advice on the make and model of the equipment that the person has, whether it can still be used, and if it can still be used how it might be retuned and if it cannot be reused, what options there might be for new equipment.

Senator BIRMINGHAM: What is the average value of such devices that might be held and is there any financial assistance that anybody may be able to access as a result of them becoming redundant?

Ms Cahill : Given the wide and disparate use of this equipment, we are talking about professional industry sectors where equipment could cost into the many tens of thousands of dollars to a piece of equipment that you might purchase from a local supplier which might cost you $25. It is very difficult with any accuracy to provide you with the information you request.

Senator BIRMINGHAM: Is there any waste strategy in place to deal with the removal and disposal of this equipment?

Ms Cahill : Not at this stage, no.

Senator BIRMINGHAM: Has the ACMA looked at that or is it in discussions with the environment department or anybody else?

Ms Cahill : We have not had direct discussions with the environment department.

Senator BIRMINGHAM: Will you be looking into it?

Ms Cahill : We certainly will.

Senator BIRMINGHAM: How many individual users visit the ACMA website every month?

Mr Chapman : We will have to take that on notice—I am not sure.

Senator BIRMINGHAM: Okay, but the type of advertising you are undertaking through Google and otherwise will be attempting to drive people to your information services as well?

Ms Cahill : Yes it will.

Senator BIRMINGHAM: Does the ACMA believe there are any suburbs or business districts where insufficient spectrum will be available following the restack for the continuance of normal business use in this type of area?

Ms Cahill : No, we are fairly confident that the processes put in place will ensure that there is still, as we have committed to do, a transition path for wireless microphone users. It may be that some will have to retune equipment, it might be that some will have to purchase new equipment, but in terms of the material spectrum that would have been available it is comparable, in terms of volume, to what is available now.

Senator BIRMINGHAM: Have there been any concerns from industry about whether appropriate spectrum is going to be available?

Ms Cahill : There have been concerns from industry in relation to certainty around where the spectrum might be available rather than, I would believe, the amount of spectrum. There have been concerns expressed about lack of clarity about where exactly these white space devices can operate.

Senator BIRMINGHAM: Have the successful bidders, such as they are, for the 700 megahertz spectrum been advised by ACMA of the extent of the users of wireless microphones that could still be trying to use that spectrum after 1 January 2015?

Ms Cahill : As part of the process of disclosure in relation to the information provided to potential bidders, there was information provided that there is a clearance process around wireless microphones. Certainly it has been out in the public domain that there is a clearance process around wireless microphones.

Senator BIRMINGHAM: When you say a clearance process, what is the commitment or otherwise that has been given to Optus or Telstra that they will take possession of clear spectrum, free of interference from these devices?

Ms Cahill : The ACMA's amendment in relation to the low-powered devices means that at the end of December 2014 wireless microphones will not be able to be operated as a licensed product. Use will be illegal.

Senator BIRMINGHAM: So you are going to prosecute the local music teacher or parish priest who is illegally using their wireless microphone—no.

Ms Cahill : The ACMA has a graduated approach. We would assist in relation to making sure that everybody is complying with the requirements of the licensing frameworks.

Senator Conroy: We are confident we will have resolved that, but here is your big chance, Senator Birmingham: would you like to make an election commitment about some funding for the transition—here is your big chance. Come on! Chance your arm.

Senator BIRMINGHAM: Are you, Minister?

Senator Conroy: Chance your arm. Come on. Just say you are going to put X dollars on the table if you get elected.

Senator BIRMINGHAM: I did not think you were, Minister.

Senator Conroy: It was your big chance to steal the show.

Senator BIRMINGHAM: ACMA has made frequent references to the ability of some wireless audio devices to be retuned. What proportion of devices currently operating the 700 megahertz band are realistically capable of being retuned?

Ms Cahill : I would have to take that on notice. I do not have the details.

Senator BIRMINGHAM: Are you acting on advice when you talk about the potential for retuning; and is there a realistic belief that it is a significant enough part to hold out that hope for people?

Ms Cahill : There is a raft of equipment, as I have said, that ranges from very sophisticated equipment used by professional production houses that have significant tune ranges. The details of that I do not have but I will take that on notice.

Senator BIRMINGHAM: You talked before about a graduated approach to compliance. What is that graduated approach that will be applied in this instance?

Ms Cahill : The ACMA's general approach in matters of areas of unlicensed operation or in breach of licensed conditions is that we work, firstly, to educate the person who is the licence holder and to achieve compliance. A lot of the time it is because people are unaware of their obligations, so part of that is the education role. We can escalate, should it be a matter that is of a grievous nature, and we can issue a penalty in lieu of infringement, a penalty in lieu of prosecution. We can under the Radiocommunications Act—

Senator Conroy: We are confident we will be able to avoid any of those sorts of issues, Senator Birmingham, and, any time you want to make any commitments about it, feel free to take to the microphone. We are confident that we will avoid any of those sorts of issues.

Senator BIRMINGHAM: Thanks, Senator Conroy. I am delighted in your confidence and I am pleased to know that you are confident. It was a rather factual question that I think Ms Cahill was answering in terms of what the graduated approach to compliance is. I think Ms Cahill was almost at the end of her answer.

Ms Cahill : I will clarify: I was just responding in terms of the general approach, and of course there are other mechanisms that we could use. Our first approach, however, is to achieve compliance through education and awareness with all licence holders.

Mr Chapman : Expressed another way, Senator, we typically, right across the full range of what we do, communicate, we tolerate, we educate and we escalate and the ultimate actions taken are very dependent on circumstances. In this particular case, what you are alluding to is that there will be many, particularly professionals, who are doing it in an amateur way. We find many examples where class licence usage cuts across APRA artists spectrum licensing and we approach it in an escalated way with sympathy and understanding for circumstances. That is our usual practice and that is what we would do if this circumstance arose.

Senator BIRMINGHAM: With regard to newly imported equipment, I understand there is or will be a labelling requirement in place. When will that requirement be put in place—or has it already been?

Ms Cahill : We are in the throes of finalising the discussion paper on that. We expect to release that in the next two weeks. We expect that that will come into force by August this year.

Senator BIRMINGHAM: So by August this year it will be a requirement for newly imported equipment to carry some type of—

Ms Cahill : Advice to purchasers.

Senator BIRMINGHAM: Is there a strategy for existing stock and stock that will be imported prior to August this year?

Ms Cahill : We have been made aware by the major suppliers into Australia that they have not been importing equipment that is going to be impacted by this matter. They have been working to ensure that that product is not available to the market. We do not have a direct strategy in relation to the equipment that has been supplied that is already out there, so that is where we are going to use our education awareness roles.

Senator BIRMINGHAM: Just to be clear, the major suppliers are not importing stuff that will not work anyway?

Ms Cahill : That is what they have indicated to ACMA in our discussions with them.

Senator BIRMINGHAM: For the sake of completeness or surety, you are still going ahead with a labelling requirement in any event?

Ms Cahill : That is right.

Senator BIRMINGHAM: Will it be a labelling requirement with a limited life applying through the transition period but then lifted? Or will it be something that will continue until a future ACMA or government decides to remove it?

Ms Cahill : It will continue until there is a future decision to remove it.

Senator BIRMINGHAM: Is there a reason why it needs to be ongoing? Once you get to a certain point, surely it can be lifted easily enough and not remain as a regulatory burden?

Ms Cahill : I am sure that will be the case. At this point, however, it is hard to predict exactly how long we may need that regime in place. We will, as with all our regulatory instruments and regimes, review that as, in this case, the issue matures and we transition.

Senator BIRMINGHAM: Has any consideration been given or is any consideration being given to pairing the 733 and the 748 megahertz sections to create a 25 megahertz band available for wireless audio devices, even if it is just as an interim measure until relisting of spectrum for auction?

Ms Cahill : I would have to take that on notice. I am sorry, but I do not have the details.

Senator BIRMINGHAM: Moving along, can I just quickly deal with a couple of tender questions. ACMA published a tender to do with economic analysis of commercial broadcasting program requirements for a cost of $79,639 on 12 April 2013. What is the purpose of this tender or project?

Ms McNeill : The purpose of this research is to inform an inquiry that we are conducting. We have called it the 'contemporary community safeguards inquiry'. The idea behind it is to establish the core principles that should guide the content of broadcasting codes in a contemporary environment. We see the economic research as being a valuable input because it will help us assess the costs of the current regulatory obligations in codes. So it will be an important input into that inquiry's process.

Senator BIRMINGHAM: Who is undertaking it?

Ms McNeill : I think the tender has been let to PwC.

Senator BIRMINGHAM: Is there any requirements of the broadcasters in terms of their participation in this or is PwC simply looking at it on the basis of the codes and information provided by ACMA?

Ms McNeill : They will use a range of inputs, but we are seeking input from the broadcasters.

Senator BIRMINGHAM: Will the study be made publicly available?

Ms McNeill : No decision has been made on that but, given that it is informing the inquiry and the inquiry will have a public-facing output, my expectation currently is that the outcomes of the research at least will be evident in the course of the outputs of that inquiry.

Senator BIRMINGHAM: On 3 January ACMA published another tender for a contract value of $37,800 for a digital citizenship consultancy. What is that?

Ms Wright : Part of our Cybersmart remit is to look at the role of Australians in an increasingly digital society and digital economy. This research focuses perhaps less on responding to problems that have emerged and more on the positive approach to educating citizens on identifying the types of offline ethics and principles that guide their lives that translate into the online world and then matching the tools that we have in our Cybersmart program to those. For example, you could take a quiz on how cybersmart you are or how good a digital citizen you are. If you got two out of five you would then be directed to particular resources that would help you skill up in that area. If you get six out of seven you are directed elsewhere. If you get 10 out of 10 basically we just direct you to have a look at Tagged because it is fun.

Senator BIRMINGHAM: That contract period, in theory, is complete. So you have received information to inform your work there, Ms Wright?

Ms Wright : Yes.

Senator BIRMINGHAM: Is that work being released to the public?

Ms Wright : We are looking to release it shortly. I think it will be midyear. At the moment we are mapping, for example, our own resources best to the various pillars of cybercitizenship to see how it can be a living program where people can further enhance their skills to participate in the digital economy and digital society. I think we are one to two months away from launch.

Senator BIRMINGHAM: I await the launch with bated breath. What is the status of the television regulation of live odds betting, from ACMA'S perspective?

Senator Conroy: Can you just be a little clearer? Do you mean the registration process going ahead at the moment—

Senator BIRMINGHAM: I mean the processes that currently exist in terms of the code being developed and changed. There are changes to the code underway. Indeed, there were updates from the industry and the government in the last week on what will be in and what will be out and where it is at in terms of becoming a formally recognised part of the code.

Senator Conroy: I am not sure Mr Chapman would have received a letter from me yet, but I have written to Free TV just confirming what to the Prime Minister announced on Sunday. I think Free TV have indicated that they will submit a revised code to ACMA. But I doubt ACMA has received that yet. So I am not sure they can give you much of an update. Perhaps there is something Mr Chapman might be able to add.

Mr Chapman : I will let Ms McNeill lead.

Ms McNeill : I can articulate for you what the current code provisions are around gambling promotions, but none of those are directed specifically at live odds. As the minister has made clear, we have not received any proposed codes for registration since the minister made her announcement last Sunday.

Senator Conroy: I should just say that officers have let me know that we did copy the letter that we sent to Free TV to Mr Chapman.

Senator BIRMINGHAM: Have ACMA had any cause to have discussions with Free TV since Sunday's announcement by the Prime Minister about the timeline for presentation of a revised code?

Mr Chapman : I have spoken, as has Ms McNeill, to the chief executive of Free TV. She has indicated to me that they are going to be working expeditiously to get us a code seeking registration. I acknowledge that. We likewise will, upon receipt, work expeditiously to go through the various steps we are required to under section 123 of the Broadcasting Services Act. The short answer your question is, yes, I have spoken to the chief executive of Free TV.

Senator BIRMINGHAM: How quickly can Free TV do that within a regulatory framework? Is there a mandatory consultation period, et cetera, that will still apply?

Senator Conroy: Before Mr Chapman jumps in, could I indicate that a letter sought the broadcasters to submit the revised code by 10 June. Notwithstanding that, I am sure Mr Chapman will outline the ACMA process. We have also indicated we expect it to be in force, at least voluntarily, while the final parts of the registration are done by the TV stations themselves.

Senator BIRMINGHAM: Sorry, Minister, you got a little quiet towards the end. You also expect it to be in force by regulation or voluntarily if the regulation cannot be in force.

Senator Conroy: There is a process which Mr Chapman or Ms McNeill will take you through.

Senator BIRMINGHAM: Is that an expectation by 10 June as well?

Senator Conroy: We have indicated to the TV stations that we expect them to start enforcing it once they have submitted it.

Senator BIRMINGHAM: And it has to be standard by 10 June?

Senator Conroy: Yes. Then there is the process which Ms McNeill will take you through now.

Ms McNeill : Senator, in response to your question concerning a mandatory consultation period, there is no mandatory consultation period under the Broadcasting Services Act. Before the ACMA can register a code it has to be satisfied that members of the public have been given an adequate opportunity to comment on the code. It is an interesting situation in which we potentially will find ourselves because each of the broadcaster groups, I think, has been out to public consultation on a proposed code in relation to live odds already. Once we have the revised proposed codes we will be able to make an assessment about whether members of the public have been given an adequate opportunity to comment on them.

Senator BIRMINGHAM: Minister, have you had any conversations with Premier Weatherill about his proposals for South Australia and how they may interact with, or conflict with, the federal proposals that you have outline?

Senator Conroy: I have not spoken to Mr Weatherill. I think officers may have been in touch over the last week or so.

Senator BIRMINGHAM: Perhaps on notice of sorts you can ensure that before we get to the broadcasting section of the department tomorrow, which is probably the relevant place to ask those questions of communication between your officers.

Senator Conroy: I am aware there have been communications.

Senator BIRMINGHAM: I am sure your office can ensure you are briefed by whatever time we get to the section tomorrow.

Senator BILYK: Last week was National Cyber Security Awareness Week, can somebody update me on what ACMA did in regard to that?

Ms Wright : Yes, I would be delighted to do that, Senator. One of the things that we published last week was what was considered some positive news on young people's actions in relation to managing their digital reputation and their digital footprint. Our research has shown us that the majority of 12- to 17-year-olds are actually setting their profiles to private on social networking sites.

Senator BILYK: Even if they should not be on them until they are 13.

Ms Wright : Increasingly private messaging is being used by teens. For example, for 16- to 17-year-olds in the period that we were in the field, 89 per cent of them were using private messaging during that period. We are very pleased with this outcome. As you know we devote a number of our resources and programs to assisting young people to manage their digital reputation. We were very pleased to have the positive feedback that these programs are assisting. I refer, for example, to the fact that we have resources on our website. Since the launch of that cybersmart website in the middle of 2009 we have 2.6 million visits to the site. We get about 73,000 visits a month and that is steadily rising. We have particular resources that do educate and empower young people. For example, we have Zippep's Circus for the littlies. We have Hector's World, NetBasics and the Cybersmart Challenge suite of activities for young people to explore those issues in relation to privacy and digital reputation. We feature in all our lesson plans and our presentations to schools information in that area. In fact, we are very frequently told by teachers—especially in upper primary and lower secondary school—that after one of our presentations to students the young people say, 'The first thing I'm going to do tonight when I go home is put my settings on private.' We think that that is a pretty good outcome.

Senator BILYK: Was the research that you mentioned done by ACMA or independently?

Ms Wright : The one on digital reputation that I just referred to was commissioned research. We have plans to release the full research report midyear, but we particularly wanted to highlight those positive results at this time when there is a lot of focus on kids and their security concerns. Overall, it is a broad study. It particularly focused on young people and social networking. We commissioned that research and we will use it as a lens over the resources that we have to work out what we should refresh, what we should discard and what we need to develop. This research will be a major follow up to the Click and connect report that was released in 2010. We know that many other entities and organisations in the cyber space in Australia drew very heavily on that research to shape programs and messaging. We would anticipate that this research study will have a similar effect.

Senator BILYK: Is the outreach program still going strongly?

Ms Wright : It is going very strongly; in fact, it is going so strongly that we have just had a revamp of that professional development training that we provide free to teachers. It is a day session. We now have a foundation module and we have moved to some customised modules so that the particular schools can choose out of the series of modules which are the ones that focus most on their issues. We want to offer that extra choice and flexibility. We are piloting that this term.

Senator BILYK: Where will that be piloted? Have you targeted some schools or a specific state?

Ms Wright : All the schools that we will be visiting at that time will have that choice. It is a pilot in the sense that we will then assess who it is working and whether those additional modules are hitting the spot. As you know, the content of our day long professional development programs are usually completely refreshed every six months.

Senator BILYK: Do you have any statistics with you—and if not, could you take this on notice—about how many schools that you have been to since the beginning of the financial year?

Ms Wright : Overall, since we launched the program we have approached 76,000 teachers. We will reach 700 teachers in those face-to-face day long presentations per month.

Senator BILYK: I know that you do this, but I just want to check that you still do it. I have attended some of it. Do you do things for parents as well? Is that still running?

Ms Wright : Yes, we do that. Through those school presentations to parents, we reach about 1,600 parents a month through those various schools.

Senator BILYK: Okay. It sounds like great work. The other thing that I wanted to ask about was the citizen conversation forums. Can someone tell me what they are going to be about and how the public can get involved? I do not think that they have started yet.

Ms McNeill : This takes us back into the territory of the contemporary community safeguards inquiry that I flagged earlier. In fact, the ACMA has conducted two citizen conversations over the last couple of years. Both of them had a focus on young people. One was focused on young people in a changing media world. The other was focused on children's television. But we have an exciting program of citizen conversations coming up in June. There are six public events, which we invite anyone who is interested to participate in, either in person at our Sydney officer. They will be webcast and there will be an opportunity to participate through social media.

The first day sees two conversations, one dealing with classification and the time shifting audience and the second one dealing with decency and the regulations in broadcasting around content that ought not be broadcast. The second pair of citizen conversations are focused on the news and facts side of things. They are focused on accuracy but also on fairness and the presentation of viewpoints. The third paired citizen conversation day will see one session focused on privacy protections and broadcasting and a second one focused on advertising in a changing media world. They are the conversations. I have the dates to hand for all readers of Hansard who might be interested in attending.

Senator BILYK: Can you apply to go or do you have to be invited to attend?

Ms McNeill : The registrations are open on our website. If we are deluged with hundreds of subscribers, which we would be delighted with, then we might need to make some difficult calls. But registrations are open at the moment. The dates for each of the sessions are as follows: 6 June is the classification and decency pairing, Tuesday 18 June is the accuracy and fairness and balanced viewpoints pairing and 25 June is advertising and the changing world and privacy pairing.

Senator BILYK: Thanks for that.

CHAIR: Just on that one on decency, I always get a bit concerned that it is code for stifling different points of view. Who are the speakers? Are there different points of view on this?

Ms McNeill : There will be different points of view on this. I do not have the speaker panel list to hand, but I think that it has already been published on our website.

CHAIR: I tried to find it but I could not.

Ms McNeill : For both the classification and the decency sessions there are a range of views. We have what you would call libertarians and we have people with a particular interest in the protection of children. We—

CHAIR: They are not the two opposite ends. Being a libertarian does not mean that you do not protect children.

Ms McNeill : Indeed.

Senator BIRMINGHAM: I refuse to let you embarrass your wife by talking about 50 Shades of Grey again, Senator Cameron!

CHAIR: Thanks very much! I am still in trouble.

Senator BILYK: You are never out of trouble.

Senator SINGH: I will come to your aid and move right along. I wanted to pick up on some questions from Senator Birmingham in relation to the government's new announcement of the new limits on sports betting advertising during TV broadcasts. The process has been fairly well canvassed. Obviously, it is in a bit of a holding pattern or waiting situation until new codes are presented to ACMA. Have you received complaints about gambling ads that are broadcast? Do you know how frequently gambling ads appear during live broadcasts of sport? Do you have any kind of data in that regard and particularly on how frequently gambling ads appear during times when children would be watching—children's viewing times?

Ms McNeill : In answer to the question about whether we receive complaints in this space, I can tell you that in the calendar year to date we have received 22 email complaints about gambling advertising in sports broadcasts. That is the first part of the question. We do not currently have information available about the frequency or intensity of gambling advertising.

Senator SINGH: Okay. Has ACMA done any work looking at whether gambling or gambling advertising is harmful or detrimental to certain members of the population, namely children?

Ms McNeill : We have in fact commissioned some qualitative research into community standards and attitudes about live odds and gambling advertising, but not into what you I think that you are describing as the social harms potentially associated either with gambling or the promotion of gambling activities.

Senator SINGH: What is the qualitative research that you have done?

Ms McNeill : It is in the field at the moment.

Senator SINGH: When are you hoping that you will have that?

Ms McNeill : We are expecting top line results imminently. We would expect to have an analysis of those results available within weeks.

Senator SINGH: You provided some kind of guidelines or terms of reference or the like to whoever is doing the research.

Ms McNeill : Yes. That is right. It is a relatively modest undertaking. A series of questions have gone out to quite a significantly sized group, but I do not have the numbers with me.

Senator SINGH: Okay. You did not think about looking at whether there are harmful effects? That did not come into the picture?

Ms McNeill : Not by way of canvassing the community. That is a more scientific undertaking. It is much more likely that that style of information would be available through literature research rather than through a community survey.

Senator SINGH: Okay. Thank you.

Senator LUDLAM: Do we have the right people at the table to ask about uses of section 313 of the Telecommunications Act to block website?

Senator Conroy: Are you still hunting for that central agency that is coordinating it?

Senator LUDLAM: Maybe I have found them. I have been waiting for this all week.

Mr Chapman : When you say 'the right people', Ms McNeill has a tangential exposure to 313, so I will let her lead.

Senator LUDLAM: Ms McNeill, we will try to keep this on message. Please go ahead.

Mr Chapman : On what aspects?

Senator Conroy: If you were to ask a question, that would help.

Senator LUDLAM: Yes. I will. Is anyone in ACMA aware of the extent of the use of section 313 of the Telecommunication Act to block websites? Start with the AFP. We know that ASIC is doing it. Who else is doing it?

Ms McNeill : The knowledge that I have is gleaned from a meeting convened by the department recently at which a number of agencies were represented.

Senator LUDLAM: All right. I was not at that meeting, so that would be a really good place to start. When did it occur and who was there?

Ms McNeill : The meeting occurred on 22 May.

Mr Chapman : Before we go on—

Senator Conroy: That was a meeting convened by my department, I think. The questions are probably best directed to them. They are coming up shortly, as in tomorrow morning, so we could—

Senator LUDLAM: The department?

Senator Conroy: Yes.

Senator LUDLAM: That is okay. I am not asking ACMA to answer any questions outside its ambit. Because Senator Conroy was kind enough to inform us on Monday night that no-one is in charge, I need to go agency by agency to find out who knows what. That is what I am doing.

Senator Conroy: Have you used any?

Mr Chapman : We have no direct responsibility for 313 notices. I frankly think that having been invited to a meeting not organised by the ACMA, it is not appropriate for us to relate second hand what we gleaned from that meeting.

Senator LUDLAM: Okay. Does ACMA have any formal or ongoing role in the AFP's use of these notices to compel ISPs to block against the Interpol list; the 'worst-of' list?

Ms McNeill : It has no formal ongoing role.

Senator LUDLAM: Is that purely between the Federal Police and the service providers?

Ms McNeill : It is. The only way in which potentially the ACMA could be drawn into that is by reason of its role in administering and enforcing the Telecommunications Act.

Senator LUDLAM: These notices are being issued pursuant to your aim with that—is that correct?

Senator Conroy: It is not the ACMA's act.

Mr Chapman : We are not responsible for every line and provision in that act. We have a number of responsibilities that reside within that act. Those provisions in that act actually empower other federal and state enforcement agencies, and we are not one of those.

Senator LUDLAM: I shall leave it there. We will pick this up in the morning with the department.

Senator BIRMINGHAM: I go to the issue of the spectrum auction that was recently completed. Mr Chapman, you were recently quoted as describing the spectrum auction as flawless. How can you suggest it is flawless when the outcome clearly did not deliver the results that the government was seeking?

Mr Chapman : The ACMA is charged with the responsibility of the most effective allocation and use of spectrum in the national interest. Those objectives are set out in the Radiocommunications Act. We have just released, through the auction program, 200 megahertz of spectrum for wireless broadband. It is the realisation of about a 10-year program, when you think back to the start of digitalisation. The comments that you are alluding to are accurate and they are attributed to me. I was talking about the ACMA's execution against our role. We planned the planning of the digital dividend spectrum in a 700-megahertz band; we released 126 megahertz of spectrum, the largest quality digital dividend released in the world; we worked to refarm the 2.5-gigahertz spectrum. As you would be aware, 700 megahertz and 2.5 gigahertz have strong complementarity. We devised an auction program through the combinatorial clock auction that had the capacity to allow package bids and therefore not stranded assets, and it had the internal capacity to deal with both low demand and high demand scenarios. We developed the software auction methodology. We had a risk that there would be poor engagement with potential participants in view of the CCA complexity. I think we effected a very tight and highly engaging stakeholder strategy to overcome that risk. We started the auction program and completed it within the foreshadowed time period. We released 200 megahertz of spectrum. My consultations with those participants confirmed the professionalism of what the ACMA did in that role. So, from my perspective, we executed flawlessly.

Senator BIRMINGHAM: Thanks, Mr Chapman. I appreciate that the ACMA had to operate within the directions of the government as well in doing so. I pick up on one statement you made, just to get an understanding. You said that one of the risks was poor engagement in view of the CCA complexity. Could you explain that, for knowledge as much as anything?

Mr Chapman : The CCA, the combinatorial clock auction—

Senator Conroy: How long do you have?

Mr Chapman : software program is the leading and most enhanced auction software methodology that can be employed. It has some leading-edge features that can be intimidating to people who use it for the first time. It can suppress an understanding of the way in which participants should work their way through the clock rounds, the supplementary rounds and the assignment rounds. That can lead to some unexpected consequences. That was the case in our auction. We worked our way through the clock rounds, the supplementary round and the assignment round. I was at pains to establish with each of the participants their level of comfort about their knowledge, the nuances of that process and the various strategies they may employ. They each confirmed to me that they were thoroughly satisfied with that stakeholder engagement and that they felt very comfortable going to the process. Indeed, after the process they felt that they got what they bargained for and that the process was seamless and flawless.

Senator BIRMINGHAM: Is it accurate to say that optimal utilisation of spectrum is a policy objective?

Mr Chapman : It may be semantics, but we are principally engaged, through the Radiocommunications Act, with the most efficient allocation and use of spectrum in the national interest. If you are talking about what I am talking about, then the answer is yes.

Senator BIRMINGHAM: Is it the most efficient and appropriate allocation of spectrum not to utilise it?

Mr Chapman : The principal objective I just outlined is not the only objective set out in the Radiocommunications Act. ACMA generally is injuncted to work consistently with government policy, and ACMA also recognises that the government of the day has, through the minister, the prerogative to arbitrate, if it sees it is necessary, between the risk of not selling all the spectrum and the risk of selling the spectrum for an inadequate return to the public purse—consolidated revenue. There are no easy answers to that trade-off. ACMA was cognisant of those right throughout. There is a very healthy balance between ACMA's role and the government's ability through formal directions to make the ultimate judgment call.

Senator BIRMINGHAM: Numerous commentators, not just those associated with any particular company in the process, have been predicting there may be a failure to successfully sell all the bundles of spectrum prior to going into this auction for some time in advance of it, and they have been highlighting concerns such as the dig market and the lack of participants, and of course, related to that, the setting of the reserve price by the minister. Did ACMA express concerns in the lead-up to the auction? Are there concerns that it may fail to—

Senator Conroy: Officers at the table are not in a position to go to the content of advice.

Senator BIRMINGHAM: Then you can tell us, Minister.

Senator Conroy: You can ask, 'Did you give advice?'

Senator BIRMINGHAM: Did you receive advice, Minister?

Senator Conroy: I am not going to reveal to you advice that is passed backwards and forwards from ACMA to the government. But the government made its decision after Vodaphone indicated it would not be participating. So there was a very strong chance there would be only two participants in the auction for the 700, as turned out to be the case.

Senator BIRMINGHAM: Mr Chapman, once the minister accepted the reserve price, were there additional steps that you tried to take to facilitate a successful auction process, given the reserve price that had been set?

Mr Chapman : You might need to help me out with that question, Senator. I am not quite sure what you are trying to tease out of me.

Senator BIRMINGHAM: Did you do or try to do anything different in the conduct of the auction process, following the minister's intervention in setting the reserve price against the recommendations of ACMA, that you would not have done had ACMA's recommendation for the reserve price stood?

Mr Chapman : I have just consulted with Mr Tanner who, as you know, was the general manager responsible for the digital transition division and had conduct of the auction within his bailiwick. We think the answer to your question is no. We were cognisant always that we needed to provide a system that had the inbuilt agility to deal with high and low demand scenarios that dealt with a reserve price established by us or by the minister. I cannot think of one thing we changed, in the overarching construct of what we did, that was affected by the minister's formal direction on reserve price.

Mr Tanner : We were clearly cognisant, and the government was cognisant after communications from Voda in September last year, of the real risk of unsold lots. Our combinatorial clock auction, like any worthwhile high spaced allocation system of allocating spectrum, deals with an imbalance, with supply exceeding demand by basically functioning so as to sell at the reserve price. The CCA was as ready to deal with the contingency of unsold lots as it was to deal with any other contingency. Once we had the reserve price we had the auction ready to go and the auction proceeded. It has built into its system the capacity to deal with that contingency. We were aware of that, but there was nothing to change inside the auction.

Senator BIRMINGHAM: Is there a difference, as some commentators have said, between the use of a starting price mechanism in an auction versus a reserve price mechanism in an auction? Was it a change in historical practice at ACMA to opt for a reserve price type mechanism?

Mr Tanner : I was not in those organisations at the time the auctions were run, but my understanding is that the Australian Communications Authority and the Spectrum Management Agency, which are the antecedents of this part of ACMA's function, conducted a series of often very major auctions during the late 1990s and early noughties. A couple of those auctions were very lucrative. ACA and the SMA did use starting prices. Basically, as I understand it, those starting prices perform the function of reserve prices. I understand that, at least in some cases, they were often relatively low compared to the reserves we use today. You see very wide variations in reserve prices overseas in more recent auctions. There is not a lot of difference between the starting price and the reserve price, but the starting prices used in some auctions were considerably lower.

Senator BIRMINGHAM: Would that be an attempt to attract more bidders to the process?

Mr Tanner : When you are setting a reserve price you are doing a number of things, but the critical thing is balancing two risk. One is the risk you will not sell all your property—and you will potentially do that if you pitch your price high and if there is low demand—and the other is that in a shallow market, a market where there is not a lot of demand relative to supply, you will cause the lots to be sold at a return which is unreasonable for the vendor.

If you want a generalisation about spectrum auctions around the world, what you do see quite frequently is that, where there is confidence that demand is going to exceed supply, there is a preference to set reserve prices relatively low and allow the auction bidding to set the market price. The bidders learn a great deal about the valuation of other bidders from watching the behaviour of the auction. So, if you are relatively confident there is going to be an excess of demand over supply, you will find that the administrations tend to pitch the reserve relatively low and let the bidders do the work. If there are grounds to believe that there is going to be a surplus of supply over demand, the reserve price is pitched higher if your concern is that the properties not all go at a fire sale and the vendor be dudded.

In our present auction I would make the observation with the 2.5 lots, there was considerably more evidence by September, October, November last year that there was a surplus of demand over supply than there was for 700 was for seven hundred. The reason for our pessimism about 700 was the withdrawal from the auction of one of three mobile players in the country. In those circumstances, I guess, we had a considerable apprehension that demand was shallow and may not outstrip supply at any reasonable price. With 2.5, we did not have such an apprehension.

When you look at the reserve prices you will find that the ACMA actually set a lower reserve, relative to international values obtained for 2.5 than the minister set for 700. That is quite a predictable thing to see in a scenario when you are anticipating that the supply is too large for demand at the time the auction is being held.

Senator Conroy: If I can add—just because you have drawn attention to commentary, which continues to be misinformed, partially due to Mr Turnbull and yourself—Vodafone, as I have stated already, I think withdrew—

Senator BIRMINGHAM: There are far bigger experts than me in this one, Minister.

Senator Conroy: Vodafone withdrew in October and November, I think, as the Mr Tanner indicated—they did not indicate the publically, but they did indicate that to us. And, if I can quote you from Mr Russell who now runs Optus in Australia, he said:

'We required 700[MHz spectrum] for core 4G coverage—in-building coverage in metro and broader geographic coverage in regional,' Russell said on a media call as Optus released its financial results for the quarter ending 31 March.

Our view from the start was that 10MHz of spectrum would be more than adequate in terms of delivering that capability.”

He goes on to say:

The coverage element is more than satisfied by the 10MHz of 700 …

So commentary is just that: commentary. The hard facts are that there were two bidders and, as Optus have indicated afterwards, they were probably only looking for 10.

Senator BIRMINGHAM: So, Minister, are you confident you got the optimal result out of your interventions in this?

Senator Conroy: I am sure that Treasury and Finance would have preferred to have more bidders. It is always the case but it was an auction and, as Mr Chapman said, it was very efficiently run. In Australia we have three now—four possibly, as a new entrant did actually purchase some of the spectrum, despite clamouring analysis. I remember breathless analysis from you, Mr Turnbull and others saying there would be no bidders. But there were two bidders and—three? Three in the other?

Mr Chapman : Three and the 2.5.

Senator Conroy: Three and—2½. So commentary, which you are quoting from beforehand, is, you know, fish-and-chip wrapping today.

CHAIR: Thanks, Senator Birmingham. I have got some questions now on the issue of consumer service by ACMA. I have just been looking at the Ofcom website and done a comparison with yours—Ofcom is the UK regulator. They have what they call their price accreditation scheme logo. Are you aware of that? They do what they describe as rigorous, independent audits for companies who provide advice to consumers about the best deal. Are you aware of that?

Ms McNeill : Senator, I do have some knowledge of this. I understand it is an accreditation scheme so that rather than, for example, the regulator doing its own assessment of the best deals, they accredit companies to publish information about the best deals—typically in telephony, I think.

CHAIR: There are six companies in the UK: two are accredited for mobiles; two are accredited for digital TV and cable, landline and broadband services; and two do broadband services on their own. I just had a look at it, and you would have some confidence that the regulator is saying: 'Here's where you can get a decent comparison.' Because one of the most complicated things, I suppose—and it is getting more complicated with packages—is getting a decent deal for all the telecommunications equipment that you are using.

Has ACMA given any thought to providing such a service to consumers here? I looked for companies that are providing this advice and there is a range. I would not have a clue if any of them are a bit like the health companies that just do a deal with a number of health funds and they really spruik the health funds. It is an issue we should have a look at. If you have not had a look at it, do you have the capacity to do something like that? Do you think it would be appropriate and is it within your remit to do something like that?

Ms McNeill : The difficulty that consumers face, as you say, when they are making choices between complex products and services ought not to be underestimated. It is something we are acutely conscious of that the agency traversed when it conducted its Reconnecting the Customer inquiry. Coming out of that inquiry were a raft of code improvements which enhance transparency and make it simpler for consumers to compare offerings across providers. That includes not only through the critical information summaries that providers are obliged to now provide to people, which allow comparison between providers across the key information that those summaries contained, but also pricing information. The cost of a two-minute call, a SMS and a megabyte of data can all be directly compared. I accept they are a different proposition from commercially available sources or endorsement of the sources, but we think that they are important improvements in transparency.

CHAIR: Where are you doing these?

Ms McNeill : These were outcomes which are embedded in the Telecommunications Consumer Protection Code. A series of very significant improvements over the previous version—

CHAIR: The companies have got to comply with these?

Ms McNeill : That is correct.

CHAIR: This is different from what I am talking about, as you are aware. What I am talking about is that Ofcom provide a service that says we have looked at these comparison companies, we have given them our seal of approval so you can go there confidently and know that you are dealing with a reputable company. One click on the Ofcom website will take you to this area you would think would be safe, regulated and available to consumers. Would that be something that is in your remit? Is it something you should look at? Is it a service you should provide to consumers in Australia? I think there is a proliferation of companies that say we can get you the best deal but that do not tell you they only do the best deal for a number of companies at a price—that is the problem.

Mr Chapman : When we launched our Reconnecting the Customer inquiry 2010-11, it led to the enhanced Telecommunications Consumer Protection Code 2012, which is now the most complete, holistic, advanced consumer protection in telco space in the OECD.

Behaviour economics and people's inability to adequately process comparative information, which is in part what you are alluding to, was at the forefront of what we did. We took the most pragmatic course we could within the confines of our act. One of the things that occured to us at that time was the production of league tables. It is not an idea that we have let go of. We decided, to be honest, to approach it in stages. We have now got the TCP code bedded in. We have been very active in the auditing and enforcement. And I think there is a mindset change within the telcos in Australia. They, I think, are very grateful the race to the bottom in customer care is over. You will have seen, over the last several months, each of the chief executives of the major telco companies talk about the new telco company for them is owning the customer and keeping the costumer—

CHAIR: I have heard all these anecdotes before, Mr Chapman. Owning the customer does not really turn me on, I must say, when it comes from some companies.

Senator Conroy: I am not sure we need to know what turns you on, Senator Cameron, but we appreciate the sentiment!

Mr Chapman : What I was going to finish that observation with was that we concluded at the time that we did not necessarily have the legislative remit and the protection afforded by legislation to be seen to be endorsing companies or to be accrediting. That was my recollection from 2011. What I would like to do is take your query on notice and give you a better answer.

CHAIR: Could you also look at Ofcom and what their legislative capacity is to deal with it? If we have a problem, we should deal with. I think consumers need that support from ACMA to get a decent deal.

Mr Chapman : Certainly, Chairman, I will do that.

CHAIR: Thanks very much. Once again, it has been very interesting.

Senator Conroy: Sorry, I think we have just got some information.

Ms McNeill : Sorry, Senator. There is just one matter that I wanted to clarify while we had the opportunity, and it might be appropriate to draw it to Senator Ludlam's attention. Earlier in the evening in response to a line of questioning, there was a question raised about whether the ACMA could rely on section 313 of the Telecommunications Act and seek assistance from carriage service providers for the purposes specified in that section. The answer is that we can but have not done so. I just wanted to clarify that matter.

CHAIR: Thank you.

Senator Conroy: Chair, before you conclude, it has been noted that the process of the auction was, as Mr Chapman said, first class. I just wanted to particularly note that. For those of us who are not aficionados and do not quite follow it as closely as Mr Tanner does, the process was overseen by him and, as has been noted, it was an excellent process. I did have to, at various times, get trapped in a room with Mr Tanner. With the amount of planning, preparation and organisation that went into something like that auction, it is easy just to tick it off and say, 'Great,' but I think Mr Tanner deserves some recognition for doing a very first-class job in pulling it together over many years. It is not something that happens easily, so I just wanted to put on the record appreciation for Mr Tanner's—

Senator BIRMINGHAM: I think those of us who have been confused—

Senator Conroy: I was trying to be kind, Senator Birmingham.

Senator BIRMINGHAM: appreciate fully his professionalism, skills and knowledge.

CHAIR: Especially on the clock auction.

Senator Conroy: I think we should have special estimates just on the clock once more.

CHAIR: Thanks very much, Mr Chapman, and I thank the officers. I thank the minister and all officers for their attendance. The committee will continue examination of this portfolio at 9 am tomorrow morning. Senators are reminded that written questions on notice should be provided to the secretariat by close of business Wednesday, 12 June. A resolution to accept all documents has been moved and passed.

Committee adjourned at 23:03