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Thursday, 5 May 1994
Page: 314

Senator TIERNEY (12.28 p.m.) —I also rise to speak to support the Telecommunications Amendment Bill 1994, which amends the Telecommunications Act 1991 to relax prohibitions on price discrimination and to allow the regulator, Austel, to test telecommunications tariffs for anti-competitive effect. The amendments serve to remove two problems from the current telecommunications legislation. The first issue deals with the apparent illegality of various pricing options introduced by both Telecom and Optus. The most important of these has been the Telecom flexiplan and strategic partnership arrangements entered into with Telecom customers.

  In the Federal Court, Optus has raised concerns that some of these arrangements may be discriminatory and are therefore illegal. This amendment comes into effect retrospectively on 15 March, and this retrospectivity was necessary to alert the industry to the coming changes but will not affect any of the court actions undertaken before 15 March. Flexiplans and strategic partnership arrangements are competitive, but could be seen to be unfair under the current act, and neither Telecom nor Optus wants to see pricing schemes declared illegal. The carriers just want to operate under equal circumstances. We believe that this bill goes a long way towards bringing that about.

  The two main schemes are flexiplan and strategic partnership. The flexiplans are pricing schemes under which, for a flat fee, customers receive discounts on various types of service. An example of this is small discounts that residential customers can receive on both local and STD calls. The strategic partnership arrangements are agreements between Telecom and large corporate customers under which Telecom provides bulk services at a discount. As Telecom is the dominant carrier, many of the services that are provided are therefore given an advantage by Telecom but, under the act as it currently exists, it is strictly forbidden to discriminate as to price in those markets against any person. The only exception is when the price differences can be justified on the basis of cost.

  All interested parties agree that the Telecommunications Act, as it was originally drafted, was not intended to disallow innovative pricing offers to customers. However, it appears that the act does stop the bundling together of two or more services. As both Optus and Telecom offer flexiplan arrangements, neither wants to see them declared illegal. However, clearly, only Telecom can offer both STD and local calls, and some current strategic partnerships may not be justified as to cost. Accordingly, the bill addresses these two problems by removing ambiguous anti-discrimination provisions in the act and broadens the carriers' rights to discriminate as to price. Anti-bundling provisions are also removed from the principal act.

  Additionally, a new section allows Austel to authorise particular types of discrimination in relation to charges, terms and conditions. Austel can decide that this discrimination is permitted on the basis of only three things. The first is that there are significant cost differences borne by the carrier in relation to the discrimination; so it is not so much on the customer as back on the carrier. The prevailing community interest in allowing the discrimination is the second ground. The third is the desirability of trial programs being run which would promote the purposes of the act.

  In deciding whether to permit discrimination, Austel can have regard to a number of factors. These include where and when the services in question are supplied, the administrative costs of the service, and the transmission capacity required to supply the service. Also crucial to Austel's new powers will be the ministerial directions, which will be disallowable instruments. The minister may direct, in general terms, on how Austel is to perform its function. It may not direct Austel to allow or disallow particular tariffs.

  I think the big advantage of this last provision is that it makes the whole market position in telecommunications clearer. It takes away the ambiguity which is currently being settled in the courts by actions and counteractions. This is costly and not a desirable way to proceed. In any marketplace we need a position where the operators know clearly what the rules are, that any innovation will not be subject to court action, and that proper competitive practices can come about.

  We welcome the government's amendments to the original legislation on this basis. We have here one of the most important industries in Australia, one of the coming boom industries, and it is extremely important that we get the regulatory framework right in the first place. We welcome the government's amendments because they represent a very large step in that direction.