Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

2010-2011

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

THE SENATE

 

 

 

 

 

 

 

 

TELECOMMUNICATIONS LEGISLATION AMENDMENT

(NATIONAL BROADBAND NETWORK MEASURES—ACCESS ARRANGEMENTS) BILL 2011

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

Amendments to be moved on behalf of the Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Broadband, Communications

and the Digital Economy, Senator the Honourable Stephen Conroy)



TELECOMMUNICATIONS LEGISLATION AMENDMENT (NATIONAL BROADBAND NETWORK MEASURES—ACCESS ARRANGEMENTS) BILL 2011

 

 

OUTLINE

 

The Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011 (the Access Bill) amends the Competition and Consumer Act 2010 (formerly known as the Trade Practices Act 1997 ) and the Telecommunications Act 1997 (Tel Act) to introduce new access, transparency and non-discrimination obligations relating to the supply of wholesale services by NBN Co Limited. It also extends supply and open access obligations to owners of other superfast networks.

 

The Access Bill operates in conjunction with the accompanying Companies Bill.

 

The proposed amendments:

·          authorise conduct by NBN corporations under Part IV, Part XIB and Part XIC of the Competition and Consumer Act 2010 to promote the national interest in structural reform of the telecommunications industry and uniform national pricing of eligible services;

·          clarify the operation of the level playing field arrangements in Part 3 of Schedule 1 of the Access Bill;

·          clarify that a utility or authority may not resupply a service supplied to it by an NBN corporation; and

·          require networks that are built after 1 January 2011, or that are upgraded or amended after 1 January 2011, and that are capable of being used to supply a superfast carriage service to residential or small business customers, to operate on a wholesale-only basis.

 

The authorisations are proposed in recognition of the Government’s objective to promote uniform national wholesale pricing of carriage services provided by NBN corporations, consistent with Government announcement on 20 December 2010. Accordingly, amendments (2) -(13) will authorise, for the purposes of subsection 51(1) and Part XIB of the Competition and Consumer Act 2011 , specific conduct that NBN corporations will engage in relating to the bundling of services, cross-subsidisation in pricing and offering interconnection to the National Broadband Network (NBN).

 

Significant changes are p roposed to Part 3 of Schedule 1 to the Access Bill to clarify and extend its operation. New Part 7 of the Tel Act will prevent owners (other than NBN corporations) of local access lines that form part of a telecommunications network (other than the NBN) from supplying a fixed-line carriage service where:

  • the network is used, or is proposed to be used, to supply a superfast carriage service wholly or principally to residential or small business customers, or prospective residential or small business customers, in Australia; and
  • no Layer 2 bitstream service is available for supply to those customers or prospective customers using the network; and
  • the network came into existence, or was upgraded, on or after 1 January 2011.

 

 

A new Part 8 is proposed to be inserted into the Tel Act, consistent with the Government’s announcement of 20 December 2010 that new optical fibre networks built after 1 January 2011 for residential or small business purposes will need to be wholesale-only as well as offering a Layer 2 service on an open access basis.

 

Under this new Part 8, a controller of a telecommunications network (other than the national broadband network) must not use a local access line to supply an eligible service to a person other than a carrier or a service provider, if:

  • the local access line is part of the infrastructure of the network; and
  • the network is used, or is proposed to be used, to supply a superfast carriage service wholly or principally to residential or small business customers, or prospective residential or small business customers, in Australia; and
  • the network came into existence, or was upgraded, on or after 1 January 2011.

 

FINANCIAL IMPACT STATEMENT

 

The amendments are not expected to have any material financial impact for the Commonwealth.

 

REGULATION IMPACT STATEMENT

 

Ordinarily regulatory impact statements would be required for these measures, however the Prime Minister has provided an exemption.

 

 



ABBREVIATIONS

 

The following abbreviations are used in this explanatory memorandum:

 

ACCC:                                      Australian Competition and Consumer Commission

 

ACMA:                                    Australian Communications and Media Authority

 

Access Bill:                               Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011

 

CCA:                                        Competition and Consumer Act 2010

 

Communications Minister:         Minister for Broadband, Communications, and the Digital Economy

 

Companies Bill:                        National Broadband Network Companies Bill 2010

 

NBN:                                        National Broadband Network

 

 

Tel Act:                                     Telecommunications Act 1997

 



NOTES ON AMENDMENTS

 

                                                            AMENDMENT (1)

 

Amendment (1) inserts new items 25A, 25B, 25C and 25D in Schedule 1 to the Access Bill.

 

Item 25A provides for the definition of the term, 'NBN corporation' to be defined by reference to the meaning given of the term in the National Broadband Network Companies Act 2011 (see clause 5 of the National Broadband Network Companies Bill 2010 (‘Companies Bill’)).

 

Item 25B updates the language of subsection 151AJ(7) of the Competition and Consumer Act 2010 (CCA) to make it consistent with  proposed new subsection 151AJ(10). This change is consequential to the amendment proposed by new item 25D below, which has the opening words “Despite anything in this section”.

 

Item 25C updates the language of subsection 151AJ(9) of the CCA.  This change is consequential to the amendment proposed by new item 25D below.

 

Item 25D provides for a new subsection 151AJ(10). This new subclause clarifies that a person is taken not to engage in anti-competitive conduct if under new section 151DA (see the notes on amendment (3) below), the conduct is authorised for the purposes of subsection 51(1).

 

                                                AMENDMENT (2)

 

Amendment (2) inserts new sections 151DA and 151 DB. Proposed new section 151DA provides for three express legislative authorisations (for the purposes of section 51 of the CCA) of certain conduct which may be carried out by an NBN corporation.

 

Section 51 of the CCA provides that, in determining whether a person has contravened Part IV of the CCA, certain matters must be disregarded, including anything specified in, and specifically authorised by, an Act.  

 

Proposed subsection 151DA(1) - objects provision

 

The objects of proposed section 151DA (which cover the three categories of authorised conduct) are to promote:

  • the national interest in structural reform of the telecommunications industry; and
  • uniform national pricing of eligible services provided by NBN corporations

by authorising, for the purposes of subsection 51(1) of the CCA, certain conduct engaged in by NBN corporations. This objects provision sets the context for the proposed section 51 authorisations.

 

The policy of uniform national wholesale pricing means that a retail service provider would pay the same wholesale price for an NBN carriage service to serve an end-user customer regardless of the end-user’s location within Australia.  In the Statement of Expectations issued to NBN Co Limited (NBN Co), and released publicly on 20 December 2010, the Minister for Communications and the Minister for Finance and Deregulation advised NBN Co that it will be required to charge access seekers uniformly for services across its network for all technologies and for its basic service offering. Accordingly, all access seekers should be charged the same prices for services. Furthermore, the price for NBN Co’s entry level service must be the same across Australia and across NBN Co’s fibre, wireless and satellite networks. However, the prices for higher-speed services only need to be uniform within a specified technology, and not across all technologies. Moreover, by providing a wholesale-only platform with uniform national wholesale pricing, the Government will further advance its objective of structural reform of the Australian telecommunications industry.

Fundamental to the implementation of national uniform wholesale pricing is the location of NBN Co’s points of interconnection.  As indicated on 20 December 2010, the Government sought advice from the ACCC on this issue.  Following a public consultation process, t he ACCC advised the Government that a semi-distributed network design, where the NBN extends to meet, but not overbuild competitive backhaul routes, would be the best outcome for competition and in the long-term interests of end users. This approach was generally supported by industry in consultations with the ACCC. The Government accepted the ACCC’s advice and as a result, NBN Co will establish approximately 120 points of interconnection: 80 in metropolitan Australia and 40 in regional Australia. In addition, the ACCC will closely monitor the level of competition on backhaul routes and address any failure in these markets to deliver competitive outcomes by using its new upfront price determination powers where needed.

Proposed subsections 151DA(2) -(4) specify and specifically authorise certain conduct for the purposes of section 51 of the CCA.  The result of this is that the conduct specifically authorised under proposed subsections 151DA(2) -(4), must be disregarded when considering whether a person who has engaged in that conduct has contravened Part IV or Part XIB of the CCA.

 

Two notes are included at the end of proposed subsection 151DA as aids to the reader. Note 1 provides that if conduct is authorised for the purposes of subsection 51(1) of the CCA, the conduct is disregarded in deciding whether a person has contravened Part IV.  Note 2 reminds the reader of subsection 151AJ(10) of the CCA which sets out the two circumstances in which a carrier or a carriage service provider is said to engage in anti - competitive conduct for the purposes of Part XIB of the CCA.

 

As a result of the inclusion of these provisions, an NBN corporation which engages in the relevant conduct will not be taken to have engaged in anti-competitive conduct for the purposes of Part XIB of the CCA.

 

(a)   Authorised conduct - points of interconnection

 

Proposed subsection 151DA(2)

 

Proposed subsection 151DA(2) sets out the authorised conduct relating to points of interconnection . It provides that if an NBN corporation is a carrier or carriage service provider and the corporation either:

·          owns or controls one or more facilities; or

·          is a nominated carrier in relation to one or more facilities;

the refusal by the NBN corporation to permit interconnection of those facilities at a non-listed point of interconnection (POI) with a service provider’s utility’s facility is authorised for the purposes of subsection 51(1).

 

A note is included at proposed subsection 151DA(2) to remind readers that proposed section 151DB provides for what is a listed point of interconnection.

 

A point of interconnection (POIs) is where an NBN corporation’s network will hand over traffic to the networks of wholesale and retail service providers. In 2010 the Government asked the ACCC and NBN Co to undertake a process, including public consultation, to seek agreement on the number and location of initial POIs for the NBN that will best meet the long-term interests of end-users. The ACCC advised the Government that a semi-distributed network design, where the NBN will extend to meet, but not overbuild, competitive backhaul routes, would be the best outcome for competition and in the long-term interests of end-users.

 

The ACCC identified the following competition criteria for the number and location of initial POIs:

 

(a)        it is technically and operationally feasible to allow interconnection (usually at an Ethernet aggregation switch); and

(b)        there are at least two competitors with optical fibres within a nominated distance from that location which connect a site to an optical fibre network which is connected to a capital city, and:

-     deliver wholesale transmission services which are suitable for use by service providers who wish to connect to the NBN at that location; and

-           there is other evidence that the particular route is, or is likely to become, effectively competitive (such as long-term contractual arrangements for the acquisition of transmission services).

 

With the ACCC's guidance, NBN Co developed a set of network planning rules based on these competition criteria. The planning rules include a 'soft cap' of approximately 80,000 premises for metro POIs and approximately 100,000 premises for outer metro/regional POIs. In December 2010, NBN Co developed a list of 120 initial POIs to the NBN based on the competition criteria and the planning rules. In February 2011, following a public confirmation process, the list was revised to 121 POIs. The ACCC maintains a list of POIs on its website.

 

Although the current list of 121 POIs is considered by the ACCC to promote competition and the long-term interests of end-users, there is nonetheless a risk that a refusal by NBN Co to offer interconnection outside this list of POIs could be considered anti-competitive, for example by restricting market entry to providers who wish to use available backhaul to interconnect closer to end-users’ premises. Proposed subsection 151DA(1) ensures that a refusal to interconnect outside the list of POIs is deemed to be authorised conduct.

 

 

(b) Authorised conduct -bundling of designated services

 

Proposed subsection 151DA(3)

 

Proposed subsections 151DA(3) set out the authorised conduct relating to the bundling of certain carriage services (known as designated services) by NBN corporations. NBN Co has advised, in its Product and Pricing Overview document released on 20 December 2010, that it proposes to offer four services as a bundle at a POI:

·          the user network interface - physical access to the ports on the Network Termination Unit at the end-user premises .

·          the access virtual circuit - access to the bandwidth allocated to the end-user premises;

·          the connectivity virtual circuit - access to the capacity required for each connectivity serving area to aggregate the access virtual circuits to the POI; and

·          the network-network interface - access to the port at an NBN corporation’s POI where access seekers connect their transmission backhaul and interconnect with the NBN.

 

NBN Co has also advised that its bundle of services will include a service that facilitates the supply of voice telephony.

 

In its Corporate Plan dated 15 December 2010, NBN Co stated that it will offer its bundled services as a uniform product construct across fibre, wireless and satellite. Technically, all the components work in conjunction with each other to deliver an Ethernet Bitstream Service to an end-user’s premises. The bundling of the services promotes uniform national pricing from the end-user’s premises to the POI.

 

Subsection 151DA(3) provides that where an NBN corporation is a carrier or carriage service provider and the corporation either:

·          refuses to supply; or

·          refuses to offer to supply;

a designated access service to a service provider or utility unless the service provider or utility acquires, or agrees to acquire, one or more other designated access services from the NBN corporation, the refusal is authorised for the purposes of subsection 51(1).

 

A ‘designated access service’ is defined in new subsection 151DA (9)) to cover any of the following five carriage services:

·          an access virtual circuit service;

·          a connectivity virtual circuit service;

·          a network-network interface service;

·          a u ser network interface service;

·          a voice telephony facilitation service.

 

Each of these services is, in turn, defined in new subsection 151DA(9). Each service is defined as an eligible service that is known by its own name, or as a component of a fibre access service that is known by its own name. Consequently, the access virtual circuit service, for example, is defined as an eligible service that is known as:

·          an access virtual circuit service; or

·          the access virtual circuit component of a fibre access service.

 

The inclusion in the definition of each service a phrase specifying that a service may be a component of a fibre access service makes it clear that the services that comprise the bundle are treated as separate services, and cannot be treated as individual components of a single service.

 



  (c) Authorised conduct: cross­-subsidisation

 

Proposed subsection 151DA(4)

 

Proposed subsection 151DA(4) provides certain cross-subsidisation conduct to be authorised for the purposes of subsection 51(1). This is further required to implement the Government’s policy of uniform national wholesale pricing, as detailed in the Government’s Statement of Expectations to NBN Co. In that statement, the Government advised NBN Co that it will be able to cross-subsidise from its national revenue flows and offer a common entry-level broadband price structure for all Australian premises across all technologies used in the rollout of the NBN.

 

Cross-subsidisation may cover setting the price of a single service at a level that is above cost in high-profit areas but below cost in low-profit areas, so that in effect the low-profit areas are cross-subsidised by the high-profit ones. Cross-subsidisation may also cover setting the prices of some services at levels that are above cost and the prices of other services at levels that are below cost, so that in effect those who purchase the higher cost services cross-subsidise those who purchase the lower cost services.

 

Specifically, proposed subsection 151DA(4) provides that the supply (or offer to supply) of eligible services to one or more service providers or utilities are, on price related terms and conditions by an NBN corporation is authorised for the purposes of subsection 51(1) of the CCA where the price and conditions are, to any extent, attributable to cross-subsidisation; and

  • the extent of that cross-subsidisation is no greater than is reasonably necessary to achieve uniform national pricing of eligible services supplied by the NBN corporation to service providers and utilities; or
  • in the case where a special access undertaking has been given by the NBN corporation is in operation—that cross subsidisation is consistent with the special access undertaking.

 

It is expected that an NBN corporation will supply or offer to supply a designated access service to one or more service providers or utilities in accordance with price-related terms and conditions set out in an ACCC- approved special access undertaking.

 

The authorisation will ensure that an NBN corporation can cross-subsidise to achieve uniform national pricing, but also limits the conduct that an NBN corporation may engage in to conduct that is reasonably necessary. The concept of ‘reasonably necessary’ is intended to have its ordinary objective meaning. The word ‘reasonably’ provides a measure of flexibility in assessing the necessity of any cross-subsidisation. This ensures that the ACCC’s powers to regulate the terms and conditions of an NBN corporation’s services are not affected, except to the extent that those terms and conditions are reasonably necessary to achieve uniform national pricing.

 

Proposed subsection 151DA(5)

 

Proposed subsection 151DA(5) provides clarity around when uniform national pricing of an eligible service supplied, or offered to be supplied, by an NBN corporation to service providers and utilities is achieved. Specifically, it provides that uniform national pricing is achieved if the price-related terms and conditions on which the NBN corporation supplies, or offers to supply, the eligible service are the same across Australia. 

 

Proposed subsection 151DA(6)

 

Proposed subsection 151DA(6) makes it clear that any price discrimination (e.g. a discount, rebate etc) is not to be taken into account when determining uniform national pricing. Discrimination by an NBN corporation may not be available to all access seekers, meaning that in effect NBN Co would not be offering uniform prices to all. Such discrimination is permitted, under proposed section 152AXC, to be inserted by this Bill, if the discount aids efficiency and all access seekers in like circumstances have equal opportunity to benefit from the discount.

 

Proposed subsections 151DA(7) and 151DA(8)

 

As it is envisaged that an NBN corporation may supply (or offer to supply) the same eligible services using different technology platforms, proposed subsection 151DA(7) is inserted for the avoidance of doubt. The subsection provides that in the context of cross-subsidisation, it is it is immaterial whether the same or different services are supplied, or offered to be supplied, using the same or different kinds of facilities. Proposed subsection 151DA(8) provides an example, namely, that the same eligible service could be supplied, or offered to be supplied, using different technology platforms. 

 

(d) definitions of key terms

 

Proposed subsection 151DA(9)

 

Proposed subsection 151DA(9) provides for the definition of key terms used in section 151DA. Subsection 151DA(9) defines the designated access services, including the access virtual circuit service, the connectivity virtual circuit service, the network-network interface service, the user network interface service and the voice telephony facilitation service. As the characteristics of the services could change over time, the provision does not attempt to impose rigid technological definitions but simply notes that they are eligible services known as they are called, or components of a fibre access service. This provision does ensure, however, that if it wishes to operate under the authorisation for bundling, an NBN corporation will need to supply services that are known as the user network interface, the access virtual circuit, the connectivity virtual circuit and the network-network interface.

 

The term, 'access virtual circuit service' is intended to cover an eligible service that is known as:

            (a)        an access virtual circuit service ; or

            (b)        the access virtual circuit component of a fibre access service.

 

The access virtual circuit service is access to the bandwidth allocated to the end-user premises.

           

A 'connectivity virtual circuit service' is an eligible service that is known as:

            (a)        a connectivity virtual circuit service; or

            (b)        the connectivity virtual circuit component of a fibre access service.

 

The connectivity virtual circuit service covers access to the capacity required for each Connectivity Serving Area to aggregate the Access Virtual Circuits to the POI.

 

Clarification about the meaning of the key concept, ‘cross-subsidisation’ (which is used in proposed subsection 151DA(5)) is provided at proposed subsection (9). It provides that cross-subsidisation in this context is in relation to the supply of:

  • an eligible service to service providers and utilities in different parts of Australia; and
  • different eligible services to service providers and utilities.

 

The ordinary (economic) meaning of ‘cross-subsidisation is intended to apply. For example, an NBN corporation may charge below cost on one service and compensate by charging above cost on other services, or may set the price of an individual eligible service at a level which is above cost in some areas and below cost in other areas.

 

As the authorised conduct relates to 'eligible services', proposed subsection 151DA(9) clarifies that the term has the same meaning as in section 152AL of the CCA.

 

A 'listed point of interconnection' is defined by reference to the meaning given by proposed section 151DB (see comments below).

 

The term, ‘network- network interface service’ is intended to covers the following two carriage services which NBN Co proposes to offer:

(a)     a network-network interface service; and

(b)    the network-network interface component of a fibre access service.

 

The network-network interface service covers access to the port at an NBN corporation’s point of interconnection where access seekers connect their transmission backhaul and interconnect with the NBN.

 

The terms, ‘nominated carrier’, ‘service provider’, and ‘telecommunications industry’ are defined by reference to the Tel Act.

 

The term, ‘point of interconnection’ is defined as a location for the interconnection of facilities. This term is widely understood by the telecommunications industry.

 

The term, ‘price related terms and conditions' has been intentionally defined broadly.

 

The term, ‘special access undertaking’ has the meaning given under Part XIC of the CCA.

 

The entities listed in the proposed definition of ‘utility’ cover those same entities to which an NBN corporation may supply services on a wholesale basis under clauses 10-16 of the Companies Bill.

 

The term ‘use’, when used in the context of a ‘facility’, has been further defined for clarity, and covers the use of a facility in isolation or in conjunction with one or more other things.

 

The ‘user network interface service’ definition is intended to cover the eligible services NBN corporations propose to offer which are known as:

            (a)        a user network interface service; or

            (b)        the user network interface service component of a fibre access service.

 



As noted above, the service covers physical access to the ports on the network termination init at the end-user premises.

 

Utilities are defined in the same manner as under the NBN Companies Bill.

 

The fifth bundled service is the ‘voice telephony facilitation service’. It is defined to means a carriage service that is a carriage service for the purpose of voice telephony.

 

Proposed section 151DB

 

As noted above, the refusal of interconnection at points which are not listed by the ACCC on its website is authorised conduct for the purposes of subsection 51(1) of the CCA. Proposed section 151DB sets out the mechanism for ascertaining how a POI becomes a ‘listed point of interconnection’, for the purposes of the proposed amendments.

 

Proposed subsection 151DB(1) requires the ACCC to compile a written list setting out points of interconnection. The ACCC is also able to vary that list at any time subject to the agreement by an NBN corporation. The requirement for the agreement of an NBN corporation reflects the previous approach to the determination of POIs on the NBN. Under this process, NBN Co and the ACCC agreed the number and locations of POIs based on the ACCC’s competition criteria and NBN Co’s planning rules. It is envisaged that future changes to the list of POIs would also need to be in accordance with the competition criteria and planning rules and would be determined by agreement between the ACCC and NBN Co. The current list of the 121 agreed points of interconnection, which has been published on the ACCC’s website, will form the basis of the ACCC’s list for the purposes of proposed subsection 151DB(1).

 

Proposed subsection 151DB(2) makes it clear that for the purposes of new Division 16 of Part XIB of the CCA, a point of interconnection specified in a list in force under proposed subsection 151DB(1) is a listed point of interconnection.

 

To ensure that there is public transparency, the ACCC is required to make the list of points of interconnection available to the public. Specifically, proposed subsection 151DB(3) requires the ACCC to publish a copy of a list in force under proposed subsection 151DB(1) on its website.

 

Such lists will not be legislative instruments nor will any variations to them (refer proposed subsection (4) and (5)). The list is administrative in character and determines no law. Any such lists would therefore not be not instruments which are legislative in character.

                                               

AMENDMENT (3)

 

Amendment (3) inserts at item 50 of Schedule 1 to the Access Bill, a new subsection 152AXB(3A). 

 

Consistent with the proposed authorisation under subsection 51(1) discussed above, proposed subsection 152AXB(3A) will ensure that an NBN corporation is not required to supply a service if a refusal by the NBN corporation to supply the service is authorised under section 151DA for the purposes of subsection 51(1).

 

                                                AMENDMENT (4)

 

Amendment (4) inserts at item 50 a new subsection 152AXB(4A). Consistent with the proposed authorisation under subsection 51(1) discussed above, proposed subsection 152AXB(4A) clarifies that subsection 152AXB (4) does not apply to require an NBN corporation to supply of a service at a location that is not a listed point of interconnection (within the meaning of section 151DB). This amendment ensures that an NBN corporation could not be required to supply one of the designated access services, on an unbundled basis, through the operation of the Category B Standard Access Obligations.

 

                                                AMENDMENT (5)

 

Proposed subsection 152AXC(1) of the Access Bill sets out the non-discrimination requirements for NBN corporations. It requires NBN corporations to supply declared services on a non-discriminatory basis, but sets out limited grounds for discrimination on the basis of creditworthiness, on the basis that the discrimination aids efficiency, or on grounds or circumstances specified by the ACCC in an instrument.

 

Amendment (5) inserts at item 50 of the Access Bill, a new subsection 152AXC(12). Consistent with the proposed authorisation under subsection 51(1) discussed above, this new subsection clarifies that conduct which is authorised under section 151DA for the purposes of subsection 51(1) is taken not to be discrimination for the purposes of section 152AXC. This amendment addresses the possibility that if an NBN corporation engages in authorised conduct, that it may then be found to have breached its non-discrimination obligations as a consequence of engaging in the authorised conduct. For example, in refusing to offer interconnection outside listed points of interconnection, NBN Co may be argued to be discriminating against access seekers which are not operating near those points of interconnection.

 

                                                AMENDMENT (6)

 

Proposed subsection 152AXD(1) of the Access Bill will prohibit an NBN corporation from carrying on seven specified activities in a way which discriminates between access seekers. Those activities effectively fall into three categories:

  • developing new, or enhancing existing, services;
  • providing information about new or existing services; and
  • providing information about technical and commercial systems and processes in place by which services are supplied.

 

Amendment (6) inserts at item 50 a new subsection 152AXD(5A). Consistent with the proposed authorisation under subsection 51(1) discussed above, this new subsection makes it clear that conduct which is authorised under section 151DA for the purposes of subsection 51(1) is taken not to be discrimination for the purposes of section 152AXD.

 

Proposed subsection 152AXD(5) provides that, if a special access undertaking given by an NBN corporation is in operation, subsection 152AXD(1) does not apply to an activity to the extent (if any) to which the activity is covered by a statement included in the undertaking in accordance with subsection 152CBA(3C). Consequently, if a special access undertaking given by an NBN corporation meets the requirements of subsection 152AXD(5), NBN Co’s proposed conduct in relation to the seven specified activities will have been approved by the ACCC.

 

                                                AMENDMENT (7)

 

Amendment (7) inserts a new item 58A, which provides for new subsections 152BCB(3B), (3C) and (3D).

 

Proposed subsection 152BCB(3B) prohibits the ACCC from making an access determination that would have the effect of requiring an NBN corporation to engage in conduct that is inconsistent with conduct authorised under section 151DA(2), or (3) or preventing an NBN corporation from giving a refusal that is authorised under subsection 151DA(3).

 

Proposed new subsection 152BCB(3C) prohibits the ACCC from making an access determination that would have the effect of preventing an NBN corporation from having cross-subsidisation provided that the extent of that cross-subsidisation is no greater than is reasonably necessary to achieve uniform national pricing of eligible services supplied by the NBN corporation to service providers and utilities.

 

This amendment ensures that the ACCC cannot use its normal regulatory powers to require an NBN corporation to engage in conduct that could compromise the Government’s policy objectives of delivering uniform national wholesale pricing.

 

For the purposes of proposed subsection 152BCB(3D), the terms, ‘cross subsidisation’, ‘eligible services’, ‘price related terms and conditions’, ‘uniform national pricing’ and ‘utilities’ are given the same meaning as in new section 151DA.

                       

                                                AMENDMENT (8)

 

Amendment (8) makes a minor change to item 60 of Schedule 1, by inserting the following subsection references: “, (3B) and (3C)” after “(3A)”. This amendment is required as a result of amendment (7), which inserts a new 152BCB(3B).

 

                                                AMENDMENT (9)

 

Amendment (9) inserts a new item 64A, which adds three new subsections, 152BDA(3B), (3C) and (3D).

 

Proposed new subsection 152BDA(3B) prohibits the ACCC from making binding rules of conduct that would operate in such a manner as either:

  • requiring an NBN corporation to engage in conduct that is inconsistent with conduct authorised under proposed sections 151DA(2) or (3); or
  • preventing an NBN corporation from giving a refusal that is allowed under proposed subsection 151DA(3).

 

Proposed new subsection 152BDA(3C) prohibits the ACCC from making binding rules of conduct that operate in such a manner as to prevent an NBN corporation from having cross-subsidisation, so long as the extent of that cross-subsidisation is no greater than is reasonably necessary) in relation to the price-related terms and conditions on which an NBN corporation supplies, or offers to supply, eligible services to one or more service providers or utilities.

 

This amendment ensures that the ACCC cannot use its normal regulatory powers to require an NBN corporation to engage in conduct that could compromise the Government’s policy objectives of delivering uniform national wholesale pricing.

 

Proposed new subsection 152BDA(3D) provides that the terms ‘cross-subsidisation’, ‘eligible services’, ‘price-related terms and conditions’, ‘uniform national pricing’ and ‘utilities’ in the context of proposed subsection 152BDA(3C) are to have the same meaning as under new section 151DA (see amendment (2)).

 

                                                AMENDMENT (10)

 

Amendment (10) modifies item 66 of Schedule 1, by inserting the following subsection references: “, (3B) and (3C)” after “(3A)”. This is a minor amendment flowing from amendment (9) - see the notes above.

 

                                                AMENDMENT (11)

 

Amendment (11) inserts a new item 76A, which adds three new subsections 152CBD(5A), (5B) and (5C).

 

Proposed new subsection 152CBD(5A) prevents the ACCC from rejecting a special access undertaking if that undertaking contains price-related terms and conditions (within the meaning of section 151DA), which are attributable to cross-subsidisation and the extent of such cross-subsidisation is no greater than is reasonably necessary. This amendment ensures that the ACCC cannot reject a special access undertaking for a reason that concerns cross-subsidisation. The amendment does not limit the ACCC’s obligation to determine that other parts of a special access undertaking are reasonable (within the meaning of section 152AH of the CCA).

The terms, ‘cross-subsidisation’, ‘eligible services’, ‘price-related terms and conditions’, ‘uniform national pricing’ and ‘utilities’ have the same meaning as in section 151DA (proposed subsection 152CBD(5B)).

                         

Proposed subsection 152CBD(5C) provides that the ACCC must not reject an undertaking for a reason that concerns a refusal authorised under new subsection 151DA(2), (3) or (4) for the purposes of subsection 51(1) and paragraph (2)(b) of this section does not apply to that refusal.

 

AMENDMENT (12)

 

Amendment (12) alters the heading to new Part 3 of Schedule 1 to the Access Bill, by removing the reference to “Ethernet”. This change is required as a result of the change proposed to the new definition of Layer 2 bitstream service - see amendment (13) below.

 

AMENDMENT (13)

 

Amendment (13) alters the first limb (at paragraph (a)) of the definition of Layer 2 bitstream service, which is proposed to be inserted into section 7 of the Tel Act. The new paragraph (a) to the definition would cover either a Layer 2 Ethernet bitstream service or a Layer 2 bitstream service specified in a legislative instrument made by the Australian Communications and Media Authority (ACMA). This change is designed to provide appropriate flexibility to accommodate possible technological change over time. The amendment responds to concerns raised by the Internet Society of Australia in its evidence to the Senate Environment and Communications Committee’s inquiry into the Access Bill. The Society noted that the term ‘Ethernet’ refers to an existing standard, and the use of the term could prevent innovation in the future if a newer technology were found by the industry to be more preferable than the Ethernet technology that is being rolled out today.

 

AMENDMENT (14)

 

Amendment (14) omits the simplified outlined under proposed section 140 in the Access Bill, and substitutes a new one. The outline is provided as an aid to readers. This proposed change represents a consequential one flowing from the changes to the substantive terms of proposed section 141 of the Access Bill, which are discussed at the notes relating to amendments (15) -(27)  below. 

 

The changes to the outline reflect the change in approach to defining the circumstances in which the obligation to supply a Layer 2 bitstream service apply. In summary, proposed section 141 prohibits owners of local access lines from using those lines to supply fixed-line carriage services where those lines are part of a telecommunications network that comes into existence (or were upgraded) on or after 1 January 2011, and such networks are used, or proposed to be used, to supply superfast carriage services wholly or principally, to residential or small business customers or prospective residential or small business customers and no Layer 2 bitstream service is available for supply.

 

The term ‘ wholly or principally’ is intended to have its ordinary meaning. By way of example, a network that predominantly served Government or large corporate customers would not be captured by the provisions, even if it had a small number of residential or small business customers as well.

 

 AMENDMENT (15)

 

Amendment (15) makes a minor consequential amendment to proposed 141(1) (at item 86) by replacing the reference “network unit” with the term, “local access line”.

 

AMENDMENT (16)

 

Amendment (16) makes a minor consequential amendment to proposed 141(1)(a) (at item 86) by replacing the reference “network unit” with the term, “local access line”.

 

                                                AMENDMENT (17)

 

Amendment (15) removes paragraph 141(1)(c) and inserts a replacement paragraph.

The criterion relating to the network being used, or proposed to be used, to supply a superfast carriage service wholly or principally to customers or prospective customers is now restricted to wholly or principally residential or small business customers, or prospective residential or small business customers, in Australia.

 

The amendment clarifies the operation of the original provisions in the Access Bill. Consultation with industry following the introduction of the bills indicated that there was a lack of certainty about the application of the provisions. In particular, there was concern that networks that primarily supplied government or large corporate customers were not clearly excluded in the original Access Bill. In this context, the Government’s announcement on 20 December 2010 that it would add a wholesale-only requirement to the level playing field arrangements indicated that this new requirement would be directed at superfast networks servicing residential and small business customers.

 

                                                AMENDMENT (18)

 

Amendment (18) amends proposed subparagraph 141(1)(e)(i) by omitting the words “after 25 November 2010” and substituting “on or after 1 January 2011”. This change is made to align the commencement date for the new level playing field requirements with the date announced by the Government on 20 December 2010 as the date from which amendments to the Access Bill to require new fixed line fibre networks built after 1 January 2011 for residential and small business purposes to be wholesale-only as well as offering a Layer 2 service on an open-access basis would have effect.

 

                                                AMENDMENT (19)

 

Amendment (19) amends proposed subparagraph 141(1)(e)(ii), which sets out one of the criteria for the application of the level playing field requirements. The new subparagraph establishes a new date, 1 January 2011, as the trigger date for a network alteration or upgrade that results in a network becoming capable of being used to supply a superfast carriage service to residential or small business customers, or prospective residential or small business customers, in Australia. This will align with the date for the proposed new wholesale-only requirement, as described in relation to amendment (18).

 

                                                AMENDMENT (20)

 

Amendment (20) omits proposed subparagraph 141(1)(f). This change is made because the former paragraph (f) provided for a limited exemption for network units used wholly to supply carriage services to a single end-user, where that end-user is a public body or a company. As a result of the scope for the new Layer 2 requirements being reframed (now targeting networks for residential or small business customers), provision for such an exemption is no longer required. Networks servicing customers that are public bodies and companies are not captured by the reframed requirements as they are not networks wholly or principally for supplying carriage services to residential and small business customers.

 

                                                AMENDMENT (21)

 

Amendment (21) inserts two new notes at the end of subsection 141. These two notes alert the reader that proposed section 141B refers to deemed networks and proposed section 141A provides for exemptions to the requirements.

 

 

AMENDMENT (22)

Amendment (22) replaces proposed subsections 141(2) and (3) (at item 86 of Schedule 1 to the Bill) with two new subsections. Proposed new subsection (2) sets out the prohibition relating to sole owners of local access lines. Proposed new subsection (3) deals with multiple owners of local access line.

 

In the circumstance where a line is owned by one person only, that person is prohibited from using that line, either individually or with another person/s, to supply a fixed-line carriage service or to allow or permit another person to use the line to supply a fixed-line carriage service.

 

In the circumstance where a line is owned by two or more people, any of the owners is prohibited from using the local access line, either alone or jointly with one or more other persons, to supply a fixed-line carriage service or to allow or permit another person to use the line to supply a fixed-line carriage service. These provisions are included as anti-avoidance measures in light of there being possibly more than one person that is capable of using or allowing others to use the local access lines.

 

                                                AMENDMENT (23)

 

Amendment (23) omits new subsections 141(5) to (9) (relating to exemptions) in their entirety. These subsections are now set out at proposed new section 141A (see amendment (27)).

                                   

                                                AMENDMENT (24)

A clarification regarding the meaning of ‘alter’ is included in proposed subsection 141(10) by amendment (24). This clarification expressly states that the meaning of the term, ‘alter’ in relation to telecommunications networks, is affected by section 141E. This is required because, under its ordinary meaning, the term could include extensions of networks, which are to be given a specific meaning by proposed section 141E.

 

                                                AMENDMENT (25)

A new definition of local access line in subsection 141(10) is inserted at item 86 by amendment (25). The term is defined by reference to the meaning given by section 141D.

AMENDMENT (26)

 

Amendment (26) inserts a new definition of ‘small business customer’ and ‘upgrade’ at item 86.

 

The term ‘small business customer’ is central to the definition of the type of networks to which the obligation to provide a Layer 2 bitstream service applies under the amendments to proposed subsection 141. The term is defined under section 141G to cover two types of end users. Firstly, it covers a customer who is a small business employer (within the meaning of the Fair Work Act 2009 ) (which is intended to cover entities carrying on business and who employ fewer than 15 employees). The second category covers natural persons who conduct a business but who do not actually employ any person (this category is intended to cover sole traders etc).

 

A clarification regarding the meaning of ‘upgrade’ is included in subsection 141(10) by amendment (24). This clarification expressly states that the meaning of the term, ‘upgrade’ in relation to telecommunications networks, is affected by section 141F. This is required because, under its ordinary meaning, the term could include extensions of networks, which are to be given a specific meaning by proposed section 141E.

 

AMENDMENT (27)

 

Amendment (27) inserts new sections 141A, 141B, 141C, 141D, 141E, 141F and 141G.

 

Proposed section 141A sets out an exemption provision similar to the exemption provision that was formerly set out under proposed section 141 of the Access Bill, and which is to be deleted by amendment (23).

 

Proposed new subsection 141A(1) would confer power on the Minister for Communications to, by written instrument, exempt a specified network from proposed section 141.  This is a new exemption and provides for the Minister to exempt an entire telecommunications network from the operation of proposed section 141.

 

Proposed new subsection 141A(2) provides that the Minister may exempt a specified local access line owner from proposed section 141. This exemption is similar to former proposed subsection 141(6), but the term ‘network unit’ has been replaced by ‘local access line’.

 

Proposed new subsection 141A(3) provides that the Minister may exempt a specified owner from proposed subsections 141(2) and (3). This exemption is similar to former proposed subsection 141(5).

 

The accompanying notes to proposed subsections 141A(1), (2) and (3)) reminds readers that subsection 13(3) of the LIA provides guidance in relation to specification in legislation by class.

 

An instrument under proposed subsection 141A(1),(2) or (3) may be unconditional or subject to such conditions as specified in the instrument. A condition that could be provided for in the instrument may, for instance, relate to the circumstances in which the exemption would be in effect. This provision is similar to former proposed subsection 141(7).

 

It is envisaged that the Minister, in exercising his powers of exemption under proposed 141A could consider a range of factors including:

•          the size of the network concerned (e.g. premises serviced);

•          the proposed duration of the exemption;

•          the basis on which the exemption would cease;

•          the impact on investors of having to change to existing plans, particularly where projects are underway, contracts are signed, or negotiations are well advanced and this can be demonstrated;

•          the relative benefits and disadvantages for end-users, including the period they may need to wait for superfast broadband;

•          the types of customers predominantly served by the network;

•          the technological capabilities and adaptability of the technologies involved;

•          the availability of other wholesale services on the network (networks would also be subject to normal telecommunications regulation, including access regulation);

•          significant changes in a carrier’s operating environment that would have a demonstrable and material  impact on its planned operations; and

•          the potential impact on NBN Co’s ability to deliver on its national objectives.

 

Applications for exemptions would be considered on their merits, and the matters set out above are indicative and do not necessarily limit the factors the Minister could consider.

 

Proposed subsection 141A(5) ensures that before the Minister can make an instrument

under proposed subsection 141A(1),(2) or (3), the Minister must consult with the ACCC and the ACMA. This exemption is identical to former proposed subsection 141(8).

 

An exemption instrument under proposed subsections 141A(1), (2) or (3) is not a legislative instrument for the purposes of the LIA (see subsection (6)). Exemption instruments are not legislative instruments for the purposes of the LIA because they simply reflect the application of the operative provision in a particular case. This statement is similar to former proposed subsection 141(9).

 

Proposed subsection 141A(7) advises that the term ‘local access line’ is defined in proposed new section 142D (see below).

 

Proposed section 141B - Deemed networks

 

Proposed section 141B provides that certain alterations, upgrades or extensions of networks will be considered to be networks in their own right and taken to have come into existence after 1 January 2011. This would mean that they would be subject to proposed section 141. Proposed section 141B also sets out certain exemptions from the deemed networks. These provisions will provide practical exemptions to permit pre-existing networks servicing residential and small business customers to be extended to meet local consumer demand or pre-existing contracts.

 

The first class of deemed networks covers telecommunications networks which are altered or upgraded on or after 1 January 2011 and, as a result of the alteration or upgrade, a part of the network became capable of being used to supply a superfast carriage service to actual or prospective residential or small business customers in Australia (proposed subsection 141B(1).



The second class of deemed networks covers telecommunications networks which are extended on or after 1 January 2011 and the extended part of the network is capable of being used to supply a superfast carriage service to actual or prospective residential or small business customers (proposed subsection 141B(2). 

 

While inherently directed at network extensions that are wholly or principally for the supply of superfast carriage services to residential and small business customers, proposed subsection 141B(2) is otherwise broad in its operation. It is, however, subject to exemptions which limit its scope. The deemed network extension rule will not apply to extensions of a telecommunications networks where a part of the infrastructure of that network is physically located in a particular area that is being or was developed as a particular stage of a real estate development project and the network is extended to another area that is being, or is to be, developed as another stage of the project (proposed subsection 141B(3)), This exemption provides certainty for carriers that have already rolled out networks in parts of real estate developments that they can continue to roll out in other parts of the same development without being subject to proposed subsection (2).  

 

Furthermore, proposed subsection 141B(4)  provides that the deemed extension rule under subsection (2) does not apply to extensions of a telecommunications network that was in existence before 1 January 2011 and which is extended on or after 1 January 2011, and no point on the infrastructure of the extension is located more than one kilometre (or a longer distance is specified in the regulations) from a point on the infrastructure of the network as the network stood immediately before 1 January 2011. This exemption will clarify that carriers may build minor extensions adjacent to their existing networks without being subject to subsection (2).

 

Proposed subsection 141B(5) provides that regulations may provide that subsection (2) does not apply to a specified extension of a telecommunications network. This provision provides flexibility to ensure that, if there are circumstances in which it is considered subsection (2) should not apply, but an extension would otherwise be captured, then a regulatory exemption may be made. A note is inserted to remind readers that the Acts Interpretation Act 1901 deals with specification by class.

 

Proposed section 141C describes particular installations and connections which will not be considered to be an alteration, upgrade or extension. This provision clarifies that carriers with superfast networks that came into existence before 1 January 2011 can continue to connect customers within the footprints of those networks without being subject to proposed section 141.

 

The following installation and connection is covered by the proposed section:

·          a line is or was installed for the purposes of connecting particular premises to a telecommunications network; and

·          the installation of the particular line enables or enabled an end user to become a customer in relation to carriage services supplied using the network; and

·          the end user’s premises is in close proximity to the line that forms part of the infrastructure of the network; and

·          the relevant network is capable of being used to supply a superfast carriage service (as defined); and

·          the network came into existence before 1 January 2011.

 

Proposed section 141D defines the term, ‘local access line’ and sets out the circumstance where a line will not be taken to form part of a local access line. Specifically, proposed subsection (141D(1)) defines a local access line to be a line that forms part of the infrastructure of a local access network.

 

A line which is on the customer side of the boundary of a telecommunications network will not be a local access line (see proposes subsection 141D(2). The customer side of the boundary is determined by reference to section 22 of the Tel Act (see proposed subsection 141D(3)). Proposed subsection (4) provides that, for the purposes of the section, ‘local access network’ has the meaning generally accepted within the telecommunications industry. A local access network would include drop cables and distribution lines, and would be largely analogous to the current customer access network. It is not intended that backhaul or transmission lines would be subject to proposed section 141.

 

Proposed section 141E provides that an alteration of a telecommunications network does not include an extension of the network, for the purposes of the new Part. This is required as ordinarily the term ‘alteration’ could capture the concept of an extension . An alteration could refer to another kind of change to a network within its existing footprint, such as the replacement of copper lines with fibre.

 

Proposed section 141F  provides that an upgrade of a telecommunications network does not include an extension of the network, for the purposes of the new Part. This is required as ordinarily the term ‘upgrade’ could capture the concept of an extension. An upgrade could refer to the installation of new software and hardware in the network, such that it becomes capable of being used to supply a superfast carriage service.

 

Proposed section 141G defines small business customer as covering two types of customers:

  • a customer who is a small business employer (within the meaning of the Fair Work Act 2009); or
  • a self-employed person carrying on a business (e.g. sole trader).

 

The definition of small business customer in the Fair Work Act 2009 has been adopted to avoid confusion. There has been a plethora of definitions of small business, and the use of this definition provides certainty and consistency across Commonwealth legislation.                                         

                                                AMENDMENT (28)

 

Proposed new Part 8

 

Amendment (25) inserts a new Part 8 into the Tel Act, which sets out the proposed new rule relating to the supply of eligible services in certain situations to be on a wholesale-only basis.

 

The Government announced on 20 December 2010 that amendments would be made to the Access Bill to require new fixed line fibre networks built after 1 January 2011 for residential and small business purposes to be wholesale-only as well as offering a Layer 2 service on an open-access basis.

 

Division 1 - Introduction

 

Proposed section 142 provides a simplified outline of proposed new Part 8 of the Tel Act and is included to assist the reader. In summary, proposed section 143 would prohibit a controller (determined by reference to proposed new subsection 143(2), 152, 153, 154, 155) of an non-NBN telecommunications network from using a local access line to supply eligible services to a person other than a carrier or a service provider, if:

·          the local access line actually is a component of the network’s infrastructure;

·          the network used, or is proposed to be used, to supply a superfast carriage service  (defined in proposed new subsection 142A) mainly or solely for residential or small business customers, or prospective residential or small business customers, in Australia (broadly same category of networks covered by new Part 7); and

·          such a network came into existence, or was upgraded, on or after 1 January 2011.

 

The use of the term ‘local access line’ is consistent with the use of the term in proposed new Part 7.

 

Proposed section 142A sets out the definitions for the following key terms used in new Part 8.

A clarification regarding the meaning of ‘alter’ is included in subsection 142A by amendment (28). This clarification expressly states that the meaning of the term, ‘alter’ in relation to telecommunications networks, is affected by section 159. This is required because under the ordinary meaning of the term, ‘alter’ could include extensions. This mirrors Part 7.

 

The term, ‘eligible service’ is given the same meaning as in section 152AL of the Competition and Consumer Act 2010 (see item 86 of Schedule 1 to the Access Bill) .

 

For the purposes of Part 8, the following terms are defined by reference to the definitions used in clause 5 of the National Broadband Network Companies Bill (Companies Bill):

·          electricity supply body;

·          gas supply body;

·          national broadband network;

·          rail corporation;

·          sewerage services body;

·          storm water drainage services;

·          storm water drainage services body; 

·          State or Territory road authority; and

·          water supply body.

 

The term ‘local access line’ is defined by reference to new section 158 - see below.

A clarification regarding the meaning of ‘upgrade’ is included in subsection 142A. This clarification expressly states that the meaning of the term, ‘upgrade’ in relation to telecommunications networks, is affected by section 160. This is required because, under the ordinary meaning of the term, ‘upgrade’ could include extensions. This mirrors proposed section 141F.

 

The term ‘small business customer’ is defined in the same manner as proposed section 141G of new Part 7 (see amendment (27)).

Division 2 Supply of eligible services to be on wholesale basis

 

Proposed subsection 143(1)

 

Proposed subsection 143(1) specifies which local access lines will be subject to the new wholesale-only restriction.  They are those lines that form part of the infrastructure of a telecommunications network in Australia and the network is used, or proposed to be used, to supply a superfast carriage services wholly or principally to residential or small business customers, or prospective residential or small business customers, in Australia. As is the case with Part 7, the network must either have come into existence on or after 1 January 2011, or have been altered or upgraded on or after 1 January 2011 and, as a result of the alteration or upgrade, the network became capable of being used to supply a superfast carriage service to residential or small business customers, or prospective residential or small business customers, in Australia.

 

The obligation on a person who controls a network, or an associate of such a person, falling within the scope of proposed section 143(1) to operate on a wholesale-only basis is set out in proposed subsection 143(2). The provision prohibits the supply of an eligible service unless the service is supplied to a carrier or a service provider.

 

The concept of control is central to the provision.  The restriction applies to any person who is in a position to exercise control of the network, or a person who is an associate of such a person. Such persons are prohibited from using the relevant networks, either acting individually or jointly with one or more other persons, to supply an eligible service to any person unless the service is supplied to a carrier or a carriage service provider.

 

The reference to acting individually or jointly is necessary as there could be more than one person who is in a position to control a network.

 

Proposed new section 154 provides clarification about control of a company. Proposed new section 155 provides further clarification on when a person is taken to be, for the purposes of new Part 8, to be in a position to exercise control of a network. 

 

If a person who is subject to a requirement under proposed subsection 143(2) engages in conduct which breaches the applicable requirement, they will have committed an offence (refer proposed subsection 143(1)) and the penalty is 20,000 penalty units. Presently, under the Crimes Act 1914 , a penalty unit is valued at $110. The penalty for contravention of the rules at proposed subsections 143(1) matches the penalty for contravention of section 42 of the Tel Act, which provides the rule that a network unit must not be used to supply a carriage service to the public unless the owner of the network holds a carrier licence or there is a nominated carrier declaration in force in relation to the network. The penalty unit figure is appropriate to the provisions, given the importance of the public policy objectives at which they are directed, namely, ensuring that uniform pricing and comparable outcomes for end-users are available throughout Australia.

 

The Minister may, by written instrument, exempt a specified network (refer to proposed subsection 144(4)) or a specified person (refer to proposed subsection 144(2)) from proposed subsection 143(1). This exemption power is included to provide flexibility so that if there are circumstances in which the application of the obligations have unforeseen and disproportionate consequences, the obligations could be removed.

 

It is envisaged that the Minister, in exercising his power of exemption under proposed section 144, could consider a range of factors similar to those that could be considered in relation to an exemption under proposed section 141A. As noted above, applications for exemptions would be considered on their merits, and the matters set out at proposed section 141A are indicative and do not necessarily limit the factors the Minister could consider.

 

Proposed subsection 144(3) provides that an instrument under proposed

subsection 144(1) or (2) may be unconditional or subject to such conditions as

specified in the instrument. A condition that could be provided for in the instrument

may, for instance, relate to the circumstances in which the exemption would be in

effect. Proposed subsection 144(4) ensures that before the Minister can make an instrument under proposed subsection 144(1) or (2), the Minister must consult with the ACMA and the ACCC. Consultation is required to ensure the views of the two relevant regulators are considered.

 

Proposed subsection 144(5) provides that an exemption instrument under proposed subsection 144(1) or (2) is not a legislative instrument for the purposes of the LIA. This is to provide industry with the necessary certainty.

 

Proposed sections 144-151 sets out a number of exemptions to the general rule about the provision of eligible services by controllers of networks falling within the scope of proposed section 143(2) only being permitted to supply eligible services on a wholesale basis (ie only to another carrier or carriage service provider).  The new sections 145-151 would permit such network controllers to supply network management services to a number of utilities, including transport authorities, electricity supply bodies, gas supply bodies, water supply bodies, sewage service bodies, storm water drainage services bodies and State or Territory road authorities. 

 

For the purposes of Part 8, the following terms are defined by reference to the definitions used in clause 5 of the National Broadband Network Companies Bill (Companies Bill):

·          electricity supply body;

·          gas supply body;

·          national broadband network;

·          rail corporation;

·          sewerage services body;

·          storm water drainage services;

·          storm water drainage services body; 

·          State or Territory road authority; and

·          water supply body.

 

The exemptions provided for under proposed new sections 145 -151 mirror the exemptions provided to NBN corporations under clauses 10-16 of the National Broadband Network Companies Bill 2010. The exemptions in that Bill reflect the fact that utilities are currently exempted, under the Tel Act, from being considered as carriers or carriage service providers, and therefore could not receive a service from an NBN corporation without specific exemptions.

 

Proposed sections 145 -151 will enable network controllers to supply eligible services to utilities where the sole use of the services is for use by the utility for activities that are necessary or desirable for the workings of their services. These utilities are limited to transport authorities, electricity supply bodies, gas, supply bodies, water supply bodies, sewerage services supply bodies, storm water, drainage services bodies and State or Territory road authorities. This is to ensure such utilities have direct and ready access to such wholesale networks for the provision of ‘smart’ services that are an increasingly important aspect of effective and efficient infrastructure management.

 

The exemption for the listed bodies only applies if the carriage service is supplied on the basis that the body is prohibited from re-supplying the carriage service. This limitation is included to make it abundantly clear that such bodies are prohibited from re-selling or on-supplying the carriage service acquired directly from an NBN corporation to any other person .  

 

Division 3 - Other provisions

 

New Division 3 comprises new sections 152-160.

 

Proposed new section 152 sets out the rules for determining an associate of a controller of a network, for the purposes of new Part 8.  The intention is to capture both controllers of the relevant networks and their associates. The inclusion of the concept of ‘associates’ is designed as an anti-circumvention measure. It is possible that a vertically integrated provider may establish a subsidiary which supplies services over the network, but which the service provider in effect controls. Consequently, the obligation to supply services on a wholesale-only basis should fall on both the controller and the associate.

 

The definition of ‘associate’ is based on the definition at section 86 of the Tel Act, and  provides that the following persons will be considered an associate of a person (the controller) in relation to control of a telecommunications network or a company;

·          a partner of the controller; or

·          if the controller or another person who is an associate of the controller under another paragraph receives benefits or is capable of benefiting under a trust—the trustee of the trust; or

·          a person (whether a company or not) who acts, or is accustomed to act; or under a contract or an arrangement or understanding (whether formal or informal) is intended or expected to act; in accordance with the directions, instructions or wishes of, or in concert with the controller; or the controller and another person who is an associate of the controller under another paragraph; or

·          another company if the other company is a related body corporate of the controller for the purposes of the Corporations Act 2001 ; or the controller, or the controller and another person who is an associate of the controller under another paragraph, are in a position to exercise control of the other company.

 

Proposed subsection 152(2) sets out circumstances where persons will be taken not be an associate. This is where the ACCC is satisfied that:

·          the two persons do not act together in any relevant dealings relating to the network or company; and

·          neither of the persons is actually in a position to exert influence over the business dealings of the other in relation to the network or company.

 

Proposed subsection 152(2) recognizes that the definition of ‘associate’ in proposed subsection 152(1) is only intended to be applied in respect of dealings relating to control of a new network, or a network that has been extended, altered or upgraded. The ACCC is therefore given the discretion to ensure that the definition is not applied too widely.

 

Proposed section 153 is inserted for the avoidance of doubt, and clarifies that control under new Part 8 includes control as a result of a trust, an agreements, arrangements, understandings or practice regardless of whether such arrangements are based on legally recognised rights. This is intentionally very broad.

 

Proposed section 154 clarifies that for the purposes of new Part 8, the question of whether a person is in a position to exercise control of a company is to be determined under Schedule 1 to the Broadcasting Services Act 1992 , but the definition of associate in subsection 6(1) of the Broadcasting Services Act 1992 does not apply and instead the definition of 'associate' in proposed new section 152 of this Bill applies.

 

Proposed section 155 sets out three main circumstances when a person (whether alone or together with one or more other persons) will be taken to be in a position to exercise control of a telecommunications network for the purposes of new Part 8. These include legally or beneficially owning the network, or being in a position whether directly or indirectly to exercise control of the operation of all or part of the network, or to exercise control of the selection of the kinds or services that are supplied using the network, or to exercise control of the supply of services using the network. It also includes tests for being in a position to veto any action taken by the board of directors of a company, or where directors are accustomed to act in accordance with the directions, instructions or wishes of the person or persons. These clauses capture direct and indirect control measures, and ensure that hidden forms of control cannot be used to avoid the regulatory requirements.

 

Proposed subsection 155(2) is inserted to clarify that an employee is not to be regarded as being in a position to exercise control of a network under subsection (1), except through an association with another person, purely because of being an employee. This will ensure that the provisions are appropriately targeted.

 

Proposed subsection 155(3) is inserted for the avoidance of doubt, and makes it clear that more than one person may be in a position to exercise control over a network.

 

Proposed section 156- Deemed networks

 

Proposed section 156 sets out circumstances in which extensions or upgrades to networks on or after 1 January 2011 will be treated as being networks in their own right and taken to have  come into existence on or after 1 January 2011.  Such deemed networks will be subject to the prohibition set out in proposed section 143.

 

The first class of deemed networks covers telecommunications networks which are altered or upgraded on or after 1 January 2011 and, as a result of the alteration or upgrade, a part of the network became capable of being used to supply a superfast carriage service to actual or prospective residential or small business customers in Australia (proposed subsection 156(1)).



The second class of deemed networks covers telecommunications networks which are extended on or after 1 January 2011 and the extended part of the network is capable of being used to supply a superfast carriage service to actual or prospective residential or small business customers (proposed subsection 156(2). 

 

While inherently directed at network extensions that are wholly or principally for the supply of superfast carriage services to residential and small business customers, proposed subsection 156(2) is otherwise broad, but it is limited by a number of exemptions are then set out which limit the subsection. The deemed network extension rule will not apply to extensions of a telecommunications networks where a part of the infrastructure of that network is physically located in a particular area that is being or was developed as a particular stage of a real estate development project and the network is extended to another area that is being, or is to be, developed as another stage of the project (proposed subsection 156(3)). As with the similar exemption at proposed section 141D, this exemption provides certainty for carriers that have already rolled out networks in parts of real estate developments that they can continue to roll out in other parts of the same development without being subject to proposed subsection (2).

 

Furthermore, proposed subsection 156(4) provides that the deemed extension rule under new subsection 156 (2) does not apply to the extensions of a pre- 1 January 2011 telecommunications network which is extended on or after 1 January 2011, and no point on the infrastructure of the extension is located more than one kilometre (or a longer distance is specified in the regulations) from a point on the infrastructure of the network as the network stood immediately before 1 January 2011. As with proposed section 141D, this exemption will clarify that carriers may build minor extensions adjacent to their existing networks without being subject to subsection (2).

 

Proposed subsection 156(5) provides that regulations may provide that subsection (2) does not apply to a specified extension of a telecommunications network. This is designed to give flexibility to the Government. A note is inserted to remind readers that the Acts Interpretation Act 1901 deals with specification by class.

 

Proposed section 157 - Certain installations and connections not to be taken to be extensions, alterations or upgrade

 

Proposed section 157 describes the circumstance where installations and connections which will not be considered to be an alteration, upgrade or extension for the purposes of the new wholesale-only requirements under new Part 8. This provision clarifies that carriers with superfast networks that came into existence before 1 January 2011 can continue to connect customers within the footprints of those networks without being subject to proposed section 156.

 

The following installations and connections are covered by the deeming provision, namely where

·          a line is or was installed for the purposes of connecting particular premises to a telecommunications network; and

·          the installation of the particular line enables or has enabled an end user to become a customer in relation to carriage services supplied using the network; and

·          the end user’s premises is in close proximity to the line that forms part of the infrastructure of the network; and

·          the relevant network is capable of being used to supply a superfast carriage service (as defined); and

·          the network came into existence before 1 January 2011.

 

Proposed subsection 158(1) defines a local access line to be a line that forms part of the infrastructure of a local access network. The treatment of a local access line here mirrors proposed subsection 141D.

 

Proposed section 159  - Alteration

 

Proposed section 159 mirrors proposed section 141E, but it applies to new Part 8. This is required as ordinarily the term ‘alteration’ could capture the concept of an extension .

 

Proposed section 160 - Upgrade

 

Proposed section 160 mirrors proposed section 141F, but it applies to new Part 8. This is required as ordinarily the concept of an ‘upgrade’ to a telecommunications network would capture the concept of an extension .

 

 



  AMENDMENT (29)

 

Amendment (29) omits “subsection 46(3) of” from the note under proposed subsection 389B(4) of the Tel Act. This is a correction of a minor referencing error.

 

AMENDMENT (30)

 

Amendment (30) inserts “(1)” before “For” at section 152AGA. This is a correction of a minor error in section referencing.

 

AMENDMENT (31)

 

Amendment (31) omits paragraphs 152AGA(a) and (b) and substitutes in their place two new paragraphs, 152AGA(1)(a) and (b). This change is consequential as a result of the new specification of networks covered by section 141(1).

 

AMENDMENT (32)

 

Amendment (32) omits “after 25 November 2010” and substitutes “on or after 1 January 2011” at 152AGA(1)(d)(i).  This represents a consequential change flowing from the amendments to new Part 7 and new Part 8.

 

AMENDMENT (33)

 

Amendment (33) omits subparagraph 152AGA(d)(ii) and substitutes a replacement paragraph. This change is consequential to the new specification of networks covered by section 141(1) and 143(1), which cover networks altered or upgraded on or after 1 January 2011 and, as a result of the alteration or upgrade, the network became capable of being used to supply a superfast carriage service to residential or small business customers, or prospective residential or small business customers, in Australia.

 

AMENDMENT (34)

 

Amendment (34) omits paragraph 152AGA(e) as it is no longer required as a result of the reframing of the Layer 2 bitstream obligation.

 

AMENDMENT (35)

 

Amendment (35) adds five new subsections and a note to section 152AGA.

 

Proposed new subsection 152AGA(2) clarifies that a network is not a designated superfast telecommunications network for the purposes of this Part if, under subsection 141A(1), the network is exempt from subsection 141(1).

 

Proposed new subsections 152AGA(3) -(7) are in substantially the same terms as proposed new sections 141B(1)-(5) and 156(1)-(5).

 

The accompanying note to proposed subsection 151AGA(7) reminds readers that new section 141 deals with the supply of Layer 2 bitstream services.

 

Proposed new subsection 152AGA(8) (relating to certain installations and connections being taken to be an extension, alteration or upgrade) is in substantially the same terms as proposed new sections 141C and 157.

 

 

Proposed new subsection 152AGA(9)  provides a definition of ‘small business customer’ for the purposes of section 152AGA. This is substantially the same as new sections 141G.

 

Proposed new subsection 152AGA(10) (regarding the meaning of alteration)  is in substantially the same terms as proposed new sections 141E and 159.

 

Proposed new subsection 152AGA(11) (regarding the meaning of upgrade) is in substantially the same terms as proposed new sections 141F and 160.