Title Telstra Corporation and Other Legislation Amendment Bill 2021
Database Explanatory Memoranda
Date 09-02-2022 07:18 PM
Source House of Reps
System Id legislation/ems/r6785_ems_3ec21faf-1280-499a-9d07-fe6df7f08a2f


Telstra Corporation and Other Legislation Amendment Bill 2021

 

2019 - 2020 - 2021

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

Telstra Corporation and Other Legislation                               Amendment BILL 2021

 

 

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Communications, Urban Infrastructure, Cities and the Arts, the Hon Paul Fletcher MP)

 


 

Telstra Corporation and Other Legislation                               Amendment Bill 2021

 

OUTLINE

The Telstra Corporation and Other Legislation Amendment Bill (the Bill) would amend legislation relating to Telstra Corporation Limited (Telstra) to ensure regulatory equivalency of obligations across the restructured Telstra group, as suggested in Telstra’s proposed Scheme of Arrangement pursuant to the Corporations Act 2001. The restructured group will comprise the following main entities:

-          Telstra Group Limited (Telstra Group) – this entity will be a new parent company that holds the other three Telstra entities.

-          Telstra InfraCo Limited (InfraCo) – this entity will be the current Telstra entity (known as “Telstra Corporation Limited”) and will in the future only operate Telstra’s passive infrastructure assets including ducts, fibre, rural and remote copper, exchange buildings, and poles.

-          Amplitel (Amplitel) – this is a new entity and will own and operate most of Telstra’s passive tower assets. Telstra sold a 49 per cent non-ownership share of its Amplitel holdings to a consortia. A unit trust will also be established to operate all of the towers owned by Amplitel and the remaining towers owned by Telstra.

-          Telstra Limited (ServeCo) – this is a new entity and will operate Telstra’s current retail business and own the base stations, and other network units in Telstra’s network, as well as its data centres, existing spectrum assets and some non-shareable towers. Most of Telstra’s employees will be employed by ServeCo.

Telstra does not require Government approval to undertake the restructure. However, without legislative and regulatory change, a range of key obligations that currently apply to Telstra would become ineffective or cease to apply to the successor entities. These obligations cover core parts of Telstra’s regulatory arrangements (including the restrictions on foreign ownership and the Universal Service Obligation (USO)), other consumer safeguards (including emergency call services and priority assistance) and the requirement for Telstra to provide other carriers with access to its transmission towers.

The purpose of this Bill is to ensure the Commonwealth’s policy interest in protecting consumers, promoting competition and supporting Telstra’s public interest roles in Australia’s telecommunications system is not diminished as a result of the restructure. The Bill has been developed on the principle of regulatory equivalence – that is, the regulatory obligations that currently fall on Telstra should also fall on the entities in the new corporate group in roughly the same way. While Telstra is free to restructure its business as it sees fit, successive Parliaments have placed and maintained a range of obligations on that business, and it is important that these remain effective.

 

 

 

The Bill seeks to address several related policy issues that arise from the restructure. The Bill:

1)      Creates a concept in the Telecommunications Act 1997 to re-point Telstra-specific obligations that would otherwise cease to apply to new Telstra entities (referred to as a ‘Telstra successor company’ and ‘designated Telstra successor company’); and

 

2)      Closes a loophole that allows carriers, including Telstra, to avoid facilities access obligations by transferring assets such as towers and underground facilities, into subsidiaries or other related entities.

To re-point obligations, the Bill generally defines three new categories of entities in the Tel Act:

1.      Demerged Telstra companies, which are the main Telstra entities (described in the Background section above). The Bill specifies that Telstra Group Limited, Telstra InfraCo Limited, Amplitel Pty Ltd and Telstra Limited (ServeCo) are demerged Telstra companies.

2.      Telstra successor companies, which are Telstra entities to which Telstra-specific obligations in the Telstra Corporations Act 1991 apply, and

3.      Designated Telstra successor companies, which are Telstra entities to which Telstra-specific obligations in other Acts and secondary legislation apply, which are generally telecommunications specific obligations.

Telstra specific obligations

The Bill places existing retail obligations on ServeCo within the Telstra group, and also
re-points corporate obligations (largely in terms of obligations specified in the
Telstra Corporations Act 1991 (the Telstra Act)) to all of the main entities in the Telstra group.

The Bill also includes a power to make a declaration to specify an entity or a class of entities as a Telstra successor company, or a designated Telstra successor company, or for the entity to be excluded altogether. Once specified, an entity would need to comply with all obligations, a class of obligations or specific obligations, as set out in the relevant instrument. These declarations are limited to constitutional corporations or those engaged in a telecommunications business as defined under the Bill. Alternatively, the Minister may also, by legislative instrument, declare that a specified company is not a Telstra successor company, or a designated successor company, for the purposes of each prescribed telecommunications law.

Carrier obligations

In addition to Telstra-specific obligations, Telstra is subject to a range of general obligations by right of being a licensed carrier under the Tel Act. ServeCo will need to apply for, and receive, a carrier licence to legally function as a telecommunications provider. The Bill recognises that in the event that a carrier licence is not forthcoming, that continuity of service remains paramount, and that it would not be in the public interest for the Telstra group to cease providing services.

The Bill mitigates this potential risk by providing that the newly created entities that own or operate network units (such as ServeCo), and who do not have a carrier licence, are deemed to hold a carrier licence until such time as either a new carrier licence application under s52 of the Tel Act has been approved or rejected by the Australian Communications and Media Authority (ACMA).

An entity with deemed carrier licences (i.e. ServeCo) is also required, within five days, to submit an application for a licence. If no application is submitted within that timeframe, one is taken to have been received by ACMA and carrier licence conditions will continue to apply to these deemed licence holders. This ensures obligations associated with carrier licences continue between the passage of the Bill and the commencement of the restructure. Carrier licence conditions that sit with InfraCo and that are better suited to ServeCo will be transferred to ServeCo as part of the carrier licence conditions attached to the deemed carrier licence, and any subsequent carrier licence approved for ServeCo.

Directions powers

The Bill provides powers for the Minister, and in some cases the ACMA, to direct a Telstra subsidiary to meet its obligations or assist in the delivery of the obligations of another Telstra subsidiary.

The ACMA’s direction power allows it to ensure its compliance and enforcement activities continue to apply to entities within the Telstra Group, where satisfied that the relevant entity “has failed, is failing, or is likely to fail” to fulfil an obligation under the relevant instrument and the directed entity has the capability or could reasonably acquire the capability to comply with the direction (including the technical, operational and organisational capability).

The ministerial directions powers allow the Minister to direct an entity to assist a Telstra successor company to fulfil specified obligations where the Minister is of the view that an entity ‘has failed, is failing or is likely to fail’ to meet that obligation. The directed entity must have the ability, or the ability to acquire the ability, to comply with a direction. The powers also provide for a penalty for failure to comply with a direction.

Access to supplementary facilities and telecommunications transmission towers

A key set of obligations placed on Telstra is the supplementary facilities and transmission tower access regime (the facilities access regime), which requires that carriers provide other carriers with access to bottleneck infrastructure as a means of promoting competition.

The Government has identified that the facilities access regime may not apply to Telstra
post-restructure in the way it was originally intended. Whilst the facilities access regime provides that a carrier that ‘own or operate’ assets must provide access to them, it is silent in terms of what ‘own or operate’ means. The Government is concerned that this lack of specificity may give rise to an interpretation that a subsidiary or sibling companies of a carrier, that owns towers or other facilities is not ‘owned or operated’ by the carrier, and therefore that the facilities access framework would not apply.

That interpretation is contrary to the Government’s policy intention – the facilities access framework exists to provide access to infrastructure that may be a bottleneck. If a carrier were merely able to create a subsidiary company and shift its passive assets into that subsidiary to avoid its access obligations, then clearly the policy intent of the regime would be defeated.

The Bill seeks to ensure the framework continues to apply. It does so by providing that if a group of companies includes a carrier, a company (other than a carrier) that is in the group must provide carriers with access to facilities and provide carriers with access to telecommunications transmission towers, where that non-carrier company holds facilities or telecommunications transmission towers.

For the purposes of the new facilities access regime, a company is initially defined as being in a group with a carrier if the carrier can cast more than 15% of votes at a general meeting, or controls more than 15% of its shares, or vice versa (referred to below as the control threshold).

The new element to the facilities access framework will not be active for the first six months of the Bill – instead the Bill requires that during this 6 months that the ACCC undertake a review of the control threshold. Following that review, the Minister has then 60 days in which to consider the report and determine an alternate control level. This will allow industry and the Government to consider the appropriate control level early in the operation of the regime.

Key consumer safeguards protected by the Bill

The Department of Infrastructure, Transport, Regional Development and Communications has reviewed and assessed the consumer safeguard obligations imposed on Telstra in consultation with key stakeholders, including Telstra. These consultations have identified the ongoing utility of these obligations as well as the need for certain aspects to be clarified and updated. It is proposed that these obligations be updated and remade as through the Telstra Corporation and Other Legislation Amendment Bill 2021 (the Bill).

The Bill proposes a number of amendments to provide certainty that important consumer safeguards, notably the universal service obligation and Telstra’s obligations in relation to emergency call services, will continue to be delivered in an equivalent manner to today. These obligations are currently set out in statute or legislative instruments, but are also subject to a contract between the Commonwealth and Telstra, the Telstra Universal Service Obligation Performance Agreement (TUSOPA). The Bill makes Telstra Limited (ServeCo), Telstra’s proposed retail service delivery company, the default primary universal service provider, as opposed to Telstra Corporation Limited, as is the case now. Given the nature of a corporate restructure, which may involve transfers of assets or spinning off business units, the Bill would create new powers for the Minister to determine that two or more different carriers or carriage service providers can be primary universal service providers, if required.

The Bill would also place obligations on designated Telstra successor companies who are parties to the TUSOPA to notify the Commonwealth of contracts relating to those key safeguards, or involving transfers of assets that were used in connection with meeting obligations under the TUSOPA. It also creates powers for the Commonwealth to be provided copies of contracts, and for the Minister to direct Telstra Limited (ServeCo), a designated Telstra successor company or a related body corporate, to do or not do an act or thing where there are actual or likely failures to comply with the TUSOPA.

Telstra has advised the Government that it is drafting inter-company agreements which will ensure that different entities within Telstra’s corporate structure are able to access relevant assets and expertise in order to ensure that the universal service obligation and other consumer safeguards continue to be fulfilled. The provisions in the Bill are intended to provide a safety net.

Key legislation amended by the Bill

Regulatory equivalency will maintain consumer and competition safeguards that currently apply to Telstra due to its historic and ongoing role in the telecommunications sector. To achieve this goal, the Bill would amend a range of primary and secondary legislation.

The Telecommunications Act 1997 is the foundational part of the national telecommunications regulatory framework that aims to promote: the long-term interests of end-users of carriage services or of services provided by means of carriage services; the efficiency and international competitiveness of the Australian telecommunications industry; and the availability of accessible and affordable carriage services that enhance the welfare of Australians through economic growth and national security.

The Telstra Act (the Telstra Corporations Act 1991) provided for the merger of Telecom and OTC into Telstra and facilitated the privatisation of Telstra Corporation Limited. The
Telstra Act also places ongoing obligations on Telstra Corporation Limited in recognition of the importance of Telstra as an Australian business of national significance. These obligations include restrictions on foreign ownership, location of headquarters and makeup of directors.

The Competition and Consumer Act 2010 sets out competition law in Australia, and seeks to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. It also contains telecommunications-specific anti-competitive conduct and access regimes.

The Telecommunications (Consumer Protection and Service Standards) Act 1999 contains a range of important safeguards for telecommunications consumers including the USO for the provision of standard telephone services and payphones, for which Telstra is the provider nationally, as well as Telstra retail price control mechanisms.

The Telecommunications (Carrier Licence Conditions - Telstra Corporation Limited) Declaration 2019 currently sets out requirements on Telstra, including responsibility for the management of the Integrated Public Number Database (IPND) and further important consumer safeguards such as directory assistance, operator assistance, priority assistance, low-income measures and the Network Reliability Framework.

The Telecommunications (Emergency Call Persons) Determination 2019 designates Telstra as the national operator of emergency call services.

The Telecommunications (Emergency Call Service) Determination 2019 imposes requirements on carriers, carriage service providers and emergency call persons in relation to emergency call services to ensure that the highest levels of access, integrity and service continuity of the emergency call service are maintained.

The Telecommunications (Statutory Infrastructure Providers—Exempt Real Estate Development Projects and Building Redevelopment Projects) Determination (No. 1) 2020 exempts real estate development projects and building redevelopment projects in which carriers have installed networks, primarily to supply voice services, from the requirement to be declared as nominated service areas under the statutory infrastructure provider (SIP) regime.

Consultation

The Department conducted a targeted consultation process with key stakeholders in September 2021. Additionally, select government agencies were provided with an exposure draft for comment.

Commencement

The Act specifies no conditions that need to be satisfied before the power to make the proposed amendments may be exercised.

The Bill would commence in several parts as specified in one or other of the four Schedules.  Schedules 1 and 4 would commence the day after Royal Assent is received. The amendments introduced in Schedules 1 and 4 are not dependent on Telstra going ahead with its Scheme of Arrangement.

Schedules 2 and 3 would commence at the earliest time when any of the property of Telstra Corporation Limited (ACN 051 775 556) is transferred to and vested in Telstra Limited (ACN 086 174 781) by virtue of an order of the Federal Court of Australia made in accordance with section 413 of the Corporations Act 2001. Amendments at these parts are only necessary if the Scheme of Arrangement goes ahead, as they change the legislative framework in ways that would not serve the Commonwealth’s interest if Telstra maintained its current corporate structure.

 

REGIONAL AUSTRALIA IMPACT STATEMENT

 

This Regional Australia Impact Statement (RAIS) provides a summary of how the Telstra Corporation and Other Legislation Amendment Bill 2021 (the Bill) will impact regional communities, economies, and stakeholders for consideration by Government.

Telstra does not require Government approval to undertake its planned restructure. However, without legislative and regulatory change, a range of key obligations that currently apply to Telstra would become less certain, less effective or cease to apply to the successor entities. These obligations cover core parts of Telstra’s regulatory arrangements (including the Universal Service Obligation (USO)), other consumer safeguards (including emergency call services and priority assistance) and the requirement for Telstra to provide other carriers with access to its transmission towers.

Identification of Impacted Region/s

If the Bill is not passed by the Parliament, Australia, including regional areas, could be negatively impacted by a reduction in obligations on Telstra. Due to the scope and size of Telstra’s service offerings across Australia, and its particular presence in regional and remote areas, many parts of regional Australia could be affected.

Impacts Assessment

The telecommunications sector is critical to the Australian economy.  While the sector is important in its own right, without ready access to telecommunications, Australia would suffer both socially and economically.  While it makes up a relatively small proportion of the Australian workforce (105,800 people directly employed compared to 12.6 million in the total economy in August 2018[1]) and a small proportion of Australia’s GDP ($43.7 billion in 2017-18 which is approximately 2.5% of Australia’s overall GDP[2]), it has a disproportionate multiplier effect on the general economy, by enabling communication and trade for other sectors. Telstra’s 4G mobile network covers 98 per cent of the total Australian population, including many regional areas where they are the only provider.

Regional Australia represents the bulk of our landmass. It is home to around 8,291,000 million people. At August 2021 employment in regional Australia was at 3,998,960 persons accounting for 30.9 per cent of total employment in Australia (12,956,180 persons). Its labour force as at August 2021 was 62.0 per cent comparative to capital cities which was recorded at 66.3 per cent.

While Telstra maintains the largest communications network in Australia, in some cases it is the only provider available in some regional and rural areas. Telstra also employs approximately 28,960 staff and provides 18.8 million retail mobile services, 3.8 million retail fixed bundles and standalone data services and 960,000 retail fixed standalone voice services.

Beyond the vital telecommunications infrastructure it provides, Telstra is a major retail service provider in regional Australia, using both its infrastructure and the National Broadband Network.  As such Telstra plays a crucial role in the economic and social life of regional Australia. Telstra’s key role has long been reinforced by a range of regulated consumer safeguards, including the USO, Customer Service Guarantee (CSG), Network Reliability Framework (NRF), and Priority Assistance, as well as the operation of the Triple Zero Emergency Call Service. While these obligations generally apply nationally, they can be of added importance in regional, rural and remote Australia where alternative telecommunications providers may be limited, and isolation adds to the risk of everyday life. Delivery of the USO and Triple Zero service is further supported by a contract with Telstra, the Telstra USO Performance Agreement (TUSOPA).

Therefore the Bill aims to avoid any negative impact of Telstra’s planned restructure by maintaining Telstra’s legislative and regulatory equivalency and ensuring services for Australians through existing protections. 

There are two possible scenarios that have a positive or negative outcome:

1.      The Bill supports maintaining the current obligations on Telstra, post-restructure.  This means, if the Bill is passed, the anticipated impact across Australia and regional areas is nil.

2.      If the Bill is not passed by the Parliament, and Telstra pursues its restructure, the current obligations placed on Telstra will be less certain or become ineffective.  This could create opportunities for negative impacts for consumers and businesses across Australia relating to access to telecommunication services and connectivity, and essential infrastructure works around Australia and in regional areas. 

Potential obligations that could be negatively impacted by Telstra’s restructure, if regulatory equivalency is not maintained include:

a.       Access to the tower and facilities access framework; it is critical that carriers can access each other’s towers to provide services to consumers.  Any change could impact the connectivity and services available.

b.      Maintenance of the USO, including the delivery services via Telstra’s copper network, on which hundreds of thousands of Australian regional consumers rely.

c.       Provision of the Triple Zero Emergency Service facility Telstra current provides, which all Australians depend on. 

d.      The effective operation of other important consumer safeguards of particular importance to regional Australians, like the CSG, NRF and Priority Assistance.

Stakeholder and Community Engagement

Targeted consultation on the Bill was undertaken with a small group of stakeholders across the telecommunications industry. Broadly, stakeholders support the Bill in achieving regulatory equivalency for Telstra, post-restructure. The importance of maintaining consumer safeguards, including the USO, is a persistent theme in consultation with regional communities. It is a strong theme in statements received to date in the
2021 Regional Telecommunications Review.

Mitigation and Management Measures

The purpose of the Bill is to maintain the Commonwealth’s policy interest in protecting consumers, promoting competition and supporting Telstra’s public interest roles in Australia’s telecommunications system is not diminished as a result of the restructure.

The Bill supports consumer safeguards and continuity of essential services for all Australians as a key mitigation measure. 

 

FINANCIALIMPACT STATEMENT

 

The Bill is not expected to have any impact on Commonwealth expenditure or revenue.

 

 


Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

TELSTRA CORPORATION AND OTHER LEGISLATION                               AMENDMENT BILL 2021

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The Bill amends legislation relating to Telstra Corporation Limited (Telstra) to ensure regulatory equivalency of obligations across the restructured Telstra group as proposed in Telstra’s Scheme of Arrangement pursuant to the Corporations Act 2001. The purpose of these amendments is to ensure that the Commonwealth’s policy interest in protecting consumers, promoting competition and supporting Telstra’s public interest roles in Australia’s telecommunications system is not diminished as a result of the restructure.

The Bill has been developed on the principle of regulatory equivalence. That is, that the regulatory obligations that currently fall on Telstra should also fall on the entities in the new corporate group in approximately the same way. While Telstra is free to restructure its business as it sees fit, successive Parliaments have placed and maintained a range of obligations on that business, and it is important that these remain effective.

Regulatory equivalence will maintain consumer and competition safeguards that currently apply to Telstra due to its historic and ongoing role in the telecommunications sector. It will ensure that the Telstra Group will continue to be required to provide telecommunications services on a universal basis, and playing a key role in the provision of services to regional and rural Australians.

The obligations provided for by these amendments generally relate to proposed new Telstra entities and not to individuals. Most amendments do not introduce any new obligations, they simply apply existing obligations to new Telstra entities and businesses. The one exception is the establishment of a new facilities access regime for bodies corporate that are related to telecommunications carriers. Those obligations seek to achieve the policy intent of the existing regulatory regime in response to Telstra’s proposed restructure.

No human rights issues were raised during consultation.

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.


ABBREVIATIONS

 

The following abbreviations are used in this explanatory memorandum:

 

ACCC             Australian Competition and Consumer Commission

ACMA            Australian Communications and Media Authority

Amplitel          Amplitel Pty Ltd (ACN 648 133 073) – Telstra’s new tower business, formerly known as Telstra TowerCo No.1.

Bill                  Telstra Corporation and Other Legislation Amendment Bill

CCA                Competition and Consumer Act 2010

CLC                Carrier Licence Conditions

CSP                 Carriage Service Provider, as defined by the Telecommunications Act 1997

Department     Department of Infrastructure, Transport, Regional Development and Communications

Minister           The Minister responsible for administering the Telecommunications Act 1997  

NBN                National Broadband Network

NBN Co          NBN Co Limited

ServeCo          Telstra Limited (ACN 086 174 781) 

TCPSS Act      Telecommunications (Consumer Protection and Service Standards) Act 1999

Tel Act            Telecommunications Act 1997

Telstra             Telstra Corporation Limited

Telstra Act      Telstra Corporation Act 1991

Telstra Group  Telstra Group Limited (ACN 650 620 303)

InfraCo           Telstra InfraCo Limited (ACN 051 775 556)

TUSOPA        Telstra USO Performance Agreement

USO                Universal Service Obligation


NOTES ON CLAUSES

 

PART 1 – PRELIMINARY

Part 1 of the Telstra Corporation and Other Legislation Amendment Bill (the Bill) deals with preliminary matters including short title, commencement and the operation of schedules to the Bill.

 

Clause 1 – Short title

This clause provides that the Bill, when enacted, may be cited as the Telstra Corporation and Other Legislation Amendment Act 2021.

Clause 2 - Commencement

Clause 2 provides for the commencement of provisions in the Bill when enacted. 

Item 1 of the table at subclause 2(1) provides that clauses 1-3 of the Bill and any other revisions not covered in the table provided at subclause 2(1), would commence on the day on which the Act receives the Royal Assent.

Item 2 of the table provides that Schedule 1 would commence on the day after the Act receives the Royal Assent.

Item 3 of the table provides that Schedules 2 and 3 to the Bill would commence at the earliest time when any of the property of Telstra Corporation Limited (ACN 051 775 556) is transferred to and vested in Telstra Limited (ACN 086 174 781) by virtue of an order of the Federal Court of Australia made in accordance with section 413 of the Corporations Act 2001.

However, the provisions in Schedules 2 and 3 do not commence at all if none of the property of Telstra is transferred to and vested in Telstra Limited (ACN 086 174 781). The item also provides that the Minister must announce, by notice published on the Department’s website, the commencement of the provisions in Schedule 2; this is to ensure that there will be clear and accessible information available to the public on the commencement timeframe. Schedules 2 and 3 commence at different times to the other schedules because the amendments contained therein should only take effect if Telstra does proceed with its restructure – if for some reason Telstra did not proceed, these amendments would not be necessary. 

Item 4 of the table provides that Schedules 4 and 5 to the Bill would commence the day after the Act receives the Royal Assent.


Clause 3 – Schedules

This section provides that legislation that is specified in a Schedule to the Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. There are eight notes accompanying clause 3 to remind readers of the instruments amended by Schedule 1 to the Bill and make clear that each instrument may be later amended or repealed.

The Telstra Corporation (Ownership—Interests in Shares) Regulations 2018 are amended in the Schedule 1.

The A Code of Access to Telecommunications Transmission Towers, Sites of Towers and Underground Facilities is amended in the Schedule 1.

The Telecommunications (Arbitration) Regulations 2018 are amended in the Schedule 1.

The Telecommunications (Carrier Licence Conditions—Telstra Corporation Limited) Declaration 2019 is amended in the Schedule 1.

The Telecommunications (Emergency Call Persons) Determination 2019 is amended in the Schedule 1.

The Telecommunications (Emergency Call Service) Determination 2019 is amended in the Schedule 1.

The Telecommunications (Statutory Infrastructure Providers—Exempt Real Estate Development Projects and Building Redevelopment Projects) Determination (No. 1) 2020 is amended in the Schedule 1.

The Legislation (Exemptions and Other Matters) Regulation 2015 is amended in the Schedule 1.


PART 2 - SCHEDULES

Schedule 1 – Amendments commencing on the day after Royal Assent

Part 1—Amendments

Amendments in Schedule 1 commence on the day after Royal Assent because they prepare the existing regulatory framework to deal with the proposed restructure of Telstra Corporation Limited (Telstra) as announced on 12 November 2020, whether it be now or in the future. The amendments at Schedule 1 to the Bill are not dependent on Telstra going ahead with its Scheme of Arrangement. These amendments:

1.      define a range of Telstra successor entities,

2.      replace references to Telstra with references to those successor entities, and

3.      place requirements on those entities to notify the ACMA when they transfer telecommunications businesses and assets.

Amendments to the Telecommunications Act 1997

Item 1 – Section 7

This item would insert three new definitions into section 7 of the Tel Act to reflect the new Telstra entities. The new terms are:

-        demerged Telstra company which would have the meaning given by new section 581J of the Tel Act.

-        designated Telstra successor company which would be defined at new section 581G

-        Telstra successor company would be defined at new section 581F of the Tel Act.

Item 2 – Before subsection 577BA(11)

Item 2 inserts a new provision into section 577BA; subsection 577BA(10C). It provides authorisation under the Competition and Consumer Act 2010 (CCA) for designated Telstra successor companies and NBN corporations to re-point obligations and rights from existing contracts, arrangements and understandings to new Telstra entities or NBN entities, and may be necessary to effect the restructure. It also authorises conduct engaged in to give effect to those contracts, arrangements or understandings. Proposed subsection 577BA(10C) does not allow the creation of any new obligations or rights.

Item 3 – New Part 34A—Telstra successor companies and designated Telstra successor companies

Item 3 would insert proposed new Part 34A into the Tel Act.

 

Division 1—Introduction

Division 1 of the proposed Part 34A sets out a new simplified outline (proposed section 581A), a new objects statement for the new Part (proposed section 581B), and three new definitions, which are specific to the Part.

Proposed section 581B outlines that the object of proposed Part 34A is (when read with provisions of other telecommunication laws that refer to the new definitions of Telstra successor company, or designated Telstra successor company) to achieve regulatory equivalency between Telstra as it stood at the end of July 2021 and the companies that are successors (immediately or otherwise) of Telstra.

The objects provisions should not be construed narrowly and are not intended to freeze a particular technology or businesses type adopted by Telstra at a point in time. The objects provisions should be read in a forward-looking manner. It is not intended that once the technology used by Telstra in 2021 comes to the end of its course/life that no replacement technology could, or upgraded technology would, be captured.

The purpose of these amendments is to safeguard the Commonwealth’s policy interest in protecting consumers, promoting competition and supporting Telstra’s public interest roles in Australia’s telecommunications system and ensure these interests are not diminished as a result of the restructure, now and into the future.

Proposed section 581C defines ‘Company’ as a body corporate for the purposes of Part 34A.

Proposed section 581D defines a wide range of law as telecommunications law, including the Telecommunications Act 1997, the Telecommunications (Consumer Protection and Service Standards) Act 1999, parts XIB and XIC of the CCA and the Telstra Corporations Act 1991 (the Telstra Act). The definition includes instruments made under these Acts.

Proposed section 581E defines a much narrower list to be ‘prescribed telecommunications law’:

-        the Telstra Act; or

-        Part 34A of the Telecommunications Act 1997; or

-        an instrument made under or for the purposes of the above laws.

Specifications of applicable telecommunications law are included to allow the Minister to make determinations under Division 2 of new Part 34A regarding the application, or non-application, of specific provisions to Telstra successor companies and designated Telstra successor companies. The distinction between ‘telecommunications law’ and ‘prescribed telecommunications law’ is so that these determinations are limited to applying a core set of laws, and the applicable obligations contained therein, to businesses that are ‘carved in’ to the framework after the restructure.

Division 2—Telstra successor company and designated Telstra successor company

Division 2 sets out the mechanism for identifying ‘Telstra successor companies’ and ‘designated Telstra successor companies’. After the Bill commences in its full legal effect, each ‘designated Telstra successor company’ will be subject to a range of regulatory obligations under the telecommunications law. Similarly, each ‘Telstra successor company’ would be subject to the ownership restrictions and related obligations under Part 2A of the Telstra Act.

Proposed section 581F defines Telstra successor companies as all demerged Telstra companies. Demerged Telstra companies are defined by proposed section 581J as:

-          Telstra Group Limited (ACN 650 620 303), as the company exists from time to time (even if its name is later changed);

-          Telstra InfraCo Limited (ACN 051 775 556), as the company exists from time to time (even if its name is later changed);

-          Amplitel Pty Ltd (ACN 648 133 073), as the company exists from time to time (even if its name is later changed);

-        Telstra Limited (ACN 086 174 781), as the company exists from time to time (even if its name is later changed).

All Telstra successor companies are initially considered designated Telstra successor companies. Entities that are named at proposed section 581J of new Part 34A (i.e. demerged Telstra companies) may be excluded from the definition at a later time by ministerial declaration in the form of a legislative instrument (proposed subsections 581F (6)-(8)). 

The designated Telstra successor company definition allows the Minister to designate particular Telstra successor companies so that specific telecommunications obligations apply to those companies, while allowing for ongoing compliance with legislative obligations related to corporate structure.

Division 2 also allows the Minister to declare, by disallowable legislative instrument, that companies other than demerged Telstra companies are Telstra successor companies (proposed subsections 581F(3)-(5)) or designated Telstra successor companies (proposed subsections 581G(3)-(5)) for the purposes of:

-        all prescribed telecommunications laws;

-        one or more prescribed telecommunications laws

-        one or more provisions of a prescribed telecommunications law.

Mirror powers are included to enable the Minister to carve out, by disallowable legislative instrument, a Telstra successor company (proposed subsections 581F(6)–(8)) or designated Telstra successor company (proposed subsections 581G (6)-(8)) for the purposes of:

-        all prescribed telecommunications laws;

-        one or more prescribed telecommunications laws

-        one or more provisions of a prescribed telecommunications law.

Proposed subsections 581F(9) and 581G(9) provides that all ministerial declarations made under section 581F(6)-(8) and section 581G(6)-(8) are irrevocable. This allows for commercial certainty regarding the obligations of an entity that has been carved out of the framework by a ministerial declaration. However, these instruments could be limited or come to an end as a result of conditions specified in them (see below).

Declarations made under either section 581F or 581G may be unconditional or conditional (refer to subsections 581F(10) and 581G(10)). One example of a condition might be that the instrument ‘carving out’ an entity as a designated Telstra successor company have effect so long as the entity retains a carrier licence (in this example, that would allow the Minister to consider the imposition of carrier licence conditions).

Proposed subsection 581H(1) specifies that the Minister must have regard to the following matters before specifying a company in a declaration under proposed subsections 581F(3), (4) or (5) or 581G(3), (4) or (5):

-        the object of Part 34A at proposed section 581B (that is, regulatory equivalency);

-          the compliance burden (if any) that would result for a company if a declaration were to be made;

-          whether a Telstra successor company or a designated Telstra successor company has transferred the whole or a part of a telecommunications business to the relevant company;

-          whether a Telstra successor company or a designated Telstra successor company has transferred a telecommunications asset to the relevant company; and

-          such other matters (if any) as the Minister considers relevant.

Proposed subsection 581H(2) limits the Minister’s specification power to companies that are constitutional corporations or companies that carry on a telecommunications business covered by paragraph 581L(1)(a), (b) or (c).This provides a framework for the Minister to make decisions appropriate to the matter at hand, constrains the delegated power and ensures that it is within constitutional limitations.

Under proposed section 581K, ACMA is required to electronically maintain a Register for information about the entities that are Telstra successor companies and designated Telstra successor companies.

The purpose of 581K is to ensure oversight of ministerial decisions that confer obligations onto declared Telstra companies. Proposed subsection 581K(4) provides that the Register is not a legislative instrument. This is because this provision is merely declaratory of the law rather than prescribing a substantive exemption from the requirements of the Legislation Act 2003. Decisions by the ACMA to update the Register with the name, ACN and details of relevant companies, and the Ministerial declarations would be administrative in character and subject to requirements under the Administrative Decisions (Judicial Review) Act 1977.

Division 3—Transfer of businesses

Division 3 deals with telecommunications businesses. It imposes a notification obligation on all Telstra successor companies and designated Telstra successor companies to notify the ACMA in writing in respect of the transfer (in whole or in part) of telecommunications businesses (proposed section 581M).

This obligation commences after the commencement of Schedule 2 to the Bill. However, Proposed section 581P(5) requires that the Minister, by legislative instrument, declare that the notification obligation is active. By default, it is inactive.

The term ‘telecommunications business’ is defined at proposed section 581L and is intended to have a broad meaning. The following kinds of business satisfy the definition of ‘telecommunication business’ for the purposes of new Part 34A:

-          a business that consists of or includes the supply of a listed carriage service, or

-          a business that consists of or includes the supply of a service that facilitates the supply of a listed carriage service, or

-          a business that consists of or includes the installation, maintenance or operation of a telecommunications network or facility that is used to supply a listed carriage service.

The Minister may also declare by legislative instrument that a specified business is (proposed subsection 581L(2)) or is not (proposed subsection 581L(3)) a telecommunications business for the purposes of proposed Part 34A.

The Minister may also declare by legislative instrument that a particular transfer is exempt (proposed subsection 581M(2)) or that a telecommunications business is exempt (subsection 581M(3)) from the notification obligations.

The notification obligations under proposed subsection 581M is a civil penalty provisions (Part 31 of the Tel Act) and provide for pecuniary penalties for breaches. The maximum fine payable for a corporation would be $250,000 for each breach of a notification obligation.

Division 3 also provides for pre-emptive notification to the ACMA if a Telstra successor company or a designated Telstra successor company proposes to transfer the whole or part of a prescribed business and the transferee is not a constitutional corporation (proposed subsection 581MA(1)). This obligation also commences after the commencement of Schedule 2 to the Bill.

A prescribed business is any class of business that are declared to be so by the Minister, by legislative instrument (proposed subsection 581M(5)). If the ACMA receives a notification under proposed subsection 581MA(1), then it must provide a copy of this notification to the Minister.

For the avoidance of doubt, Division 3 does not prohibit or require approval for the transfer of telecommunications businesses or prescribed telecommunications businesses. It only requires notification.

The ACMA is required to provide such notices to the Minister, which will help inform whether the ministerial declaration powers should be used to designate the new business owner as a Telstra successor company or designated Telstra successor company. These requirements provide transparency to the Minister and the Government in the event that Telstra transfers ownership of such a business.

Division 4—Transfer of assets

Division 4 deals with telecommunications assets. It imposes a notification obligation on all Telstra successor companies and designated Telstra successor companies to notify the ACMA in writing in respect of the transfer of telecommunications assets (proposed section 581P).

This obligation commences after the commencement of Schedule 2 to the Bill. However, proposed section 581P(5) requires that the Minister, by legislative instrument, declare that the notification obligation is active. By default, it is inactive.

The term ‘telecommunications asset’ is defined at proposed section 581N and is intended to have a broad meaning. The following kinds of asset would satisfy the definition of ‘telecommunications asset’, unless they are a type exempted by ministerial declaration under proposed subsection 581N(2):

-          a telecommunications network used, or to be used, to supply a listed carriage service, or

-          a facility used, or to be used, to supply a listed carriage service.

The Minister may declare by legislative instrument that a specified asset is (proposed subsection 581N(2)) or is not (proposed subsection 581N(3)) a telecommunications asset for the purposes of the proposed Part 34A.

The Minister may declare by legislative instrument that a particular transfer of a prescribed business is exempt (proposed subsection 581P(2)) or that a specified telecommunications asset is exempt (proposed subsection 581P(3)) from the notification obligations.

Under proposed section 581Q, the concept of ‘transfer’ as used in Division 4 of Part 34A is broader than legal ownership, and also includes transfer of beneficial ownership and in the case of leases, transfer of the lease.

The notification obligations provide transparency to the Minister and government in the event that an entity transfers the ownership of assets in the future to entities that would not be suitably regulated, or where the asset was of such particular significance or importance that it was considered appropriate to bring it within the scope of telecommunications laws.

The notification obligations under proposed subsection 581P is a civil penalty provision (Part 31 of the Tel Act) and provide for pecuniary penalties for breaches. The maximum fine payable for a corporation would be $250,000 for each breach of a notification obligation.

Division 4 also provides for pre-emptive notification to the ACMA if a Telstra successor company or a designated Telstra successor company proposes to transfer the whole or part of a prescribed asset and the transferee is not a constitutional corporation (proposed subsection 581PA(1)). This obligation also commences after the commencement of Schedule 2 to the Bill.

A prescribed asset is any class of asset that are declared to by so by the Minister, by legislative instrument (proposed subsection 581PA(5).

Division 4 does not prohibit, or require ACMA or Ministerial approval of, transfer of telecommunications assets. If the ACMA receives a notification under proposed subsection 581PA(1), then it must provide a copy of this notification to the Minister.

Division 5—Consultation relating to declarations

Division 5 outlines the consultation procedures for ministerial declarations made under the  Part. These allow that a draft of the declaration must be published on the Department’s website and invite comment within a specified period of at least 30 days.

The Minister must have due regard to these comments when making their decision. Declarations made under Division 2 of this Act are not subject to this statutory consultation process, though the Minister would be expected to provide a draft of the instrument to the affected entity and allow an opportunity for that party to be consulted and provide their views on the proposed decision in a shorter timeframe, consistent with the principles of natural justice.

This exemption allows for a swifter reaction to a proposed change where that change could disrupt regulatory equivalency outcomes, especially where that equivalence is in the public interest. Clause 4 of the Bill enables consultation on proposed instruments under Division 3 and 4 of Part 34B to occur on the day after the Bill receives the Royal Assent. This assists with timely implementation.

Division 6—Directions

Division 6 provides the Minister and the ACMA with powers to direct any designated Telstra successor companies, or their bodies corporate, to take a specified action if a different designated Telstra successor company has failed, is failing, or is likely to fail to fulfil an obligation under a telecommunications law, or to comply with an ACMA direction. The ACMA is given powers to deal with existing ACMA directions and the Minister with powers to deal with all other existing obligations under telecommunications law.

Division 6 does not limit the content of directions given under the proposed sections it contains. The directions can be to facilitate in any way, including to comply with an ACMA direction, a Telstra entity to fulfil an obligation in place of the original delinquent designated Telstra successor company.

These powers will ensure that regulatory equivalence is maintained in respect of all ACMA directions and telecommunications law obligations applied to designated Telstra successor companies prior to the corporate restructure.

Proposed section 581TA deals with the ACMA’s direction power. It provides that when the ACMA is satisfied that a designated Telstra successor company has failed, is failing, or is likely to fail to comply with an existing direction it has given, it is able to give a written direction to another Telstra designated successor company or related body corporate to take a specified action.

A directions power may be required to have a Telstra entity comply with a direction issued to Telstra by the ACMA.

The ACMA’s power is limited to circumstances where it is satisfied that:

-          the specified action will facilitate the original designated Telstra successor company complying with the original direction; and

-          the body corporate that it directs has either the capability or the ability to acquire the capability to comply with the new direction; and

-          The body corporate is either a constitutional corporation or carries on a telecommunications business as defined at proposed subsection 581L(1).

Before giving or varying a direction under proposed section 581TA, the ACMA is required to consult the ACCC (proposed subsection 581TA(5)) and the public (proposed subsection 581TA(6)-(8)). In conducting the public consultation, the ACMA must publish a draft of the direction on its website and invite comment within a specified period of at least 30 days. The ACMA must have due regard to any comments received on the draft direction when making its decision.

A body corporate that is subject to a direction under proposed section 581TA is required to comply with that direction (proposed subsection 581TA(3)). This is a civil penalty provision and Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions.

Proposed section 581TB deals with the ministerial direction power. It provides that when the Minister is satisfied that a designated Telstra successor company has failed, is failing, or is likely to fail to fulfil an obligation imposed on it by name under a telecommunications law, they are able to give a written direction to another Telstra designated successor company or related body corporate to take a specified action.

The Minister’s power is limited to circumstances where they are satisfied that:

-          the specified action will facilitate the original designated Telstra successor company fulfilling the obligation; and

-          the body corporate that it directs has either the capability or the ability to acquire the capability to comply with the direction; and

-          The body corporate is either a constitutional corporation or carries on a telecommunications business as defined at proposed subsection 581L(1).

Before giving or varying a direction under proposed section 581TB, the Minister is required to consult the public (proposed subsection 581TB(5)-(8)). In conducting the public consultation, the Minister must publish a draft of the direction on the Department’s website and invite comment within a specified period of at least 30 days, unless the Minister is satisfied that a shorter period is necessary due to urgent circumstances. The Minister must have due regard to any comments received on the draft direction when making their decision.

A body corporate that is subject to a direction under proposed section 581TB is required to comply with that direction (proposed subsection 581TB(3)). This is a civil penalty provision and Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions.

Division 7—Transitional

Part 34A contains several references to Telstra InfraCo Limited. This is the expected new name of the entity currently known as Telstra Corporation Limited. In the event that the company does not change its name as advised to Government, proposed section 581U provides that that a reference to Telstra InfraCo Limited in a telecommunications law is to be read as a reference to Telstra Corporation Limited. This transitional rule allows that the provisions re-pointed by the Bill apply to Telstra Corporation Limited if it has not changed its name to Telstra InfraCo Limited when the section commences. This provision protects against any circumstance that that would otherwise leave the existing Telstra Corporation Limited uncovered by legislative obligations.

Item 5 - At the end of subclause 17(1) of Schedule 1

Item 5 inserts a note to subclause 17(1) of Schedule 1 to the Tel Act to remind the reader of the mirror obligation under new section 581Y, which applies to eligible companies.

Item 6 - At the end of subclause 33(1) of Schedule 1

Item 6 inserts a note at the end of subclause 33(1) of Schedule 1 to the Tel Act to remind the reader of the mirror obligation under new section 581ZD, which applies to eligible companies.

Amendments to Telstra Corporation Act 1991

These amendments are directed at extending the obligations under the Telstra Act to all Telstra successor companies. Doing so will ensure regulatory equivalence for corporate obligations before and after the restructure.

Items 9-10 - Section 3 (paragraph (b) of the definition of Telstra) and Section 3 (at the end of the definition of Telstra, after paragraph (b))

Items 9 and 10 amend the definition of “Telstra” to make clear that the term refers to the company as it exists from time to time (even if its name is later changed). This change is required, as Government has been informed that Telstra Corporation Limited will change its name to Telstra InfraCo Limited as part of a corporate restructure. Item 9 is a minor change consequential to the new wording proposed to be added by Item 10.

Item 11 - Section 3

Item 11 inserts a new definition at section 3 for the term Telstra successor company and the definition refers readers to section 581F of the Tel Act for the definition.

Items 12-49 (Amendments to Part 2A of the Telstra Corporation Act 1991

Items 12-49 (inclusive) of Schedule 1 to the Bill represent amendments to Part 2A of the Telstra Act. They are largely mechanical, substituting references to “Telstra” with “the Telstra successor company” or “a Telstra successor company” at the following sections in keeping with the Bill’s intent of regulatory equivalency between existing Telstra and all Telstra successor companies post-restructure:

-          section 8BD (the simplified outline to Part 2A);

-          section 8BE (definitions in the Schedule - accompanying notes);

-          section 8BG (meaning of unacceptable foreign-ownership situation in relating to Telstra);

-          section 8BH (acquisitions of shares);

-          section 8BI (requirement to take all reasonable steps to ensure that an unacceptable foreign-ownership situation does not exist in relation to Telstra);

-          section 8BJ (remedial order that the Federal Court could make if an unacceptable foreign-ownership situation exists in relation to Telstra);

-          section 8BM (ministerial power to direct a person to cease holding a stake within a specific time);

-          section 8BN (record-keeping and giving of information);

-          section 8BQ (requirement for Head Office of Telstra to be in Australia);

-          section 8BR (base of operations of Telstra to be in Australia)

-          section 8BS (Telstra to remain incorporated in Australia);

-          section 8BT (Chairperson of Telstra must be an Australian citizen);

-          section 8BU (majority of directors of Telstra must be Australian citizens);

-          section 8BUA (at least 2 directors must have knowledge of, or experience in, the communications needs of regional, rural or remote areas); and

-          section 8BY (winding-up of Telstra not prevented by the Act).

 

 

Items 50-52 – 8CC

Section 8CC of the Telstra Act is a provision designed to attract the corporation’s power and the communications power under the Constitution and the Tel Act. It currently provides that the restrictions on the ownership of Telstra as outlined in Part 2 of that Act do not apply to Telstra unless Telstra is a corporation to which paragraph 51(xx) of the Constitution applies, or it carries on a business that consists of or includes the supply of a carriage service (within the meaning of the Tel Act).

Items 50-52 (inclusive) amend section 8CC to ensure regulatory equivalence by attracting the communications power when applying Telstra Act obligations to Telstra successor companies.

Item 50 substitutes references to “Telstra” with “the Telstra successor company” in section 8CC.

Item 51 of Schedule 1 to the Bill amends section 8CC by adding a new paragraph (aa) describing an alternative circumstance for the ownership restrictions under Part 2A of the Act to apply, being where the Telstra holding company is a corporation to which paragraph 51(xx) of the Constitution applies.

Item 52 inserts an additional three subparagraphs into section 8CC, which has the effect of expanding the types of Telstra successor companies that would be subject to the obligations and restrictions under Part 2A of the Telstra Act. The additions are designed to attract the communications power under the Constitution, by referring to companies (or holding companies of such corporations) conducting business that consists of, or includes, the supply of a service that facilitates the supply of a carriage service or installing, maintaining, operating or providing access to a telecommunications network or a facility used to supply a carriage service.

Item 53-54 – Subsection 8CCA(1)

Section 8CCA is an anti-avoidance provision that prohibits Telstra from, either alone or together with one or more other persons, entering into, beginning to carry out or carrying out a scheme if it would be concluded that the company did so for the sole or dominant purpose of avoiding the application of any provision of the Act.

Items 53 and 54 update the references to Telstra in the existing anti-avoidance provision to capture Telstra successor companies.

Item 55 – Part 2B (heading)

Item 56 – Subsections 8CD (2) and (4)

Item 55 makes a consequential amendment to the heading of Part 2B by removing the reference to “relating to Telstra” to reflect the expanded companies to be captured by Part 2B.  Item 56 replaces all references in subsection 8CD (2) and (4) to “Telstra” with “a Telstra successor company”.

 

 

Items 57-62 – Clause 12 of the Schedule

Clause 12 of the Schedule to the Telstra Act sets out the definitions and concepts relevant to the ownership rules under Part 2A of the Act. This set of amendments (Items 57-62) updates all references to “Telstra” with “Telstra successor company” (with a definitive or indefinite article depending on the context) to reflect the expanded companies to be captured by Part 2B.  Item 56 would replace all references in subsection 8CD(2) and (4) to “Telstra” with “a Telstra successor company”.

Amendments to Telstra Corporation (Ownership—Interests in Shares) Regulations 2018

Item 63 – Section 5

Item 63 adds a note that the term “Telstra successor company” is defined in the amended Telstra Corporations Act 1991.

Items 64 -78 – Amendments to Parts 2 and 3 of the Telstra Corporation (Ownership—Interests in Shares) Regulations 2018

Items 64-78 (inclusive) of Schedule 1 to the Bill represent amendments to Parts 2 and 3 of the Telstra Corporation (Ownership—Interests in Shares) Regulations 2018. They are largely mechanical, substituting references to “Telstra” with “the Telstra successor company” or “a Telstra successor company” in keeping with the Bill’s intent of regulatory equivalency between existing Telstra and all Telstra successor companies post demerger and into the future.

Part 2 – Transitional

Items 78A-80 provides transitional arrangements for the period between the commencement of Schedule 1 (i.e. the day after Royal Assent) and the commencement of Schedule 2 (i.e. on the approval of a scheme of arrangement for the Telstra’s restructure).

Under the existing Part 33 of the Tel Act, Telstra is authorised to engage in conduct that would otherwise be considered anti-competitive under the CCA to facilitate the operation of:

-          its structural separation undertaking, and

-          contracts, arrangements and undertakings that support the structural separation undertaking.

In preparation for its corporate restructure, designated Telstra successor companies will need to engage in this conduct prior to the approval of its Scheme of Arrangement. To facilitate this work, the transitional provisions authorise designated Telstra successor companies to engage in this conduct in the transitional period prior to the re-pointing of the authorisations when Schedule 2 commences.

Without these authorisations, designated Telstra successor companies could either be in technical breach of a contract, arrangement or undertaking, or be in breach of the CCA when engaging in necessary preparatory work for the restructure.

Item 78A – Interpretation

Item 78A provides a series of definitions for interpreting the transitional provisions. The “transitional period” is defined as the period beginning at the commencement of Item 78A (i.e. the day after Royal Assent) and ending at the earliest of the following times:

-          the commencement of Schedule 2 (i.e. on the scheme of arrangement for  Telstra’s restructure taking effect), or

-          six months after the commencement of Item 78A, which the Minister can extend to nine months by legislative instrument.

In effect, the transitional provisions would run between Item 78A commencing the day after Royal Assent and Telstra’s scheme of arrangement taking effect. If the scheme of arrangement were never to take effect, these transitional provisions would eventually fall away (i.e. between six and nine months after Item 78A takes effect).  

Item 78A also provides that:

-          for the purposes of the proposed Part 34A, the transitional provisions are taken to be telecommunications law,

-          for the purposes of the transitional provisions, “ACCC” means the Australian Competition and Consumer Commission and

-          for the purposes of the transitional provisions, “Telstra Limited” means Telstra Limited (ACN 086 174 781) (i.e. ServeCo), as the company exists from time to time (even if its name is later changed).

-          For the purposes of the transitional provisions, “NBN Co” means NBN Co Limited (ACN 136 533 741), as the company exists from time to time (even if its name is later changed).

Item 79 – Transitional – undertakings about structural separation

Item 79 provides that, if a designated Telstra successor companies engages in conduct during the transitional period in order to facilitate Telstra Limited complying with the undertaking after the commencement of Schedule 2 to the Bill, the conduct is authorised under the CCA. The provision also requires that the ACCC have regard to the conduct to the extent that the conduct is relevant when performing a function, or exercising a power, under the telecommunications-specific anti-competitive conduct regime in Part XIB of the CCA.

Item 80 – Transitional – undertakings about contracts, arrangements and understandings

Item 80 provides that, if a designated Telstra successor company engages in conduct during the transitional period to facilitate another designated Telstra successor company giving effect to a provision in a contract, arrangement or understanding covered by section 577BA (i,e. the Definitive Agreements or Telstra’s Structural Separation Undertaking) after the commencement of Schedule 2, the conduct is authorised under the CCA. The provision also requires that the ACCC have regard to the conduct to the extent that the conduct is relevant when performing a function, or exercising a power, under the telecommunications-specific anti-competitive conduct regime in Part XIB of the CCA.

Item 81 – Transitional – variation of contracts, arrangements and understandings

Item 81 provides that if a demerged Telstra company or NBN Co:

-          negotiate or enter into a variation of a contract, arrangement or understanding covered by section 577BA (i.e. the Definitive Agreements) in order to re-point obligations contained in contract, arrangement or understanding from Telstra to another demerged Telstra company, and

-          that variation will only come into effect after the Scheme of Arrangement is accepted by the Federal Court,

Then the variation and any conduct to give effect to the variation are authorised under the CCA.


Schedule 2 – Amendments contingent on the implementation of an approved Scheme of Arrangement

Amendments in Schedule 2 to the Bill would commence at the earliest time when any of the property of Telstra Corporation Limited (ACN 051 775 556) is transferred to and vested in Telstra Limited (ACN 086 174 781) by virtue of an order of the Federal Court of Australia made in accordance with section 413 of the Corporations Act 2001. This event represents the implementation of Telstra’s proposed Scheme of Arrangement for its proposed corporate restructure. If this event does not occur, then these provisions would not come into effect. If the event occurs, the Minister would be required to announce, by notice published on the Department’s website, the commencement of these provisions.

These amendments are dependent on Telstra going ahead with its Scheme of Arrangement in adherence with the process under the Corporations Act 2001. This is because the proposed modifications set out in Schedule 2 alter the legislative framework to specifically address the implications of the proposed demerger and maximise the objective of equivalence in regulatory outcomes. If Telstra maintained its current corporate structure the changes would not serve the Commonwealth’s interests and the regulatory status quo should be maintained.

The amendments proposed by Division 1 of Schedule 2 to the Bill cover the following primary legislation:

-          Competition and Consumer Act 2010

-          Telecommunications Act 1997

-          Telecommunications (Consumer Protection and Service Standards) Act 1999

The amendments proposed by Division 2 of Schedule 2 to the Bill cover the following primary and secondary legislation:

-          A Code of Access to Telecommunications Transmission Towers, Sites of Towers and Underground Facilities

-          Section 19 of the Telecommunications Act 1997

-          Telecommunications (Emergency Call Persons) Determination 2019

-          Telecommunications (Carrier Licence Conditions—TelstraCorporation Limited) Declaration 2019

-          Telecommunications (Emergency Call Service) Determination 2019

-          Telecommunications (Statutory Infrastructure Providers—Exempt Real Estate Development Projects and Building Redevelopment Projects) Determination (No. 1) 2020

In broad terms, the amendments in Schedule 2 to the Bill:

-          replace references to Telstra with references to Telstra successor entities;

-          allow structural separation undertakings to be extended to Telstra successor entities;

-          allow the Migration Plan to be extended to Telstra successor entities;

-          re-point existing Carrier Licence Conditions (CLCs) imposed on Telstra to one or more Telstra successor entities that hold carrier licences or which will be deemed to hold carrier licences;

-          extend existing conditions imposed on Telstra as one of the existing Emergency Call Persons to be extended to Telstra successor entities; and

-          deem the initial Telstra demerged companies to hold a carrier licence.

Part 1—Main Amendments

Division 1—Amendments

Amendments to the Competition and Consumer Act 2010 in Schedule 2

The amendments to the CCA made by Schedule 1 to the Bill are largely mechanical, substituting references to Telstra with references to designated Telstra successor companies in keeping with the Bill’s intent of regulatory equivalency. Exceptions are noted as follows:

Item 1 - Subsection 4(1)

Item 1 inserts a new definition into subsection 4(1) of the CCA for a designated Telstra successor company, referring to the definition given of that term in proposed section 581G of the Tel Act.

Item 2 - Paragraph 151BU(4)(f)

Item 3 - Subparagraph 151BUA(2)(b)(iv)

Item 4 - Subparagraph 151BUB(2)(b)(iv)

Item 5 - Subparagraph 151BUC(2)(b)(iv)

Under the TCPSS Act, the Minister has power to impose retail price controls on Telstra. Under Division 6 of the CCA, the ACCC can make record-keeping rules relating to information that is relevant to the ACCC’s functions and powers.

The ACCC can use these powers to require Telstra to keep records that contain information regarding its compliance with retail price controls set under the TCPSS Act. The ACCC must also report to the Minister annually on the adequacy of Telstra’s compliance with the price control arrangements.

Division 6 also sets out the circumstances in which access can be given to reports prepared by carriers or carriage service providers in accordance with record-keeping rules.

Items 2 – 5 of Schedule 2 to the Bill updates all references to Telstra in the identified sections of Division 6 of the CCA with the term “designated Telstra successor company” keeping with the proposed extension of the retail price control arrangements to the designated successor companies (refer Items 110-122 of Schedule 2, discussed below).

 

Item 6 (Division 15 of Part XIB (heading))

Item 6 amends the heading of Division 15 of Part XIB of the CCA. Part XIB is a telecommunications-specific anti-competitive conduct regime and Division 16 of that Part deals with voluntary undertakings given by Telstra.

The existing subsection 151CQ (2) requires the ACCC, in performing a function, or exercising a power under Part XIB to have regard to the conduct of Telstra in complying with an undertaking to the extent that conduct is relevant. This provision recognises the inter‑relationship between Telstra’s conduct when complying with an undertaking given by Telstra in force under sections 577A, 577C or 577E of the Tel Act and the provisions Telstra is subject to under the telecommunications industry anti-competitive conduct and record-keeping rules under Part XIB of the CCA.

As a consequence of the proposed Telstra restructure and the amendments repoint Telstra’s structural separation undertaking (see Item 41 of Schedule 2 to the Bill), Items 7 - 19 are directed at recognising the expanded entities that will be covered by the section undertakings originally given by Telstra and accepted by the ACCC in March 2012.

Item 7 – Before section 151CQ

Item 7 inserts a new section 151CMD (Voluntary undertakings originally given by Telstra).

This extends the existing exemptions from anti-competition obligations connected with Telstra’s compliance with an in-force structural separation undertaking to designated Telstra successor companies. The intention is to support the Telstra group in meeting its structural separation undertaking obligations given that the structural separation undertaking currently in force given by Telstra will be extended to relevant designated Telstra successor companies.

It is in the Commonwealth’s interest that Telstra continues to meet any obligation imposed on the Telstra group through voluntary obligations. This provision allows designated Telstra successor companies to meet any obligations required under the  structural separation undertaking without contravening anti-competition obligations, provided the sole intent of the designated Telstra successor company is to meet an existing structural separation undertaking obligation.

Item 8 - Subsection 151CQ(1)

Item 9 - Subsection 151CQ(1) (note 1)

Items 11 - Paragraph 152AR(4)(e)

Item 12- Subsection 151CQ(1)

Item 18 - Subsection 152ER(1)

Item 19 - Subsection 152ER(1) (note 1)

These items are minor technical changes that are consequential to other changes made by Schedule 2.

Item 10 – After paragraph (152AR(4)(d))

This provision allows that Telstra’s standard access obligations will not prevent a designated Telstra successor company from complying with structural separation undertaking obligations.

Item 12 – Paragraph 152AR(4)(f)

Item 13 – Subsection 152BCB(3A)

Item 14 – Paragraphs 152BCCA(a) and (b)

Item 15 – Subsection 152BDA(3A)

Item 16 – Paragraphs 152BDCA(a) and (b)

These items update references to “Telstra” with “designated Telstra successor company” to provide with exemptions from various provisions in the telecommunications access regime where application of those provisions would require a designated Telstra successor company to engage in conduct in connection with its Migration Plan.

Item 12A – Subsection 152BCB(3A)

Item 13A – Section 152BCCA

Item 14A – Subsection 152BDA(3A)

Item 15A – Section 152BDCA

These items make clear that the exclusions or carve outs of the specific provisions from the various ACCC enforcement powers only apply to the extent that the Migration Plan imposes obligations or prohibitions on a designated Telstra successor company.

Item 17 – After section 152EQ

Item 17 inserts a new section 152EQA that reflects the application of Telstra’s structural separation undertaking to all designated Telstra successor companies in the operation of the Part XIB anti-competitive conduct provisions.

Proposed subsection 152EQA(2) would allow the ACCC to have regard to Telstra’s structural separation undertaking in force under 577A of the Tel Act when considering conduct by a designated Telstra successor company in relation to the Part XIB anti-competitive conduct provisions. This is a necessary change to reflect that the current undertaking will apply to each designated Telstra successor company by operation of proposed section 577ACA.

Proposed subsection 152EQ(3) would provide that the ACCC must not perform a function, or exercise a power, under Part XIB so as to prevent a designated Telstra successor company from complying with the undertaking.

 


Amendments to the Telecommunications Act 1997 in Schedule 2

Unless otherwise noted, the amendments to the Tel Act made by Schedule 2 are mechanical, substituting references to “Telstra” with “designated Telstra successor companies”.

Item 20 – Section 7

Item 1 inserts new definitions into the Tel Act. It defines the following Telstra companies:

-          ‘Telstra InfraCo’ means Telstra InfraCo Limited (ACN 051 775 556), as the company exists from time to time (even if its name is later changed), and

-          ‘Telstra Limited’ means Telstra Limited (ACN 086 174 781), as the company exists from time to time (even if its name is later changed).

Item 21 – 56AA Deemed carrier licence—designated Telstra successor company

To achieve the regulatory equivalence objective, many regulatory obligations currently imposed on Telstra will be extended to the designated Telstra successor companies (which by default covers the existing Telstra Corporation and three new companies). Several of these obligations are imposed as CLCs.

To ensure that the extended obligations apply immediately from commencement of Schedule 2 to the Bill, and in recognition that a carrier licence application process takes time, Item 21 inserts a new provision into the Tel Act, which deems designated Telstra successor companies that own or operate network units to hold a carrier licence (proposed subsections 56AA(1)-(2)). The deemed carrier licence does not apply if a nominated carrier declaration is in force in relation to the company’s network unit at the relevant time (proposed subsection 56AA(1)(e).

This deeming arrangement would apply until such time as a new carrier licence application has been approved or rejected by the ACMA or the review rights have been exhausted (proposed subsection 56AA(7)). Those entities with deemed carrier licences are also required, within a nominated timeframe (5 days), to submit an application for a licence under section 52 of the Tel Act (proposed subsections 56AA(3)-(6)). If the entity wishes to continue to get the benefit of the deemed licence after the default period has expired and the ACMA has refused the application, they must, within 28 days of the refusal apply for internal review, and request reconsideration of the application.

To ensure that deemed licences take effect immediately, the ACMA is not bound by the normal requirement to consult with the Communications Access Co-ordinator before a carrier licence is deemed to have been granted (proposed subsection 56AA(8)).

This provision ensures there is no gap after the restructure of Telstra comes into effect in respect of the application of the regulatory obligations extended to designated Telstra successor companies that have not been issued with carrier licences and therefore not subject to CLCs. It is intended to limit any service discontinuity or service disruption that may arise from this situation.

 

Item 22 – After section 63

Item 22 inserts a new proposed section 63A (Conditions of a carrier licence held by a designated Telstra successor company). This reflects that the Telecommunications (Carrier Licence Conditions ‑ Telstra Corporation Limited) Declaration 2019 (CLC Declaration) currently applies a number of specific conditions to Telstra Corporation Limited, including:

-          Section 7 (operator services)

-          Section 8 (directory assistance services)

-          Section 9 (alphabetical public number directory)

-          Section 10 (integrated public number database)

-          Section 11 (disclosure of Specified Premises Location Information to NBN)

-          Section 12 (priority assistance arrangements)

-          Section 13 (low‑income measures)

-          Section 15 (monitoring and reporting at the Field Service Area (FSA) level)

-          Section 16 (monitoring, remediation and reporting at the Cable Run level)

-          Section 17 (monitoring, prevention, remediation and reporting at the CSG service level)

-          Section 18 (methodologies and variations to methodologies)

Following Telstra’s restructure, proposed 63A(1) will repoint existing licence conditions in sections 7, 8, 9, 10, 12, 13, 14, 15, 16, 17 and 18 above so that they are taken to apply to a carrier licence held by ServeCo. ServeCo will be deemed to have been granted a carrier licence under proposed section 56AA. The purpose of this provision is twofold. First, to ensure that there is no gap immediately after the corporate restructure in respect of the operation and enforceability of those CLCs. Second, that the obligations are pointed at the Telstra successor entity best placed to fulfil the obligations.

Proposed 63A(2) will mean that the existing licence condition in section 11 of the CLC Declaration is taken to apply to a carrier licence held by ServeCo. The condition in section 11, however, will also continue to apply to Telstra InfraCo in line with its existing carrier licence as the former Telstra Corporation Limited. As such, proposed subsection 63A(3) provides that where obligations sit across entities, obligations may be discharged by single or multiple entities as required. If an obligation is discharged by a single entity that obligation is taken to have been complied with by all entities on whom that obligation sits. This recognises that the ability to discharge an obligation may sit across one or more entities within the new Telstra Group.

Proposed subsections 63A(4)-(8) are to deal with any new carrier licence declarations (interim Telstra CLC declaration) that may be made or any licence conditions that are inserted (interim conditions) in the time between the Bill being introduced into the Parliament and the commencement of proposed section 63A. For example, the Government commenced consultation on possible amendments to the licence conditions applying to Telstra Corporation Limited on 8 October 2021[3]. These amendments relate to reporting on Telstra’s delivery of voice service under the USO in rural and remote areas.

Following Telstra’s restructure, any interim Telstra CLC declaration or interim conditions would apply to both Telstra InfraCo Limited and to ServeCo. But similar to proposed section 63(3), proposed section 63(5) operates such that either Telstra InfraCo Limited or ServeCo could singly discharge the obligation, in which case, the obligation is taken to have been complied with by all entities on whom that obligation sits.

Following from this, proposed Items 132-139 (discussed further below) make a number of consequential changes to the CLC declaration, including to reflect repointing of a number of existing licence conditions to ServeCo, and to recognise in some cases multiple designated Telstra successor companies will be responsible for a licence condition.

Item 23 Subsection 69(5A) (note)

This item makes a minor technical change to the note at subsection 69(5A), consequential to the amendments in this schedule.

Item 24 Before paragraph 69AA(4)(a)

This item amends subsection 69AA(4) to prevent the ACCC from issuing a direction to a designated Telstra successor company forcing it to undertake remedial action in relation to a breach of its CLCs where that action would prevent it from complying with a structural separation undertaking to the extent that the particular company has an obligation under the undertaking.

The Government takes the view that Telstra should continue to meet its undertaking obligations in order to promote beneficial competition and consumer outcomes that are in the public interest.

Item 25 - Paragraph 69AA(4)(a)

Item 26 - Paragraph 69AA(4)(b)

Item 27 - Subsection 70(2A) (note)

Item 28 - Section 104

Item 29 - Section 105C (heading)

Item 30 - Subsection 105C(1)

Item 31 - Subsection 285(2) (paragraph (a) of the definition of integrated public number database)

Item 32 - Subsection 285A(2) (paragraph (a) of the definition of integrated public number database)

Item 33 - Subsection 291A(3) (paragraph (a) of the definition of integrated public number database)

Item 34 - Subsections 472(1) and (5)

Item 35 - Subsection 564(3) (note 1A)

Item 36 - Subsection 571(3) (note 1A)

Item 37 - Part 33 (heading)

Item 38 - Section 577 (after the paragraph beginning “Telstra may give”)

Item 39 - At the end of section 577

Item 40 - At the end of section 577AB

 

These items are minor technical changes that are consequential to other changes made by Schedule 2.

 

 

Item 41 – After section 577AC

This item inserts two new sections after existing section 577AC. The effect of the provisions is to repoint the structural separation undertaking obligations which currently apply to Telstra Corporation Limited to other designated Telstra successor companies.

It is in the Commonwealth’s interest that Telstra continues to meet its obligations in regard to this undertaking. Re-pointing these obligations reflects this Bill’s intent to have regulatory equivalency applied across the new Telstra structure.

The proposed section 577ACA re-points the structural separation undertaking. Proposed subsection 577ACA(1) does so by providing that if a structural separation undertaking is in force, it has effect as if each obligation and prohibition imposed on Telstra by the undertaking were imposed instead on Telstra InfraCo, ServeCo and any designated Telstra successor company specified in an instrument under proposed subsection 577ACA(2).

Proposed subsection 577ACA(2) allows the Minister, by legislative instrument, to specify one or more designated Telstra successor companies for the purposes of repointing the structural separation undertaking.

Proposed subsections 577ACA(3)-(4) allow the Minister, by legislative instrument, to determine that one or more specified obligations or prohibitions in the structural separation undertaking are not repointed to one or more specified designated Telstra successor companies.

Item 41 also inserts a new section 577ACB, which provides that when the Minister is satisfied that a designated Telstra successor company has failed, is failing, or is likely to fail to fulfil an obligation imposed on it by Telstra’s structural separation undertaking, the Minister can give a written direction to another designated Telstra successor company or related body corporate to take a specified action.

A Telstra entity may need to be directed to provide NBN Co access to Telstra infrastructure, such access having been paid for under the Definitive Agreements.

The Minister’s power is limited to circumstances where the Minister is satisfied that:

-          the specified action will assist the first designated Telstra successor company to fulfil its obligation under the undertaking; and

-          the body corporate that it directs has either the capability, or could reasonably acquire the capability, to comply with the direction;

-          the body corporate is either a constitutional corporation or carries on a telecommunications business as defined under proposed section 581L.

Before giving or varying a direction under proposed section 577ACB, the Minister is required to consult the public (proposed subsection 577ACB(5)-(8)). In conducting the public consultation, the Minister must publish a draft of the direction on the Department’s website and invite comment within a specified period of at least 30 days, unless the Minister is satisfied that a shorter period is necessary due to urgent circumstances. The Minister must have due regard to any comments received on the draft direction when making their decision.

A body corporate that is subject to a direction under proposed section 577ACB is required to comply with that direction (proposed subsection 577ACB(3)). This is a civil penalty provision and Part 31 of the Tel Act provides for pecuniary penalties for breaches of these provisions.

The proposed 577ACB does not limit the content of directions given under the proposed sections it contains. Directions are intended to have a broad ambit. The directions can be to assist in any way, including that the body corporate fulfil an obligation in place of the designated Telstra successor company.

Item 42 - Section 577AD

Item 43 - Section 577AD

Item 44 - Subsection 577B(1)

Item 45 - Subsection 577B(2)

Item 47 - Subsection 577BA(2)

 

These items are minor technical changes that are consequential to other changes made by Schedule 2.

Item 48 - After section 577BA(2)

Item 48 extends the authorisation of conduct that would otherwise be considered anti-competitive under the CCA, if that conduct is undertaken by a designated Telstra successor company to vary the structural separation undertaking or Telstra’s Final Migration Plan.

This will allow any designated Telstra successor company to vary the structural separation undertaking and any designated Telstra successor company and NBN Co to enter into agreements about the Migration Plan without breaching anti-collusion provisions in the CCA.

Item 49 - Subsection 577BA(6)

Item 50 - Paragraph 577BA(7)(a)

Item 51 - Paragraph 577BA(7)(b)

Item 52 - Paragraph 577BA(8)(a)

Item 53 - Paragraphs 577BA(8)(b) and (c)

Item 54 - Paragraph 577BA(8)(e)

 

These items are minor technical changes that are consequential to other changes made by Schedule 2.

Item 54A - After paragraph 577BA(8)(f)

Item 54A has the effect of extending the competition authorisation under section 577BA of the Tel Act to any conduct engaged in by another designated Telstra successor company in order to facilitate Telstra or the other designated Telstra successor company giving effect to a provision of a contract, arrangement or understanding.

Item 55 - Paragraph 577BA(9)(a)

Item 56 - Paragraph 577BA(9)(b)

Item 57 - Subsection 577BA(9)

Item 57A - Paragraph 577BA(10)(c)

Item 58 - At the end of subsection 577BE(1)

 

These items are minor technical changes that are consequential to other changes made by Schedule 2.

Item 59 - After section 577BE

Item 59 inserts two new sections after the existing section 577BE. They mirror the proposed new sections 577ACA and 577ACB, but cover Telstra’s final migration plan rather than the structural separation undertaking.

It is in the Commonwealth’s interest that Telstra continues to meet its obligations in regards to the migration plan. The modifications (or variations) of the final migration plan to one or more other designated Telstra successor company may be required to enable certain obligations and commitments under the plan to be repointed to other relevant companies in the new Telstra group to reflect changes in asset holdings and operations, especially because post the restructure of Telstra, certain retail facing commitments under the plan would no longer be capable of applying to InfraCo (a wholesale only entity).

Proposed section 577BEA repoints the final migration plan. Proposed subsection 577BEA(1) does so by providing that if a final migration plan is in force, it has effect as if each obligation and prohibition imposed on Telstra by the final migration plan were imposed instead on Telstra InfraCo, ServeCo and any designated Telstra successor company specified in an instrument under proposed subsection 577BEA(2).

Proposed subsection 577BEA(2) allows the Minister, by legislative instrument, to specify one or more designated Telstra successor companies for the purposes of repointing the structural separation undertaking.

Proposed subsections 577BEA(3)-(4) allow the Minister, by legislative instrument, to determine that one or more specified obligations or prohibitions in the structural separation undertaking are not repointed to one or more specified designated Telstra successor companies.

Item 59 also inserts proposed section 577BEB, which provides that when the Minister is satisfied that a designated Telstra successor company has failed, is failing, or is likely to fail to fulfil an obligation imposed on it by the final migration plan, they are able to give a written direction to a designated Telstra successor company or related body corporate to take a specified action.

A directions power may need to be used to direct a Telstra successor company to comply with an undertaking made previously by Telstra, in the form of a migration plan, under s577A(1)(b) of the Tel Act, such as a direction to a Telstra successor company to refrain from supplying fixed-line carriage services to retail customers in Australia using a telecommunications network of which a Telstra successor is in a position to exercise control.

The Minister’s power is limited to circumstances where the Minister is satisfied that:

-          the specified action will assist the first designated Telstra successor company to fulfil its obligation under the undertaking; and

-          the body corporate that it directs has either the capability, or could reasonably acquire the capability, to comply with the direction;

-          the body corporate is either a constitutional corporation or carries on a telecommunications business as defined under proposed section 581L.

Before giving or varying a direction under proposed section 577BEB, the Minister is required to consult the public (proposed subsection 577BEB(5)-(8)). In conducting the public consultation, the Minister must publish a draft of the direction on the Department’s website and invite comment within a specified period of at least 30 days, unless the Minister is satisfied that a shorter period is necessary due to urgent circumstances. The Minister must have due regard to any comments received on the draft direction when making their decision.

A body corporate that is subject to a direction under proposed section 577BEB is required to comply with that direction (proposed subsection 577BEB(3)). This is a civil penalty provision and Part 31 of the Tel Act provides for pecuniary penalties for breaches of these provisions.

Item 60  â€“ Subsection 577BF(2)

Item 60 clarifies that that designated Telstra successor companies may provide the ACCC with a variation of the final migration plan if the final migration plan imposes obligations or prohibitions on a designated Telstra successor company.

Item 61 – Before section 577G

Item 61 inserts a new section 577FA dealing with enforcement of the Telstra structural separation undertaking under section 577A, which will be extended in its application to designated Telstra successor companies. The amendment mirrors the existing provisions in section 577G, which provide for enforcement of undertakings as they apply to Telstra Corporation Limited and extends the ability to enforce the undertaking to designated successor companies.

Given the importance of the undertaking at section 577A and the potential negative impact on competition in the telecommunications industry if an undertaking is breached, the enforcement powers (including the range and nature of the order) for the Federal Court available under section 577G are replicated in new section 577FA, as is the standing for the  ACCC to apply to the Federal Court to enforce a structural separation undertaking that is in force under section 577A and the related obligation, as it applies to a designated Telstra successor company. Enforcement for section 577A undertakings in the Federal Court is already available in the current regime; as such, proposed section 577FA is not conferring new powers or jurisdiction on the Federal Court.

 

Proposed subsection 577FA(2) sets out the orders that the Federal Court may make if it is satisfied that Telstra has breached an undertaking. The Federal Court may make any or all of the orders set out.

 

Proposed subsection 577FA(3) provides that in addition to the Federal Court’s powers under proposed subsection 577FA(2), the Federal Court has power to make an order directing any person to do or refrain from doing a specified act and the power to make an order containing such ancillary or consequential provisions as the court thinks just.

 

Item 62 - Section 577G (heading)

Item 63 - Paragraph 577G(1)(a)

 

These items are minor technical changes that are consequential to other changes made by Schedule 2.

 

Item 64 – Before subsection 577M(1)

Item 64 inserts a new subsection 577M(1A) that applies a definition of an associate of designated Telstra successor companies for the purposes of Part 33. This definition mirrors existing subsection 577M(1), which has been modelled from the definition of ‘associate’ in section 6 of the Broadcasting Services Act 1991. The concept of associate is relevant to Part 33 of the Tel Act regarding voluntary undertakings given by Telstra.

 

Item 65 – Section 577Q (heading)

Item 66 – Before subsection 577Q(1)

Item 67 – Subsection 577Q(2)

Under section 577A, and as proposed to be extended by proposed section 577ACA to designated to designated Telstra successor companies, Telstra and the designated companies

must take all reasonable steps to ensure that a company over which each company is in a position to exercise control will not supply fixed-line carriage services to retail customers using such a telecommunications network. Control is a fundamental concept to these prohibitions.

Item 66  inserts a new subsection 577Q(1A) which sets out rules for determining the question of whether a designated Telstra successor company is in a position to exercise control of a telecommunications network, and mirrors the rule that applies to determine when Telstra Corporation Limited is in a position to exercise control of a network in subsection 577Q(1). This is based on existing section 577N, which provides a definition for “control” for the purposes of Part 33. That definition is modelled from the definition in clause 6 of the Schedule 2 to the Broadcasting Services Act 1991 and was adapted for the purposes of proposed Part 33. Items 65 – 67 are minor and consequential to Item 66.

 

Item 69 - Paragraph 17(2A)(b) of Schedule 1

Item 70 - Paragraph 17(2A)(c) of Schedule 1

Item 71 - Paragraph 17(4A)(a) of Schedule 1

Item 72 - Paragraph 17(4A)(b) of Schedule 1

Item 73 - Before paragraph 18(6)(a) of Schedule 1

Item 74 - Paragraph 18(6)(a) of Schedule 1

Item 75 - Paragraph 18(6)(b) of Schedule 1

Item 76 - After paragraph 33(6)(a) of Schedule 1

Item 77 - Paragraph 33(6)(b) of Schedule 1

Item 78 - Paragraph 33(6)(c) of Schedule 1

Item 79 - Paragraph 33(8)(a) of Schedule 1

Item 80 - Paragraph 33(8)(b) of Schedule 1

Item 81 - After paragraph 34(6)(a) of Schedule 1

Item 82 - Paragraph 34(6)(b) of Schedule 1

Item 83 - Paragraph 34(6)(c) of Schedule 1

Item 84 - Paragraph 34(8)(a) of Schedule 1

Item 85 - Subparagraphs 34(8)(b)(i) and (ii) of Schedule 1

Item 86 - After paragraph 35(6)(a) of Schedule 1

Item 87 - Paragraph 35(6)(b) of Schedule 1

Item 88 - Paragraph 35(6)(c) of Schedule 1

Item 89 - Paragraph 35(8)(a) of Schedule 1

Item 90 - Paragraph 35(8)(b) of Schedule 1

Item 91 - Before paragraph 36(7)(a) of Schedule 1

Item 92 - Paragraph 36(7)(a) of Schedule 1

Item 93 - Paragraph 36(7)(b) of Schedule 1

These items make amendments to various provisions in Schedule 1 to the Tel Act to ensure that a carrier will not be compelled to give access to a supplementary facility, underground facility or telecommunications transmission tower under the Schedule 1 access regimes (and associated arbitration powers) if the giving of the requested access (or the arbitration determination) would have the effect of requiring a designated Telstra successor company to engage in conduct in connection with matters covered by the final migration plan, to the extent that the company actually has obligations under the plan.

Item 94 - Clause 10 of Schedule 2 (heading)

Item 95 - Subclause 10(1) of Schedule 2

Item 96 - Subclause 10(2) of Schedule 2

Item 98 - Subclause 10(2) of Schedule 2

These items make amendments to various provisions in Schedule 2 of the Tel Act that are consequential to the amendments in Schedule 2 of the Bill.

Item 99 - Clause 20 of Schedule 2

This item is a minor, technical correction and would repeal existing clause 20 of Schedule 2 and replace it with a new subclause 20(1) that is broadly the same in substance. Existing clause 20 included a reference to clause 19 of the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 (Telstra’s former CLCs declaration about priority assistance obligations). That declaration was repealed and ceased to be in legal force when the Telecommunications (Carrier Licence Conditions - Telstra Corporation Limited) Declaration 2019 came into force on 29 March 2019.

The new clause omits reference to the Carrier Licence Conditions (Telstra Corporation Limited) Declaration 1997 and exempts a licensed carrier from priority assistance obligations under this part if priority assistance obligations are a part of that entity’s CLCs.

In recognition of the passage of time that has lapsed since the former declaration ceased to have effect, new subclause 20(2) ensures that there is no obligation taken to have been imposed on Telstra in the ensuing period, provided that section 12 of the Telecommunications (Carrier Licence Conditions - Telstra Corporation Limited) Declaration 2019 was in force at the time.

 

 

 

 

 

 

 

 

Amendments to the Telecommunications (Consumer Protection and Service Standards) Act 1999 (TCPSS Act) in Schedule 2

Items 101 to 108B comprise changes to Part 2 of the TCPSS Act (which concerns public interest telecommunications services and currently specifies that Telstra Corporation Limited is the sole primary universal service provider). The effect of these amendments would be to repoint the USO to Telstra Limited and provide the Minister with powers to apply the primary universal service provider obligations to more than one person and to establish requirements to report on contracts or asset transfers, or provide copies of relevant contracts. This is discussed in further detail below.

Item 100 is a change to the simplified outline of the TCPSS Act that is consequential to proposed changes, to be inserted by items 110 to 122, to Part 9 of the TCPSS Act, which relates to retail price controls on Telstra. The effect of the amendments is to extend the Minister’s power to impose retail price controls on each designated Telstra successor company. This is discussed in further detail below.

Item 109 is a minor change to Part 3 of the TCPSS Act to reflect the effect of Telstra’s restructure on the way certain exemptions are treated under the Regional Broadband Scheme.

Unless otherwise noted, the amendments to the TCPSS Act made by Schedule 2 are mechanical, substituting references to Telstra in Parts 2 and 9 of that Act with references to designated Telstra successor companies.

Item 100 – Section 4 (paragraph beginning “Telstra is subject to”)

Item 100 amends the simplified outline of the TCPSS Act as a consequence of the changes to the Act to be inserted by items 110-122 of this Bill. Currently, the simplified outline provides that Telstra is subject to price control arrangements. Items 110-122 propose changes to the TCPSS Act that would allow price control arrangements to be applied to all designated Telstra successor companies, so item 100 amends the simplified outline to state this.

Item 101 – Subsection 12A(2)

Item 101 amends subsection 12A(2) of the TCPSS Act to insert a reference to subsection (1). Subsections (1) and (2) of section 12A of the TCPSS Act currently provide that the Minister may determine a single primary universal service provider. The change inserted by item 101 is consequential to the changes inserted by item 102 that would allow the Minister’s powers to determine primary universal service providers, as amended by this Bill, to be used to determine either a single provider or more than one provider. This is to cover the contingency that in future multiple Telstra (or other) companies may need to be designated to ensure the USO is fulfilled as intended, where a supply chain involving multiple entities exists.

Item 102 – After subsection 12A(2)

Section 12A of the TCPSS Act provides a mechanism for designating carriers and carriage service providers as primary universal service providers. By virtue of the existing transitional rule in section 12D, Telstra Corporation Limited is designated as the primary universal service provider under section 12A for the universal service obligation. There are two separate service obligations, set out in section 9, which are to ensure standard telephone services (STS) and payphones are reasonably accessible to all people in Australia on an equitable basis, wherever they work or live.

Items 105-107 amend section 12D to determine that Telstra Limited (i.e. ServeCo, which will be responsible for supplying carriage services) is the primary universal service provider, rather than Telstra Corporation Limited (which will become Telstra InfraCo and not supply carriage services).

Item 102 inserts proposed subsections 12A(2A-2E), which would allow the Minister to make a determination that places the responsibilities of a primary universal service provider for a service obligation on two or more specified persons. These amendments provide flexibility should it be necessary to apply universal service obligations to other carriers or carriage service providers in the future.

By way of example, the USO currently requires Telstra to supply a carriage service (standard telephone services) but the delivery of such services requires particular infrastructure to be in place. With Telstra’s restructure separating the supply of carriage services from the ownership of infrastructure, there may be a risk in the future of a lack of clear lines of accountability for the achievement of the service obligation. Accordingly, item 102 provides the flexibility for the Minister to address such a problem by determining that the service obligation should apply to more than one person. This could, for example, mean applying the obligation to both ServeCo and another designated Telstra successor company such as Telstra InfraCo. Should particular assets or businesses be transferred to other entities who are not designated Telstra successor companies, and those assets or businesses be required to deliver the service obligation, the Minister would also be able to determine that the new owner of the assets or businesses is a primary universal service provider and therefore subject to the service obligation.

Proposed new subsection (2B) provides that the Minister must not specify a person in a determination under section 12A unless that person is a carrier or a carriage service provider. This reflects the fact that the universal service obligation requires the supply of carriage services to the public, and the supply, installation and maintenance of underlying infrastructure used to supply carriage services to the public.

Proposed new subsection (2C) provides that the Minister may determine, under subsection (2A), different primary universal service providers in respect of different service obligations; and the same person as a primary universal service provider in respect of one or more service obligations. This provision is modelled on the existing subsection 12A (2) of the TCPSS Act but reflects that there could be two or more different primary universal service providers.

Proposed subsections 12A(2D-2E) provide that the Minister must only have a single determination in force at any given time (providing either that there is a single primary universal service provider in respect of a service obligation, or that two or more specified persons will be responsible for one or more service obligations). The subsections are intended to remove the potential for conflict between existing and subsequent determinations.

Item 103 – Subsection 12A(3)

Item 103 would amend subsection 12A (3) to insert the words ‘at least’ after the words ‘there is’. This is a mechanical change that is a consequence of the other changes to be inserted by items 101-109 to reflect the possibility that there may be two or more primary universal service providers.

Items 104 (Section 12C - Obligations of primary universal service providers)

Item 104 would repeal the existing section 12C of the TCPSS Act and substitute a new section. Section 12C currently provides that a primary universal service provider in respect of a service obligation must fulfil that obligation. The proposed new section 12C makes two main changes.

First, it provides that, if there is only one primary universal service provider in respect of a service obligation, then that service obligation is imposed on the primary universal service provider. This has the effect of requiring the primary universal service provider to fulfil the obligation. Second, it provides that, if there are 2 or more primary universal service providers in respect of a service obligation, that obligation is imposed on all of the providers, but may be discharged by any one of those providers. It also makes clear that if the service obligation is complied with by any of those primary universal service providers, then the obligation is taken to have been complied with by the other primary universal service provider or providers.

The proposed new section 12C will therefore ensure that universal service obligations are fulfilled in the following circumstances:

1.         There is a single primary universal service provider for all the service obligations.

2.         There are multiple primary universal service providers, with each fulfilling a separate service obligation.

3.         There are multiple primary universal service providers jointly responsible for fulfilling a service obligation.

The proposed new section 12C will also ensure that, where multiple primary universal service providers are jointly responsible for a service obligation, each provider can meet the role expected of it. For example, if ServeCo and Telstra InfraCo were to be jointly responsible for the supply of standard telephone services, ServeCo could discharge the obligation by supplying the services (and Telstra InfraCo would not, therefore, need to have the ability to supply standard telephone services but would be expected to supply the infrastructure over which the services are supplied).

Item 105 – Section 12D (Heading)

Item 106 – Subsection 12D(1)

Item 107 – At the end of section 12D

These items amend section 12D of the TCPSS Act to replace references to ‘Telstra’ with references to ‘Telstra Limited’ (i.e. ServeCo). The effect of this change is that the Minister is taken to have made a determination under section 12A that Telstra Limited (i.e. the designated Telstra successor company that will, under Telstra’s proposed scheme of arrangement, supply standard telephone services and payphones) is the primary universal service provider in respect of the universal service obligations to ensure that standard telephone services and payphones are reasonably accessible to all people in Australia.

Item 107 inserts a new subsection (3) into section 12D that provides that the determination does not apply to Telstra Limited unless Telstra Limited is a carrier or carriage service provider. This new subsection provides consistency with proposed new subsection 12A(2B), to be inserted by item 102 of this Bill, that requires that no person can be determined to be a primary universal service provider unless that person is a carrier or a carriage service provider.

Demerged Telstra successor companies that own a network unit at the commencement of Schedule 2, and that would ordinarily be a carrier under s42 of the Tel Act, and that do not hold a carrier licence at the commencement of Schedule 2, including ServeCo, will be deemed to hold a carrier licence under item 21 of Schedule 2 to the Bill. Persons supplying carriage services to the public, such as ServeCo, will also be CSPs.

Item 108 - Paragraph 12E(1)(a)

Item 108 makes a consequential amendment to section 12E of the TCPSS Act in light of the changes to sections 12A, 12C and 12D to provide for the possibility that there may be multiple primary universal service providers.

Item 108A - At the end of Division 3 of Part 2

Item 108A inserts proposed new Subdivision C into Division 3 of Part 2 of the TCPSS Act, which deals with contracts and grants to ensure the achievement of objectives relating to public interest telecommunications services.

The proposed subdivision places obligations on designated Telstra successor companies that give the Commonwealth visibility of contracts or asset transfers that are, or would be, relevant to the delivery of outcomes under a contract the Commonwealth has entered into with Telstra Corporation Limited, under section 14 of the TCPSS Act. The Commonwealth has entered into a contract known as TUSOPA. Specific modules of the TUSOPA require Telstra to supply standard telephone services and payphones in accordance with the USO, and to supply emergency call services. In return, Telstra is paid up to $290 million per annum (excluding GST) for these specific modules. The TUSOPA also sets out particular contractual requirements on how Telstra fulfils the requirements. For example, Telstra must generally use its copper network to supply standard telephone services outside NBN Co’s fixed-line footprint.

Subdivision C—Notification of relevant contracts entered into by designated Telstra successor companies

Proposed Subdivision C defines three key terms – “relevant contract”, “transfer of asset” and ”authorised officer”. These are defined at proposed sections 22A, 22AA and 22B. The subdivision then sets out notification obligations on designated Telstra successor companies in respect of relevant contracts (and variations) entered into, or to be entered into, by those companies, and the provision of copies of contracts where required by written notice or under rules (proposed sections 22C, 22CA, 22D and 22E).

Definitions and designations

Proposed section 22A defines “relevant contract” for the purposes of the new provisions. This is the key term for the purposes of proposed new Subdivision C, as it specifies what sorts of contracts are captured and therefore subject to the new obligations in the subdivision. To be a “relevant contract”, a contract or agreement must be entered into by a designated Telstra successor company, for a purpose relating to either or both of:

-          the achievement of any or all of the policy objectives of Division 3 of Part 2 of the TCPSS Act;

-          the transfer of one or more assets that were used in connection with the fulfilment of obligations imposed on the designated Telstra successor company by the TUSOPA.

The policy objectives of Division 3 of Part 2 of the TCPSS Act are set out in section 13 of that Act, and include the USO (relating to the availability of standard telephone services and payphones), access to a free emergency call service, access to the National Relay Service (including SMS, video relay and relevant applications), access to untimed local calls in extended zones and measures to support the continuity of carriage services in the transition to the NBN. Assets that may be used in connection with the fulfilment of obligations could include, for example, Telstra’s copper network outside NBN Co’s fixed-line footprint, or equipment used to supply a free emergency call service.

Proposed new section 22AA defines the transfer of an asset for the purposes of proposed Subdivision C as when:

-          the legal ownership of the asset is transferred in whole or in part; or

-          the beneficial ownership of the asset is transferred in whole or in part (whether by way of a declaration of trust or in any other way); or

-          if the asset is the subject of a lease—the lease is transferred.

This definition captures a broad range of possible ownership structures because assets may be subject to such structures.

Proposed section 22B defines an ‘authorised officer’. An authorised officer is the person to whom a designated Telstra successor company must provide a notice, or a copy of a contract, as required under Subdivision C. Subsection (1) provides that authorised officer means an SES employee, or an acting SES employee, who holds, or performs the duties of, a position designated under subsection 22B((2). Subsection (2) provides that the Minister may designate an authorised officer by notifiable instrument.

It is envisaged that the positions to be designated would be those responsible for managing the TUSOPA and associated policy matters (such as the USO).

A note accompanies subsection 22B(1) for the assistance of readers and states that the expressions ‘SES employee’ and ‘acting SES employee’ are defined in section 2B of the Acts Interpretation Act 1901.

Notification of relevant contracts

Proposed subsection 22C(1) requires a designated Telstra successor company to give the authorised officer (if one has been designated) notice of when it has entered into a relevant contract or variation of a relevant contract. If the Minister has not designated a departmental officer as an authorised officer, the notice must be issued to the Minister. The notice must be provided within seven days of the company entering into the relevant contract or variation, and the notice must set out the following:

-          the names of the parties to the contract or variation, as the case requires;

-          the nature of the contract or variation, as the case requires;

-          the date the contract or variation, as the case requires, was entered into;

-          the date when the contract or variation, as the case requires, came, or is to come, into effect;

-          if the contract or variation deals with the transfer of an asset – the name of the transferee; and

-          any other information (if any) relating to the contract or variation, as the case requires, as specified by the Minister under subsection 22C(2) by legislative instrument.

This requirement is intended to keep the Commonwealth informed of changes in the ownership or control of assets important to Telstra’s delivery of its obligations under the TUSOPA, noting, for example, that Telstra is subject to an ongoing obligation to provide standard telephone services using its copper network in specified circumstances. It is envisaged that if the Commonwealth became aware of a change in ownership or control of such an asset that may affect the delivery of these services, the Minister could use the direction powers in proposed section 21A of the TCPSS Act to take remedial action, or if necessary, consider further interventions, such as the use of CLCs.

Given that, under the proposed scheme of arrangement, Telstra Limited will be the party to the TUSOPA, section 22C will place a requirement to notify the Minister or authorised officer on Telstra Limited. Other entities within Telstra’s corporate structure will control key infrastructure used to meet the obligations under the TUSOPA, such as the copper network. Those entities could enter into contracts without notification obligations being imposed. Telstra Limited will need to have contractual or other effective arrangements in place with other Telstra entities so that, if any such contract is entered into, those entities will advise Telstra Limited in order that it can then advise the Commonwealth.

Proposed subsection 22C(3) provides that proposed subsection 22C(1) is a civil penalty provision. A note is provided for the assistance of the reader that advises that Part 31 of the Tel Act provides for pecuniary penalties for breaches of penalty provisions. As such, the maximum penalty for a body corporate is $250,000 for each contravention. The level of penalty reflects the importance of the universal service obligation and of the need for accountability for the considerable funding provided to Telstra each year under the TUSOPA.

Notification of proposed contracts

Proposed subsection 22CA(1) requires a designated Telstra successor company to give the authorised officer (if one has been designated) notice of any proposed relevant contract, if that contract is entered into for a purpose relating to the transfer of one or more assets that were used in connection with the fulfilment of obligations imposed on the company by the TUSOPA. If the Minister has not designated a departmental officer as an authorised officer, the notice must be issued to the Minister. The notice must be provided at least 30 days before the company enters into the relevant contract, and the notice must set out the following:

-          the names of the parties to the proposed contract;

-          the nature of the proposed contract;

-          the date the proposed contract, is to be entered into;

-          the date when the proposed contract is to come into effect;

-          the name of the transferee of the assets; and

-           other information (if any) relating to the proposed contract or variation, as the case requires, as specified by the Minister under subsection 22CA(2) by legislative instrument.

Given that under the proposed scheme of arrangements, Telstra Limited will be the party to the TUSOPA, section 22CA places a requirement to notify the Minister or authorised officer on Telstra Limited. Other entities within Telstra’s corporate structure will control key infrastructure used to meet the obligations under the TUSOPA, such as the copper network. Those entities could propose to enter into contracts, without notification obligations being imposed. Telstra Limited will need to have contractual or other effective arrangements in place with other Telstra entities so that, if any such contract is entered into, those entities will advise Telstra Limited in order that it can then advise the Commonwealth.

Similar to proposed section 22C, this requirement is intended to keep the Commonwealth informed of changes in the ownership or control of assets important to Telstra’s delivery of its obligations under the TUSOPA, noting, for example, that Telstra is subject to an ongoing obligation to provide standard telephone services using its copper network in specified circumstances. It is envisaged that if the Commonwealth became aware of a change in ownership or control of such an asset that may affect the delivery of these services, the Minister could use the direction powers in proposed section 21A of the TCPSS Act to take remedial action, or if necessary, consider further interventions, such as the use of CLCs.

Proposed subsection 22CA(3) provides that proposed subsection 22CA(1) is a civil penalty provision. A note is provided for the assistance of the reader that advises that Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions. As such, the maximum penalty for a body corporate is $250,000 for each contravention. The level of penalty reflects the importance of the universal service obligation and of the need for accountability for the considerable funding provided to Telstra each year under the TUSOPA.

Copies of relevant contracts – requirement imposed by Ministerial notice

Proposed subsection 22D(1) requires a designated Telstra successor company, when requested by an authorised officer or the Minister by written notice, to give the authorised officer (or the Minister as relevant) a copy of a proposed relevant contract or variation of a relevant contract within 7 days after the notice is given. Such a notice could be served after the designated Telstra successor company notifies the authorised officer, or the Minister, in accordance with proposed subsection 22CA(1) of its intention to enter into a relevant contract.

Subsection 22D(2) provide for a similar document provision requirement, but relating to  executed relevant contracts and executed variations of relevant contracts. The same timeframe of 7 days also applies. Such a notice could be served after the designated Telstra successor company notifies the authorised officer, or the Minister, in accordance with proposed subsection 22C(1) that it has entered into a relevant contract or a variation of a relevant contract.

These provisions are intended to provide the Commonwealth with access to contracts relevant to the delivery of services under the TUSOPA so it can be assured these important community service obligations will continue to be delivered in the manner required.

Designated Telstra successor companies must comply with the obligations (proposed subsection 22D(3)).

Subsection 22D(4) provides that subsection 22D(3) is a civil penalty provision. The accompanying note reminds the reader that Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions.

Copies of relevant contracts—requirement imposed by rules

Proposed subsection 22E(1) allows the Minister, by legislative instrument, to make rules that must be complied with by a designated Telstra successor company. If the company has entered into a relevant contract in a class of relevant contracts specified in the instrument, the company would need to provide copies of all relevant contracts and contract variations within the class to the authorised officer (or the Minister if there is no designated authorised officer). The copies would need to be provided within 7 days after such a contract or contract variation is entered into.

Subsection 22E(2) provides that a designated Telstra successor company must comply with a requirement imposed by rules made under subsection (1). Subsection 22E(3) provides that subsection 22E(1) is a civil penalty provision. The accompanying note reminds the reader that Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions.

These provisions are intended to enable specified types of documents to be obtained on a standing basis and in a particular manner, as opposed to being requested individually.

Item 108B – At the end of section 44

Item 108B amends section 44 of the TCPSS Act to allow for an additional class of persons to be determined to be ‘participating persons’. Participating persons are required to contribute to the Telecommunications Industry Levy, which is used to contribute to meeting the costs of public interest telecommunications contracts and grants, such as payments to Telstra under the TUSOPA for fulfilling the universal service obligation and the obligation to supply the emergency call service.

Currently, participating persons are persons who were carriers at any time during an eligible revenue period (subject to an eligible revenue threshold that has been determined under a separate Ministerial instrument). Section 44 of the TCPSS Act also provides that, if the Minister determines that carriage service providers are participating persons for an eligible revenue period, then a person who was a carriage service provider during that period would be a participating person. No such determination has been made. The proposed amendment would add a third category, of persons who were in a class of persons specified by regulations at any time during an eligible revenue period.

Such persons would not be carriers or carriage service providers. They could be entities that are separate from carriers, or part of a carrier group but not themselves carriers, for example entities that hold tower assets that have been spun off by carriers. The drafting is cast broadly to minimise opportunities for entities to seek to avoid being captured by regulations.

This amendment would allow Government, if needed, to respond to broader changes in the market and the risk of carriers spinning off tower companies, and potentially other assets, to entities that are not carriers. The monetisation of such assets would not impact the overall amount of levy needing to be collected, but could see some carriers placed in a more favourable position relative to others when it comes to the collection of levy. This reflects that participating persons that are able to sell significant assets to non-carriers may have opportunities to reduce their share of total eligible revenue used to calculate levy contributions, likely at the expense of other carriers. The amendment provides a flexible mechanism to deal with such issues should the need arise.

Item 109 - Subsection 96(1)(heading)

Item 109 replaces ‘Telstra’ with ‘Designated Telstra successor company’ in the sub-heading relating to Telstra in subsection 96(1) of the TCPSS Act, which relates to local access lines that are exempt from the Regional Broadband Scheme charge. This will clarify the scope of the subsection, making it clear that it is intended to capture transitioning lines owned by any designated Telstra successor company.

Existing subsection 96(1) outlines three classes of lines that are exempt from the Regional Broadband Scheme charge under Part 3 of the TCPSS Act. These are identified in section 96 by subheadings, which refer to Telstra, Optus and other networks. Generally speaking, no charge will be levied against Telstra’s lines during the period in which they are owned by Telstra but they are subject to a legally enforceable agreement under subsection 577BA(9) of the Tel Act to transition to ownership by NBN Co. Once they are owned by NBN Co, it is NBN Co who will be liable to pay the charge on the line if it is associated with a chargeable premises. The corporate restructure may give rise to a transfer in the existing legal ownership of those lines (not yet transitioned to the NBN) from Telstra to potentially one or more other designated Telstra successor companies in the new Telstra group.

Items 110 - 122 (price control arrangements for Telstra)

Items 110 to 122 amend Part 9 of the TCPSS Act so that the retail price control arrangements that may be applied to Telstra may be applied to the designated Telstra successor companies.

The price control arrangements allow the Minister, by legislative instrument, to determine, under section 154 of the TCPSS Act that specified carrier charges are subject to price control arrangements. No price controls are currently in place.

 

Division 2—Transitional

Item 123 – section 577G of the Telecommunications Act 1997

Item 123 allows that despite the amendment of section 577G of the Tel Act made by this Part, that section continues to apply, in relation to a breach that occurred before the commencement of this item, as if that amendment had not been made. This allows the ACCC to continue making applications to the Federal Court for any breaches under 577A, 577C or 577E after the commencement of Schedule 2, whether the breach occurred before commencement or not.

Part 2—Other Amendments

Amendments to the A Code of Access to Telecommunications Transmission Towers, Sites of Towers and Underground Facilities in Schedule 2

Item 124 - Clause 1.2.1

Item 125 - Clause 1.2.1

Item 126 - Clause 1.2.1

Item 127 - Clause 1.2.1

Item 128 - Clause 1.2.1

Item 129 - Clause 6.1 (definition of Telstra)

These amendments to the A Code of Access to Telecommunications Transmission Towers, Sites of Towers and Underground Facilities made by Schedule 2 of the Bill are largely mechanical, substituting references to Telstra with references to designated Telstra successor companies in keeping with the Bill’s intent of regulatory equivalency.

Amendments to the Telecommunications Act 1997

Item 130 - At the end of subsection 19(1)

Item 131 - Subsection 19(2)

These amendments are minor and mechanical, which reflect the current situation at law that the written determination made by the ACMA under subsection 19(1) of the Tel Act specifying a person as a national operator of emergency call service (general and NRS provider) has been registered as a notifiable instrument. The current instrument is the Telecommunications (Emergency Call Persons) Determination 2019. The amendments ensure that that section 13(5) of the Legislation Act 2003 is attracted into the future to allow future amendments to be made to this Determination if necessary.

Amendments to the Telecommunications (Carrier Licence Conditions—Telstra Corporation Limited) Declaration 2019 in Schedule 2

The amendments to the Telecommunications (Carrier Licence Conditions—Telstra Corporation Limited) Declaration 2019 made by Schedule 2 of the Bill change the title of the determination to reflect Telstra Corporation Limited’s change of name to Telstra InfraCo Limited, and amends references to Telstra to allow conditions to apply to both Telstra InfraCo Limited and other licensees. This is in keeping with the Bill’s intent of regulatory equivalency, and the deemed carrier licence regime included in these amendments as a way of ensuring service continuity.

Item 132 - Section 1

This amendment changes the name of the Declaration to reflect the change of name to Telstra InfraCo Limited.

Item 133 - At the end of section 3

This item adds a note at the end of section 3 to remind readers of the effect of proposed section 63A of the Tel Act. That section would provide that, until a ministerial declaration has been made to make CLCs in relation to a carrier licence held by ServeCo:

-          the carrier licence is subject to the conditions set out in section 11 of this declaration; and

-          for that purpose, a reference in that section to the licensee is to be read as a reference to Telstra Limited.

Item 133A - Section 4 (definitions of emergency call service, emergency service, ESA, FSA and inoperative)

Item 133A repeals these definitions. These definitions are no longer required as part of the CLCs for Telstra InfraCo Limited (formerly Telstra Corporation Limited) given the repointing of the majority of existing licence conditions to ServeCo following Telstra’s restructure.

Item 135 - Section 4 (definition of licensee)

This item repeals the definition of licensee and substitutes the new name and company number of Telstra InfraCo Limited, and makes clear that term applies as the company exists from time to time (even if its name is later changed).

Item 135AA – Section 4 (definitions of location dependent carriage service, operator assistance service, operator services, priority assistance, public number, payphone, T(CPSS) Act and unlisted number)

Item 135AA repeals these definitions. These definitions are no longer required as part of the CLCs for Telstra InfraCo Limited (formerly Telstra Corporation Limited) given the repointing of the majority of existing licence conditions to ServeCo following Telstra’s restructure.

Item 135A

Item 135A repeals licence conditions for Telstra InfraCo Limited (formerly Telstra Corporation Limited) that will be re-pointed to ServeCo following Telstra’s restructure.

Item 136 - Subsection 11(1)

Item 137 - Subsection 11(1) (definition of Telstra Representatives)

Item 138 - Subparagraph 11(8)(g)(iii)

Item 138A - Sections 12 to 18

Item 139 - Schedule 1

Item 136 inserts a new more generic term and definition of ‘licensee representative’ to recognise that there is more than one entity covered by the CLC Declaration. Item 137 repeals the definition of Telstra representative as it is no longer required following the insertion of a more generic term ‘licensee representative’. Items 138, 138A and 139 make consequential changes.

Amendments to the Telecommunications (Emergency Call Persons) Determination 2019 in Schedule 2

This instrument is made under paragraph 19(1)(b) of the Tel Act and section 7 of the Determination currently provides that Telstra is the national operator of emergency call services (general) (i.e the emergency call person). These emergency call services provide allow end-users to make a free voice call to the emergency call person (ECP) for 000 and 112. The ECPs then transfer emergency calls to the emergency service organisations (police, fire or ambulance) in the State or Territory where assistance is required.

The amendments to the Telecommunications (Emergency Call Persons) Determination 2019 made by Schedule 2 of the Bill are in keeping with the Bill’s intent of regulatory equivalency.

Item 142 – Section 4 (paragraph (c) of the note)

Item 142 replaces a reference to ‘Telstra’ with ‘Telstra Limited’ to note that the term is defined in section 7 of the Tel Act.

Item 143 - Section 7

Item 143 substitutes references of “Telstra” with “Telstra Limited” which has the effect of declaring that Telstra Limited (i.e. ServeCo) will be the ECP for 000 and 112 calls.

Item 144 - Section 7 (note 1)

Item 140 - Section 4 (before paragraph (a) of the note)

Item 141 - Section 4 (paragraph (b) of the note)

Item 142 - Section 4 (paragraph (c) of the note)

The amendments proposed by these items are largely mechanical and consequential to the change made by Item 143.

Amendments to the Telecommunications (Emergency Call Services) Determination 2019 in Schedule 2

The Telecommunications (Emergency Call Services) Determination 2019 is made under subsection 147(1) of the TCPSS Act and imposes requirements on carriers, carriage service providers (CSPs) and emergency call persons (ECPs) for emergency call services (ECSs).

The amendments to the Telecommunications (Emergency Call Services) Determination 2019 made by Schedule 2 of the Bill are largely mechanical changes, consequential to the changes at Item 135 which re-points certain licence conditions (including the IPND Manager conditions) and Item 143 which re-points the ECP role to Telstra Limited), keeping with the Bill’s intent of regulatory equivalency.

Amendments to the Telecommunications (Statutory Infrastructure Providers—Exempt Real Estate Development Projects and Building Redevelopment Projects) Determination (No. 1) 2020 in Schedule 2

Item 148 - Section 4 (after paragraph (b) of the note)

Item 149 - Section 5 (heading)

Item 150 - Subparagraph 5(b)(ii)

Item 151 - Subparagraph 5(b)(ii)

Item 152 - Subparagraph 5(b)(iii)

Item 153 - Section 6 (heading)

Item 154 - Subparagraphs 6(b)(ii) and (iii)

Item 155 - Subparagraph 6(b)(iii)

Item 156 - Section 9 (heading)

Item 157 - Subparagraph 9(b)(ii)

Item 158 - Subparagraph 9(b)(ii)

Item 159 - Subparagraph 9(b)(iii)

Item 160 - Section 10 (heading)

Item 161 - Subparagraphs 10(b)(ii) and (iii)

Item 162 - Subparagraph 10(b)(iii)

The amendments to the Telecommunications (Statutory Infrastructure Providers—Exempt Real Estate Development Projects and Building Redevelopment Projects) Determination
(No. 1) 2020
made by Schedule 2 of the Bill are mechanical, adding references to designated Telstra successor companies.


Schedule 3 – Amendments relating to contracts and agreements

Amendments in Schedule 3 commence at the earliest time when any of the property of Telstra Corporation Limited (ACN 051 775 556) is transferred to and vested in Telstra Limited (ACN 086 174 781) by virtue of an order of the Federal Court of Australia made in accordance with section 413 of the Corporations Act 2001. If this event does not occur, then these provisions will not come into effect. The Minister must announce, by notice published on the Department’s website, the commencement of these provisions.

 

These amendments are dependent on Telstra going ahead with its Scheme of Arrangement and are intended to allow the Definitive Agreements and the Telstra USO Performance Agreement (TUSOPA) to continue to be effectively bound to demerged Telstra entities under Telstra’s final corporate structure. They will not be required if Telstra maintains its current corporate structure.

Amendments to the Telecommunications Act 1997 in Schedule 3

Telstra Corporation Limited (ACN 051 775 556) has entered into a series of agreements with NBN Co Limited, known as the Definitive Agreements.

These Definitive Agreements facilitate the efficient rollout of a high speed NBN for all Australians. They provide a range of obligations and rights and grants NBN Co with access to Telstra facilities and infrastructure over a minimum period of 35 years (which may be further extended), ensuring that the fixed-line components of the National Broadband Network could be rolled out efficiently and avoids duplicating infrastructure.

 

As part of the Definitive Agreements, Telstra has agreed to ‘network preference’ arrangements, under which it and its related entities have undertaken to use only the NBN fixed-line network to provide fixed-line carriage services to Telstra’s customers in the fixed-line footprint until 2032 (subject to limited exceptions).

 

The Definitive Agreements also implement, in contractual form, the progressive disconnection of Telstra’s copper and Hybrid Fibre Coaxial network. This requirement is also a regulatory one for Telstra pursuant to the section 577A Undertaking.

 

The Definitive Agreements caught by the new provisions are those covered by a determination under section 577BA(9) of the Tel Act, namely:

-          The Access Deed, which document commitments made by NBN Co to Telstra in respect of the supply of NBN Co’s basic service offering and the charging for certain wholesale supply services. 

-          The Continuity Deed, which sets out the terms and conditions under which NBN Co will:

(a)        provide Telstra a licence to access specified copper loops and sub-loops for the provision of ADSL (asymmetric digital subscriber line), voice services and other existing Telstra services during the migration period and to continue to provide special services, services to non-premises and services over long copper tails until such time as those services are migrated to the national broadband network or another technology;

(b)        provide Telstra a licence to access parts of NBN Co’s hybrid fibre-coaxial network to provide Telstra broadband services during the migration period and for the ongoing provision of Foxtel services; and

(c)        set out arrangements for access by each party to the other party’s infrastructure in or associated with a national broadband network rollout region or proposed rollout region.

-          The Implementation and Interpretation Deed which documents condition precedent and various agreements related to the national broadband network as well as common provisions which are incorporated into other agreements between Telstra and NBN Co related to the NBN.

-          The Infrastructure Services Agreement which sets out, amongst other matters, the terms for the provision of long-term access to infrastructure and related services by Telstra to NBN Co, including ducts, pits and manholes, dark fibre, other fibre and exchange access and for the sale of copper lines, hybrid fibre-coaxial lines, lead-in-conduits and other infrastructure by Telstra to NBN Co and the provision of related services.

-          The Subscriber Agreement, which sets out, amongst other matters, terms applicable to the disconnection by Telstra of copper-based customer access network services and hybrid-fibre coaxial broadband services that are provided to premises in the national broadband network fixed-line footprint and other terms related to disconnection and migration processes.

These agreements contain commercially sensitive information that are confidential to NBN Co andor Telstra.

 

Telstra Corporation Limited is currently the counterparty to the Definitive Agreements and Telstra has indicated that a new company in the Telstra Group, namely Telstra Limited (ACN 086 174 78) will be the main company responsible for providing services to retail customers, although it will be dependent on inputs from other Telstra successor companies. Telstra Corporation Limited or Telstra InfraCo Limited would continue to own infrastructure critical to the rollout of the NBN.

Item 1 – At the end of Subdivision A of Division 2 of Part 33

Item 1 inserts a new section 577BAA into Part 33 of the Tel Act to enable the Minister to direct, by legislative instrument, designated Telstra successor companies to take specified actions to facilitate another designated Telstra successor company fulfilling its obligations under the Definitive Agreements.

This proposed new power is to enable the smooth and timely fulfilment of Definitive Agreement obligations after Telstra’s restructure and is consistent with the Bill’s objective of regulatory equivalence.

Proposed subsection 577BAA provides that, when a designated Telstra successor company is a party to the Definitive Agreements, the Minister is satisfied that the designated Telstra successor company has failed, is failing, or is likely to fail to fulfil an obligation imposed on it by name under the Definitive Agreements, they are able to give a written direction to another Telstra designated successor company or related body corporate to take a specified action as set out in the direction.

The Minister’s power is limited to circumstances where they are satisfied that:

-          the specified action will facilitate the original designated Telstra successor company fulfilling the obligation; and

-          the body corporate that it directs has either the capability or the ability to acquire the capability to comply with the direction;

-          the body corporate is either a constitutional corporation or carries on a telecommunications business as defined under proposed subsection 581L.

A body corporate that is subject to a direction under proposed section 577BAA is required to comply with that direction (proposed subsection 577BAA(3)). This is a civil penalty provision and Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions. As such the penalty amount is $250,000 for each contravention.

Before giving or varying a direction under proposed section 577BAA, the Minister is required to consult the ACCC and the public (proposed subsection 577BAA (5)-(8)). In conducting the public consultation, the Minister must publish a draft of the direction on the Department’s website and invite comment within a specified period of at least 30 days, unless the Minister is satisfied that a shorter period is necessary due to urgent circumstances. The Minister must give due regard to any comments received on the draft direction when making their decision.

Proposed subsections 577BAA(9)-(11) outline the consultation process when the Minister is satisfied that publishing a draft direction on the Department’s website could be expected to prejudice the commercial interests of a person. In that case, the Minister is not required to publish a draft direction. However, before giving or altering a direction in these circumstances the Minister must give each affected company:

-          a copy of the draft direction or variation; and

-          a notice inviting the affected company to give comments about the draft to the Minister within the period specified in the notice (which must be at least 30 days).

The Minister must have due regard to any comments received on the draft direction when making their decision.

Proposed subsection 577BAA(12) defines an affected company for the purposes of the section as:

-          a body corporate that is a party to the contract, arrangement or understanding;

-          a body corporate that is, or will be, subject to the direction.

Item 1A – After subsection 577BA(10)

Item 1A has the effect of extending the competition authorisation under section 577BA of the Tel Act to the making of contracts, arrangements and understandings, by any body corporate to comply with a ministerial direction requiring one designated Telstra successor company to assist another designated Telstra successor company in fulfilling an obligation under the Definitive Agreements (proposed subsection 577BA(10A)). Conduct engaged in to give effect to a provision of a contract, arrangement or understanding for that purpose is also authorised.

Proposed subsection 577BA(10B) also extends competition authorisation under section 577BA of the Tel Act to conduct engaged in by a body corporate to comply with a direction under the proposed subsection 577BAA(1) (see Schedule 3 to the Bill).

Amendments to the Telecommunications (Consumer Protection and Service Standards) Act 1999 in Schedule 3

Telstra’s delivery of the USO and other important public interest services is reinforced by a contract with the Commonwealth under section 14 of the TCPSS Act. The contract is known as TUSOPA. Telstra is currently a party to the contract and Telstra has indicated that as part of the announced corporate restructure, the name of this company is proposed to be changed to Telstra InfraCo Limited, but the company will remain the same legal entity.

Further, Telstra has indicated that a new company in the Telstra Group, namely Telstra Limited (ACN 086  174 78) 781) will be the main company responsible for providing retail and wholesale services to customers, although it will be dependent on inputs from other Telstra successor companies. Telstra InfraCo Limited would continue to own infrastructure critical to the delivery of the USO, such as the copper network and backhaul networks.

Telstra has advised that, as part of the court order it will seek on the Scheme of Arrangement, Telstra Limited will become a party to the TUSOPA, in place of Telstra Corporation Limited. This change will occur regardless of whether or not the Commonwealth provides consent. All rights and liabilities under the TUSOPA would also transfer to Telstra Limited by virtue of the court order, including any liability arising in respect of the period prior to the implementation of the Scheme.

As Telstra InfraCo will continue to own the core fixed-line infrastructure upon which the USO services are delivered, and the effectiveness of obligations under the TUSOPA depend upon such infrastructure, new section 21A will confer a power on Minister to direct Telstra Limited, or another designated Telstra successor company, to take certain actions required to fulfil its obligations under the TUSOPA. This will provide some certainty that important community safeguards (the universal service obligation and the emergency call service) that are funded by the Commonwealth through the TUSOPA will continue to be delivered.

Item 2 – After section 21

Item 2 of Schedule 3 inserts a new section 21A into the TCPSS Act to enable the Minister to direct, by legislative instrument, designated Telstra successor companies to take specified actions to facilitate another designated Telstra successor company fulfilling its obligations under TUSOPA. The power could only be used where the Minister is satisfied that a designated Telstra successor company that is a party to the TUSOPA has failed, is failing, or will fail to fulfil its obligations under the TUSOPA.

In these circumstances, the Minister may give a written direction to ServeCo, a designated Telstra successor company or a related body corporate (within the meaning of the Corporations Act 2001) to do a specified act or thing, or not to do a specified act or thing.

The Minister must not give a direction unless satisfied that the act or thing will facilitate a designated Telstra successor company fulfilling its obligations under the TUSOPA, and unless the Minister is satisfied that the body corporate has the capability (including the technical, operational and organisational capability) to comply with the direction, or could reasonably acquire the capability (including the technical, operational and organisational capability) to comply with the direction. The Minister may also not give a direction unless the body corporate is either a constitutional corporation or carries on a telecommunications business as defined under proposed subsection 581L in the Tel Act.

This proposed new power provides flexibility to address unforeseen circumstances that may affect the delivery by Telstra and its successors of important contracted community service obligations.

By way of example, a company or business unit, infrastructure, hardware, software, other facilities or other resources (e.g. staff or intellectual property) that have been used and continue to be needed to deliver a contractual obligation, may be sold or transferred to a third party, a designated Telstra successor company or another business unit. If satisfied that this has led, or could lead to, a failure to fulfil the obligations under the TUSOPA, the Minister could then use the direction power, for example by directing Telstra Limited or other related bodies corporate to maintain binding contracts to ensure uninterrupted delivery of contracted services.

Nothing in proposed section 21A is intended to limit the powers of the parties to negotiate future changes independently, in recognition of the freedom of legal parties to contract. 

It is envisaged there will be few if any instances where the body corporate would not itself have or be able to acquire from another person the capabilities required to deliver TUSOPA outcomes, noting Telstra must currently have these capabilities to deliver TUSOPA outcomes, and it has committed to continuing to deliver TUSOPA outcomes into the future, notwithstanding its restructure.

A body corporate that is subject to a direction under proposed section 21A is required to comply with that direction (proposed subsection 21A(4)). This is a civil penalty provision (subsection 21A(5)). A note is provided to remind the reader that Part 31 of the Tel Act provides for pecuniary penalties for breaches of civil penalty provisions.

Before giving or varying a direction under proposed section 21A, the Minister is required to consult the public (proposed subsections 21A(6-9)). In conducting the public consultation, the Minister must publish a draft of the direction on the Department’s website and invite comment within a specified period of at least 30 days, unless the Minister is satisfied that a shorter period is necessary due to urgent circumstances. The Minister must have due regard to any comments received on the draft direction in finalising a decision to make, or not make, the direction.

Telstra has indicated to the Commonwealth, in discussions and in writing, on many occasions its intention to continue to fully deliver its obligations under the TUSOPA, supported, where needed, by appropriate, comprehensive inter-company agreements. The directions power provides an additional safeguard, along with others in the Bill, in this regard should it be needed.


Schedule 4—Amendments relating to access to supplementary facilities and telecommunications transmission towers

Amendments in Schedule 4 commence on the day after Royal Assent because they have been included to complement the existing regulatory framework regarding access to telecommunications facilities and towers. The amendments at Schedule 4 to the Bill are not dependent on Telstra going ahead with its Scheme of Arrangement.

Amendments to the Telecommunications Act 1997

The Government has identified that the facilities access regime under Schedule 1 to the Tel Act could be interpreted in a way that a related body corporate of a carrier that owns telecommunications towers or other facilities is not covered by the regime. That interpretation is contrary to the Government’s policy intention. The facilities access framework exists to provide access to infrastructure that may be a bottleneck. If a carrier were able to create a subsidiary company and shift its passive assets into that subsidiary, and merely by reason of that action avoid its access obligations, then clearly the policy intent of the regime would be defeated.

Thus, the Bill also seeks to close this loophole. It does so by providing that if a group of companies includes a carrier, a company (other than a carrier) that is in the group must provide carriers with access to facilities and provide carriers with access to telecommunications transmission towers, where that non-carrier company holds facilities or telecommunications transmission towers.

The obligations to provide access to facilities and telecommunications transmission towers does not take effect until 60 days after the ACCC has made a report to the Minister about the appropriate control threshold for a company to be considered a related body corporate. Because such a report must be made within six months after the commencement of Schedule 4, this is effectively a delay in the commencement of the obligations by roughly six months. This will give the Government, industry and the ACCC an opportunity to consider the appropriate control threshold before the obligations take effect.

Item 1A – After paragraph 570(3)(aa)

Item 1A inserts a provision into Part 31 of the Tel Act that applies penalties for breaches of the other provisions inserted by Schedule 4 to the Bill.

Item 1 – Before Part 35

Part 34B—Access to supplementary facilities and telecommunications transmission towers

Item 1 inserts a new Part 34B into the Tel Act. This new Part largely mirrors the carrier to carrier facilities access regime contained in Parts 3 and 5 of Schedule 1 to the Tel Act. However, it would apply in respect of telecommunications transmission towers and supplementary facilities owned by a body corporate that is not a licensed carrier but in a carrier company group (an eligible company).

The inclusion of this new part is to prevent carriers from moving tower assets and supplementary facilities into related body corporates that are not required to be licensed carriers, hence avoiding the Schedule 1 carrier access regime.

The access obligations at Schedule 1 of the Tel Act are important for the promotion of an openly competitive marketplace. The establishment of an access scheme for non-carriers contributes to this competition outcome.

Division 1—Introduction

Division 1 of new Part 34A provides a simplified outline of the new Part.

It also defines the concept of ‘carrier company group’ (proposed section 581W) to mean 2 or more bodies corporate, where at least one of those bodies corporate is a carrier, and each of the bodies corporate are related to each other as per section 50 of the Corporations Act 2001. That is, if one body corporate is:

-          a holding company of the other body corporate;

-          a subsidiary of the other body corporate; or

-          a subsidiary of a holding company of the other body corporate.

There are several ways a body corporate can be a subsidiary, as determined by section 46 of the Corporations Act 2001. A body corporate is a subsidiary if another body corporate:

-          controls the composition its board; or

-          is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at its general meeting; or

-          holds more than one-half of its issued share capital (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital).

Proposed subsection 581W(4) provides that, in the absence of a ministerial determination to the contrary, all references to ‘one half’ in section 46 of the Corporations Act 2001 should be read as ‘15%’ for the purposes of proposed section 581W. Therefore, the default position would be that a body corporate is a subsidiary if another body corporate can cast more than 15% of votes at a general meeting, or controls more than 15% of its shares.

Proposed section 581W confers power on the Minister, by legislative instrument, to determine that, for the purposes of the provision, each reference in section 46 of the Corporations Act 2001 to one half is taken to be a reference to the percentage specified in the determination. This effectively allows the Minister to increase or decrease the ‘more than one half’ shareholding threshold relevant to ascertaining under one of the limbs in section 46 if a body is a subsidiary of another.

Before making or varying a determination under proposed subsection 581W(3), the Minister is required to publicly consult on the proposed variation which includes publishing a notice on the Department’s website and inviting interested persons to give written comments about the draft to the Minister within a period specified in the notice of at least 30 days (proposed subsection 581W(5)-(6)). The Minister must have due regard to any comments made by interested parties received in time before making or varying the determination (proposed subsection 581W(7).

Proposed section 581X defines the concept of ‘eligible company’ for the purpose of new Part 34B (covering both new access regimes) to mean a body corporate that is in a carrier company group and is not a carrier.  The two new access regimes will apply more transparency and consistency regarding the use of important telecommunications facilities,promote competition and an efficient use of resources (enabling carriers to gain access to more facilities for the purposes of co-locationetc).

Proposed section 581XA provides that if a person (either individually or in a partnership or as a trustee) owns or operates a facility or telecommunications transmission tower, the Minister can, by legislative instrument, determine that person to be a related body corporate to a specified body corporate for the purpose of the proposed Part 34B.

Division 2—Access to supplementary facilities

Division 2 mirrors the supplementary facilities access obligations in Schedule 1 to the Tel Act and applies to supplementary facilities owned or operated by an eligible company. The term ‘owned’ under new Part 34B is intended to have a broad meaning and capture both legal and equitable ownership and leasing arrangements. Proposed section 581Y(8) sets out a special circumstance where NBN Co is not taken to be the operator of facilities.

The primary obligation of Division 2 of new Part 34B is set out at subsection 581Y(1) and requires an eligible company to, if requested to do so by a carrier, give the requesting carrier access to facilities owned or operated by the eligible company. The term ‘facility;’ is defined in section 7 of the Tel Act and has a broad meaning as:

-          any part of the infrastructure of a telecommunications network; and

-          any line, equipment, apparatus, tower, mast, antenna, tunnel, duct, hole, pit, pole or other structure or thing used, or for use, in or in connection with a telecommunications network.

The meaning of a supplementary facility for the purposes of new Division 2 of Part 34B also extends to land on which a facility is located, a building or structure on that land and customer equipment, or customer cabling, connected to a telecommunications network owned or operated by a carrier (proposed subsection 581Y(9)).

A breach of the access obligation under proposed subsection 581Y(1) is a civil penalty provision, and penalties apply for a breach (proposed subsection 581Y(2)) – 10,000 penalty units per breach by operation of proposed  section 570(3)(aa) of the Tel Act (see: Item 1A of Schedule 4 to the Bill).

Proposed subsections 581Y(3) and (4) outline where eligible companies are not required to comply with the access obligation. Proposed subsection 581Y(6) clarifies when a carrier’s request for access to an eligible company’s supplementary facilities is reasonable; this requires regard to  be had to the question whether compliance with the request will promote the long term interests of end users of carriage services or of services supplied by means of carriage services (as per Part XIC of the CCA). However, other matters can be considered, as proposed subsection 581Y(7) clarifies that subsection 581Y(6) is not intended to limit the matters to which regard may be had.

Proposed subsection 581Y(8) clarifies that if:

-          there is an agreement between Telstra (or a designated Telstra successor company) and an NBN Co, and

-          the agreement relates to the NBN Co’s access to facilities owned or operated by Telstra or the designated Telstra successor company; and

-          apart from the operation of proposed section 581Y, the agreement would result in the NBN Co being the operator of the facilities

the NBN Co is not taken to be the operator of those facilities.

Proposed subsection 581Y(10) states that a carrier is not entitled to make an access request before the end of the 60-day period beginning on the day after the specified in a ministerial determination about the control threshold for related bodies corporate (see proposed subsection 581W(3)).

Proposed subsection 581Y(11) defines NBN Co for the section by reference to the meaning given in section 577BA (namely, NBN Co, NBN Tasmania and a company that is a related body corporate of NBN Co).

Proposed subsection 581Z deals with the terms and conditions on which access to supplementary facilities in compliance with proposed subsection 581Y(1) must be given. In broad terms, the terms and conditions are to be first agreed between the eligible company and the requesting carrier concerned and if agreement cannot be reached, the terms and conditions would be determined by an arbitrator appointed by the parties. As a backstop, the parties can appoint the ACCC to be the arbitrator and regulations can make provision for and in relation to the conduct of an arbitration.

Proposed section 581ZA empowers the Minister to make a determination setting out principles dealing with price‑related terms and conditions relating to the new access obligation. This power is intended to enable government intervention on access pricing if parties cannot agree to commercially negotiated reasonable terms.

Division 3—Access to telecommunications transmission towers

Division 3 of Part 34B contains the proposed facilities access regime that specifically apply to telecommunication transmission towers owned or operated by an eligible company. As above, the term ‘owned’ is intended to have a broad meaning in this context. This regime broadly mirrors the telecommunications transmission towers access obligations in Part 5 of Schedule 1 to the Tel Act and requires eligible companies to provide carriers with access to these facilities upon request.

Proposed sections 581ZB and 581ZC provide definitions for Division 3. Proposed section 581ZB defines a telecommunications transmission tower as a piece of infrastructure used to supply a carriage service by means of radio communications that is:

-          a tower; or

-          a pole; or

-          a mast; or

-          a similar structure.

Proposed subsection 581ZD(10) sets out a special circumstance where an NBN Cois not taken to be the operator of telecommunications transmission tower.

Proposed section 581ZC provides for an extended meaning of access to include access to any tower that replaces a tower located on the same site. This is to ensure that businesses do not try to circumvent access requirements by replacing existing towers with a new tower that may ordinarily fall out of the access regime.

The primary obligation of Division 3 is set out at subsection 581ZD(1) and requires an eligible company to, if requested to do so by a carrier, give the requesting carrier access to a telecommunications transmission tower owned or operated by the eligible company.

A breach of the access requirement under proposed 581ZD(1) is a civil penalties provision, and penalties apply for a breach (refer subsection 581ZD(2)) – 10,000 penalty units per breach by operation of proposed section 570(3)(aa) of the Tel Act (see Item 1A of Schedule 4 to the Bill).

Proposed subsections 581ZD(3) and 581ZD(8) outline when eligible companies are not required to comply with the access obligation in general, while 581ZD(4) provides that eligible companies are not required to comply in relation to a particular telecommunications transmission tower if the ACCC has issued a certificate stating that compliance is not technically feasible. Proposed subsection 581ZD(5) requires that the ACCC must have regard to certain issues when deciding whether a carrier’s request for access to an eligible company’s supplementary facilities is technically feasible. The ACCC may consult the ACMA before making such a decision (proposed subsection 581ZD(6)) and must use its best endeavours to make the decision within 10 business days of receiving an application (proposed subsection 581ZD(7)).

Proposed subsection 581ZD(10) clarifies that if:

-          there is an agreement between Telstra (or a designated Telstra successor company) and an NBN Co, and

-          the agreement relates to the NBN Co’s access to a telecommunications transmission tower owned or operated by Telstra or the designated Telstra successor company; and

-          apart from the operation of proposed section 581ZD, the agreement would result in the NBN corporation being the operator of the telecommunications transmission tower

The NBN Co is not taken to be the operator of that telecommunications transmission tower.

Proposed subsection 581ZD(11) states that a carrier is not entitled to make an access request before the end of the 60-day period, beginning on the day after specified in a ministerial determination about the control threshold for related bodies corporate (see proposed subsection 581W(3)).

Proposed section 581ZE deals with the terms and conditions on which access to supplementary facilities in compliance with proposed subsection 581ZD(1) must be given. In broad terms, the terms and conditions are to be first agreed between the eligible company and the requesting carrier concerned. If agreement cannot be reached, the terms and conditions would be determined by an arbitrator appointed by the parties. As a backstop, the parties can appoint the ACCC to be the arbitrator and regulations can make provision for and in relation to the conduct of an arbitration.

Proposed section 581ZF gives the ACCC the power to make code setting conditions that are to be complied with in relation to the provision of access by eligible companies to the telecommunications transmission towers (and related sites). Eligible companies are obliged to comply with the code. For clarity, proposed subsections 581ZF(4) and (5) make clear that new section 581ZF does not, by implication, limit the matters that may be dealt with by codes or standards referred to in Part 6 of the Tel Act and noting in that subsections 581U(3) and (4) limits subsection 33(3B) of the Acts Interpretation Act 1901 (which sets out the interpretive rule that a power shall not be taken, by implication, not to include the power to make provision for or in relation to a particular aspect of a matter by reason only that provision is made by the Act in relation to another aspect of that matter or in relation to another matter).

Proposed section 581ZG notes that the existence of Division 3 is not intended to limit the scope of facilities or anything else under the general access regime under Division 2 of new Part 34B (refer section 581ZG).

Division 4 – Review of corporate control percentages

Proposed section 581ZH contains the requirement that within six months after the commencement of the section, the ACCC must conduct a review of whether a ministerial determination should be made under proposed subsection 581W(3) and, if so, the percentage that should be specified in the determination.

Taken with the delay in commencement of access obligations until after the ACCC review (proposed subsections 581Y(10) and 581ZD(11)), this effectively provides for a delay in the commencement of the obligations by roughly six months. This will give the Government, industry and the ACCC an opportunity to consider the appropriate corporate control percentages before the obligations take effect.

 

 

Telecommunications (Arbitration) Regulations 2018

Item 2 - Section 5 (paragraph (a) of the definition of arbitration)

Item 2 would amend the definition of ‘arbitration’ under the Telecommunications (Arbitration) Regulations 2018 to recognise the introduction of Part 34B. This is consequential and will enable the ACCC to arbitrate a dispute relating to access terms and conditions under the proposed access regimes applicable to eligible companies.

Item 3 - Section 5 (subparagraph (b)(i) of the definition of service)

Item 3 would amend the definition of ‘service’ under the Telecommunications (Arbitration) Regulations 2018. This change is consequential to proposed new Part 34A.


 

Schedule 5—Exemption from sunsetting

Amendments in Schedule 5 commence on the day after Royal Assent because they relate to a declaration that could be made under Schedule 1, which also commences on the day after Royal Assent. The amendments at Schedule 5 to the Bill are not dependent on Telstra going ahead with its Scheme of Arrangement.

Legislation (Exemptions and Other Matters) Regulation 2015

Item 1 Section 12 (after paragraph (aa) of table item 61)

Item 1 would provide that a declaration made under section 581F (that a company is a Telstra successor company) or 581G (that a company is a designated Telstra successor company) does not sunset. This provides certainty for relevant companies as to the legislative framework that applies to it, by removing the risk that the instrument determining its status as a Telstra successor company or a designated Telstra successor company would not sunset and need to be remade.

This is critically important in the context of Telstra’s restructure. If, at some point, a ministerial exemption was provided in right of a certain regulatory obligation, Telstra may seek to attract capital and investment in that entity. In the event that exempting instruments were subject to sunsetting, this would dissuade investment and add to uncertainty, not in the public interest, especially given that some of the assets in question are long term assets, with an investment cycle of 20 – 30 years.

 



[2] Australian Bureau of Statistics (2018) Australian System of National Accounts, 2017-18, Cat. No. 5204.0, table 2.

[3] https://minister.infrastructure.gov.au/mckenzie/media-release/increasing-transparency-delivery-universal-service-obligation