Chapter 2 - Key Issues


Chapter 2 - Key Issues

Introduction

2.1                 Generally, most submissions were concerned with whether the recommendations of the Estens Report had been addressed in the Bill and whether they had been implemented in a satisfactory way.

2.2                 Several submissions strayed outside the provisions of the Bill to address other matters. Some, for instance, expressed views on the suitability and adequacy of the Estens recommendations in achieving the policy objective of future-proofing telecommunications in regional, rural and remote Australia. The Committee considered it was not productive to re-examine the basis for the Estens recommendations but has, nonetheless, recorded some of these observations in this chapter for the sake of completeness.

2.3                 Others such as Optus did not criticise the Estens recommendations but offered other solutions to the challenge of 'future-proofing'. Optus saw 'the real path to resolving service delivery lags between urban and non-urban telecommunications users is through effective infrastructure competition'.[15] The Competitive Carriers Coalition (CCC) similarly emphasised the importance of competition in delivering the desired outcomes. The Committee considered that the wide ranging nature of these suggestions were too far outside this inquiry to be considered in detail, noting also that other current inquiries are considering such matters.[16] Nevertheless, the Committee has canvassed some of these matters at the end of this chapter. The Committee notes also that the state of competition in rural, regional and remote Australia is an obvious focus of the reviews established by the Bill.

2.4                 This chapter discusses:

  • support for the Bill and its objectives;
  • periodic reviews, including
  • the timing of the first review;
  • the maximum period of time that can elapse between reviews;
  • the membership of the review committee; whether officers, agents or other people associated with, or related to, Telstra or other carriers or service providers should be eligible for membership of the RTIRC;
  • the need for guidance about the matters the RTIRC is to consider in assessing performance;
  • the need for publication of the RTIRC findings;
  • the need for the government and Telstra to respond publicly to the findings; and
  • the local presence plan, including:
  • the need for consultation on the local presence plan;
  • the need for publication of the local presence plan; and
  • whether the local presence plan should be a disallowable instrument.

2.5                 The Committee’s conclusions and recommendations are presented at the end of this chapter.

Support for the Bill and its objectives

2.6                 No submission expressly opposed the Bill but most considered that it required amendment to make it more effective, as discussed in more detail below. Only Telstra indicated that it considered:

... that [the Bill] is effective to achieve the government[']s stated objective of implementing the government’s response to the recommendations of the Regional Telecommunications Inquiry in relation to the regular reviews of telecommunications services in regional, rural and remote Australia, and to facilitate imposing a local presence licence condition on Telstra.[17]

The policy basis for the Estens recommendations – future proofing telecommunications in rural, regional and remote Australia

2.7                 The availability, on an equitable basis, of telecommunications services has for a long time been a part of social and economic policy in Australia. Section 3 of the Telecommunications Act 1997 reflects this:

(2) The other objects of this Act, when read together with Parts XIB and XIC of the Trade Practices Act 1974, are as follows:

(a) to ensure that standard telephone services, payphones and other carriage services of social importance are:

(i) reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business; and

(ii) ...

(iii) are supplied at performance standards that reasonably meet the social, industrial and commercial needs of the Australian community;

(b) ...

(c) to promote the supply of diverse and innovative carriage services and content services;

(d) to promote the development of an Australian telecommunications industry that is efficient, competitive and responsive to the needs of the Australian community;

(e) to promote the effective participation by all sectors of the Australian telecommunications industry in markets (whether in Australia or elsewhere);

(f) ...

(g) to promote the equitable distribution of benefits from improvements in the efficiency and effectiveness of:

(i) the provision of telecommunications networks and facilities; and

(ii) the supply of carriage services; ...

2.8                 No submissions or witnesses doubted the need for measures to ensure the equitable provision of services to rural, regional and remote Australia. Furthermore, the importance of the availability of high speed internet access in regional, rural and remote Australia was implicit in most, if not all, submissions. In fact, the need for such a facility was said to be more critical for those Australians in rural, regional and remote Australia. Dr Walter Green of the Communications Experts Group (CEG) observed in evidence that:

Anecdotal evidence and surveys clearly show that the further a person is away from Perth the greater the need for internet access. [...] there are federal and state governments that are cutting back on expenditure and expecting rural and remote communities to use the internet to access services. Governments, both federal and state, are expecting people to have access to the internet, so they should be doing more to ensure that they get that access. The dial-up access that is available today is clearly unsuitable.[18]

2.9                 Such access was not, however, being provided to a level sufficient to meet demand, according to Dr Green, who suggested that Telstra did not always respond to demand but, instead, to threats from competitors.[19]

2.10             Furthermore, demand for greater bandwidth was expected to follow an upward trend which would increase the level of unmet demand unless measures are taken to significantly improve service. For instance, Dr Green forecast that within three years domestic demand would be for services capable of delivering two megabits per second, and that over the next five years the availability of new services such as videoconferencing and TV services would lead to demand for bandwidth in the order of 54 megabits per second.

2.11             In a similar vein, Optus considered that the ‘future proofing’ of regional, rural and remote Australia requires broadband infrastructure as well as a second provider of broadband infrastructure to 'provide the platform for developing services and applications, which Telstra lacks the incentives to deploy without competition'.[20]

2.12             However, the Committee notes that in general broadband take-up throughout the nation has burgeoned. According to the Australian Competition and Consumer Commission's report, Snapshot of Broadband Deployment as at 31 December 2004, total broadband take-up was 1,548,300. This represented a massive 121.6% increase on the figure for December 2003. As part of its response to the Estens Report, the Government has developed the $142.8 million National Broadband Strategy to focus on increasing the access to, and the affordability of, broadband services for regional Australians. A key component of this Strategy is the Higher Bandwidth Incentive Scheme (HiBIS) which provides a financial incentive to registered Internet Service Providers to offer broadband services to people in regional, rural and remote Australia at prices comparable to those in metropolitan Australia. As at 15 April this year, there were 12,843 HiBIS customers. HiBIS provides a vital incentive for Telstra to upgrade its exchanges to ADSL. In a media release of 2 March 2005, Telstra stated that '220,000 more rural and regional telephone users have access to ADSL broadband services than 10 months ago'.[21] Telstra went on to acknowledge that this was 'largely due' to HiBIS. Indeed, since the commencement of HiBIS, more than 260 Telstra telephone exchanges in rural and regional areas have been upgraded to ADSL.

2.13             SETEL observed that the past focus on the ‘Standard Telephone Service’ is no longer sufficient to meet the needs of regional, rural and remote Australia. It said that that benchmark ‘is no longer relevant to the needs of small, micro and home based business users. In fact most residential users have moved beyond this outdated benchmark’.[22] Mr Ewan Brown from SETEL observed that broadband was a ‘business necessity’, a situation created, in part, by the Government:

...government bureaucrats in particular are requiring more and more contact by electronic means—for example, the business entry point database has something like 27,000 business regulations on line and there is a key requirement for businesses to utilise electronic services to access that information. We do not think the efficiencies are there because a dial up download to on of those services leads to intense frustrations...[23]

2.14             Further, Mr Brown observed that rural businesses were disadvantaged by the variety and adequacy of communications services:

They are always behind the eight ball in terms of competition against other businesses in areas that do have access to faster speeds. The government information dissemination side is that more and more reliance is being placed, both by big business and government, on electronic services for access.[24]

2.15             The National Farmers' Federation (NFF) considered that ‘rural and regional Australians require other than the standard telephone service to get on with their activities’.[25] The CCC supported the proposal to establish regular independent reviews of regional telecommunications.[26] AAPT applauded the proposal to ‘institutionalise regular reviews of telecommunications services independent of the decision about Telstra ownership’,[27] stating that:

... institutionalising reviews of the adequacy of telecommunications services is indeed a valuable action. However, it would also appear that the nature and scope of these reviews should be inclusive of all other relevant policy issues and conducted in a way that is competent to deal with the issues. That then would inform a view of the objectives, frequency, staffing and processes of any review.[28]

2.16             AAPT suggested, however, that the RTIRC reviews should have a much broader scope than those proposed in the Bill and proposed different terms of reference for the reviews.[29] The Committee considers that these matters are outside the scope of this inquiry.

2.17             AAPT also observed, referring to historical material, that the debate about whether ‘communications services should be regarded as a social policy or whether they should be operated business enterprises’[30] is an old one. AAPT said that there has always been a tension between the commercial interests of the main provider of communications services — whether the Post Master General at the time of federation or Telstra today — and the goal of delivering equitable service across the country.

Periodic reviews by the RTIRC

The timing of the first review

2.18             While requiring that the RTIRC should conduct an inquiry at least every five years (proposed subsection 158P(3)), the Bill is silent about when the first review should take place.

2.19             Due to ‘the state of progress in providing widely available and affordable medium speed data services in non-metropolitan areas’, SETEL suggested that a maximum period should be prescribed for the first review.[31] In the public hearing, Mr Ewan Brown suggested that the first inquiry should be held within two years of the time the recommendations in the Estens report are put into place.[32]

The maximum period of time that can elapse between reviews

2.20             Some submissions appeared to be founded on the misconception that the Bill requires the RTIRC to conduct reviews every five years. In fact, proposed subsection 158P(3) provides that the time between reviews must be less than 5 years. It is, therefore, possible for the RTIRC to conduct its inquiries more frequently.

2.21             Nonetheless, there was some concern that reviews may be held infrequently and that this should be constrained by reducing the maximum period of the review cycle. For example, CEG argued that the five year review period was unacceptable for two reasons and supported a maximum of three years:

a) A minimum of two reviews are required to achieve a change, the first to determine the impact and need and the second to obtain community input and implement solutions i.e. a total six years instead of the proposed ten years. There are concerns that the current broadband service offerings will not meet the needs of the rural community in the near future.

b) The rate of adoption of Technology by the community. Surveys such as the Telecommunications Needs Assessment by the Department of Industry and Resources(WA) have shown that the rural community are able to adopt and benefit from new technologies such as broadband in less than five years.[33]

2.22             Expanding on the second point at the public hearing, Dr Walter Green, Director of CEG, drew the Committee’s attention to two surveys that were conducted by the government of Western Australia in 1997 and 2003. Dr Green reported that;

In Western Australia, if you look at the survey that was conducted in 1997 on the telecommunication needs of rural and remote parts of WA and then you look at a similar survey conducted in 2003—that is a six-year gap—there was a completely different focus as to what the community needed in terms of the way it conducted its business and used telecommunications. I think that that is a very useful indicator of the fact that five years is far too long and that three years would have been a more appropriate period in order to hasten the introduction of newer technology. I believe there is a real situation that the five-year period will inhibit the introduction of technologies and services rather than promote them.[34]

2.23             Dr Green emphatically rejected Telstra’s view[35] that a five year review period is appropriate because of the length of time to conduct the review and to make and implement decisions arising from it.[36] His view is that infrequent scrutiny by the RTIRC would provide an environment for game playing and opportunity to delay the introduction of services to rural, regional and remote areas.[37]

2.24             SETEL suggested that the first review be within two years, the second within three years after the first report is presented and that, thereafter, the reviews should take place according to the five year cycle indicated in the Bill.[38]

2.25             The NFF observed that a three-year time frame:

... allows for sufficient time for a variety of new technologies to be implemented, if they are warranted, and it allows the review committee to find out what the benchmarks are and whether or not changes need to be made.[39]

2.26             AAPT argued that the reviews should be more frequent and that they should have a wider brief. With regard to the timing of the review, AAPT observed:

The Bill also provides that this timing runs from date of completion to date of completion. It is extremely hard to time a reviews progress before the event, and in any event it can facilitate frustrating a review if the review is constrained to a short completion time. Consequently, it is a bad idea to time reviews from completion date to completion date. It is better to time the review from completion of one to commencement of the next.[40]

2.27             The CCC also agreed that a maximum review cycle of five years is too long.[41] It also identified the rate of change in technology as being an influencing factor.[42] However, Telstra expressly supported the five year cycle, stating that 'It is important that these reviews are conducted at a frequency that allows adequate time for implementation of recommendations between reviews'.[43]

The membership of the RTIRC

2.28             Proposed subsection 158T(2) of the Bill requires that RTIRC members have knowledge of, or experience in, matters affecting regional, rural and remote parts of Australia or telecommunications. Furthermore, under proposed subsection 158T(4) the RTIRC Chair must not be, in general terms, an officer of Telstra or of the Commonwealth.

2.29             However, a common theme in submissions was that the RTIRC’s membership should be further constrained, particularly in relation to membership of Telstra officers or more generally to membership of officers of carriers and service providers.

2.30             CEG, for instance, observed that 'a majority of the members of the RTIRC should be from the rural areas or have a good working knowledge of rural issues'[44] and that the RTIRC should never have a majority of carrier representatives. In the public hearing, Dr Green went further and argued that the independence of the committee would require that carrier or service provider interests (that is, not just Telstra) should be excluded.[45] Carriers and service providers would, nonetheless, have a role in the reviews ‘in the provision of information support’.[46]

2.31             Dr Green pointed out that, in his experience, people in regional, rural and remote communities are capable of expressing their service needs, the implication being that service provider input is not required to articulate informed views by that community.[47]

2.32             SETEL was also concerned about the independence of the RTIRC, arguing that:

Membership of the review panel should comprise independent representatives. No Telstra employees should be included in the RTIRC membership. A majority of non-Telstra members is not sufficient.[48]

2.33             Mr Ewan Brown from SETEL repeated these views at the hearing, adding that SETEL would prefer interests and businesses in rural, regional and remote Australia to be represented on the RTIRC.[49]

2.34             AAPT identified a tension between the need for independence and the risk of ‘getting advice from someone who is so sufficiently removed that they have insufficient knowledge or experience to contribute anything useful’.[50] It also questioned why the proscriptions on the membership of officers of the Commonwealth and Telstra alone should be thought to encourage the independence of the RTIRC.

2.35             AAPT also commented on some drafting inconsistencies in the Bill:

The term “RTIRC member” is at some times used to include all members and at some times used to refer to only the members other than the Chair.[51]

2.36             The Western Australian Department of Industry and Resources (WADIR) also remarked that the Bill does not safeguard an independent RTIRC:

The proposed legislation (section 158T (3)) only requires that a majority of the members of this Regional Telecommunications Independent Review Committee (RTIRC) not be officers or employees of the Commonwealth or of Telstra. This does not make the committee independent, nor does incorporating the word “independent” in its title.[52]

Benchmarks for reviewing acceptable service

2.37             The Bill provides that the RTIRC must conduct reviews of the adequacy of telecommunications services in regional, rural and remote parts of Australia. In doing so, the RTIRC must have regard to whether people in regional, rural and remote parts of Australia have equitable access to telecommunications services that are currently available in one or more urban parts of Australia.[53]

2.38             Some submissions expressed concern about this framework. There was a widely held view that competition was the 'primary means of driving better services in to regional and rural Australia'[54] and that only in the event of market failure—infrastructure bottlenecks, for example—should there be targeted regulatory intervention. [55] Telstra agreed that 'competition gives good outcomes'.[56]

2.39             CCC observed, therefore, that one of the factors that the RTIRC should have regard to is the state of competition in rural, regional and remote Australia.[57] AAPT held similar views.[58]

2.40             Others questioned whether the standard of services in more urban areas of Australia represented a sound benchmark against which to review the adequacy of services in rural, regional and remote Australia. AAPT expressed concern that benchmarking against services in urban areas:

... would imply that only customers in those geographic areas are likely to experience problems or that the only problem with achieving the objectives of the regime in the future is likely to be in relation to regional services. We know that today it is not only regional, rural and remote areas that have problems accessing some modern telecommunications services. We know from other inquiries that the Senate has undertaken that there have been problems in the outer suburban areas of our large cities. [59]

2.41             The City of Casey's submission lent support to these observations when it pointed out that services in outer metropolitan areas are sometimes unsatisfactory.[60]

2.42             With regard to the appropriate standard of services in rural, regional and remote Australia, there was agreement that the standard telephone service, as protected by the Universal Service Obligation (USO), was no longer a satisfactory baseline standard. CEG thought the standard telephone service as a baseline service standard is 'woefully inadequate'.[61] SETEL considered that should be 'a high level benchmark universal service as a major philosophical goal of governments in the country'.[62] The NFF observed that 'rural and regional Australians require other than the standard telephone service to get on with their activities'.[63]

2.43             Nonetheless, Optus considered that 'the USO as a means of supporting basic services should continue (although it is not appropriate as a vehicle for delivering advanced services)'.[64] It did, however, propose a different funding model for the USO which, it suggests, favours Telstra financially at the expense of less well resourced service providers.

The need for the government and Telstra to respond publicly to the findings

2.44             Proposed section 158Q of the Bill requires the Government to respond to the recommendations of the RTIRC’s reviews. Additionally, the Committee raised with Telstra whether it would also be willing to respond. Telstra agreed that it would:

I do not think we would see an objection to that. In the end, depending on whether Telstra is a completely private company or still a company in government hands, I think either way, Telstra would want to respond to any recommendations. It would happen either directly to the public or through responding to a government requirement; one way or the other we would respond publicly.[65]

The local presence plan – transparency and accountability

2.45             Proposed section 66 of the Telecommunications Act 1997 provides that a local presence licence condition on Telstra may empower the Minister or the Australian Communications and Media Authority (ACMA) to make decisions of an administrative character.

2.46             This provision is opaque. The Explanatory Memorandum states that the main purpose of this provision is to clarify that a local presence licence condition that may be imposed on Telstra under existing powers can empower ACMA to make a decision of an administrative character.[66]

2.47             More usefully, Telstra made the following observations:

Telstra interprets this as flagging an intention that at some point the decision to approve Telstra’s local presence plan under the licence condition may be one that is delegated to the ACA or its successor. Telstra’s key concerns in relation to the process for approval of the local presence plan are that the decision is made in a way that:

  • gives due regard to the terms of Estens Recommendation 8.1 that the local presence requirement on Telstra should not be unduly prescriptive or burdensome, and should be broadly compatible with Telstra’s commercial interests;

  • is transparent and drives appropriate accountability;

  • gives Telstra the necessary commercial flexibility to respond to customer needs and focus on customer outcomes;

  • ensures that regulatory intervention only occurs in situations of demonstrated market failure; and

  • minimises unnecessary bureaucracy and the extent to which resources are diverted into bureaucratic processes and away from meeting real customer needs.[67]

2.48             Telstra’s submission, in the Committee’s opinion, raises issues about the content of any local presence plan as well as process by which it is established. As to Telstra’s concerns about the content of the local presence plan (LPP), these are no doubt matters on which it is capable of representing its views to the appropriate authority if the need arises and the Committee makes no further comment. The Committee takes the same view about other issues raised by Telstra about statements in the Explanatory Memorandum that speculate about the effects of this amendment on its organisational structure.[68]

2.49             The question of transparency and accountability in the process by which any LPP is developed was raised by Telstra and others. This issue took on a sharper focus in the light of explanations given in the public hearing by the Department of Communications, Information Technology and the Arts (DCITA) that the Minister can, even under the existing legislation, put in place local presence plans that are not subject to any parliamentary scrutiny.[69]

2.50             Telstra noted:

... section 63(13) of the Telecommunications Act specifically provides that a licence condition is a disallowable instrument. Accordingly, in order to preserve this important Parliamentary accountability, Telstra suggests that proposed new section 66 should specifically provide that any requirement imposed by a subsidiary instrument under the licence condition should also be a disallowable instrument.[70]

2.51             Clearly, by the mechanism of making any LPP a disallowable instrument, a degree of accountability is achieved. However, submissions were also made about the process by which the terms of any LPP, made in accordance with a licence condition, might be established. The Bill is silent about this.

2.52             While it is possible that that any licence condition made under section 66 of the Telecommunications Act might require Telstra to develop an LPP under a transparent process of consultation, this is not required by the Bill or the existing legislation. Several witnesses addressed the need for consultation in the development of the LPP. For example, Mr Mark Needham on behalf of the NFF considered that:

It is important that the government consult appropriately so that the [local presence] plans are meaningful and detailed and deliver all the necessary outcomes that a primary universal service provider needs to deliver as part of its provision.[71]

2.53             Furthermore, the NFF supported a public consultation process which might include, for instance, a requirement that a draft LPP be published to enable members of the public affected by it to respond.[72]

2.54             The Minister for Communications, Information Technology and the Arts has indicated that the Government hopes to have a LPP 'approved and in place in the second half of this year'. The Minister set out what she envisaged as being the requirements of a LPP:

I see a Local Presence Plan continuing a devolved, locally based management structure, ensuring appropriate resources are committed to maintenance of existing services and delivery of new services, and continued provision of high quality customer service experiences to consumers in rural and regional Australia.[73]

Other issues

2.55             As noted at the beginning of this chapter, some submissions did not directly address the provisions of the Bill but canvassed matters that are relevant to the goal of future-proofing telecommunications in regional, rural and remote Australia. Such matters include:

  • whether the Bill implements those of the Estens recommendations that it purports to;
  • changes in the competition regulatory regime; and
  • services in marginal metropolitan areas.

2.56             These issues are briefly discussed below.

Whether the Bill fully implements the Estens Report recommendations

2.57             A representative from DCITA told the Committee that the Bill constitutes a comprehensive response to the recommendations in Chapters 8 and 9 of the Estens Report.[74] However, not all submissions agreed.

2.58             The WADIR argued that the Bill does not fully reflect the recommendations of the Estens Report. In particular, it points out that in conducting the review, the RTIRC should have regard to any telecommunications strategic plan as was recommended by the Estens Inquiry.[75]

2.59             In response to the Committee's questioning about the progress of the strategic plan, a DCITA representative said:

In terms of a strategic plan, more recently we had some discussions with our state government counterparts who raised the issue with us. They have sought to provide ideas and information about what could be included in a strategic plan. At this stage we have been looking at what would be the basis of a strategic plan, what would be acceptable to the states in the first instance and what would be the role of such a plan in the context of already having a national broadband strategy and a number of other strategies. So, really, at this stage we are looking at things from a preliminary type level.[76]

2.60             The NFF argued that ‘recommendation 9.5 (of the Estens Report) is not addressed at all and that there are some shortcomings in relation to recommendations 9.1 and 9.4’.[77] For instance, Recommendation 9.1 says that ‘... the review process should be linked to a strategic plan for telecommunications and underpinned by ongoing arrangements that provide a high degree of certainty that Government funds will be made available to support service improvements’ [78] (emphasis added). The NFF stated that it understands this recommendation to mean that the legislation should include 'an appropriate mechanism in place to ensure that adequate funding is provided'.[79]

2.61             The Committee notes the response from DCITA on this issue:

... I suppose the Bill is proceeding on the assumption that it would be very difficult to have an independent review committee binding a future government to actually spend money in that way. Probably the most appropriate way forward is to have the independent review committee[e] making transparent recommendations ... and then the minister has to formally respond to those ...[80]

2.62             The Committee considers that the Government has an exemplary track record of investing in improved telecommunications services and infrastructure. Since it came to office, the Government has invested more than $1 billion in telecommunications – mostly in rural and regional areas. There is no reason that this will not continue, particularly in light of the Government's response to recommendation 9.5 of the Estens Report. The Government believes that it is competition that drives innovation, enhanced services, improved choice and cheaper call costs. The Government has a three pronged approach to telecommunications, as outlined by the Minister in her address to the Australian Telecommunications Users Group Conference in March this year:

1. encouraging competition to deliver innovation, cheaper prices and greater choice - so far the benefits from competition are impressive with more than 100 carriers and the economy estimated as more than $10 billion larger than it would have been without telecommunications competition reform;

2. maintaining tough regulatory safeguards such as price controls, untimed local calls, the Customer Service Guarantee and the Universal Service Obligation; and

3. where there is no commercial incentive for the market to service a particular area, providing targeted funding through programs such as the highly successful $108 million Higher Bandwidth Incentive Scheme.[81]

Changes in the competition regulatory regime

2.63             While it is clear that the Bill does not touch on reforms of the competitions regulatory regime, and that such matters are beyond the scope of this inquiry, such measures have the same policy goals – the improvement of services in regional, rural and remote Australia—as those addressed by the Estens inquiry. The Committee therefore records briefly some of the observations made in submissions on this issue.

2.64             Optus suggested three specific measures should be introduced:

  • the introduction of a rule prohibiting unreasonable discrimination in favour of its own retail operations;
  • measures to prevent Telstra, for a period of 180 days, from targeting customers that it has lost to competitors. Optus suggests that this would hinder Telstra’s ability to undermine the efforts of other providers to acquire customers; and
  • a better resourced ACCC to enable the existing competition rules to be applied in a more timely and effective manner.

2.65             SETEL also saw competition as underpinning the improvement in services in regional, rural and remote Australia:

SETEL favours strong competition between telecommunications carriers and service providers. Regulation, policies and funding programs should be designed to foster innovation and the development of competition in a range of services throughout Australia with the aim of delivering pro-competitive outcomes for all end users.[82]

2.66             Similar observations were made by CCC and AAPT. CCC emphasised the importance of competition and competition policy in delivering the necessary communications service delivery outcomes which the Estens recommendations seek to achieve:

The CCC has consistently argued that increasing the level of competition must be the first step in attempts to raise the standard of services to rural and regional centres.

The most recent of the inquiries into the state of rural and regional communications, the Page Research Centre’s report, firmly concluded that competition should be the first priority for future regional and rural telecommunications policy.

It said:

"While the Page Research Centre acknowledges that there will always be a role for government in telecommunications service delivery, it believes competition is the most efficient means to creating a progressive telecommunications industry. The Page Research Centre believes the non-metropolitan Australia suffers from a lack of true competition in the telecommunications market."

The CCC believes the problem of ineffective or weak competition is not confined to non-metropolitan areas but is one that affects markets across the whole of Australia. In this, the CCC’s arguments are consistent with the views expressed by the ACCC. [83]

Services in marginal metropolitan areas

2.67             The submission made by the City of Casey addresses issues which are outside the terms of reference of this inquiry but nonetheless germane to the debate about telecommunications standards in Australia.

2.68             The City of Casey summarised its concerns by arguing that:

(1) the Bill be amended to ensure that the purview of the proposed Regional Telecommunications Independent Review Committee will include reporting on the adequacy of telecommunications services within metropolitan areas; and

(2) the Bill (or the ACMA Bill) be amended explicitly to call for immediate review of the alignment of the telephony charging zones and the White Pages directory boundaries in our major cities with their planning boundaries and to propose the legislative changes needed to achieve cost-effective realignment.[84]

2.69             In relation to the first point, the Committee notes that the Bill is intended to address certain recommendations of the Estens Report. That inquiry was concerned expressly with telecommunications services in regional, rural and remote Australia. The Committee considers that it ought to be cautious about extrapolating the recommendations of the Estens Report to metropolitan areas. Having said that, the Committee considers that the existing review mechanisms contemplated in the Bill would not prevent consideration by the RTIRC of the level of services in places such as Casey. As its submission notes, the expression 'regional, rural and remote Australia' is not defined and this, the Committee believes, provides for flexibility in the scope of the RTIRC review process. An attempt to legislatively prescribe the boundaries of regional, rural and remote Australia would not, in the view of the Committee, be productive.

2.70             The Committee cannot comment on the validity of the second concern articulated by the City of Casey because it is outside the terms of this inquiry and the Committee did not receive any other submissions or evidence which would justify the recommendation sought.

Committee conclusion

2.71             This inquiry concerned the provisions of a Bill which is stated to implement recommendations 8.1, 8.2, 9.1 and 9.2 of the Estens Report. The inquiry was not directly concerned with considering the whole of the Estens Report, nor with examining alternative mechanisms for producing the desired outcomes. Even so, there is some natural overlap between these matters and to some extent, the Committee has considered it appropriate to consider these matters as they may inform further policy development in this area.

2.72             However, the Committee has confined its recommendations to the provisions of the Bill. The Committee notes that some common themes emerged in submissions in relation to certain aspects of the Bill.

2.73             First, there was widespread concern that the maximum period between reviews should be reduced from five years, notwithstanding that under the existing proposal, it would be open to the RTIRC to conduct reviews more frequently. The Committee agrees that the speed at which technology advances in the communications industry is reason to review progress more frequently. The Committee considers that a maximum review period cycle of 3 years is appropriate. The first review, however, should be conducted within two years.

Recommendation 1

The Committee recommends that the Bill be amended to reduce the maximum period of the review cycle from five to three years.

Recommendation 2

The Committee recommends that the Bill be amended to provide that the first review is to be conducted within two years of the Bill obtaining Royal Assent.

2.74             The membership of the RTIRC was a focus of several submissions and the Committee considers the concerns to be well founded. However, the Committee also considers that some service provider involvement is appropriate to bring expertise and balance to the recommendations of the RTIRC. Accordingly the Committee considers that no more than one service provider should be on the RTIRC.

Recommendation 3

The Committee recommends that the membership of the RTIRC be restricted so that no more than one service provider can be represented on the RTIRC and that the majority of the members be made up of representatives of organisations with an interest in regional affairs, such as, for example, the National Farmers' Federation, the Australian Local Government Association and the Isolated Children's Parents Association.

2.75             In view of the fact that most of the initiatives in the Bill impact substantially on Telstra and that Telstra can have only minority membership of the RTIRC, the Committee considers it desirable that Telstra be required to respond publicly to the reports of the RTIRC.

Recommendation 4

The Committee recommends that Telstra be required to respond to RTIRC reports within the same time frame as the Government.

2.76             The Committee also notes AAPT's suggestions of drafting inconsistencies in the use of the term 'RTIRC member' and recommends that proposed sections 158T, 158U and 158V be amended to clarify the different uses of that term.

Recommendation 5

The Committee recommends that the drafting inconsistencies in relation to the use of the term 'RTIRC Member' in proposed sections 158T, 158U and 158V be corrected.

2.77             Even though any local presence licence condition imposed on Telstra will be a disallowable instrument and therefore publicly available, the Committee sees merit in ensuring that the local presence plan itself is also publicly available. The Committee considers that the local presence plan and any amendments to it should be made available on the future ACMA website. In addition, to bring transparency to the process of determining the content of the LPP, a draft plan should be published for comment.

Recommendation 6

The Committee recommends that:

  1. any local presence plan should be published in draft form to allow for responses from the public affected by it;

  2. that the final local presence plan should be publicly available on the ACMA website; and

  3. any local presence plan should be required to be a disallowable instrument.

Recommendation 7

Subject to the above recommendations, the Committee recommends that the Bill be passed.

 

Senator Alan Eggleston
Chair

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