Proposals see ACMA get boosted powers as Telstra low income requirements wound down

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Closeup of mobile phone in business man hands
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The Department of Infrastructure, Transport, Regional Development and Communications began consultation on Part C of its Consumer Safeguards Review on Monday, which examines issues related to consumer choice and fairness.

Under the proposals put forward for comment, the Australian Communications and Media Authority (ACMA) would gain the ability to directly enforce consumer protection rules.

“There are strong arguments for ACMA being empowered to directly enforce compliance with codes, including by issuing infringement notices, seeking pecuniary penalties and accepting enforceable undertakings — without having to first direct a provider to comply,” the discussion paper states.

Under the current process, ACMA is only able to issue formal warnings and written directions once a breach occurs, the consequences of which the paper described as only “discouraging future breaches”.

“No immediate sanction can be applied, even if significant consumer detriment occurred,” the paper said.

“ACMA can only issue an infringement notice or seek a pecuniary penalty order from the Federal Court if there is non-compliance with a direction to comply with a code.”

When ACMA signs off on a new consumer protection code, all existing directions are negated, and the compliance process returns to a blank slate.

“The enforcement pathway for direct regulation (industry standards and service provider determinations) is more direct,” the paper said when discussing a shift to direct enforcement.

“Compliance is mandatory in the first instance, and ACMA can impose penalties without having to first issue a direction to comply.”

The paper also pointed out the current process to develop new codes is slow — the 2011-12 code took two years to complete and the recent update took over 18 months — and means contested matters cannot be quickly managed.

“The existing code development process is better suited to static, non-pressing issues, or those where there is agreement on the way forward,” it said.

Another proposal put forward was to look at the legacy obligations relating to Telstra and fixed voice services over the copper network and to dispense the outdated and unneeded requirements. The department said that free access to emergency service, porting numbers, caller ID, and standard terms should remain as direct regulation.

Up for potential removal are preselecting a different telco for long distance and international calls, untimed local calls, directory assistance, offering operator services, itemised billing, and removing price controls on Telstra. Many of these services have been replaced or become outdated due to the use of mobile phones and the shift to online engagement.

Due to mobile services encompassing both voice and data being at the same price or lower than Telstra’s low-income voice-only service, the department is asking whether it is fit for purpose.

“Given the changes in the market and consumer use, the Department considers that the obligation on Telstra to provide low income measures is of declining relevance,” it said.

“However, it may be appropriate for Telstra to continue to provide low income measures in relation to fixed line phone services for the duration of its contract as the USO provider (currently until 2032).”

The Australian Competition and Consumer Commission is currently looking into the entry level pricing of NBN. The government-owned broadband wholesaler introduced 12/1 entry level bundle in October.

If any of the legacy obligations are withdrawn, the department is seeking to know if the services would continue to be offered, or whether transitional or grandfathering arrangements for existing users are needed.

The discussion paper also pointed out the complexity of the telco sector for consumers, with overlapping and yet fragmented supply chains.

“The multi-layered supply chain impacts on the likelihood of a seamless service experience and challenges the existing consumer protection paradigm. For example, NBN Co and a consumer’s retail provider are separate businesses, though both impact on the consumer experience,” it said.

“A network provider and an [over-the-top] provider are similarly separate businesses, though both impact on consumer experience. Further, many current consumer safeguards either apply only to Telstra (reflecting the old market structure) or are designed for a voice service delivered over the copper network. They are not reflective of the new environment.”

The paper said the high compliant numbers and high levels of consumer dissatisfaction suggested not all telcos were “consistently delivering on their customers’ wants and expectations around choice and fairness”.

The Communications Alliance, which develops the consumer codes that ACMA approves, said regulations should provide safeguards while encouraging innovation.

“The co-regulatory system in the Australian communications sector — in which government can set objectives, industry and consumer experts can design the detail, and regulators can scrutinise the outputs and enforce compliance — has served the nation well,” CEO John Stanton said.

“We believe that both co-regulation and formal government regulation have their place in a modern consumer safeguards framework — and that improvements can be made to the ways in which both forms of regulation are executed in Australia.”

Communications Minister Paul Fletcher said Australians are using technology in different ways than when many regulations were written.

“The existing telecommunications consumer safeguards were largely designed for voice services delivered over the copper telephone network. Today, we have a vastly different telco landscape with the NBN available to 99% of homes and businesses in Australia,” he said.

“For example, 51% of Australian adults were mobile-only for voice calls as at June 2019, up from 27% in 2014. 79% of 25 to 34-year olds rely on mobiles for all voice calls.”

The deadline for submission is 5pm AEST on Monday, August 24.

The initial part of the Consumer Safeguards Review was handed down in November 2018 and saw the government choosing to keep the role of the Telecommunications Industry Ombudsman. Part B of the report appeared a year later and called for mandatory rules for timeframes around wholesale connection, fault repair, and appointment keeping.

The Part B report did not call for backup services to be mandated however, after a number of telcos pointed out that retailers with mobile networks would be at an advantage.

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