regulation and policy direction

This page looks at regulation of Australian telecommunications as of August 2003.

It covers -

• the legal framework - federal law and the co-regulation regime
• policy direction

In essence, regulation of telecommunications in Australia has three aspects: technical regulation (eg standards), rules about how the network is used (affecting for example copyright and censorship), and competition regulation (reflecting the dominant position of the five largest telecommunication groups). The 'co-regulatory' regime provides for substantial self-regulation by industry, both through formal codes and through administration of particular matters (including disputes) by industry bodies.

     legal framework

Section 51(v) of the Australian Constitution establishes telecommunications (including broadcasting) as a Commonwealth - ie national - power.

Subject to section 92 of the Constitution the Commonwealth is able to make laws with respect to telecommunications. That power embraces legislation such as

• the Telecommunications Act 1997 (here), the Broadcasting Services Act 1992 (here), which regulates television and radio broadcasting,
• the Broadcasting Services Amendment (Online Services) Act 1999 (BSA Act) - discussed here - which provides the basis for federal regulation of online content
• Crimes Legislation Amendment (Telecommunications Offences and Other Measures) Act 2004.

The legal framework for Australian telecommunications regulation involves a broad range of legislation, some concerned specifically with market activity within the telecommunications industry, some with content regulation (eg censorship, security and copyright) and some with general trade practices/competition questions. Responsibility for that legislation involves several federal ministers and their subordinate departments and agencies.

The legislation establishes a "co-regulatory regime", with substantial self-regulation by telecommunication service providers. That industry self-regulation is encouraged through the development of voluntary industry codes of practice and technical standards, fostered in particular by the Australian Communications Industry Forum (ACIF). The expectation is that self-regulation will encourage industry to respond to customer needs without first having to overcome excessive regulatory restrictions.

Cogent analysis of the regime is provided in Australian Telecommunications Regulation (Uni of NSW: UNSW Press 2004) edited by Alasdair Grant and Wrong Number: Australia's Telecommunications Mess and How to Fix It (Crows Nest: Allen & Unwin 2008) by Henry Ergas.

     policy direction

As noted on preceding pages of this profile, policy direction reflects a broad consensus characterised by -

• arguments that competition within the telecommunication sector produces public goods (eg lower prices for consumers, greater availability of infrastructure, scope for business users to spread risk)
• a substantial degree of industry self-regulation as not only politically and economical desirable but technically essential, since government agencies are not equipped to address some technical concerns
• a differentiation between technical regulation (eg network standards) and competition regulation (attention to anticompetitive behaviour, particularly by dominant players), with the latter forming part of a broader economy-wide competition policy
• reliance on private sector investment in and management of networks, in contrast to past shibboleths about public sector ownership of the "commanding heights" of the economy
• acceptance that particular operators may be owned and controlled by offshore interests, in contrast to restrictions on ownership and control of broadcasters
• differentiation of service standards, with notions of a basic voice service (reflected in the Universal Service Obligation) for all Australians and what are tacitly premium services for which access is determined by geographical location or preparedness to pay additional charges.

As preceding pages of this profile have suggested, there's been less agreement on specific questions. Arguably the 1997 legislation - and implementation by bodies such as the ACCC - was 'pro-competition' but inadequately 'pro-competitor', favouring the incumbent operators.

Eli Noam's 'Entrepreneurship & Government in Telecommunications' - in The Emergence of Entrepreneurship Policy (Cambridge: Cambridge Uni Press 2003) edited by David Hart - comments that "it is difficult to do competitive telecommunications" -

the costs of new networks were higher than expected, from truck rolls to customer acquisition to capacity planning. And the incumbents were not passively accepting their challengers but instead fighting them through market responses, foot-dragging and regulatory delay. They were helped by the risk-averse attitudes of important customers who wanted to be sure that the new network providers would be round next month

before noting incumbency advantages such as network externalities and economies of scale.






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