Vertigan Review Bill amendments to ACCC 'counterproductive': Telcos

The Australian government has published the submissions that telecommunications companies made in response to its Vertigan Review Bill, with all of the telcos involved arguing against numerous changes to the Australian Competition and Consumer Commission's (ACCC) regulatory role.

The Telecommunications Legislation Amendment (Access Regime and NBN Companies) Bill 2015 [PDF] was registered in the House of Representatives on December 2, 2015, as a result of the six reports undertaken as part of the Vertigan Review into the National Broadband Network (NBN).

"The Telecommunications Legislation Amendment (Access Regime and NBN Companies Bill) 2015 will implement, in part, the government's response to the independent cost-benefit analysis and review of regulatory arrangements for the National Broadband Network undertaken by the panel of experts headed by Dr Michael Vertigan AC," the explanatory memorandum for the Bill [PDF] said.

"The government response indicated that the government would introduce legislation in two tranches. This Bill contains measures that respond to recommendations made by the Vertigan panel to fine-tune the operation of the telecommunications access regime and NBN Co's line-of-business obligations."

Among other amendments, the Bill addresses several roles of the Australian Competition and Consumer Commission (ACCC), requiring the ACCC to consult with relevant parties before making interim access determinations or binding rules of conduct; to use a consistent method in making final access determinations for NBN and others; to specify its necessary and desired changes in accepting new or varied special access undertakings (SAUs); and to provide those submitting SAUs with more flexibility to respond to the changes required by the ACCC.

The draft legislation also increases the probability that the ACCC can accept fixed principles provisions in new or varied SAUs, and ensures a greater consistency in SAU determinations by requiring the ACCC to have regard to its own precedents.

The submissions on the Bill included statements from Telstra, Optus, Macquarie Telecom, and the Competitive Carriers Coalition (CCC), which is made up of several non-dominant Australian telcos.

Telstra's submission on the Bill took issue with the lack of merits-based reviews of ACCC decisions under the legislation, pointing out that while the government's own response [PDF] to the Vertigan Review in December 2014 had mentioned using the opportunity to insert this provision -- "This would also be an appropriate time to reconsider key regulatory issues such as the re-introduction of merits review" -- as recommended by the Vertigan panel, no such provision was included in the Bill.

"Telstra encourages the government to take the present opportunity to begin the process of re-introducing merits-based review rights to align the regulation of the telecommunications sector with other utility sectors, and to promote better regulation to which the government is committed," Telstra's submission says.

Along with Optus, Macquarie Telecom, and the CCC, Telstra also argued against the "scope creep" being allowed by Section 22B of the Bill.

In its own submission, Optus welcomed some of the Bill's amendments, but claimed that others "materially alter existing checks and balances within the regulatory arrangements".

While Optus did not address merits-based reviews of the ACCC's decisions, it did say that the amendment seeking to ensure consistency in access determination pricing decisions went too far.

"The proposed amendments clearly go further than ensuring that an access provider is not disadvantaged as compared to NBN Co, since it also requires the ACCC to ensure that NBN Co is not disadvantaged compared to other access providers," Optus argued.

"On a cursory consideration, the proposed amendments appear fairly benign and the objective of achieving consistency in access determination does not appear unreasonable. However, it is not clear what problem these amendments are seeking to address, since no issue has arisen to date to warrant these changes."

The CCC agreed, saying the access determinations create "needless red tape", with Macquarie Telecom adding that they "add red tape, risk creating further delay and complexity to an already highly bureaucratic process, and, in so doing, create further barriers to smaller stakeholders participating in these important regulatory processes."

Macquarie Telecom labelled it "a solution in search of a problem".

Optus also pointed out that the amendments addressing the consistency of ACCC decisions "do not address any specific identified problem", and the changes to ACCC variation powers of an SAU were "counterproductive", with the CCC saying the latter would effectively shift discretion and flexibility from the ACCC to the monopoly owners.

The CCC added that it would be "unthinkable" for the ACCC to not have regard of its own precedent regardless of whether this was part of the Bill, while the definition of "declared services" for definitive agreements was "entirely unnecessary".

Consulting with affected parties before making interim decisions would also bog down the independent regulator and prevent it from being able to act decisively, according to the CCC.

"These amendments can have no possible effect other than to create a lawyers' picnic and slow the ACCC's already laborious processes when it is asked to respond to allegations of anti-competitive conduct or set prices and access rules for monopoly services," the CCC concluded.

Macquarie Telecom also used its submission as a platform to insinuate continuing bias on the part of NBN in favour of Telstra, saying the regulatory process already favours Telstra in that submissions must be so extensive that smaller telcos cannot practically take part.

The Vertigan Review Bill also clarifies interactions for the facilities access regime; mandates that providers must give access to in-building cabling to competing service providers; provides an exemption for NBN's non-discrimination obligations for trials of services "to promote innovation"; allows NBN companies to dispose of surplus assets; reduces restrictions on supplying non-communications goods, services, or investments for NBN's business operations; and authorises NBN to restrict its network to certain points of interconnection and to require customers to purchase bundled NBN services in order to drive the rollout of the network, with these authorisations to cease once the NBN is built and fully operational.

Optus, Macquarie Telecom, and the CCC also argued against the section lifting NBN's non-discrimination obligations under s152F in regards to pilots and trials of technology.

The Vertigan Review was commissioned at the end of 2013 and undertaken in 2014.