The Treasurer, Peter Costello, and the Minister for Communications, Information

Technology and the Arts, Senator the Hon Richard Alston, today jointly announced

arrangements for a Productivity Commission review of competition regulation in

Australia’s telecommunications sector.

Section 151CN of the Trade Practices Act 1974 requires a review of the operation

of Part XIB of the Trade Practices Act – that part which deals with anti-competitive

conduct in the telecommunications industry. In addition, the review is consistent with the

Commonwealth’s obligations under national competition policy.

The Government is committed to facilitating the ongoing development of an effective and

competitive telecommunications framework. Accordingly, the Government has widened the

scope of the review to cover other aspects of the telecommunications specific competition

regime, including Part XIC of the Trade Practices Act – which deals with interconnection

and access – and relevant provisions of the Telecommunications Act 1997, such as

pre-selection of carriage service providers and number portability.

The efficient provision of telecommunications services which meet the needs of

customers has a direct bearing on the overall health of the economy.

Liberalisation of the telecommunications sector has already delivered significant

benefits to Australia in the form of more industry players, lower prices, new and

innovative services and products and improved service quality.

The Government has always been committed to monitoring the operation of the regulatory

regime to ensure it is working effectively. We incorporated into the Trade Practices Act

this review requirement in recognition that now is the appropriate time to assess the

achievements since 1 July 1997. The Productivity Commission review will assist

in identifying whether the regulatory regime is working as effectively as possible and

that the benefits of competition regulation are being delivered to customers.

The terms of reference are attached.

The Productivity Commission is to report to the Government within twelve months of

receipt of the reference. The Productivity Commission will consult widely with key

interest groups and affected parties.

CANBERRA

6 June, 2000

Contact: Sasha Grebe, Office of the Senator the Hon Richard Alston (02) 6277 7480

Contact: Niki Savva, Treasurer’s Office (02) 6277 7340

Section 151CN of the Trade Practices Act 1974 requires that before 30 June 2000,

the Minister for Communications, Information Technology and the Arts should cause to be

conducted a review of Part XIB of that Act which deals with anti-competitive conduct in

the telecommunications sector. At the Minister’s request, the following reference is

made to the Productivity Commission.

I, PETER COSTELLO, Treasurer, pursuant to Parts 2 and 3 of the Productivity

Commission Act 1998 hereby:

1. Refer telecommunications specific competition regulation for inquiry and report within

   twelve months of receipt of this reference.

2. Specify that in conducting the review, the Commission has regard to the intent of the

   Parliament in establishing the review, the state of competition in the telecommunications

   market, and the impact of new technologies and delivery platforms.

3. Specify that in making its recommendations, the Commission aim to improve the overall

   economic performance of the Australian economy.

4. In particular, request that the Commission examine and report on:

1. The operation to date of Parts XIB and XIC of the Trade Practices Act 1974, and

   the following provisions of the Telecommunications Act 1997:

1. Part 17, which deals with pre-selection in favour of carriage service providers;
2. Division 5 of Part 21, which deals with technical standards about the interconnection of

   facilities;

3. Part 22 as it pertains to number portability;
4. Division 3 of Part 25, which deals with ACCC inquiries, particularly in relation to the

   declaration of services under Part XIC; and

5. Parts 2 to 5 of Schedule 1, which deal with various access matters;

2. The community and economic benefits and costs, including ongoing network investment, flowing

   from the provisions mentioned in paragraph 4(a);

3. Whether the provisions in paragraph 4(a) are sufficient to prevent integrated firms

   taking advantage of their market power with the purpose or effect of substantially

   lessening competition in a telecommunications market, or whether alternative arrangements

   are required or appropriate; and

4. Whether any or all of the provisions mentioned in paragraph 4(a) above should be

   repealed or amended.

5. Specify that the review:

1. Take account of any recent studies undertaken;
2. Have regard to the established economic, social and environmental objectives of the

   Australian Government; and

3. Not encompass the structural separation of Telstra, in line with Government policy on

   this issue.

6. In undertaking the review, the Commission is to advertise nationally, consult with key

   interest groups and affected parties, and release a draft report. The Government will

   respond to the final report produced by the Commission within six months from the date it

   is received.

PETER COSTELLO