Licensing of carriers and service providers

Market Entry/Regulation

The Australian telecommunications industry is regulated by the Telecommunications Act 1997 (Telecommunications Act), which allows full and open competition. Entry to all telecommunications markets is open and subject to minimal entry and ongoing operational requirements. The regime is technology neutral.

Foreign ownership in the industry is subject to the general provisions of the Foreign Acquisitions and Takeovers Act 1975. The exception is Telstra, foreign ownership of which is restricted to 11.67 per cent of total shares under the Telstra Corporation Act 1991.

The main entities regulated by the Telecommunications Act 1997 are carriers and service providers. Carriers are persons who own telecommunications facilities. Service providers use carriers to provide phone or Internet services, and/or content, such as Pay TV, to the public.

Carrier licensing

A licence permits a carrier to own infrastructure used to supply telecommunications services to the public. It also requires carriers to meet specific obligations, such as contributing to the Universal Service Obligation (USO) and compliance with the telecommunications access regime. Carriers must be licensed by the Australian Communications and Media Authority (ACMA). There are no restrictions on who can apply for a licence or the number of licences issued by the Australian Communications and Media Authority (ACMA).

Licensing fees consist of a $2 500 application fee, and an annual fee comprising a variable percentage of the annual revenue calculated in relation to the cost of maintaining the regulatory regime.

Further information about carrier licence obligations can be found at the ACMA's website.

The owner of certain telecommunications facilities (known as 'network units') which are used to supply carriage services (services for carrying communications) to the public must either:

hold a carrier licence; or
make arrangements to ensure that another licensed carrier accepts carrier-related responsibilities for those network units.

There are four types of network units:

line links connecting distinct places in Australia, where the line link or links meets certain minimum distance requirements
satellite-based facilities used to supply carriage services between two or more points in Australia
base stations used for mobile services or wireless local loop (customer access network) services
certain fixed radiocommunications links.

The Minister has the power to determine other facilities as 'network units' if regulation of those facilities becomes necessary. The Minister can also impose further licence conditions on individual carriers, classes of carriers, or all carriers.

Carriers are obliged to comply with licence conditions. These include obligations to comply with the following:

the Telecommunications Act 1997
the telecommunications access regime (under Part XIC of the Trade Practices Act 1974)
related facilities access obligations (under Schedule 1 of the Telecommunications Act).

Service providers

There are two types of service providers—carriage service providers and content service providers. While service providers do not require individual licences they must comply with relevant telecommunications regulation, including service provider rules set out in Schedule 2 of the Telecommunications Act.

A carriage service provider generally uses a carrier service to supply telecommunications services to the public using network units owned by a carrier. Internet service providers (ISPs) are carriage service providers.

A content service provider is a person who supplies, or proposes to supply, content services to the public (for example, a Pay TV service).

Where a carrier is engaged in these activities, they are also considered to be a service provider.

All service providers must comply with legislated service provider rules. These rules include obligations to:

comply with the Telecommunications Act 1997 (including, for example, an obligation on carriage service providers supplying the standard telephone service, mobile services or Internet access services to join the Telecommunications Industry Ombudsman scheme)
provide directory assistance, operator services and itemised billing to customers using the standard telephone service
in the case of carriage service providers, comply with access obligations imposed by the telecommunications access regime.

The ACMA may impose additional service provider rules, when authorised by regulations to do so.

Exemptions

A number of carrier licensing exemptions apply for defence and intelligence operations, transport authorities, broadcasters and electricity supply bodies.

The Minister also has the power to make a determination, exempting specified network units, persons or use of a network unit from carrier licensing obligations. This can occur in situations where the regulation is deemed to be inappropriate or against the objectives of the Telecommunications Act.

The Minister can also make a determination exempting carriage service providers from certain regulatory provisions if it is considered appropriate to address any anomalies, which emerge during the operation of the Telecommunications Act.

Queensland Rail exemption—consultation

Queensland Rail has requested an exemption from carrier licensing in order to supply free wireless internet services on its trains. A draft determination has been prepared to provide this exemption, and is available for comment through the department’s website.