Australia - United States Free Trade

Australia-United States Free Trade Agreement - Guide to the Agreement

12. Telecommunications

1.    Purpose and structure

The obligations in this Chapter apply to government measures affecting trade in telecommunications services. However, measures relating to broadcast or cable distribution of radio or television programming are specifically excluded from the Chapter (other than to ensure that enterprises operating broadcast stations and cable systems have continued access to, and use of, public telecommunications services).   There is nothing in the Agreement to compel any enterprise to establish, construct, acquire, lease, operate or provide telecommunications networks or services where such networks or services are not offered to the public generally.

The Chapter builds on WTO rules in relation to major suppliers of telecommunications that control essential facilities or have a dominant position in a market. The Parties must prevent anti-competitive conduct and ensure that major suppliers provide interconnection, resale of designated services, leased circuit services and co-location of equipment on reasonable, non-discriminatory terms and conditions.

There are strong provisions on transparency and review for regulatory decisions. Regulators must be independent and impartial and properly explain decisions, such as determining which services are subject to regulation and licensing decisions. Australia and the US have also embraced a hands-off regulatory approach where markets are functioning competitively.

The Chapter consists of   four broad parts, a total of 25 Articles, and an exchange of letters. The exchange of letters establishes regular consultation on issues and developments in the communications and IT sectors. This will give government and industry greater understanding of these dynamic sectors and enable them to pursue bilateral issues of particular interest. There is also a non-binding letter associated with the Chapter which outlines the Government's policy in relation to government ownership of Telstra.

2.    Section A: Access to and Use of Public Telecommunications Services

Both Parties reaffirm their obligations under the WTO General Agreement on Trade in Services (GATS) which ensure that all enterprises of the other Party have access to and use of any public telecommunications service, including leased circuits, offered in its territory or across its borders, on terms and conditions that are reasonable and non-discriminatory (including with respect to timeliness).  

In accordance with this obligation, both Parties will ensure that enterprises can freely use public telecommunications services to send information and access databases, and will only intervene to ensure the security or confidentiality of messages.   'Confidentiality' will not be used as a means of arbitrary or unjustifiable discrimination or as disguised restriction on trade in services. Furthermore, no conditions will be imposed on access to, and use of, public telecommunications networks or services other than as necessary to safeguard the public service responsibilities of suppliers (for example, in order to   make their networks or services available to the public generally, or to protect the technical integrity of the network).

3.    Section B: Obligations for Suppliers of Public Telecommunications Services (PTS)

The commitments in this section are consistent with, and build upon, our respective GATS obligations and do not require any legislative or regulatory changes.

In summary, both Parties agree to ensure that suppliers of public telecommunications services provide:

4.    Section C: Obligations for Major Suppliers of Public Telecommunications Services (PTS)

The commitments in this Section cover obligations on the Parties in relation to regulating telecommunications companies that control essential facilities or have a dominant position in a particular market. A supplier will only be subject to these additional commitments where it is a major supplier for a particular service.   That is, a company which is a major supplier for most telecommunications services but not, for example, for mobile services, will not be treated as a major supplier for mobile services.

Both sides also agree to maintain competitive safeguards to prevent suppliers who, alone or together are a major supplier in its territory from engaging in, or continuing, anti-competitive practices. They also agree to ensure that major suppliers of PTS in its territory:

The Chapter also sets out conditions for the public availability of interconnection offers (an interconnection agreement is the agreement between a facilities-based supplier to allow a service supplier to 'inteconnect'   - or use its facilities to deliver services   - at a certain rate and on certain terms and conditions):

The commitments in this Section are consistent with, and build upon, our GATS obligations and do not require any legislative or regulatory changes.   The commitments on resale, leased circuits, colocation and access to poles, ducts, conduits and rights of way are additional to our GATS commitments, but similar to provisions contained in the Singapore-Australia FTA.

5.    Section D: Other Measures

In this section we have made a number of commitments which add to our existing commitments under the GATS.   These commitments are consistent with our existing laws and practices and do not require any legislative or regulatory changes.

Both Parties agreed to highlight their hands-off regulatory approach to value-added services, which means that they will not intervene unless necessary to remedy a practice that the Party has found in a particular case to be anti-competitive under its law or regulation, or to otherwise promote competition or safeguard the interests of consumers.  

Both Parties are committed to existing practices of independent regulation. And will continue to ensure that:

The Parties have also agreed to notify each other, as soon as feasible, of any intention to reduce or divest any government interest in a telecommunications supplier.

Parties have agreed to maintain their approach to transparent and independent regulatory procedures which incorporates basic principles of natural justice. Each Party will ensure that rulemakings, processes and conditions of licenses, reasons for denial or licences, and any tariffs filed with a regulator, are published or made available to interested persons.

Both sides agree to administer any universal service obligations in a transparent, non-discriminatory and competitively neutral manner.

The Parties also undertake to administer procedures for the allocation and use of scarce telecommunications resources, including frequencies, numbers and rights of way, in an objective, timely, transparent and non-discriminatory manner, and to make publicly available the current state of allocated frequency bands (but not the identification of frequencies assigned for specific government uses).   Australia will maintain all existing practices and retain the right to allocate frequency bands taking into account existing and future needs.   Australia will endeavour to rely generally on a market-based approach in assigning spectrum for terrestrial non-government telecommunications services.

Both Parties agreed to maintain their robust frameworks for enforcing their own laws, and have committed to maintaining some of the basic principles for resolving domestic telecommunications disputes.   Enterprises are entitled to:

Furthermore, consistent with current regulatory approach, each Party may forebear from applying regulation to a service upon a strict process of determination by its telecommunications regulatory body that enforcement is not necessary to prevent unreasonable or discriminatory practices, to protect consumers and to enhance competition.   However, a Party must give adequate public notice, and an opportunity to comment, prior to any decision regarding forbearance and the capacity to obtain judicial review of such decision by an independent and impartial judicial authority.

6.    Exchange of Letters on Consultation

The side letter on consultation commits the Parties to meet once a year, or as otherwise agreed, and to include industry representatives as may be relevant, to discuss and resolve any issues and to maintain a forward-looking and cooperative relationship.   Initial subjects for discussion include developments in market structure, convergence, technological innovation including in relation to advanced wireless services, Internet charging, voice over Internet protocol, broadband, number portability, and digital products

7.    Letter on Telstra

The side letter on Telstra is a non-binding part of the Agreement. It makes no commitments but serves to explain the current Government's policy with regard to Telstra (for an explanation of the different types of side letters see Chapter 1 on institutional issues).   The side letter explains that the current Government has long been committed to the full sale of Telstra subject to certain service conditions being met.   The letter does not commit the Government to selling its remaining share of Telstra. Rather, it explains that the Government had recently tabled a bill in Parliament proposing the full sale of Telstra which was rejected, and any future sale would be conditional on such a bill passing through Parliament.   The letter explains Telstra's operational independence, Australia's rigorous regulatory framework and principles of competitive neutrality which ensure that government enterprises such as Telstra do not derive any commercial advantage from having government ownership.

March 6, 2004

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