1 REGULATORY OBSERVER
1 REGULATORY OBSERVER
Australian Government releases Regulator Performance Framework
On 29 October 2014, the Australian Government released a new Regulator Performance Framework(RPF). The RPF is part of theGovernment’s commitment to reduce unnecessary or inefficient regulation imposed on individuals, business and community organisations by at least $1 billion every year.
On request from the Government, the Productivity Commission (PC) published a report on 19 March 2014, describing a possible Regulator Audit Framework by which the performance of regulators could be audited. The RPF is largely based on the PC’s report; however a more streamlined approach to indicators has been used in the RPF.
The RPF establishes a common set of performance measures that will allow for the assessment of regulator performance and their engagement with stakeholders. All Commonwealth regulators will be assessed against six key performance indicators(KPIs), being:
- regulators do not unnecessarily impede the efficient operation of regulated entities;
- communication with regulated entities is clear, targeted and effective;
- actions taken by regulators are proportionate to the risk being managed;
- compliance and monitoring approaches are streamlined and coordinated;
- regulators are open and transparent in their dealings with regulated entities;and
- regulators actively contribute to the continuous improvement of regulatory frameworks.
The KPIs are outcome‐based and look at the impact and consequences of regulators’ actions. Regulators will have to show how they have met each indicator by providing evidence of their activities.
These KPIs and the related performance report will be published annually by regulators based on externally validated data, with the report certified by the regulator’s CEO, Board or relevant accountable authority. Relevant Ministerial Advisory Councils will validate the KPIs as well as the results of each regulator’s performance reports.
The Department of Prime Minister and Cabinet will issue guidance on implementation, including on engagement with stakeholder groups, by 1 January 2015. There will be a six-month transition period for regulators to align internal policy and practice to the RPF prior to the commencement of the first assessment period on 1 July 2015.
1 REGULATORY OBSERVER
International Regulatory Round-up
COMMUNICATIONS
Europe
European Commission issues recommendation on relevant product and service markets
On 9 October 2014, the European Commission (EC)issued an updated recommendation on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation.The EC considers it justified to remove access to the public switched telephone network(PSTN) at a fixed location and call origination on the PSTN provided at a fixed location from the list, in particular because of the decline in traditional telephonyand the emergence of products based on alternative technologies.
UK: Ofcom launches investigation into Premier League football rights
On 18 November 2014, the Office of Communications (Ofcom) opened an investigation into how the Premier League sells live UK audio-visual media rights for Premier League football matches. The investigation will be carried out under the Competition Act and follows a complaint from Virgin Media, which was submitted to the Ofcom in September.
UK: Ofcom unveils plans for new spectrum auction
On 7 November 2014, the Ofcom invited potential bidders to comment on proposals for the Ofcom's auction of spectrum in the 2.3 gigahertz (GHz) and 3.4 GHz bands, which is expected to take place in late 2015 or early 2016. While no specific uses for this spectrum have been prescribed, it is likely to be of interest to the mobile industry. The spectrum bands are frequencies which could be suitable for providing very high data capacity.
UK: Ofcom welcomes decision on pay TV ‘wholesale must offer’
On 5 November 2014, the Ofcom welcomed a court ruling that paves the way for more top sports events to be made available for the first time to viewers of BT’s YouView TV service. The Competition Appeal Tribunal has published an interim ruling that Sky Sports 1 and 2 should be made available on BT’s YouView service, which uses broadband to deliver TV channels to viewers.
UK: Ofcom takes action against Three on complaints handling
On 8 October 2014, the Ofcom finedThree £250,000for failing to comply with its rules on handling customer complaints. The investigation found that Three did not handle some customer complaints in a fair and timely manner. This was because some complaints were closed without the company establishing that they were fully resolved.
UK: Average cable speed overtakes fibre
On 3 October 2014, the Ofcom reported that average broadband speed delivered by cable services in the UK is now faster than that of fibre. In the six months to May 2014, the average speed delivered by cable broadband reached 43.3 megabits per second (Mbit/s), overtaking the average speed for fibre connections for the first time (42.0Mbit/s).
Americas
US: Rural broadband experiments draw interest from over 180 applicants
A Federal Communications Commission(FCC)experiment exploring how to expand robust broadband in rural America in the most cost-effective way has attracted almost 600 project bids
from 181 applicants, representing projects costing nearly $US885 million. In total, the 181 applicants proposed to serve over 76,000 census blocks in all 50 states and Puerto Rico. The FCC will identify the provisionally winning bidders, who then will be required to submit information demonstrating their financial and technical ability to participate in the $100 million experiment.
US: FCC explores new technologies that could unlock spectrum for mobile wireless services
On 17 October 2014, the FCC began examining the use of new frequency bands for mobile services as part of its efforts to help meet the growing demand for spectrum. Based on a recommendation from the Technological Advisory Council, the Notice of Inquiry seeks to broaden the FCC’s understanding of the state of the art in technological developments that could unlock millimeter wave spectrum above 24 GHz for nextgeneration mobile wireless services.
CANADA: CRTCreleases 2014 Communications Monitoring Report
On 16 October, the Canadian Radio-television and Telecommunications Commission (CRTC) released its 2014 Communications Monitoring Report. The report found that in 2013, the average Canadian family spent $CAD191 per month oncommunications services, a 3.2 per cent increase from $CAD185 per month in 2012.
Oceania
NZ: Commerce Commissionupdates indicators for monitoring mobile telecommunications markets
On 3 November 2014, the Commerce Commission of New Zealand (CCNZ)announced its new indicators for monitoring the mobile telecommunications markets.The changes to the indicators include collecting data on new services such as bundles combining voice, text and mobile broadband, machine-to-machine services and over the top applications like Skype, Viber and Facebook messaging.
NZ: Commerce Commission suspends investigation into proposed changes to Chorus’s regulated UBA service
On 16 October 2014, the CCNZ suspended its investigation into Chorus’s proposed changes to the regulated unbundled bitstream access (UBA) service. In July 2014, the CCNZ received a complaint from Telecom (now Spark) about Chorus’s proposed constraints to the regulated UBA service. On 4 September 2014, the CCNZ released an independent legal opinion questioning the legality of Chorus’s proposals.
Energy
Europe
UK: Ofgem makes it easier to compare supplier performance on resolving complaints
On 19 November 2014, the Office of Gas and Electricity Markets (Ofgem)announced that it would be publishing quarterly figures provided by energy suppliers showing how the six largest companies compare on resolving complaints. The latest figures covering January to September 2014 are available at the Ofgem's Supplier Performance on Consumer Complaints webpage.
UK: Ofgem sets out funding plans for £1 billion transmission subsea link
On 27 October 2014, the Ofgem set out proposals to allow £1.1 billion funding for a new subsea link in the north of Scotland. The regulator’s proposal is £173.9 million less than the funding request from Scottish Hydro Electricity Transmission. The new link will connect 1.2 gigawatts (GW) of new renewable electricity generation following completion in 2018. It will connect the electricity grid on either side of the Moray Firth.
UK: Ofgem proposes new rules regarding reporting on company profits
On 10 October 2014, the Ofgem proposed new rules that will make information on energy company revenues, costs and profits more accessible. The rules, expected to come into force in 2015, include a requirement for the companies to have their annual segmental statements independently audited. Companies will also be required to publish their statements no later than four months after their financial year end.
Germany: Transmission system operators submit draft network development plans for 2024
On 4 November 2014, the Bundesnetzagenturannounced that transmission system operators (TSOs)had submitted their revised drafts of the network development plan (NDP) and the offshore network development plan (ONDP) for 2024. The NDP sets out the network expansion measures that, from the operators’ point of view, are needed up to 2024 to secure electricity supplies in Germany. The ONDP sets out the transmission links considered necessary by the TSOs up to 2024 to transport the energy generated at offshore wind farms.
Oceania
NZ: Commerce Commission reduces the margin that it applies to regulated businesses’ cost of capital
On 30 October 2014, the CCNZ released its final decision on the weighted average cost of capital (WACC) used for regulated businesses. The WACC uplift (or margin) for price-quality regulation has been set at the 67th percentile, down from the 75th percentile. The WACC is used in the price-quality path and information disclosure regimes that apply to electricity lines and gas pipeline businesses.
Australian Regulatory Round-up
Communications
ACCC releases position statement on treatment of Telstra-NBN Co arrangements for Telstra's fixed line prices
On 22 October 2014, the ACCC released a position statement on how it intends to account for the effect of arrangements between Telstra and NBN Co in its final access determinations for Telstra’s regulated fixed line services.The ACCC will use the regulatory value of Telstra’s assets, not the higher payments agreed between Telstra and NBN Co in their Definitive Agreements, to adjust the cost base for NBN effects when determining regulated charges.
Telstra commits to improving its compliance with the Australian Consumer Law
On 21 October 2014, the ACCC reached a resolution with Telstra after an investigation into representations by Telstra to consumers who complained about faulty mobile phones. The ACCC was concerned that, on some occasions, Telstra may have misled consumers about their consumer guarantee rights. Telstra has committed to various measures to continue to improve its compliance with the Australian Consumer Law.
Energy
AER issues network revenues draft decisions for ACT and NSW energy customers
On 27 November 2014, the Australian Energy Regulator (AER) issued draft decisions on the revenue proposals submitted by Australian Capital Territory (ACT) and New South Wales (NSW) distribution and transmission businesses starting on 1 July 2015. The AER has not accepted the revenue allowances proposed by any of the gas or electricity businesses. In part, this is due to the AER’s decision to apply a lower rate of return and corporate tax allowance, consistent with the Rate of return guideline and recent market trends.
AER issues draft decision on revenue for TasNetworks
On 27 November 2014, the AER issued a draft decision on the revenue proposal submitted by the Tasmanian electricity transmission business, TasNetworks. The revenue proposal applies for the four years starting on 1 July 2015. The AER has broadly accepted the revenue proposal put forward by TasNetworks, noting that TasNetworks has managed to balance the need for a safe and reliable energy supply with the concerns customers have raised about their bills.
ACCC takes action against EnergyAustralia and Bright Choice Australia
On 21 November 2014, the ACCC instituted proceedings in the Federal Court against EnergyAustralia and its telemarketing company, Bright Choice, for allegedly contravening the Australian Consumer Law by making false or misleading representations and engaging in misleading or deceptive conduct when dealing with certain consumers to sell EnergyAustralia’s electricity and gas plans.
ACCC issues third carbon monitoring report
On 29 October 2014, the ACCC provided the third carbon monitoring report to the Treasurer. The report details the ACCC’s monitoring activities in the September 2014 quarter to assess the general impact of the carbon tax scheme, and includes the effect of the carbon tax repeal. The ACCC has observed businesses acting quickly to remove carbon tax cost components from prices, with widespread adherence to the reporting and information requirements of the new carbon tax price reduction obligation laws.
TrANSPort
ACCC releases annual container stevedoring report
On 30 October 2014, the ACCC released its 16th annual container stevedoring monitoring report. In 2013-14, capital and labour productivity at Australia’s container ports reached the highest levels the ACCC monitoring program has observed. Average stevedoring prices fell in 2013-14 and, in real terms, are now at one of the lowest levels recorded by the monitoring program.However, the ACCC has identified two key risks to future performance: the potential impacts of labour outcomes; and port privatisations where adequate regard is not given to promoting competition or the appropriate level of economic regulation.
ACCC authorises owner drivers to collectively bargain with Toll Transport at Brisbane Airport depot
On 16 October 2014, the ACCC granted authorisation allowing a group of small business owner drivers to collectively bargain with Toll Transport for the supply of air freight courier transport services at the Toll Priority Brisbane depot. There are currently 76 owner drivers who meet these criteria. On 3 November 2014, Independent Contractors Australia applied to the Australian Competition Tribunal for review of the determination.
Regulatory Observer is a regular publication of the Australian Competition and Consumer Commission. For editorial enquiries and mailing list enquiries please contact Simon Haslock ().
1 REGULATORY OBSERVER