CSP registrations and higher penalties – round two of enhancing telecommunications Consumer Safeguards

Compliance with industry codes is currently voluntary unless the ACMA issues a direction to comply and then takes further action for ongoing non-compliance.

The Bill makes compliance with industry codes registered with the ACMA under Part 6 of the Act mandatory – with a breach of an industry code to become a civil penalty provision. This includes, but is not limited to, the Telecommunications Consumer Protections Code.

Notably – these changes apply retrospectively. The Government has stated in the Explanatory Memorandum that: “…it is expected that the ACMA would take a common-sense approach to enforcement action in relation to previous and currently unaddressed instances of non-compliance that it uncovers following the commencement of these amendments.”[1]

The maximum penalties for breaches of industry codes and industry standards by corporations will rise from $250,000 to the greater of:

• 30,300 penalty units ($9.999 million at the time of drafting);
• if the value of the benefit can be determined and attributed to the breach, 3 times the value of that benefit, or
• if the value of the benefit cannot be determined, 30% of the adjusted turnover of the company during the breach turnover period (which is generally 12 months). For the purposes of this test, adjusted turnover is “the sum of the values of all the supplies” that the relevant company and any related body corporates “have made or are likely to make during the period”[2] other than supply between related corporates, supplies that are input taxed, supplies not for consideration, supplies not made in connection with the companies enterprise and supplies that are not connected with the indirect tax zone.

This brings the penalties into closer alignment with the penalties for breaches of carrier licence conditions and service provider determinations ($10 million) and is more consistent with the penalty framework in other sectors (such as energy and banking) and under the Australian Consumer Law.

The maximum penalty for infringement notices is currently capped at 60 penalty units ($19,800 at the time of drafting) per breach. Higher penalties can be applied for breaches of general carrier licence conditions (section 68) and service provider rules (section 101) if the Minister has made a determination specifying a higher maximum penalty (see Telecommunications (Infringement Notice Penalties) Determination 2022).

The Bill expands the Minister’s power by enabling them to make a determination that any breach of a civil penalty provision can be subject to a higher maximum penalty of 20% of the maximum pecuniary penalty for the contravention.

Although this does not immediately enable the ACMA to issue bigger infringement notices, given the number of infringement notices the ACMA has been issuing of late, this is an area that should be actively monitored. 

The Bill will require “registerable” CSPs to be registered with the ACMA in order to supply (or offer to supply) listed carriage services to the public. Registration must be refreshed every year. This is a major change as currently there is no registration process for CSPs (unlike carriers for whom there is a licensing regime).

Registerable CSPs include CSPs who supply: a public mobile telecommunication service (PMTS);  carriage service that enables end-users to access to the internet; or  standard telephone service (STS) to residential customers or small business customers.[3] Practically – this captures all CSPs who are required to be members of the TIO Scheme. The Minister also has the power to declare a CSP to be registrable.

In addition to requiring the ACMA to establish and maintain the CSP Register, the Bill also provides the ACMA with the ability to:

• impose conditions on a CSP’s registration if satisfied that the condition is reasonably necessary to promote compliance with the Act. There are currently no limitations on what these conditions could be. However - as a decision to impose a condition is a reviewable decision, we expect them to be used relatively sparingly by the ACMA (at least at first);
• prevent CSPs from offering or supplying services by refusing the registration of (or refusing to renew the registration of) a CSP, including where: (a) the CSP has engaged or is engaging in conduct that poses a significant risk to consumers, or is a breach or likely breach of telecommunications law; or (b) if a CSP is required to, but is not, a member of the TIO scheme;
• revoke the registration of a CSP.

CSPs will have a 6-month period to comply with the new registration and compliance requirements once these changes come into effect (which is either a day fixed by Proclamation or otherwise 12 months’ after Royal Assent). With at least 1,500 CSPs estimated to be in the market, it is likely the Minister will issue transitional rules.

Carriers and wholesale CSPs (ie a CSP that onsells carriage services to another CSP) will be prohibited from supplying or offering to supply listed carriage services to an unregistered CSP, unless they have reasonable grounds to believe that the CSP is not required to be registered. This is a broader test than just checking if a CSP is registered as it also requires the carrier/wholesale CSP to reasonably believe that the CSP does not need to register (for example based on the type of services they know the CSP will supply).

Practically, this means carriers and wholesale CSPs will need to make registration a pre-requisite to offering to supply and supplying listed carriage services unless they are confident that the CSP does not need to be registered. Consideration will also need to be given to imposing a contractual obligation on customers to proactively notify the carrier/wholesale CSP if there is any change in their circumstances such that the CSP would become a registrable CSP. However - the Minister will have the ability to make a determination of specific circumstances where it is appropriate or reasonable for a carrier or wholesale CSP to supply, or offer to supply, services to an unregistered registerable CSP.

A breach of this obligation is a civil penalty provision (via section 101 for CSPs and section 68 for carriers) with can result in penalties of $10 million per contravention.