On 21 January 2025, the Australian Government announced proposed changes to the Telecommunications Act 1997 (Cth) (the Act) that significantly strengthen the ACMA’s compliance and enforcement powers and increase penalties for breaches of telecommunications regulation. On 12 February 2025, the Australian Government introduced the Telecommunications Amendment (Enhancing Consumer Safeguards) Bill 2025 (Cth) (the Bill).
Key changes include:
- Removal of the ‘two step’ process to enable the ACMA to take direct and immediate enforcement action against breaches of industry codes,
- Significant changes to maximum penalties for breaches of industry codes and standards and the approach to determining penalties, and
- Introduction of a carriage service provider (CSP) registration scheme with a publicly available register of CSPs and a prohibition against supplying wholesale services to unregistered but registrable CSPs.
Enforcement for breaches of industry codes
If passed, the ACMA will be able to take enforcement action directly against telecommunication providers for breaches of industry codes without issuing a preliminary direction to comply. Currently, irrespective of the significance of the breach, the ACMA must first issue a direction to comply and can only take further action in for ongoing non-compliance. This is because compliance with industry codes is initially technically voluntary, so the Bill now makes compliance with industry codes mandatory and makes a breach of an industry code a civil penalty provision.
The removal of the existing two-step enforcement process will likely result in the ACMA moving more quickly to take stronger action in cases of non-compliance, especially against larger telecommunications providers or in cases of repeated non-compliance. Stronger enforcement action could include seeking pecuniary penalties through the Federal Court, enforceable undertakings and issuing an infringement notice. It would also allow the ACMA to take action for a singular breach that is not systemic or affecting many customers. This change may help address industry criticisms over the lack of enforcement action over breaches of industry codes, such as the Telecommunications Consumer Protections Code.
Importantly, direct enforcement action will only apply to industry codes registered with the ACMA under Part 6 of the Act, and will not apply to industry codes which are not registered, including various industry codes registered with the e-Safety Commissioner and other unregistered industry codes made by the Communications Alliance.[1]
Significant changes to penalties
The Bill clarifies what was left hanging In the initial Government announcement –penalties based on turnover will be an alternative basis to setting penalties.
The maximum penalties for breaches of industry codes and standards by corporations will significantly increase, 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.
This increase brings it into line with the maximum penalties for breaches of carrier licence conditions and service provider rules and determinations ($10 million), the penalty frameworks in the energy and banking sectors, competition legislation and the Australian Consumer Law. The increase in the penalties may ease the concerns previously raised by Australian Communications Consumer Action Network (ACCAN), the TIO, the ACMA and the ACCC.
The Explanatory Memorandum indicates this approach is intended to allow the Federal Court to determine the appropriate penalty and for this to be scaled according to the size of the provider and the value of the benefit obtained from the breach. Accordingly, this change is likely to impact most on the larger telecommunications providers (who are perceived to have substantial financial resources), to ensure penalties have a strong deterrent effect, rather than being viewed as the ‘cost of doing business’.
The maximum penalty that can be imposed by an infringement notices for all breaches, including breaches of consumer protection related industry codes and standards, has changed to 20% of the maximum pecuniary penalty in penalty units or dollar amounts. The Minister also has the power to determine different infringement notice penalty amounts for different classes of body corporate, so a scaled approach to infringement notice penalties could also be introduced.
CSPs will be required to register with the ACMA
The Bill introduces a new CSP registration scheme, requiring CSPs to be registered with the ACMA to supply or offer to supply telecommunications services to the public. Unlike the other amendments in the Bill, this scheme will not come into effect from Royal Assent, but on a day fixed by Proclamation or otherwise 12 months’ after Royal Assent which gives industry and the ACMA some time to prepare for the new obligations and for requirements for registration applications to be developed. Currently, only carriers are required to be licensed and are then included in an ACMA register.
The change is said to help increase the ACMA’s visibility of CSPs operating in the market. The ACMA will maintain a CSP Register and can:
- impose conditions on the CSP’s registration if satisfied that the condition is reasonably necessary to promote compliance with the Act, or
- prevent CSPs from offering or supplying services by refusing registration of a CSP, including where 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.
The registration period is short - registration is valid for a one-year period and may only be for longer if otherwise determined by the Minister. Given the burden and uncertainty the regime may produce, it is hoped that the Minister will make such a determination which covers all CSPs promptly. The Minister may also exercise new powers to declare a CSP to be registrable – either individually or by class - and to declare that a specified CSP or class of CSPs is not registrable.
New obligation on carriers and wholesaling CSPs to not supply services to an unregistered CSPs
The Bill would also introduce a new prohibition on carriers and wholesale CSPs supplying or offer 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. Reasonable grounds will include reliance on an error with the ACMA’s CSP Register, for example if a CSP is mistakenly shown as being registered when they are not. We recommend that carriers and suppliers of wholesale carriage services ensure they update their compliance processes ahead of the CSP registration scheme taking effect, so checking registration is a pre-requisite to offering to supply and supplying services.
Power to stop CSPs operating in the market by revoking registration
Under the Bill, the ACMA would gain a new power to exclude CSPs from the market if they are deemed to pose an unacceptable risk to consumers or have caused significant consumer harm. This power is expected to be used as a measure of last resort, with ACMA required to consider the CSP’s compliance history, the impact on its consumers, and the necessity of preventing consumer harm, amongst other matters (including any additional matters determined by the Minister). Before revocation, the ACMA must also consult the Minister and a Communications Access Coordinator.
The Bill provides for the review of these decisions, avenues for re-registration and maintaining connectivity for impacted consumers, for example, there is a process that allows CSPs to show cause as to why their registration should not be revoked. If a CSP’s registration is revoked, the provider is required to give customers written notice of the revocation and make arrangements to transfer the customers to a registered provider.
The Explanatory Memorandum compares the revocation powers to the ability of the Australian Energy Regulator (AER) to revoke an electricity retailer’s authorisation and electricity licences in the energy sector. While the use of such powers is also said to be a measure of last resort, the AER has revoked a number of different electricity retailers’ authorisation in the last decade, after these retailers were suspended from the National Electricity Market after a Retailer of Last Resort event.
Timing
CSPs will have a 6-month period to comply with the new registration and compliance requirements. The Minister may make transitional rules, which will be necessary given the ACMA will need to manage initial registration applications for the existing eligible CSPs, with the estimates that there may be over 1,500 eligible CSPs.
Potential impact on TCP Code revision and future of co-regulation
The proposed reforms are consistent with calls by industry for stronger enforcement powers for the ACMA over breaches of the TCP Code, given criticisms of the co-regulation regime, and indicate the likelihood of the Government keeping the existing co-regulation regime rather than moving to direct regulation. The ACCAN, the ACMA and Communications Alliance have welcomed the proposals.
The proposed changes to the Telecommunications Act represent a significant shift in the regulatory landscape for Australian telecommunications providers. With the ACMA poised to gain enhanced enforcement powers and the ability to impose substantial penalties, it is crucial for providers to proactively reassess their compliance frameworks and operational practices, given the range of obligations contained in registered industry codes and standards. The introduction of a CSP registration scheme and the prohibition on wholesale supply to unregistered CSPs further underscores the need for vigilance in adhering to regulatory requirements.
