Third-party access rights are provided for in Australia under both economy-wide instruments and through legislation specific to particular industries. The economy-wide regime is set out in Part IIIA of the Trade Practices Act, which was enacted in 1995 subsequent to the Independent Committee of Inquiry into Competition Policy in Australia (the ‘Hilmer Report’ of 1993). Importantly, a separate access regime for telecommunications is set out in Part XIC of the Trade Practices Act, which came into effect in July 1997 and differs in significant respects from Part IIIA.^[2]

While there are significant differences between these access regimes, there are some broad ‘architectural’ similarities. In Australian access regimes, the precise scope of mandated third-party access is typically determined not by statute but by an essentially administrative process which includes or excludes individual services from a requirement to provide access. What is determined by statute are the mechanisms involved in that process as well as the broad criteria that process must consider, so that it is through these (as well as through the attitude adopted by the administrative decision-makers) that the degree to which the regime is ‘conservative’ (that is, restrictive) in granting access is determined.

In Part IIIA and in Part XIC, services covered by the regime are said to be ‘declared’. However, the criteria and relevant process for declaration differ and there are more stringent checks and balances against declaration in the former regime than in the latter.^[3]

The main result of these differences is that far more services have been declared under Part XIC than under Part IIIA. Moreover, Part XIC declarations have involved a number of services that are close substitutes and some that are simply intended for resale. Both of these outcomes would not be possible under Part IIIA. Finally, very few services have had declaration revoked or subsequently limited under Part XIC.

Once a service is declared, the ACCC can, in the event of dispute between an access seeker and an access provider, use powers of mandatory arbitration to determine the terms and conditions of access to that service. Under both Part IIIA and Part XIC, an access provider also has the scope to submit an Undertaking setting out the terms and conditions on which it will provide a service. If the Undertaking is accepted, the ACCC must arbitrate an access dispute in a manner consistent with that Undertaking. The Undertaking, in other words, provides access providers and access seekers with a degree of certainty as to the terms and conditions of access.

In practice, the Undertaking mechanism under Part XIC has not been effective, in the sense that Undertakings are rarely accepted for key services. To date, only two Undertakings offered by Telstra have been accepted, one that merely copied the indicative prices issued by the ACCC immediately prior to the Undertaking being lodged, while another had very short duration (and was accepted on the basis of that fact).^[4] All the other Undertakings offered by Telstra have been rejected, as have the Undertakings offered by SingTel Optus and by Vodafone. There is a right to appeal to the Australian Competition Tribunal for review on the merits of decisions in respect of Undertakings. All such appeals by Telstra, Optus and Vodafone have failed.

When an Undertaking is not in place, the ACCC must arbitrate disputes taking account of a list of considerations set out in the legislation. Here, too, Part XIC differs from the other access regimes. These differences go both to the substance of the factors the ACCC must take into account and to the relevant process.

With respect to the factors, Part IIIA was initially relatively non-prescriptive regarding the determination of the terms and conditions of access to services brought within the scope of the access regime — indeed, its broad structure was similar to that of Part XIC.

Thus, many of the provisions which the ACCC was initially required to take into account in setting access charges under Part IIIA were very general in character and hence capable of wide interpretation, much like the analogous provisions in Part XIC. Under s44X (the section of Part IIIA which defines the relevant criteria but to which other sections, discussed below, have now been added), the ‘legitimate business interests’ of the service provider must be considered, as well as the interests of those with a right to use the service. The section also requires some assessment of the competitive benefit of access, such that the ACCC must consider the ‘public interest in having competition in markets’. Consideration must also to be given to ‘the direct costs of access’. These considerations are substantially similar to the ‘laundry list’ of factors set out, for the determination of access disputes, in s152CR of Part XIC.

Additionally, the legislation did not assign weights to the criteria in the section; it simply obliged the ACCC to have regard to each and every factor. As a result, the ACCC could simply trade one factor off against another, thereby determining disputes much as it thought fit.

This situation has changed as significant modifications have been made to Part IIIA and, specifically, to s44X (changes which have not been replicated in Part XIC). The most important change is the insertion of ‘pricing principles’ which the ACCC must take into account. One of these principles requires that the regulated price be sufficient to at least cover the efficient costs of providing access, including a return commensurate with regulatory and commercial risk. In contrast, under Part XIC, there is no explicit requirement for access prices to cover costs.

Regarding the process by which access charges are set when an access Undertaking is not in place, the most significant difference is that Part XIC does not provide for a right of review on the merits of ACCC arbitration decisions, while Part IIIA and its associated regimes generally do. Effectively, if an Undertaking is not in place, there are few constraints on the manner in which the ACCC can set access charges under Part XIC.

The manner in which the pricing discretion vested in the ACCC has been implemented reflects an additional important feature that differentiates the telecommunications access regime from its counterparts, and particularly those in the energy industries.

In energy, regulators generally set an overall price or revenue cap for a fixed period of time, typically five years. That overall cap then sets a constraint within which the regulated entity determines the level of individual regulated prices; that is, the price structure.

In contrast, under the telecommunications regime the regulator determines prices for individual services from time to time, with redeterminations being triggered by access disputes. As a result, a particular access charge — say the access for the wholesale version of the line-rental services — may be determined several times in the course of a few years, if bilateral access disputes with respect to that service are brought to the ACCC for arbitration. Moreover, that price may be set without regard to how other prices for regulated access services have been determined, except to the extent to which the ACCC chooses to take account of those other prices in its final determination.

The process of setting access prices in telecommunications is therefore inherently more discretionary, messier and more vulnerable to changing and potentially inconsistent regulatory decision-making than is the case in the other Australian access regimes.