Network Insight Institute

3. Governance and regulation

3.1.    Overall principles
3.2.    Regulators
3.3.    Relations with parliament and government
3.4.    Consultation, submissions and hearings
3.5     Problem-solving, conciliation, arbitration
3.6     Complaints and consumer/user remedies
3.7.    Enforcement of decisions and rules
 

Note on what this heading covers.  This section is about who should make the decision and how.  Many experts in public policy would say that the nature of the decision-makers and the processes they use have more impact than the rules themselves.  Of the hundred or so decision-making regimes in the current laws, the decision-making provisions are usually in standard form, designed for purposes such as food standards, social security or rural subsidisation.  The options in this section canvass the best approach for communications subjects, ranging from news media where free speech is a dominant consideration, to the national spectrum plan.
 

3.1.   Overall principles

•    Legislation should create a general requirement of access that is supplemented by compulsory industry codes
Source:  Media Access Australia
The method used to regulate in this area will impact on the content and usability of the Act. Current communications law is difficult to comprehend and harder to apply. Further a lot of regulation is reserved to voluntary industry codes many of which have no signatures. This has produced inconsistent obligations within the one industry.

Although access requirements are contained in one section of the Broadcasting Services Act in order to understand these provisions reference must be made to other sections of the Act. To further confuse matters the rules for captioning are divided between the Broadcasting Services Act and an Australian Human Rights Commission exemption to the Disability Discrimination Act. Individual respondents to the Department of Broadband, Communications and the Digital Economy’s Media Access Review were rarely aware of how this interaction worked.

Media Access Australia proposes that the regulation of access would be consolidated into one section of the act rather than separated between different regulators. This approach has many benefits:

•    Ensures that access is understood as a genuine, universal requirement of communications media that does not vary across formats.
•    Assists industry in understanding and meeting their obligations.
•    Allows consumers to easily learn what is required by law and therefore make complaints if the appropriate standard is not being met.

However, industry will need some guidance as to what is required to meet their access obligations. Ideally this information would be contained in flexible, industry codes that all participants would be required to sign up to. Alternatively, the code could operate as a defence to the act so that meeting the obligations of the code would prevent a business from breaching their obligations. This would encourage industry to comply and simplify any enforcement process.
 

3.2    Regulators

3.2.4.    Funding, financial, accountability issues

3.3.    Relations with parliament and government

•    The regulator should operate more independently of executive government
Source:  Based on interview with Patrick Fair
In a perfect world there would be terms of office for ACMA  (or any future body with a similar role) that would be long enough to make them immune from political influence.  That is because the independence of the regulator is paramount.  There would be safeguards in the legislation stating that decisions have to be made with regard to predetermined principles such as free market operation, implementation of community standards, interoperability and technical neutrality.

It is important to be mindful that the more that is mandated on a regulator by an Act, the more regulation becomes beholden to the fashion or technology of the day.

It is important for ACMA to operate independently within the terms of its charter.  To help ensure independence ACMA should have its funding allocated perhaps over a 3 year funding cycle and have freedom to determine the allocation of spending within the organisation without the approval of the executive.  ACMA should be operate independently of the public service, with its own staff.  The appointment of board members should be made or be made subject to approval by the Parliament.

[Source:  Patrick Fair, interviewed by Network Insight in June 2008]

3.3.1    Reporting and accountability: to whom and how

3.3.2    How and when to consider government policy

3.4.    Consultation, submission and hearings

About this section.  It covers all the steps leading up to making a decision, including how communications players and the public should be consulted or heard, and what rights they should have to engage with regulators and know what material the regulators are considering.

•    Blogging as form of consultation and input 
Source:  Australian Government Information Management Office
An Australian Government Consultation Blog was under consideration in 2008.  It presages future use of online technologies to obtain enhanced dialogue about future and communications decisions.  A summary by AGIMO (the Australian Government Information Management Office) of policy options proposed by people commenting on the proposal includes the following:  

...online consultation mechanisms should be supplementary to existing processes rather than replacements and to encourage maximum participation, respondents required that they should be clearly and widely publicised.  Mechanisms that assist a participant to find, and to tell others about consultations of interest to them are supported.  The concept of a ‘one-stop-shop’ for consultation is important and has the potential to facilitate much greater citizen engagement.

Respondents suggested that the overall success of a government discussion forum will depend on the skill and expertise of the people managing and contributing to discussion.  Moderators, either government officers or members of the community of interest, must be able to convey government policy clearly but not stifle or steer discussion away from sensitive issues.  That capacity requires openness, honesty and skill.

Respondents indicated their desire to widen the scope of the proposed consultation blog and discussion forum from government initiated topics to include topics suggested by the public.  Enabling the general public to suggest and initiate discussion topics would provide true collaboration where citizens have the opportunity to actively shape policy.’

[Ref:  Department of Finance and Deregulation, Australian Government Management Information Office, 2008, Public Submissions to the Australian Government Consultation Blog Discussion Paper, visited 24 July 2008, http://www.finance.gov.au/publications/public-submissions-consultation-blog/docs/AGIMO_Consult_Blog_MAR08_OPT.pdf]

[Note:  The Department of Broadband, Communications and the Digital Economy recently conducted the first of a series of trial blogs.  Information about the trial can be found at http://www.dbcde.gov.au/communications_for_business/industry_development/digital_economy/future_directions_blog]

•    Criteria to consider in the design of self-regulatory schemes and industry codes
Source:  Ofcom
The UK communications regulator, Ofcom, in 2008 released criteria to be considered in the design of self-regulatory or co-regulatory codes schemes.  Many of the codes are legally binding on UK communications players.  The Ofcom criteria  followed an extensive review of self-regulation (including co-regulation).  There are close parallels to what are currently called industry codes in Australian law, and which would seem likely to continue in some form through any new Communications Act.

Ofcom announced the criteria in a more extensive statement: Identifying appropriate regulatory solutions: principles for analysing self- and co-regulation (10 December 2008).  It said that the each of the criteria was to be weighed in context, and on a case-by-case basis.  The criteria are:

Public awareness: in many cases the objectives of the scheme are unlikely to be met if consumers and citizens are not aware of its existence and its remit by active promotion. This may be required for a number of reasons, including: 
 - to ensure that citizens and consumers are aware of their rights, for example, the right of redress other than by complaining directly to the supplier; 
 - where the purpose of the scheme is to inform citizens and consumers; 
 - where participation in a scheme is likely to have reputational benefits, and where people can make a choice between companies which are members and those which are not. 
In some cases, however, public awareness may not be important, for example, in
addressing wholesale processes between providers.  

Transparency:  The success of a scheme adopted as an alternative to statutory regulation, will depend on stakeholders’ confidence. This will require openness and transparency in operation, and a degree of public accountability in relation to the scheme’s performance. As a minimum this should include publishing annual reports – with an element of objective review - on the scheme’s progress. Effective arrangements for wide public consultation on any significant issues are also desirable. 

Significant participation by industry:  The private incentives of companies may conflict with the public interest, or may lead an individual company to free-ride on the reputation created by other members. To have an effective impact, a scheme should represent a very high proportion of traders in the market place, or traders representing the vast majority of consumers. It will then be in a position to influence, and act independently of, individual members, to ensure that its influence extends across the industry.

Adequate resource commitments:  Industry members must ensure that there are adequate resources in place to operate the scheme effectively. They should also ensure that the distribution of costs is proportionate and does not preclude smaller and less well resourced players from joining the scheme. Staff resources would need to be sufficient and skilled to cope with the volume and type of work which is likely to arise. Cost commitments should be based on what is required to achieve the objectives of the scheme, rather than on the willingness of industry to contribute. In some cases, the cost of a scheme may exceed the cost of performing the same functions by a regulator, but the benefits (e.g. ensuring industry engagement)  may outweigh these cost considerations. 

Enforcement measures:  In many industries, individual companies may have incentives to cheat on their obligations, and the scheme’s effectiveness may depend on punishment mechanisms. Schemes may need to have sanctions that provide an incentive to comply. To administer this, the disclosure and transparency of information from members is essential for participants to be able to monitor the effectiveness of the scheme. Where applicable, it is also important to disclose what penalties can be imposed and whether they have been imposed for identified breaches. In the case of co-regulation, some forms of sanction may necessitate Ofcom exercising specific statutory powers. The co-regulatory body should be able to identify circumstances and pro-actively recommend where it would be more appropriate for Ofcom to use back-stop powers. 

Clarity of processes and structures:  when establishing a scheme, it is desirable to develop clear terms of engagement for scheme members at the outset. This should include an agreement on terms of reference, institutional structures, clarity on funding arrangements, time limits to achieve the objectives where such limits are appropriate, decision making arrangements, and voting rights.

Audit of members and scheme:  Insufficient governance and administration of a scheme is likely to prevent it from achieving its objectives. It is advisable that schemes set and audit Key Performance Indicators (KPIs) to ensure that these are met consistently across the industry. Similarly, relevant KPIs for the scheme itself in meeting its objectives should be identified. Where KPIs have been set, they should be published and regularly reviewed in the light of changing circumstances. 

System of redress in place:  In some cases companies may under-deliver or fall short on promises. Consumers and citizens should have the right to adequate complaint handling standards where they have been dissatisfied by the initial response of a provider. It is desirable for there to be a genuinely independent appeals mechanism that can ensure that complaints are resolved quickly and effectively, and their outcomes disclosed. An effective scheme will have an alternative redress mechanism such as independent arbitration, or an ombudsman scheme, which is easy to access and readily identifiable at the point of need and has even-handed and transparent procedures. 

Involvement of independent members:  There is a clear tension between the desirability of autonomous schemes and the objectives of drawing on the experience, expertise, resources and engagement of the industry within them. The benefits of self-regulation may only be realised if the scheme is respected by other stakeholders including consumer and citizen groups, government and parliamentarians. Consequently a system involving a mixture of independent lay and industry members will be appropriate in both the scheme’s governing body and further operating committees. This may not apply to certain types of schemes, for example, those dealing with detailed technical issues where non-specialist participants may have little to contribute, and where the interests of citizens and consumers are not directly impacted by these issues.

Regular review of objectives and aims:  Schemes are often introduced for particular objectives which may be overtaken by changes in the market or the expectations of stakeholders. Schemes should actively review trends in the market landscape and changes in citizen and consumer needs, and monitor whether their remit and operations are sufficient to meet these.

Non-collusive behaviour:  it is important that any scheme does not provide a forum for collusion and is compliant with both European and UK competition law. Sufficient Principles for analysing co- and self-regulation  transparency and approval should be built into the design of any solution to demonstrate to third parties that industry members are committed to non-collusive behaviour and agree to comply with the relevant codes.

The original UK context of the criteria is set out in the full Ofcom statement: Identifying appropriate regulatory solutions: principles for analysing self- and co-regulation.  An important feature is Ofcom’s five steps for deciding whether self-regulation is appropriate for an area:
1    Do the industry participants have a collective interest in solving the problem?  
2    Would the likely industry solution correspond to the best interests of citizens and consumers?  
3    Would individual companies have an incentive not to participate in any agreed scheme?
4    Are individual companies likely to ‘free-ride’ on an industry solution?  
5    Can clear and straightforward objectives be established by industry?

[Ref:  Ofcom Identifying appropriate regulatory solutions:  principles for analysing self- and co-regulation, visited 4 February 2009, http://www.ofcom.org.uk/consult/condocs/coregulation/statement/]

3.5.    Problem-solving, conciliation, arbitration

 

3.6.    Complaints and consumer/user remedies

•    National, generic law for consumer protection affecting communications
Source:  Productivity Commission
A 2008 Productivity Commission report highlighted inconsistencies between state and federal consumer protection regimes.  It indicated that the confusion had produced a lack of responsiveness in policy-making.  It suggested a consistent national consumer framework applying across the country jointly enforced by Federal, State and Territory Governments.  It also recommended extension of  TIO functions to other areas of communications.

‘Australian Governments should improve the effectiveness of alternative dispute resolution (ADR) arrangements for consumers by:  extending the functions of the Telecommunications Industry Ombudsman to pay TV and reviewing options for further consolidation, including through a single consumer entry point for communication services complaints …’
‘the new national law should explicitly give regulators the power to bring representative actions on behalf of affected consumers, whether or not they are parties to the proceedings.’

[Ref:  Productivity Commission, Australia’s Consumer Policy Framework,  2008, visited 21 October 2008,
http://www.pc.gov.au/__data/assets/pdf_file/0008/79172/consumer2.pdf
http://www.pc.gov.au/__data/assets/pdf_file/0006/79170/consumer1.pdf]
  
 

3.7    Enforcement of decisions and rules

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