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Creina Chapman, CommsDay Summit 2019

The ACMA’s compliance and enforcement priorities

Good morning. I would like to acknowledge the Gadigal People of the Eora Nation as the traditional custodians of the land on which we meet today. I pay my respects to their elders past, present and emerging.

This morning, I would like to:

  • provide some observations on the current communications environment, taken from our most recent Communications report
  • update you on changes to Authority arrangements since we last met
  • formally announce the ACMA’s Compliance Priorities for 2019–20.

Sometimes when you are in the middle of a sector changing so rapidly, it is difficult to see the transformational ‘wood’ from the operational ‘trees’.

In our Communications report 2017–18, we looked back over just the past five years to get a picture of the medium-term changes in the sector. And it is fair to say the change has been so extensive that the landscape referenced in our Communications report 2013–14 is today almost unrecognisable. I’d like to highlight today some of our key findings.

Firstly, data-hungry services—in particular, video content—have driven huge increases in the amount of data downloaded by Australians across communications networks:

  • The volume of data downloaded over fixed-line services almost tripled from 2014 to 2018, with demand rising from 1.03 million terabytes to 4.08 million terabytes.
  • For mobile networks, the volume of data downloaded increased five-fold from 2014 to 2018, from 38,734 terabytes to 246,765 terabytes.

Secondly, Australians are accessing services over many more devices, increasingly on the move and matching devices to different use cases:

  • From June 2014 to June 2018, the number of Australian adults using five or more devices almost doubled from 23% to 40%.
  • Australia adults who were mobile-only for data with no fixed internet connection at home decreased by nearly a third from 23% in 2014 to 16% in 2018.
  • However, 27% of Australian adults reported having a mobile only for voice calls at home in 2014, growing to 41% in 2018. 

Thirdly, Australian industry and government have invested significantly in communications networks to keep up with current and expected future demand:

  • The Australian Government has contributed equity of over $24 billion between 2013–14 and 2017–18 towards the National Broadband Network (NBN) rollout. The government has also committed $220 million to deliver more than 800 new mobile base stations (since 2013).
  • In addition to infrastructure rollout and upgrade costs, telecommunications carriers have spent around $5 billion on spectrum licences (including $2 billion from the digital dividend auctions in 2013).

But, revenues to support such investment have increasingly shifted to online and ‘over-the-top’ providers that rely heavily on communications networks and underlying infrastructure to deliver their services:

Consistent with international trends, the bulk of Australian revenue growth is captured by non-infrastructure service providers, such as internet carriage providers or digital platforms. While revenue from wireless telecommunications has grown annually by around 2%, the annual growth of revenue related to fixed networks declined each year by around 2.5% between 2014–2018.

As we note in our report, it is clear that interconnectivity, mobility and content will remain central to the ongoing growth of these dynamic, innovative and disruptive sectors that are now critical to the work, home and social lives of all Australians.

The 2017 ACMA Review made a number of recommendations, accepted by the government, to position the ACMA to respond to the dynamism of the communications sector.

This included a new Authority model of five full-time members with specialist associate members.

We have codified how that model works in our Code of Conduct for Authority members and associate members. The Code sets out the Authority’s strategic intent, approach to business, duties, responsibilities and culture and values to guide its work over the years ahead.

Importantly the Code identifies Authority leads for particular subject areas aligned with their skills or expertise as well as four internal committees—each chaired by a full-time Authority member. These are the:

  • Content Committee (Chair: Creina Chapman)
  • Telecommunications and Consumer Committee (Fiona Cameron)
  • Spectrum Committee (James Cameron)
  • Compliance and Enforcement Committee (Chris Jose). I am pleased to let you know Chris will be here for the duration of the CommsDay conference.

Our new Authority arrangements provide an increased focus on transparency, timeliness and clarity of decision-making. I would like to acknowledge and thank my fellow Authority members for their energy, expertise and professionalism as we create and implement the new Authority operating model.

Today, I can announce a tangible demonstration of the Authority’s increased focus on transparency, timeliness and clarity—our inaugural ACMA-wide annual Compliance Priorities for 2019–20.

In determining our annual Compliance Priorities, we take into account a number of factors:

  • What are matters of significant public interest or concern?
  • What are potential and actual causes of harm to consumers?
  • What are the high level risks of non-compliance, from technological developments, to specific industries and issues impacting a particular geographical area?
  • What are the emerging issues where we can encourage compliant behaviour, deter non-compliance or boost public confidence?
  • What are the technological or market developments that test the ongoing efficacy of the regulatory framework?
  • What are the specific areas we can clarify the scope and reach of the law?

The ACMA has identified six Compliance Priorities for 2019–20:

  1. telecommunications consumer safeguards
  2. small cells for 4G/5G and base station compliance
  3. unsolicited communications
  4. broadcast news
  5. gambling
  6. solar invertors interference and unlicensed activity in the 5.6GHz and 400MHz.

I would like to explain each briefly this morning.

A key function of the ACMA is to provide safeguards to protect the interests of consumers. This has become an even more important focus during the final stages of the NBN roll-out. We want to foster industry compliance, promote best practice and seek to raise awareness amongst consumers of their rights.

This year, we have nominated three regulatory areas which we see as the most pressing safeguards: rules concerning NBN migration, complaints handling rules, and financial hardship provisions.

Last year we put in place new rules designed to provide additional consumer protections during migration to the NBN. Telcos must take steps so that consumers’ services remain connected during the migration process.

We will be active in monitoring compliance with these rules and will hold providers to account through a series of spot checks and regular audits. Where we identify a potential breach of the rules, we will take prompt and proportionate action.

We also expect carriers and service providers—whether large or small, or wholesale or retail—to take the necessary steps to inform themselves about the new rules and their business implications.

Last year we also put in place a new Standard to require a more robust process for service providers to resolve consumer complaints. This includes NBN migration complaints.

These new rules replace those previously contained in the TCP Code.

We have undertaken 41 investigations into complaint handling processes. After identifying widespread non-compliance, we issued formal warnings to 27 providers and remedial directions to four. After this action, all affected providers addressed our compliance concerns.

I would like to reiterate though, providers should not need a formal warning or direction from the regulator to comply with industry-wide rules.

We will continue to analyse levels of industry compliance with complaint handling process requirements through audits. This year, we will focus on whether retail service providers are resolving consumer complaints within required timeframes, and are keeping records and reporting schedules.

The ACMA is aware of the considerable and escalating concern about a small number of employees and agents who are incentivised by selling practices in the industry that are not in the best interest of customers.

We see evidence of customers being encouraged to make financial commitments which are excessive or beyond their financial capacity. The impact of this is serious, particularly for those in vulnerable circumstances, leading to financial hardship and denial of access to critical services.

I know that new requirements relating to credit assessments by service providers and potential financial hardship in a new Chapter of the TCP code which we expect to be in force by mid-year. We will also be focused on compliance with the new provisions.

Our second broad Compliance Priority is ‘small cell’ base stations. While these low-powered mobile base stations are used to deliver 4G services, this deployment will exponentially increase with the roll-out of 5G.

We are already seeing signs of public concern about the increased number of small cells in our local communities.

For this reason, we will work with the carriers and other government agencies to fully inform the public about the equipment being installed in their street.

We will be considering whether installations of base stations comply with EME standards set by the Australian Radiation Protection and Nuclear Safety Agency (or ARPANSA), including a future audit program.

We will also be monitoring carriers’ compliance with the Mobile Base Station Deployment Code.

We have recently found instances where PIPE Networks, a subsidiary of TPG, failed to fulfil its Code obligations. We made compliance directions that carry the prospect of stronger action for any future non-compliance.

Over the coming year, we will prioritise compliance activity in this area to consider whether Code obligations are being met as more and more small cells are deployed.

The social and economic effects of unsolicited communications are significant—undermining confidence in communications networks and in legitimate marketing practices.

This year we will concentrate on two telemarketing sectors where we see issues: unlawful lead generation, and solar product marketing.

Lead generation is a marketing practice for identifying potential customers, conducted both online and offline, often via surveys and competitions, and via telemarketing and spam. Consumers are targeted by sales staff, without having consented or even knowing how those calling have their details.

We will target unlawful lead generation this year, with a clear message to industry: you cannot outsource your compliance obligations. If lead generation is the basis for your calling lists, you must be able to prove the consumers called have consented if they are on the Do Not Call Register.

The penalties can be strong—a lead generator—Lead my Way—paid an infringement notice of $285,600 last year following an ACMA investigation.

Last year, complaints about solar product marketing accounted for nearly 11% of all consumer complaints about telemarketing, and that trend continues to date this year.

We’re building on last year’s strong compliance focus on solar telemarketing. This has led to legal action this month against two companies for their solar telemarketing practices: Balaska Proprietary Limited, trading as Energy Options, and V Marketing—both based in Queensland.

The ACMA will allege that Balaska outsourced its telemarketing to V Marketing, which in turn made telemarketing calls to numbers on the Do Not Call Register without the consent of the consumers involved.

The ACMA will also focus on the enforcement and effectiveness of existing regulation on broadcasters in relation to news content.

More Australians are consuming or accessing online news, but the main source of news is still offline, including broadcasting.

The news sector has managed its own credibility in the past and it needs to continue to do that. There are few things more important in a democracy than accurate and reliable news.

Impartiality, distinguishability and transparency of news and factual content has, historically, been of substantial interest to the Australian community. Challenges include separating and distinguishing between commercial content and news editorial as well as the transparency of this process.

The ACMA will focus on practices of the broadcasters and whether or not the current regulatory framework—including the broadcasters’ codes of practice—are fit for purpose today.

Signalling the integrity of news as a priority compliance area sends a clear message to both industry and the community that the ACMA is focused on promoting a healthy broadcast news environment.

This Compliance Priority forms part of a larger body of work being undertaken by the ACMA in relation to news services including looking at media plurality and localism of news content.

Gambling is a serious community issue in Australia, and the dramatic growth of new media and technology has only compounded the issue.

In 2019-20 we have three key gambling regulation focuses: gambling advertising during broadcasts and online, credit betting and offshore unlicensed gambling.

During 2018, the ACMA developed and approved new rules to strengthen restrictions on gambling advertising. There is now a ban on advertising of gambling services and companies between 5am and 8.30pm during live sport.

And online services streaming live sport have now been brought in line with television and radio broadcasting services.

We are closely monitoring these rules and are collecting and analysing complaints data, as well as advertising placement and audience data. We are also undertaking quantitative and qualitative research on consumer expectations and experiences of gambling advertising, particularly focusing on consumption of live sports. We will be publishing this research later in 2019.

The Australian Government’s National Consumer Protection Framework includes a new ban on consumers being able to bet online using credit which came into effect in February 2018.

As part of our compliance activities, last year we reviewed betting operators Terms and Conditions to determine if they were compliant with this new ban.

This year we will be looking at the actual business practices of betting operators to make sure they are not offering credit. We have also been charged by government with setting up a National Self-Exclusion Register, preventing problem gamblers from being able to access gambling services under a uniform national scheme.

Over the past eighteen months, we have taken extensive action to disrupt illegal offshore gambling being offered to Australians. In 2019-20 this will continue to be a Compliance Priority.

Reforms to the Interactive Gambling Act in late 2017, expanded the ACMA’s powers to take action against offshore gambling sites. This is a challenging regulatory area, and we use a suite of tools to enforce compliance.

These include driving compliance by working with state and territory regulators, key sporting and racing bodies, federal government agencies including AUSTRAC the ATO and Australian Criminal intelligence Commission, overseas regulators and third-party providers like software suppliers and payments processors.

We have conducted a campaign of targeted investigations and enforcement. These have been investigations we have initiated as well as those responding to complaints. In our first year we investigated 138 websites resulting in identifying 90 contraventions for providing services and for advertising.

Together with our disruption efforts we have now seen the withdrawal of more than 35 major offshore wagering services from the Australian market, including some of the world’s largest bookmakers.

Pleasingly, recent statistics from Global Betting and Gaming Consultants and from H2 Gambling Capital indicate there is a noticeable downward trend in offshore gambling expenditure.

Another of our core functions is the oversight and enforcement of the interference management conditions imposed on radiocommunications licenses. This priority area is squarely aimed at our responsibility to maximise the commercial and social benefits derived from access to spectrum.

This year we are particularly conscious of the proposed expansion of government subsidies for solar installations. This could lead to an increased risk of the supply of non-compliant solar invertors, causing interference to domestic radio and television reception. We will prioritise device compliance activities.

We have also identified an increased risk of unlicensed operations in two bands—5.6GHz and 400MHz including the operation of low-cost non-standard two way radios imported from overseas suppliers and licensees operating on expired licenses. 

This year we will prioritise auditing and monitoring unlicensed operations in the 5.6 GHz band which is licensed for point to multi point systems in regional areas, and in the 400MHz band in Adelaide and Perth which is licensed predominantly for land mobile services.

In conclusion, setting annual Compliance Priorities will now become a familiar feature of the ACMA’s annual calendar. This Authority-wide strategic approach to compliance and enforcement helps to streamline our work and provides greater transparency and clarity for industry.

But just because an area of our responsibilities is not called out as a compliance priority does not mean that it will be ignored, far from it.

I thank Comms Day for the opportunity to announce the ACMA’s compliance priorities for 2019–20 at your conference and I hope you all enjoy today’s sessions.

Thank you.

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