ACMA media release 59/2008 – 19 May

19 May 2008

ACMA invites comment on new industry fee regimes to access Do Not Call Register

The Australian Communications and Media Authority is seeking comment on two options for the new fees that telemarketers will be charged to access the Do Not Call Register from 1 July 2008.

The new fee regimes follow the Government’s election commitment and a recent Federal Budget measure to require industry to fully fund the direct costs in operating the Register from 1 July 2008.

Industry has been partially contributing to the costs in operating the Register through the payment of access fees since the Register commenced operation in May 2007. ACMA estimates that it will have received $2.1 million in total revenue from industry accessing the Register in its first year of operation. This is $0.88 million more than the adjusted direct costs in operating the Register under the current partial cost recovery arrangements. This over-recovery is largely due to the industry demand for list washing services being underestimated in the initial modeling of the subscription fees.

Consistent with the Australian Government Cost Recovery Guidelines, any over-recovered funds are required to be returned to industry.

The estimated direct cost to operate the Register over the next three financial years is $9.20 million. After deducting the $0.88 million that was over-recovered in the first year, the cost recovery arrangements for the Register are expected to collect $8.32 million in revenue over the next three years under either option.

ACMA is seeking comment on whether to structure the fees to return the over-recovered funds over the next three years or in one year, 2008-09. The two options, which are contained in a discussion paper released today, are:

Option 1 – Stable pricing regime. Under this option, the excess fees collected in the first year would be returned evenly over the next three years. This option would assist in minimising price fluctuations and deliver a relatively stable scale of fees over the initial four-year Register contract period.

Option 2 – Fluctuating pricing regime. Under this option, all excess fees collected in the first year would be returned in 2008-09. This option would result in the fees reducing by a third from 1 July 2008, but then more than doubling in the following year, before falling again in 2010-11.

A copy of the discussion paper is available from the ACMA website or by calling (03) 9963 6895. Written responses to the discussion paper are due no later than Friday 30 May 2008.

Media contact: Donald Robertson, ACMA Media Manager, on (02) 9334 7980.

Backgrounder

Under the Do Not Call Register Act 2006 (the Act), the Australian Communications and Media Authority is responsible for establishing and overseeing the operation of the Do Not Call Register (Register) which includes determining the fees payable by industry for accessing the Register.

As part of its ‘Savings for Labor’s Better Priorities – Do Not Call Register’ election commitment and a recent Budget measure, the Government will require industry to fully fund the direct costs of the Register from 1 July 2008.

The Register allows individuals to ‘opt out’ of receiving certain unsolicited telemarketing calls by registering their home or mobile telephone numbers that are primarily used for private or domestic purposes.

It is illegal for any non-exempt telemarketer to make an unsolicited telemarketing call to any number listed on the Register. To avoid possible penalties for calling listed telephone numbers, telemarketers are able to check, or ‘wash’ their calling lists against the numbers listed on the Register. In general, the person who submitted a list for washing can rely on the washed list they receive for 30 days.

On 1 February 2007, ACMA contracted Service Stream Solutions Pty Ltd to build and operate the Register until February 2011, for $13.31 million (including GST), with an option for an additional three years. Service Stream was awarded the contract following a competitive tender process. ACMA has subsequently acquired additional services under the Do Not Call Register contract and included in the contract some optional services that if taken-up, following industry consultation, would increase the potential value of the contract to $14.45 million over the four years.

On 1 May 2007, ACMA made a determination about the fees payable by industry for accessing the Register in the first year of operation. Under section 21 of the Act, the fees must not amount to taxation and are payable to ACMA on behalf of the Commonwealth. The Do Not Call Register (Access Fees) Determination 2007 commenced on 25 May 2007.

ACMA’s experience is that the level of industry demand for washing services is contributing to the successful operation of the Do Not Call Register. Under the scheme, telemarketers submit their telephone number lists to the Register Operator for checking against the Register. This process of ‘washing’ calling lists helps telemarketers avoid breaching the Act.

ACMA is proposing to continue to adopt an ‘Annual Subscription Fees and Excess Usage Charges’ model. This model provides for significant flexibility, where subscribers are able to self-select into the most appropriate subscription type depending on their annual telemarketing needs.

Between 25 May 2007 and 31 March 2008, the telemarketing industry had taken out 2,719 subscriptions to wash more than 773 million numbers against the Register. By 31 March 2008, over 2.21 million numbers had been listed on the Register.

Four out of five paid subscriptions taken out to 31 March 2008 were to wash up to 20,000 numbers or up to 100,000 numbers per annum. Even under option 1 (the option that would deliver the higher fee for 2008-09) the subscription fee for washing up to 100,000 numbers per annum will not exceed $340 per annum in 2008-09. Of the 2,719 subscriptions that have been taken out, only 5 have been at the top rate of $80,000 to wash up to 100 million numbers per annum.

As it did before the first year of operation, ACMA engaged Access Economics (an independent consultancy organisation) to assist in determining the new fees for accessing the Register.

ACMA is inviting comment from industry on the proposed fee options and pricing structure for accessing the Register from 1 July 2008. The proposed fee options are set out in Tables 1.1 and 1.2 below.

ACMA is also proposing to make a small number of other minor changes and clarifications to the Do Not Call Register (Access Fees) Determination 2007.

Compliance

ACMA’s general approach to compliance is to seek to resolve a matter, where appropriate, without resorting to formal procedures. Where complaints are received ACMA issues an advisory letter to the relevant business providing it with an opportunity to review its compliance processes and address the apparent issues.

At the end of April 2008, 20,838 complaints had been received. There are signs that industry compliance is improving with the average number of complaints received per month falling from 3,538 in the first three months of operation to around 1,900 in the three months to April 2008.

Furthermore, about 60 per cent of the businesses who have received an informal notification from ACMA ceased to be the subject of consumer complaints within four to six weeks, suggesting that ACMA’s current approach to compliance is proving effective.

Complaints are largely driven by systemic non-compliance within a relatively small section of the industry, with 5 per cent of the businesses ACMA has received complaints about responsible for about 70 per cent of the total complaints received. ACMA’s formal investigations are focusing on these businesses.

Where an informal approach to a business is not appropriate or not effective in addressing the apparent compliance issues, ACMA undertakes a formal investigation into the matter.

As at 16 May 2008, ACMA had commenced 18 formal investigations into alleged breaches of the Do Not Call Register legislation, and will be taking appropriate enforcement action where a business is found to be in breach of the requirements. ACMA is currently expecting to finalise about five investigations by 30 June 2008.

More information on the Do Not Call Register scheme can be found at www.donotcall.gov.au

Table 1.1 Summary of current and proposed charging arrangements for Option 1 - Stable pricing regime

Table 1.2 Summary of current and proposed charging arrangements for Option 2 – Fluctuating pricing regime

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