Ministry of Information,Communications and the Arts

Speech by Dr Yaacob Ibrahim at the Second Reading on the Telecommunications (Amendment) Bill 2011

Press Release   •   Nov 21, 2011 15:39 SGT

Mr Speaker, Sir, I beg to move, “That the Telecommunications (Amendment) Bill be now read a Second time”.  

Sir, the Telecommunications Act provides the Infocomm Development Authority the power to regulate the telecommunications sector in Singapore.  Amongst others, it empowers IDA to grant licences, issue codes of practice and set standards of performance. The Act seeks to establish a robust regulatory framework that promotes and preserves a vibrant and competitive telecommunications sector.  

The Act was last reviewed in 2005, and it is timely for us to review it again to ensure its relevance to the fast evolving telecommunications landscape.  

Mr Speaker, Sir, the proposed amendments to the Act broadly covers six areas. I will go through each of them in greater detail.  

Separation Order  

First, amendments provide the Minister with the power to issue a Separation Order for the transfer of telecommunications assets or business of a licensee to a separate entity. This serves to eliminate barriers to competition created by the control of bottleneck infrastructure or the possession of significant market power by vertically-integrated telecommunication licensees.   

In the telecommunications market, a vertically-integrated operator that controls the network infrastructure as well as concurrently participates in the wholesale and retail services markets may not have the commercial incentive to open up these services to its competitors. It may even discriminate against them to gain an unfair advantage for itself.  Therefore, remedies such as separation are increasingly being considered and used in other jurisdictions such as the European Union and Australia, to ensure equal and open access to key network elements and services.  

I would like to assure businesses that it is not the Government’s intention to exercise the power of Separation Order frivolously. As far as possible, the Bill provides clear conditions and limitations under which a Separation Order can even be considered. Moreover, should the Minister issue the order on an ex ante basis, he may only do so as a “last resort” after having considered the effectiveness of other existing and potential regulatory measures and found them insufficient to enhance competition in the industry. In such a case, the Bill allows the possibility of compensation to the affected licensee.  

Special Administration Order  

Sir, the second set of amendments empowers the Minister to issue Special Administrative Orders or SAOs. An SAO is an order from the Minister directing the takeover of control of a telecommunication licensee’s affairs, business and property by another person, so as to ensure that a key telecommunication network or service continues to be functional, for public and national interest.    

Currently, section 58 of the Act only provides powers for the Minister to act in cases of public emergency, public interest or public security. In these cases, the Minister may issue directions to licensees to prohibit or regulate the use of, or to require the use or control of telecommunication systems and equipment.    

In cases of insolvency and abandonment of the network by a licensee, the Minister does not have the powers to ensure that the telecommunication network or service run by the licensee in question continues functioning, and any disruption to the network or service could result in severe social and economic repercussions. Thus, the amended Act would enable the Minister to issue an SAO in such events, to ensure operational continuity of key telecommunication networks and services.  

We are mindful that telecommunication licensees may have some concerns over these powers, and we have thus limited the conditions under which an SAO may be issued. These include times when the Minister needs to step in to safeguard public interest, or to ensure the reliability and continuity of key networks and services provided by Public Telecommunication Licensees or Critical Support Infrastructure operators.   

Penalty Framework  

The third set of amendments revises the maximum administrative financial penalty to 10% of the annual business turnover for licensable services of a licensee, or $1 million, whichever is higher. This is to ensure that the penalty framework continues to act as a sufficient deterrent to secure licensees’ compliance to regulatory conditions.  The adjustment of the penalty ceiling is in alignment with other domestic laws such as the Electricity Act, the Gas Act and the Competition Act.  

Notwithstanding the higher penalty ceiling, the actual quantum of penalty imposed by IDA will continue to be based on the facts and severity of each case in the event of breaches of regulatory conditions.  

In addition, the Bill also proposes to give IDA the power to cancel or suspend either part of or the whole licence, or reduce the period that the licence is to be in force, should a financial penalty not be paid within the specified period. IDA will do this by giving notice in writing to licensees, without payment of any compensation.   

Compliance with the COPIF  

Sir, the fourth set of amendments concerns compliance with the Code of Practice for Infocomm Facilities in Buildings, or COPIF in short. The COPIF requires building or land owners and developers to provide space and facilities, so as to facilitate the roll out of telecommunication services by operators.    

Today, any non-compliance with the COPIF is immediately an offence, and the contravener is liable to fines and/or imprisonment.  However, the COPIF does not exist to mete judgement on contraveners as an end, but rather, it is only a means to an end to ensure that operators have the necessary space and facilities to provide telecommunication services to consumers in buildings. Thus, the amendments seek to empower IDA to first issue written orders to any building or land owner or developer, who contravenes a provision of the COPIF.  This will allow IDA to take into consideration the different circumstances faced by building or land owner or developer before making any non-compliance with the COPIF an offence. With this approach, IDA will have a greater ability to secure compliance with the COPIF, which will in turn ensure efficacy in the deployment of telecommunication systems in buildings.  

Changes in the Consolidation Framework  

The fifth set of amendments seeks to update the consolidation framework. This is to account for new concepts relating to mergers and acquisitions as well as new business models that have emerged.  These concepts such as voting shares and the holdings of associates have been incorporated in legislation such as the Companies Act, the Banking Act, the Electricity Act and the Postal Services Act.     

On a related note, the current regime provides for a penalty to be imposed on an acquiring party which is a Designated Telecommunication Licensee or DTL, should it fail to comply with IDA’s direction to divest its voting shares in another DTL. Going forward, the Bill proposes to extend the regime to cover acquiring parties of DTLs which may not be DTLs of themselves.   

Clarification of PTL Rights  

The sixth broad area of amendments clarifies the rights and privileges of a Public Telecommunication Licensee or PTL. The existing legislation allow for a PTL to enter land to install and maintain its telecommunication installation or plant in such land. The modifications serve to provide greater clarity over the privileges of a PTL with respect to rights to enter land and buildings to deploy telecommunication systems.  

With new industry structure such as the Next Generation Nationwide Broadband Network, it is necessary to clarify the privileges accorded to the PTLs, to ensure that PTLs enjoy statutory protection of their telecommunication installations and plants regardless of which layer of the industry they operate in. Thus, the Bill also clarifies the rights of a PTL in the case where telecommunication infrastructure is transferred from one PTL to another.     

Other Amendments  

Other than those I have mentioned in detail, there are other more straightforward amendments proposed in the Bill. These amendments serve to clarify that IDA’s regulatory purview extends to all telecommunication networks and equipment even if they are used for broadcasting purposes. They also clarify IDA’s powers in governing the number allocation framework and in the licensing of satellite orbital slots.  The Act would also be amended to cater for the service of documents using newer forms of communication in addition to registered post and other means allowed today. These will include facsimile transmission and electronic mail.  

Conclusion  

Sir, in conclusion, the proposed amendments serve to enhance powers for MICA and IDA to promote and preserve the competitiveness of the telecommunication sector, as well as to ensure a continuity of key telecommunication network and services. The amendments also seek to update the regulatory framework in line with industry developments such as new industry and company structures.  

These changes, taken together, fortify the Telecommunications Act to be a more comprehensive and effective regulatory framework, ensuring a vibrant and competitive telecommunication industry that ultimately benefits consumers.  

Mr Speaker, Sir, I beg to move.