TELECOMMUNICATIONS BILL

[Mr Speaker in the Chair]

Order for Second Reading read.

The Minister for Communications and Information Technology (Mr Yeo Cheow Tong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill provides the detailed regulatory powers of the Info-communications Development Authority of Singapore (IDA) in the telecommunications sector. It repeals and re-enacts substantively the provisions of the present Telecommunications Authority of Singapore (TAS) Act.

As I had pointed out in my Second Reading speech for the IDA Bill, information and communications technology, or ICT, will be of increasing relevance and importance to Singapore as we move into a knowledge-based global economy. We need to not only promote and nurture the growth of ICT, but also transform Singapore into a vibrant and global ICT hub.

One feature of the knowledge-based economy will be the widespread use of the Internet and Internet Protocol applications. We will therefore need to actively work to become a regional and global hub for Internet content development, hosting and delivery. To realise this, Singapore will need to become an even more competitive node for global telecommunications. We must ensure that our telecommunications infrastructure is well developed, well connected regionally and internationally, and competitively priced.

It is therefore important to increase and broaden our connectivity to key regional and global information infrastructures. From less than an aggregate of 10 megabits per second in 1998, Singapore's Internet bandwidth into the Asian region will grow ten-fold to more than 100 megabits per second by the year 2000. Singapore's Internet bandwidth into the region is expected to grow exponentially into gigabits per second by the year 2005. The locations and bandwidth of such connections would be both market and demand-driven.

Sir, the telecommunications sector has become extremely complex and competitive internationally, with service providers innovating furiously, and new value-added services and products being introduced in rapid succession. Development in such a dynamic environment cannot be regulator-driven, nor can the market place be restricted if it is to be vibrant.

The Government recognises this. We have therefore progressively liberalised the paging, Internet Access Service Provider (IASP) and mobile telecommunications sectors. By 1st April 2000, the public basic telecommunications service sector will also see the entry of our second operator, StarHub. The entry of new players, as we liberalise, will often involve technical and contractual issues between the new and existing players, particularly where interconnections and interconnectivity are involved.

IDA must therefore fairly, transparently and expeditiously manage the implementation issues, such as interconnection arrangements, between the incumbent and the new telecommunications operators. We recognise that the regulatory approach and framework must also evolve as the industry develops and matures. The entry of more service providers will enhance competition, thereby allowing IDA to exercise a lighter regulatory hand. The Government can then let the market self-regulate more, intervening only when anti-competitive practices appear.

Mr Speaker, Sir, let me now explain the main provisions of the Bill.

Our regulatory approach in the telecommunications sector is structured to allow the IDA to regulate its licensees in a fair and transparent manner. The IDA will rely on licence conditions, directions, codes of practice and standards of performance to safeguard national and consumer interests and ensure the quality of telecommunications services. This is provided for in clauses 5, 26 and 27 of the Bill.

The Bill will also enable IDA to address issues that are critical to the development and liberalisation of the ICT industry, such as preventing anti-competitive practices. To protect consumer welfare and public interest, apart from suspending or cancelling a licence, a financial penalty may be imposed on licensees that breach these regulatory requirements. The limit for the financial penalty is generally based on the potential public consequences and the economic benefits a licensee can deliberately reap from the breach, or non-compliance. A breakdown in telecommunication service arising from a breach can cause serious and widespread disruption to business and personal communications. In clause 8 of the Bill, we have thus set the maximum financial penalty for a telecommunications licensee at $1 million. This should be adequate deterrent against errant and irresponsible actions by licensees.

Clause 69 contains explicit provisions allowing aggrieved licensees to appeal to the Minister. The appeal can be against any decision of the IDA in the exercise of any discretion vested in it, such as an order for suspension or cancelling of a licence, or the issuance of directions, or anything contained in a code of practice or standard of performance.

Going forward, as I mentioned earlier, we recognise the need to regulate with a lighter touch as the industry matures and moves to a more competitive market-driven environment. In such an environment, industry self-regulation will be promoted where possible. Clause 28 of the Bill empowers IDA to issue advisory guidelines. This will allow the IDA to step back in appropriate circumstances and let the licensees work out mutually agreeable solutions among themselves.

Sir, given the growing importance of the telecommunications network, we must ensure that due care and diligence is taken by contractors doing work in the vicinity of telecommunication cables, to prevent cable cuts to the telecommunications network. This will be addressed by requiring detection works to be undertaken prior to actual commencement of earthworks, and by properly trained and licensed workers.

Clauses 29 and 30 of the Bill provide for IDA to license telecommunications cable detection workers. The provisions will make it mandatory for contractors who undertake earthworks to engage qualified telecommunications cable detection workers to locate the cables in the vicinity before commencing with earthworks. Contractors will be required to take due care and diligence to prevent cable cuts to the network.

Clause 29 also stipulates that contractors who fail to do so shall be liable, upon conviction, to a fine not exceeding $100,000 or to imprisonment of up to 3 years or to both. In addition, clause 30 of the Bill states that cable detection workers who are unlicensed shall be liable, upon conviction, to a fine of up to $10,000 or to imprisonment for a term not exceeding 12 months or to both.

Sir, the Telecommunications Bill sets out the regulatory framework for the efficient and effective operation of the IDA in a liberalising environment in the short term, and in a fully liberalised environment in the long term. It is the aim of the IDA to ensure that fair and market-driven competition can be introduced as early as possible, so that it will be able to regulate the industry with a lighter touch while protecting the interests of consumers.

Sir, I beg to move.

Question proposed.

Mr Chay Wai Chuen: Mr Speaker, Sir, this Bill covers a wide area, as has been mentioned by the Minister, in telecommunication services and setting out the rules and regulations for the provision of such services, the codes of practice, the offences and penalties, enforcement powers as well as the international obligations and areas of strategic interest. It vests the Authority with the exclusive privilege of operations and the provision of telecommunication systems and services in Singapore, including the power to grant licences for operations in specific areas of services. This power to license also includes the power to require licensees to share systems or inter-connection access to systems with other licensees.

The spirit of transparency and global competitiveness is quite definitive in this field of telecommunications. I wonder how will the licensees, who have certain competing strengths built up over years of market expertise, human skills or strategic investments in anticipating the market or building synergies in their own businesses, view the directions from the Telecommunication Authority, or IDA subsequently, to share their resources or competencies with other licensees on this sacred altar of transparency and inter-connection access.

Also, there is a question of national strategic interest, either in having some critical or important telecommunication systems or features reside in or belong to Singapore. It is a typical free-rider problem that one encounters often in businesses and organisations. The infrastructure is built up by the pioneer. The newcomers come to ride on the infrastructure support built up. How does one price it? By fixing benchmark market cost in equivalent features globally, or in a market asset price of the stockholding company? The danger is always there. Because of our local market limitations we may end up giving up a lot for very little.

How does the Telecommunication Authority, or IDA subsequently, make out fair compensation to such infrastructural cost and rewards for risk involved? If such compensating criteria are not well defined in advance or certain businesses are unduly or unfairly penalised by unwitting extraction of its business advantages to some other licensees, there may be reduced incentive for strategic investments and for long-term dynamic growth and development of the industry, which may therefore be affected. I hope the Minister can clarify.

The requirement in clauses 53 and 54 stipulating Government's overriding international rights is also important and very reassuring. Singapore has made its stand to fulfil its role as a responsible member of the international community, its intention to override all licensees' conduct of business at variance with such international responsibilities to which the Government is a signatory.

The intention to stipulate better telecommunication cable detection work by contractors is also most welcome in clauses 29 to 32. We all know that any damage to telecommunication cabling network costs a lot of money for the businesses affected. And the latest regulatory role of the Bill allows for this detection work by contractors and penalty fines for them are the least we can do to continue protecting our cable network.

Assoc. Prof. Toh See Kiat: Mr Speaker, Sir, I rise to support this Bill. The first thing I would like to say is that the Bill is timely and we have debated on the Info-communications Development Authority of Singapore Bill, and we realise why we have to do this.

The first point that I raised earlier on in the debate on the Info-communications Development Authority of Singapore Bill, and now under this Bill, is that in clause 2, there is a definition of "TAS". Here, my argument is even stronger than earlier. It says, ""TAS" means the Telecommunication Authority of Singapore reconstituted by the repealed Act;" My question earlier on and my question now is: how can an Authority be reconstituted under a repealed Act? I believe the words should have been better put as, ""TAS" means the Telecommunication Authority of Singapore formerly reconstituted under the repealed Act."

My other more substantial point relates to clause 4. Under clause 4, the monopoly given to the licensee is excepted in that if "a person runs a telecommunication service solely for his own use or solely for the purposes of his business . on a single set of premises in single occupation;" Those are the words in the Bill. This would mean that the exception to the monopoly privilege will not cover, it seems to me, a world-wide or even a nation-wide corporate intranet. It is within one company, but it seems to fall outside this and therefore there is an infringement.

The other possibility is that if we have a private network in an intelligent building, it could be one premise, if you see it that way, but there are many occupiers and therefore even though they should not be regulated by the Act, it appears that they will be. I wonder if this is intended.

Sir, moving on to clause 33 of the Bill, this is the beginning of the offences and penalties (Part VI), and I believe clause 33 can be read too widely. The clause, as it stands, would seem to require operators of e-commerce businesses which would happen to be riding on an ISP, a licensed ISP at that, to be licensed too. And I hope this would not happen because otherwise, as could be possible, portals like Yahoo and e-mails like Yahoo.com or hotmail.com, or the chat rooms that are set up under e-commerce shopping malls, or perhaps on-line stock trading services - these may all come within the licensing provisions of the Bill. If there is no licence, then it would be illegal, and this would hamper a lot of e-commerce.

Further, I do believe that we need to clarify whether technologies used by companies like MediaRing and Net2 Phone would be similarly telecommunication systems that need to be licensed, because they breach the monopoly privilege of the licensee. So we do hope that the Minister would clarify this and, if necessary, this could be done in the regulations under the Bill.

Moving on to clause 35 again, I have a clarification. Clause 35 is an offence clause which penalises those who operate a radio communication system or service, and if you do not have a licence, it could well give you penalties under this clause. My question is: would an Internet radio service, which could eventually also be wireless, be covered under this clause? If so, then it should be excluded.

Next, my point is on clause 41 and perhaps the clauses after that, clauses 42 to 48 which deal with the interception of telecommunication services and such offences. Looking specifically at clause 41, I regret that this is perhaps not wide enough to cover and protect against electronic snooping which does not touch, tamper, remove or damage any installation or plant under this clause. Certainly, if you were to use current technology to intercept mobile phone messages, it would really not be touching, tampering, damaging or removing any installation or plant under the Telecommunications Bill. Consequently, it could be read as a lacuna in the law because we prohibit people from intercepting messages only if it touches the line or the plant or the installation of the Telecommunication Authority but not if they are clever enough to avoid all these. Sir, I would like the Minister to clarify on this point.

Other than that, Sir, I support the Bill.

Mr Simon Tay: Mr Speaker, I have not intended to speak on the Bill which I generally support. I would like, however, to raise three points for the Minister's clarification.

The first two relate to the Minister's comments on the need for transparency to ensure that anti-competitive measures are struck down and that the new authority will regulate with a lighter touch. In this regard, my first two points relate to the right of appeal and to the question of transparency. It seems to me that the rights of appeal are limited to the Minister. Then, obviously, the reasons for the Minister's decision and the hearings will not be public, and this may not be best practice as regards transparency. Public hearings might be better.

The second relates to clause 28(3)(b). Clause 28(3)(b) allows in respect of advisory guideline wherein the authority simply must "publish each advisory guideline in the way it thinks fit". Again, if we are to take best practice transparency seriously, surely public publication either in the Gazette, as with all other laws or regulations, should be the bare minimum and not "in the way it thinks fit".

My third point relates to a different issue, and this of course is the relation of international rights to the right of the licensees. Sir, this Bill is taking part in a very dynamic situation in which international negotiations under the umbrella of WTO are opening up and other sectors. There will be an effect on licences. It could be a question of vested rights, a licence already given is then in some way compromised. I would like the Minister's assurance that consultations will be held with licensees prior to these international negotiations that might affect them.

Mr Yeo Cheow Tong: Mr Speaker, Sir, first, let me thank the three Members who have spoken up in support of the Bill.

Sir, I will take the points brought up by the speakers one by one.

First, let me deal with Mr Chay's comments. The first point he raised was about requiring the existing licensees to share their facilities and he asked how would the licensees view the directions from the regulator for them to share their resources. Sir, as I pointed out earlier in the session on Questions for Oral Answer, tough decisions have to be made and it is very difficult to make all the licensees happy. Of course, those who have been adversely impacted will not be very happy. But the key thing is for us to ensure that the regulatory framework is one which is fair and transparent, so that no one feels that they are being discriminated against or they are being taken advantage of. We have to ensure that there is no free rider. That is one of his main concerns - that new companies will come and free ride on what has been put in by the existing companies. So there will be no free riders. All the services will have to be negotiated. All the interconnections will be negotiated at a price agreed upon.

Sir, let me stress that the regulation and liberalisation of the telecommunications sector is not unique to Singapore. Because the telecommunications sector is so vital to the efficient operation of the entire economy, many countries have, in fact, actively proceeded even before us, to open up their telecommunications sector. Therefore, many of the interconnect practices and requirements have already been fairly well established.

Why do we need to have the interconnect facilities? In a multi-operator environment, we need to ensure that consumers are able to enjoy seamless and transparent services and that the service providers are able to share scarce infrastructural resources on commercially agreed upon terms. For example, it would not make economic sense nor will it be in our national interest if SingTel subscribers are not able to phone subscribers of M1 handphones and vice versa.

Interconnection and access therefore is vital in a competitive multi-operator environment, so that the customers can have a choice of service providers and they can seamlessly and transparently contact and communicate with anyone they want. In the area of infrastructure sharing, we will only direct sharing where there is a real bottleneck situation. For example, all the mobile phones and paging operators are required to share the infrastructure to provide radio coverage in the MRT and our city tunnels, given the sheer lack of space and the operation constraints in these tunnels. The IDA will only issue directions after careful assessment of the circumstances requiring sharing.

On interconnection and access, IDA's requirements for the operators to have interconnection and access obligations are very similar to what other countries are practising, because we have taken the opportunity to learn from them.

Mr Chay also raised his concern whether we will actually be giving up a lot for very little. In actual fact, we are giving out very little to gain a lot. Because the telecommunications infrastructure is a very fundamental infrastructure for the entire economy. By making sure that we are able to liberalise and introduce competition, our rates have been steadily declining. And as a result, I think it has been a boost to many parts of the economy, especially companies that are engaged in international trade and companies which have very heavy data flow between Singapore and their offices in the region and elsewhere.

Mr Chay also asked whether by having the interconnection requirements, we will reduce incentives for strategic investments. As I pointed out just now, if there are strategic investments that are required but which are only marginally viable, we will be very happy to take a look and co-fund those investments, if they are in the national interest. On the other hand, by making sure that we are able to introduce competition, I think this forces the companies to innovate to provide more value-added services and therefore increase their own viability. I think as a result of that, we have in the last 18 months or so been seeing the introduction of numerous new services, all of which add to the bottomline of the operators.

Sir, he has also agreed with our requirements for contractors to employ licensed cable detection workers. I thank him for his support.

With regard to Prof. Toh's point on the definition of "TAS", in clause 2, I have asked and I was told that the formulation of the words is correct. But, again, as was pointed out earlier on, I will also seek further advice on this from the AG's Chambers.

Clause 4 only applies to equipment which is on a single set of premises in single occupation. He asks whether this is deliberate, because it seems to rule out quite a few other situations, for example, companies with multi locations within Singapore which seek to set up their own national Intranet as well as bigger buildings where there are multiple occupants. Sir, the scope of the definition is indeed an intended one. For the case of one user, many premises, the national Intranet situation that he talked about is that the company should take telecommunication services from a public basic telecommunication service provider who then has certain rights to either enter the land for installation and to repair and also to be able to extend the network beyond the boundaries of one particular property owner. So it is intended not to apply to such situation.

In the case of one premise, many users or occupiers, the smart building that Prof. Toh was talking about, this would be the provision of telecommunication services to third parties, as the users and occupiers are not related but just happened to be in the same building. And therefore such potential service providers should actually obtain a licence from IDA.

Sir, he touched on clause 33 and asked whether this requires e-commerce operators riding on licensed ISPs to be licensed, and he mentioned companies like Yahoo, Chat Room facilities, Media Ring and Net2Phone. In fact, clause 33 is not a new provision. It is an existing provision in the current TAS Act. TAS to-date, in fact, does not license any content or Internet service provider. So portals like Yahoo, free mails given by them, and Microsoft, and Media Ring and Net2Phone are, in fact, already not required to be licensed. The other thing is that Media Ring and Net2Phone actually do provide a service. They provide software or equipment to Internet subscribers, and being not service providers themselves, they do not require to be licensed.

He talked about clause 35 - whether service providers who are providing radio service through the Internet need to be licensed. Sir, the answer is yes. Any equipment intended for wireless transmission, regardless of the content to be transmitted, needs to be licensed by IDA. The reason for this is very simple. This is to ensure that the operation of such equipment does not cause interference to any other wireless services or equipment.

Prof. Toh commented that clause 41 is not wide enough to cover against, for example, electronic snooping. Clause 41 has a very clear intention. The intent is to protect the telecommunication's installation of plant or the public telecommunication licensee from damage if someone in the course of trying to intercept messages or to commit mischief damages or tampers with the installation or plant. It is not meant to cover or to protect against electronic snooping or unlawful interception. I believe that one of the reasons is that now mobile telephony being encrypted is quite difficult to snoop into versus the old analogue system where actually it is like a radio station where you can just tune in. The new GSM and CDMA systems are encrypted and each generation of new phones involves even stronger encryption and therefore it is now proving to be quite difficult for people to just snoop into such transmissions.

Mr Simon Tay commented that while we are talking about transparency and the need to act against anti-competitive practices, the rights of appeal are quite limited and the rights of appeal have to be made to the Minister. The reason for this is that in many cases, the information contained in those appeals are highly sensitive commercially and therefore it is not appropriate for those appeals to be heard openly because it will mean divulging commercially sensitive information. In any case, if such information is not commercially sensitive, if need be, we will be very happy to let the companies publicise the decisions. In any case, the appellants are normally heard by the Ministry as well. Whilst the case may not be heard in the open, they have the ability to make their case heard very clearly by the Ministry and Minister.

He mentioned about clause 28(3)(b) where the Authority must publish each advisory guideline in the way it thinks fit. Mr Simon Tay feels that it should be gazetted. Sir, to be published "in the way it thinks fit" leaves the flexibility to the Authority to publish the advisory guidelines. Today, there are many, many channels. For example, TAS now posts many of the requirements and policies on the Internet. So rather than restrict it to only one medium, it is better that we leave the flexibility to the IDA to publish those guidelines. The key thing is that those guidelines would be published. But let us give it the flexibility to choose the medium or better still the media in which to do so.

Mr Speaker: Order. Mr Yeo, can you allow Mr Wong to move the exemption motion first.