TELECOMMUNICATIONS (AMENDMENT) BILL

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TELECOMMUNICATIONS (AMENDMENT) BILL: Order for Second Reading read.

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The Senior Minister of State for Information, Communications and the Arts (Dr Balaji Sadasivan): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Telecommunications Act governs the regulation of the telecommunications sector in Singapore. It provides, amongst others, for the Infocomm Development Authority (IDA) to grant licences, issue directions, codes of practice and standards of performance in connection with the operation of telecommunication systems, provision of telecommunication services, and the conduct of telecommunication licensees. The Telecommunications Act, together with these other instruments, allows the IDA to establish a robust regulatory framework to encourage and promote a vibrant and competitive telecoms sector.

Since the Act was last reviewed in 1999, there have been changes and developments in the telecoms industry. The telecommunications market was fully liberalised in April 2000. Today, there are a large variety of operators offering a wide range of telecommunication services, albeit in varying degrees to the different market segments.

The proposed amendments, Sir, are a result of a comprehensive review of developments in the telecommunications sector, and practical experience from regulating the sector in the past five years. We have sought to ensure that the Telecommunications Act remains relevant to the industry today, and have taken into account best practices in benchmark jurisdictions like Hong Kong, Australia, the UK and the US. As part of the review, a public consultation was conducted on the proposed amendments to the Telecommunications Act in July last year.

I will now go through five main proposed amendments to the Telecommunications Act.

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Control, consolidation and acquisition of telecom licensees

First, the control of telecommunication licensees. Mr Deputy Speaker, Sir, telecommunication licensees are currently governed through licence conditions and provisions in the Telecom Competition Code. These conditions, some of which require the IDA to pre-approve every ownership change in licensees, were developed to address control of privately-owned licensees.

However, such requirements are not practical for licensees that are publicly traded. Clause 19 introduces a new Part VA to the Telecommunications Act to govern control of telecom licensees. The proposed amendments include a notification threshold at 5%, and approval thresholds at 12% and 30% where certain designated licensees are required to notify, or seek the IDA's approval for ownership changes.

In proposing these thresholds, MICA took into account precedents in other statutes. The notification threshold at 5% is based on the definition of "substantial shareholders" in the Companies Act. The 12% approval threshold is consistent with legislation, such as the Banking Act, and the 30% threshold is consistent with the 30% voting control level under the MAS Take-Over Code at which a person will be required to make a general offer for a public company.

The new Part VA will also give the IDA powers to institute disenfranchise mechanisms if ownership changes of these designated licensees raise regulatory, competition or public interest concerns. The designated licensees will be required to seek the IDA's approval for the appointment of key management positions. The IDA will also be empowered to obtain information on shareholdings of the designated licensees. Clause 29 also introduces a new section

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69B which empowers the Minister to order remedial actions to be taken where a person acquires the assets, business or shares of a telecommunication licensee if the Authority has concerns as to whether that person is a fit, or proper person, or national interest concerns.

Sir, these amendments streamline the regulatory requirements governing control and allow day-to-day trading to proceed unless the stated thresholds are reached. They will also prevent transactions that are likely to substantially lessen competition in the telecommunications market, or that are against national interest.

Sharing of telecommunication infrastructure for broadcasting services

Second, the sharing of telecommunication infrastructure. Sir, the Telecommunications Act currently allows the IDA to direct a telecommunication licensee to coordinate and cooperate with any other person in the use or sharing of telecommunication infrastructure. With the convergence of technology platforms, infrastructure originally intended for providing telecommunication services are increasingly being used for broadcasting services. There is a need to ensure that there are sufficient and clear regulatory powers to deal with the sharing of telecommunication infrastructure in these cases.

Clause 16 will thus amend section 27 of the Telecommunications Act to state explicitly that the IDA can also give directions to telecommunication licensees to share their infrastructure for the provision of broadcasting services. In addition, clause 32 introduces a related amendment to the Broadcasting Act to empower the Media Development Authority to direct a broadcasting licensee to coordinate and cooperate with a telecommunication licensee in the use of

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the latter's infrastructure where such cooperation is necessary for the provision of broadcasting services.

Provision of space for telecommunication equipment

The third issue relates to the provision of space for telecommunication equipment. Most buildings in Singapore have space set aside for the purpose of installing equipment to provide telecommunication services to that building. However, there may be cases where insufficient space has been set aside within the building for this purpose. To facilitate network roll-out and ensure that telecommunication services can be provided to every building, there may be cases where space and facilities in certain buildings have to be used to service neighbouring buildings as well. For example, in some pre-war shophouses, there is no equipment room space to accommodate equipment for providing broadband services and it would be necessary to install the equipment in another building in order to provide broadband services to these shophouses. Clause 12 amends section 21 of the Telecommunications Act to allow IDA, where the matter has been referred to IDA, to give directions, where reasonable, to building owners and licensees for the installation of equipment in one building to provide telecommunication services to another.

Safeguards have been put in place to ensure that such directions can only be given, where reasonable, and only in relation to space that has already been set aside for telecommunication equipment.

Penalty framework

Several amendments have also been proposed to strengthen the penalty framework in the Telecommunications Act for effective regulation and enforcement.

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Clause 6 introduces several new conditions under which the IDA can suspend or cancel a licence, including situations where a licensee has gone into liquidation, is no longer able to comply with its licence conditions, or in the public interest. These amendments have been proposed in light of IDA's experience over the years. For example, IDA has previously encountered cases during the economic downturn where licensees went into either forced or voluntary liquidation and were not able to continue their telecommunication operations and services.

Amendments have also been proposed to increase the penalties for offences. Clause 6 increases the penalty for non-compliance with a written order to rectify a breach of licence condition, code of practice or standard of performance or direction, from a maximum fine of $10,000 to $100,000, in addition to a maximum jail term of 3 years. Clause 28 provides for an additional fine of up to $1,000 a day for every day that an offence continues after conviction. In addition, clause 27 increases the composition sum in the Telecommunications Act from $1,000 to $5,000.

Reconsideration and appeal process

Fifth, the avenues of recourse against the IDA's decisions in the Telecommunications Act. Under various sections of the Telecommunications Act today, parties aggrieved by the IDA's decisions may appeal to the Minister as provided for in the Act. Clause 29 introduces an option for aggrieved parties to ask the IDA to reconsider its decision. I would like to stress that this is an additional avenue of recourse for aggrieved parties. They would still be able to appeal to the Minister as provided for in the Act, instead of asking for reconsideration from IDA.

In addition, clause 29 adds some provisions to detail the appeals process,

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such as the requirement for an appeal submission to state as concisely as possible the grounds of appeal, and the power for the Minister to request for information which may be relevant to the appeal. This will allow appeals to the Minister to be considered holistically and expeditiously.

Conclusion

Sir, in conclusion, let me say that these amendments, while fairly technical, are necessary to refine the Telecommunications Act to ensure that the legislative provisions are clear and sufficient, and remain relevant for the regulation of a fast-changing telecommunications sector.

Sir, I beg to move.

Question proposed.

Mr Zainudin Nordin (Bishan-Toa Payoh): Mr Deputy Speaker, since the last review of the Telecommunications Act (TA) done in 1998 and 1999, there have been many structural and environmental changes faced by the telecommunications industry in Singapore and globally.

This review is very timely, as there has been no review since the telecommunications market was fully liberalised on 1st April 2000. Currently, we can clearly see that there are numerous operators or licensees offering a myriad of telecommunication services targeted at the different market segments and niches. The revision is necessary to identify and address the issues arising in an increasingly competitive multi-operator, multi-network marketplace. The revision has also been designed to align and incorporate the upcoming regulatory changes in the proposed Telecom Competition Code 2004, Telecom Consolidation Guidelines and the Competition Bill.

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I would like to congratulate and thank the Ministry of Information, Communications and the Arts, IDA and the other relevant stakeholders in the industry who have participated in the review to ensure that the Telecommunications Act is updated and, progressively, will continue to remain relevant while carefully considering the new market conditions and realities in a fast changing industry.

To start, I would like to touch on some of the more consequential developments or amendments on the Bill. Firstly, power to grant spectrum right. This provision in the TA empowers the IDA with the express power to grant, vary, suspend or cancel spectrum rights. However, Sir, to remove any uncertainty and provide some comfort to licensees who have paid a substantial amount to secure spectrum rights and licence, it would be good that any change or variation would be expressly subject to reconsideration and appeal under section 69.

Secondly, suspension or cancellation of licence. This amendment will allow the IDA to suspend, reduce, restrict or cancel the licence granted based on a widened scope and category of cases and without any compensation. However, the authorities should take into consideration the heavy capital investment in both infrastructure and licence fees upfront payment. There should be some consideration for the cost recovery by the licensees. In this respect, may I propose that this section be amended to allow licensees to dispose or sell the licence to another party if all the conditions to own the licence are satisfied by the buyer.

Thirdly, removal or alteration of installation or plant for telecommunications. At the request of the property owner or developer, the public telecommunication licensee shall make reasonable alterations or relocations of telecommunication installation or plants. Sir, the term

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"reasonable" here is ambiguous and can be potentially contentious. We should clarify what it means to be "reasonable" and provide real situation examples. There should also be some guidelines with regard to the terms and conditions that the licence can impose, especially with regard to the relocation cost or compensation. Once some clarity is provided, we can avoid stalemates between the property owner, developer and public telecommunication licensee.

Fourthly, provisions of space or facility or installation, plant or system by direction of Authority. To enhance street level and in-building service and coverage, developers may be directed to provide space and facilities in certain buildings to install telecommunication equipment when the authority considers it necessary. Again, here, it would be helpful if land owners can understand the conditions that may lead to such a situation. In addition to this, we should provide assurance that the authority involved is properly advised and technically competent to make such assessment. Can the claims be disputed? These are just a few questions that may arise from some of the quarters.

Wherever possible, the telecommunication licensee should install their equipment in the main distribution frame room so as not to tarnish the aesthetics of a building and deprive the developer or owner of valuable space. This would also provide a secure space for the equipment. This provision should also be applicable to other commercial and public spaces, for example, the MRT lines, expressway tunnels and underground shopping centres. In addition to the IDA's role in limiting the amount of space that may be used, IDA should also be empowered to set limits to rentals for equipment room space based on independent assessment

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of the market rental. This would ensure that transactions that take place between the property owners and the telecommunication licensees are at arms length and would not disadvantage either party.

Fifthly, codes of practice and standards of performance. This provision expands the scope of matters for which the IDA may issue a code of practice. As failure to comply to a mandatory provision in such a code of practice is an offence, the authority must ensure that the notification be made as accessible as possible. Any major change in the codes of practice and standards of performance should seek public comment and industry stakeholders' feedback. This would foster transparency in the changes or modifications made to the codes and encourage buy-in from the relevant parties.

Mr Deputy Speaker, Sir, any exemption granted to parties under section 26(5)

should be made known to all parties, to prevent exploitation and avoid the appearance of giving preferential treatment to a specific party. If we fail to control the granting of exemptions, we may end up with an environment with differing values of standards and quality. This is one rojak that we would like to avoid.

In closing, Sir, it is my belief that the proposed amendment has identified the gaps and made marked improvements and updates in the provision of the Act. As there are revisions and new provisions being introduced, the Authority must help clarify the few ambiguities present in the amended Act. With greater empowerment of the IDA, it must move as a proponent of the industry and be transparent and flexible enough to allow for changes in the fast-paced and liberalised telecommunications industry.

Mr Deputy Speaker: Order. I propose to take the break now. I suspend the

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Sitting and will take the Chair again at 4.05 pm.

Sitting accordingly suspended

at 3.45 pm until 4.05 pm.

Sitting resumed at 4.05 pm

[Mr Deputy Speaker in the Chair]

TELECOMMUNICATIONS (AMENDMENT) BILL: Debate resumed.

Mr Low Thia Khiang: Mr Deputy Speaker, Sir, I refer to the new section 5(a), subclause 4, in which it says: "No person shall question whether the grant of a spectrum right under subsection (1) was, or was not, effected with the consent of or in accordance with the terms of a general authority given by the Minister, and the validity of a spectrum right granted under that subsection shall not be impugned on the ground that it was granted neither with the consent of nor in accordance with the terms of a general authority given by the Minister."

Sir, I would like the Minister to clarify what is the intent of this clause because, as I read it, I wonder why is it necessary to prevent people from questioning the grant of a spectrum right, as what the clause said: "No person shall question...", and whether this clause means that the authority - in this case, I suppose it is the IDA - does not need to account for or to justify the grant of a spectrum right. That means they can do what they want without the need to be accountable, and "no person shall question" them, as this clause says. Can the Minister clarify?

Dr Balaji Sadasivan: I thank the hon. Members, Mr Zainudin Nordin and Mr Low Thia Khiang, for the points that they have

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raised with regard to the amendments of the Telecommunications Act.

The first point raised by both Members was with regard to new section 5A, which is the power to grant spectrum rights. Mr Zainudin had expressed the view that any use of section 5 be subject to appeal under section 69, and Mr Low Thia Khiang had asked whether anyone can question the Minister.

Mr Deputy Speaker, Sir, first of all, the powers for the IDA to grant, vary, suspend or cancel spectrum rights exist today in the Telecommunications (Radio Communications) Regulations. So, section 5A provides express powers in the Telecommunications Act for legislative neatness. It is not a new power that IDA is acquiring as a result of amendments to the Act. Frequency spectrum is a national asset and, therefore, IDA has a right to grant spectrum in a manner that protects national interests. However, that does not mean that a person cannot appeal against any decision that the IDA makes because, with regard to appeal, under section 69, telecommunication licensees may appeal against any of IDA's decisions, including IDA's decisions to change or vary their spectrum rights. Non-licensees, such as those applying for spectrum rights, may also appeal against IDA's decisions under section 5A. These appeal channels are provided for in section 69(1) and (2). So, section 5A should be read in conjunction with section 69.

Mr Zainudin's second point was with regard to section 8, ie, the suspension or cancellation of licences. He proposed that this section be amended to allow licensees to dispose of or sell the licence to another party. Mr Deputy Speaker, Sir, section 8 does not prevent a licensee from selling or transferring his licence, if it is allowed under the terms of the licence and subject to IDA's approval. The expanded scope for which IDA can suspend or cancel a licence is for

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situations where the licensee has gone into liquidation, is no longer in a position to comply with his licence, or it is in the public interest.

The hon. Member's next point was with regard to section 17(2), which was the relocation of telecommunication equipment. He wanted clarification on what were considered reasonable alterations, and on guidelines for the terms and conditions that could be imposed in a dispute between a property owner and the telecommunication licensee. What is reasonable in a dispute must depend on the facts of each case. For example, there may be a case where the property owner or developer may desire the relocation of an installation simply because he feels that it is more aesthetically pleasing to him. In another case, the owner or developer may want to relocate the installation in order to be able to redevelop the land into usable housing space. It may probably be reasonable for the licensee to relocate the installation in the latter case, but not the former. As it is not possible to prescribe and cater for each and every possible circumstance in legislation, what would be considered reasonable in each case would be a matter best left to the court to decide upon, if the parties are unable to agree on their own.

As for what would be considered reasonable terms and conditions, some form of guidance is already provided for in section 17(3). The effect of section 17(3) is that it would be reasonable, as a starting point, for the licensee to require that the property owner or developer bear the full cost of alteration or relocation of the installation or plant in the absence of factors dictating otherwise. Beyond that, the reasonableness of the terms and conditions imposed by the licensee would depend on the facts of each case. What

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is ultimately deemed to be reasonable in each case is again a matter best left to the court to decide upon, if the parties cannot agree on their own.

The hon. Member's next point concerns section 21(1), the provision of space or facility or installation, plant or system by direction of the Authority. There are three issues raised with regard to this section:

(1) When would it be considered necessary for telecommunication services to be provided to any building or land;

(2) The location where telecommunication equipment should be installed; and

(3) The ability of the Authority to set rental limits.

On the first issue, whether it is necessary for any given telecommunication service to be provided to any particular land or building would very much depend on the regulatory policies in force at that time. For example, it is currently a regulatory policy that basic voice services are available to all who request them. As such, if there is currently insufficient space set aside in a particular building for the installation of equipment to provide basic voice services, then the Authority may require that the owner of that building provides the necessary space. However, as regulatory policies would change from time to time in order to cater for the changing telecommunication environment, it is neither desirable nor feasible to legislate strict criteria for the assessment of necessity. Because of changes in technology, what is a necessity today may not be a necessity tomorrow. As a safeguard, however, any decision of the Authority as to the necessity of providing telecommunication services under the revised section 21 can be appealed to the Minister. This is already provided for in the revised section 69.

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On the second issue, the location of installation of equipment, the Authority has issued a Code of Practice for Info-communication Facilities in buildings (COPIF). The COPIF dictates, among other things, the specifications of the space and facilities to be provided by building owners for the installation of telecommunication equipment within their buildings, as well as the use of such space and facilities. The Authority is currently reviewing the COPIF, and will shortly carry out a separate public consultation on its proposed revisions of the COPIF.

On the third issue, the ability of the Authority to set rental limits, the revised section 21

already provides that the Authority can direct that the telecommunication licensee contributes to the cost and expense of the provision of the space or facilities in question as well as any other requirement that the Authority may specify. This would include the setting of rentals for the use of the space where appropriate. If the Authority sees fit to set such rentals, then it would, as a matter of course, take into account appropriate factors for determining the quantum of the rental, including the current market rental for similar space in similar buildings.

The hon. Member's next point was with regard to section 26, the codes of practice and standards of performance, and in particular, the granting of exemptions. He asked for transparency of the process. We agree with the Member on the need for transparency and consultation with the industry. IDA will consult members of the public and the industry on major changes to the codes of practice. As an example, IDA conducted two public consultations on the proposed amendments to the Telecom Competition Code last year. Exemptions may be granted for licensees or persons to be exempted from some provisions in the codes of practice. IDA will assess each

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exemption request to determine if the exemption can be granted in line with IDA's regulatory principles. Where exemptions have significant impact on the sector, IDA will generally consult on the proposed exemptions before reaching a final decision. For example, licensees classified as dominant may apply to be exempted from certain dominant licensee obligations imposed on them under the Telecom Competition Code. IDA will undertake a vigorous study and assess the exemption application as well as the state of competition in the market. IDA will base its decision on its assessment as well as comments received from the industry through public consultation. Codes of practice and exemptions will be published appropriately, such as on the IDA's website or in Government Gazette .

Mr Deputy Speaker, Sir, I thank the Members for the points raised. Sir, the amendments to the Act are fairly technical, but they are needed in order to keep the Act relevant to the fast changing telecommunications sector. It also keeps pace with the convergence of technology between the telecommunications and the broadcasting sectors.

Mr Low Thia Khiang: Sir, on a point of clarification. The Minister said that new section 5A(4) should be read together with the other sections. If the aggrieved parties who are affected by the grant of spectrum rights are allowed to appeal, why is there a need for this section to state that no person shall question whether the grant of spectrum right was, or was not, effected with the consent of or in accordance with the terms? What is the difference between these two when they appeal?

Dr Balaji Sadasivan: Mr Deputy Speaker, Sir, this is a question of legal drafting. Under subsection (4) that he mentioned, you cannot question the validity of a spectrum grant but you can

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appeal to the Minister if you think that the decision should be reconsidered.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Balaji Sadasivan].

Bill considered in Committee.

[Mr Deputy Speaker in the Chair]

The Chairman: The citation year "2004" will be changed to "2005" as indicated in the Order Paper Supplement.

Clauses 1 to 32 inclusive ordered to stand part of the Bill.

Bill reported without amendment, read a Third time and passed.