The Chimera of the Triple Zero Custodian

The Minister for Communications today introduced the Telecommunications Legislation Amendment (Triple Zero Custodian and Emergency Calling Powers) Bill 2025 into the Parliament. That this Bill has been introduced some 15 months after the Government response to the Bean report agreed to the recommendation to establish a Triple Zero Custodian noting it was "subject to further investigation and consultation".

The Government has been criticised for this being a slow response. The realities are that the Communications Minister struggles to get any space on the legislative agenda, which includes the time of Parliamentary Counsel. As an example, the Bill to legislate a service provider registration scheme was introduced in August this year, it was included in the legislative priorities list (low priority) when Conroy was Minister. So this response is about ten times faster.

But what do we get for our buck here? Well clearly we get a Triple Zero Custodian. But that is mere smoke and mirrors because in the Bill we find that the Triple Zero Custodian will be the Secretary! 

So there is no new function here. What we do get is a whole lot of extra powers given to the ACMA and a power for the Secretary to direct the ACMA in the exercise of those powers. Progressively the ACMA isn't an independent regulator charge to deliver outcomes, it is just an extension of the Department. Added to that is that since the Turnbull Government the old Department of Communications (under various names dating back to the Post-Master General in 1901) got merged into the Department of Infrastructure etc.

I worked with Richard Bean at Unwired. He is a sound lawyer. He was apponted to be Deputy Chair at the ACMA, but primarily on the strength of his background in television not communications. I admit I have not read his report on the 2023 Optus issue. I assumed, perhaps cuynically, that calling for the report was a classic case of the Minister needing to be seen to be doing something.

Now let's ask one simple question. How would any of the legislation have affected the latest issue?  

If Optus is to be believed, and I have no reason not to, the short answer is 'probably not much'? The Triple Zero call failure came about because of a botched network upgrade in which the Optus employees did not follow the company's own procedures, which included testing Triple Zero.

No amount of extra reporting requirements, investigation powers, or other powers given to a group of people who do not and have not actually run a telecommunications carrier can change the simple fact of an employee not doing what they are supposed to. Well, actually more than one, because call centre staff failed to escalate complaint calls.

Enhanced monitoring at the 000 answering point to monitor traffic could, arguably, have identified a statistically anomolous drop-off in call volumes and further identified this as being from Optus mobiles. But this doesn't avoid the problem occurring and like all regulation winds up generating a false sense of security. Why should Optus bother making their test calls if the Triple Zero service will do it for them.

And what of the Minister's actions of calling in the CEOs of the three mobile carriers? What does this do other than blur in the public's minds exactly who is responsible. The Minister has, unwittingly, reduced the comparative reputational damage that Optus will suffer. The public hears 'all telcos suck' rather than 'Optus sucks.'

The Bill does nothing at all to increase the consequences for a carrier (or its employees) being negligent with respect to their Triple Zero obligations. A serious response would be to start introducing something like the points system for a driver's licence with the same potential consequences. 

It doesn't help that well-meaning journalists pontificate on the idea that the Triple Zero service was built for 1960s phones and question whether it can cope with reality in 2025. The number was chosen in conjunction with the Community Telephone Plan in 1960 (see section 8). This plan introduced the dialling plan for direct dialling of national trunk (long distance) calls. '0' was the first digit dialled to get you out of the local exchange, and the ranges starting '00' and '01' were for service calls - other than '002' to '004' for Tasmania. The idea that the 000 number was chosen because it was easier to find the zero on the rotary dial is mentioned as only the third of the considerations in the choice of number in the ACMA's own history of the service.

So far we only know that there were deaths associated with failed calls, not whether the inability to reach Triple Zero contributed to that outcome. This was not the case back in 2002 in what was known as the Boulding case. That case revolved around a fixed line outage that meant the family could not call anyone when their child suffered a severe asthma attack. 

The review found Telstra had not breached any of its universal service obligations, so the outcome was a whole new layer of regulation to create a categoty of priority customers for fault restoration. Policy makers and advocates need to remember that the entire cost of any new regulation falls on consumers, not telcos or their shareholders. If Government thinks they need to control the minutiae of telco operations, then renationalise the industry. If they are concerned about the operation of  Triple Zero, take responsibility for the service rather than contracting it out.

Meanwhile all the blather about Triple Zero has been framed as preparation for summer and trying to guarantee that Australians can rely on the service through natural disasters. The reality, however, is that the greatest risk to connecting to anything from a mobile phone remains loss of power to base stations. The policy of encouraging tower sharing, especially in regional areas, means there isn't as much routing diversity as might at first seem.

The Triple Zero Custodian legislation seems to be the antithesis of the Government priority on growth through cutting red tape. It is a layer of new powers that would have made little to no difference in the Optus case and will make little or no difference in natural disasters. It is the epitome of a Minister needing to be seen to do something (in response to a feview commissioned by a Minister needing to be seen to do something). 

Note: The emergency calling number designed into mobile network operations is 112. The ability to make calls to 112 over other carriers networks is a core part of the design standards. When the first digital mobile phones (GSM or 2G) were launched in Australia regulators made the decision to require the same functionality apply to 000 instead of educating Australians of the 112 code from mobiles. I suspect, but do not know, that calls to 112 from Optus mobiles would have successfully connected during the outage. Further note that the Telephone Numbering Plan 2025 shows the 112 code as being unused, in other words we could fully enable 112 as an alternate calling number on all networks. 

*********************************
Life is what happens while you are busy making other plans JWL

It is time for real eform of retail electricity markets

In his opening address to Energy Week today, Chris Bowen has announced planned changes o the Default Market Offer to make it a price cap on all offers. Today, he argies, it usually only works as a benchmark. He observed 'The vast majority of billpayers, some 80%, could be getting a better deal. It’s difficult to defend the DMO, when the customer is required to do the deal hunting.'

Fiddling with the DMO is not the solution. The fundamental flaws in the design of retail markets needs to be addressed.

The biggest myth of energy reform in Australia is that 'retail competition' was introduced in Australia. In a system with retail competition purchase decisions made by consumers have an influence over the price and quantity of electricity dispatched. 

The choices consumers make of their retailer has no impact on wholesale prices. These are entirely determined by the amount of energy that AEMO decides it needs to purchase in any five-minute interval. This price is virtually independent of any willingness to pay by consumers.

Residential, and most business, consumers can be divided into two groups. The first and smaller group is those consumers who have some capacity to adjust their consumption based on wholesale market prices. These consumers, working individually or through aggregators, have the ability to influence wholesale prices.

The remaining consumers have no impact on wholesale prices. Allowing these consumers to have a choice of retailer achieves absolutely no positive economic benefit. Indeed, the impact is entirely negative as it generates retailer costs in competition. Increases in these costs are a major contributor to the most recent increase in the DMO. That this aspect of retail competition has no benefit is reflected in the Minister's plan for 'stripping out the DMO’s competition allowance.'

There is a better way that utlises the concept of competition for the market rather than competition in the market. I outlined this in more detail in my NEM Review submission under the heading 'Making retail markets work for consumers'. The position is simply that rather than requiring all retailers to offer a standing offer for when they are the default provider for a connection point there should be only one default retailer. Anyone who chooses not to choose a market offer from a retailer is placed on the standing offer of the default retailer.

The default retailer is chosen by competitive auction every three or five years where the bid price is the retail margin the bidder requires to be the default provider. Rather than a regulator deciding what is an appropriate retail margin, the market bids for this to be the lowest margin. As this margin applies to the default operator only, there is no competition cost included in the margin.

This not only reduces prices for the consumers who 'choose not to choose', it also focuses retailers who compete for customers to compete on the basis of how they help those customers to use the tools available to them to reduce the wholesale cost of energy they consume.

An additional reform can and should occur in the way distribution network costs are recovered. The distribution networks were initially constructed to provide public lighting. The use of the networks to provide residential services is a marginal use and households should only face this marginal cost.

This means that the cost of operating a distribution network to only deliver public use services (street lights, traffic lights, powering NBN cabinets) should be estimated and billed as a lump sum to the relevant Local Council. The Council should recover these costs in land rates. The idea of recovering the fixed costs of utilities through taxation goes back to a paper by Hotelling in an article that suggests utility rates should be set equal to marginal costs which are always less than average costs, and so the residual cost should be recovered from taxation. 

This concept sparked what is known as the Marginal Cost Controversy. Ronald Coase argued that the 'correct' solution to the problem was two part tariffs, which is what we see in electricity today. However, in doing so Coase ignored some important issues of equity. Recovering fixed costs through land taxes levies the cost dispropprtionately on the well off, it is a progressive tax. More importantly, if one property is worth more than another it is possibly because of a wider steet frontage which reflects more network cost being incurred. 

Recovering fixed costs through rates has the other desirable effect of eliminating bad debt, as all unpaid rates are recovered when a property is transferred. From the perspective of retail electricity prices it simplifies the approach to only charging for the marginal cost due to consumption. 

I have elsewhere written that the idea of an essential link between networks charging a 'cost-reflective' tariff (time of use or demand based) and retailers pricing should be broken. The retailer should always face a 'cost reflective' tariff, even when there is only an accumulation meter. The retailer should be charged the cost-reflective price on the profile of the residual demand at the zone sub-station (i.e. the demand less the aggregate profiles of the connections woith interval meters). But the retailer should not be allowed to charge a cost reflective price unless (a) there is an interval meter and (b) the consumer has chosen to be charged a cost reflective price.

*********************************
Life is what happens while you are busy making other plans JWL