The 2012/13 TDL liability allocation determination process commences in April 2013. Section 82 of the Telecommunications Act 2001 requires certain telecommunications service providers, who meet the criteria set out in the Act, to provide the Commerce Commission with revenue and shareholding information by 4 April.
Parties meeting both the following criteria will need to supply revenue and shareholding information to the Commission:
- A person, or company, who provides telecommunications services in New Zealand via some component of a public telecommunications network. This may include the transmission of voice, data, SMS or any other content – but does not include broadcasting.
- A person, or company, who has earned $10 million or more from providing telecommunications services in the 2011/12 financial year. The $10 million dollars can be met through revenue from a combination of liable persons where there is significant shareholding between two or more parties.
It is important to note that telecommunications service providers must take responsibility for identifying if they are captured by the section 82 requirements and if so, to provide the information to the Commission within the specified timeframes. Failure to comply with these requirements, when they apply can attract a penalty of up to $300,000.
Who are liable persons?
Parties required to provide this information are a subset of a group defined in the Act as liable persons. A liable person:
- provides a telecommunications service, which may include the transmission of voice, data, SMS, or any other content, but excludes broadcasting (this being the transmission of programmes for the reception by the public)
- provides the telecommunications service in New Zealand
- operates a component of the public telecommunications network over which the telecommunications service is provided
- operates a component of a public telecommunications network that falls within the public side of the network demarcation point – the component must be operated by the person, not a third party
- operates a telecommunications network that is publicly available, ie, not limited to private use.
Furthermore a person or company operates a public telecommunications network when they do one or more of the following:
- owns the component or has rights similar to ownership, such as a long-term lease, or exclusive licence
- has a right to exclude use of the component by other parties
- can independently authorise third-party use of, and access to, the component to provide a telecommunications service.
Who is obliged to provide the Commission with information?
Just being a liable person doesn’t mean a person or company is required to provide information in accordance with section 82 of the Act. Only a liable person who has earned $10 million or more from providing telecommunications services in the 2011/12 financial year is required to comply with section 82.
The $10 million threshold can be met through revenue from a combination of liable persons where there is significant shareholding between two or more parties. Under section 79 of the Act, the Commission is required to combine two or more liable persons’ telecommunications revenue when determining if they meet the $10 million threshold. Section 79 provides:
(1) For the purposes of this Part, any 2 or more bodies corporate must be treated as 1 person if –
a) one of them is a body corporate of which the others are subsidiaries
b) all of them are subsidiaries of the same body corporate
c) all of them are associates of each other
d) one of them owns or controls shares that in the aggregate carry the right to exercise or control the exercise of 20% or more of the voting power at meeting of the others
e) a third person owns or controls shares in each of them that carry the right to exercise or control the exercise of 20% or more of the voting power at meetings of each of them.
What information does the Commission require?
If you are required to provide information under section 82 of the Act, the Commission requires the following information:
- a copy of the liable persons financial statements for the period from 1 July 2011 to 30 June 2012
- a revenue amount which identifies the “telecommunications revenue” earned by the liable person for the 2011/12 financial year
- details of the names of the liable persons shareholders who owned 20% or more shares in the liable person on 30 June 2012
- confirmation of whether any of those shareholders that owned 20% or more shares in the liable person on 30 June 2012, also owned 20% or more shares in another liable person
- a contact name and contact details for any shareholder with 20% or more shareholding in the liable person on 30 June 2013 that held 20% or more shares in another liable person.
What happens if you fail to comply with the section 82 requirements?
If you are not a liable person or you are a liable person that didn’t fulfil the established criteria in the 2011/12 financial year – then you are not required to provide the Commission with any information this year.
However, if section 82 does apply to you and you didn’t comply, this constitutes a breach of section 156A of the Act, which can attract a penalty of up to $300,000.
The Commission has two civil penalties it can apply for non-compliance with section 82, either:
- a civil infringement notice of $2000 under section 156D
- a pecuniary penalty of up to $300,000 ordered by the High Court.
The Commission prefers to work with industry parties to determine if they are required to comply with section 82 and to secure the information required under that provision.
However, the Commission considers non-compliance to be a serious matter and will pursue the available remedies against non-complying parties if it feels such measures are necessary to maintain the integrity of the levy process.
Next steps
After 4 April, the Commission will collate the information it receives from liable persons complying with section 82. Subsequently, the Commission may also undertake an additional process of serving notices to provide information under section 81 of the Act on some telecommunications service providers that have not complied with section 82. This may be done with telecommunications service providers who either:
- we think may have met the criteria and should have complied
- we do not have sufficient financial or shareholding information to assess their status in terms of the criteria.
The Commission will then analyse all the information it receives from liable persons complying with section 82 requirements (and notices under section 81), to confirm those liable persons that qualify to pay a portion of the 2012/13 TDL.
The Commission will contact those qualifying liable persons to advise them of their status in terms of the 2012/13 TDL, before the end of the financial year (30 June 2013). We will also instruct them on the further information disclosure and liability allocation processes supporting the apportionment of the 2012/13 TDL that will commence from the end of the financial year.
