Time to fix Australia’s Universal Service Obligation

Today I submitted a personal submission to Australia’s Productivity Commission inquiry on the Telecommunications Universal Service Obligation (see here for details of the inquiry).

It is high time that the USO is reformed. Many of the existing arrangements are a hangover from the last century.

The ‘standard telephone service” is still important in my view as a “safety net” service. Today’s range of new communication services (mobile, Skype, WhatsApp etc) are innovative but not universal or consistent in their quality. End users need a “safety net” telephone service, especially in times of stress or emergency.

But the current arrangements fall far short of this. There is no minimum availability benchmark for the “standard telephone service”. The ACMA has reported that the unavailability of the Telstra standard telephone service has increased to nearly 2 hours per month in 2014/15 from a figure of less than 1 hour in previous years. This may be a signal of ongoing declines as the technology used continues to age.

Under current plans Telstra will still be required and paid to provide USO standard telephone services in areas serviced by the NBN Fixed Wireless network. This does not make sense as the NBN Fixed Wireless network has sufficient availability and wholesale service capability to allow RSPs to support the standard telephone service. Significant cost savings could be achieved by make this change.

Mobile networks are an important complement to the USO and should be recognised as being equivalent where coverage and signal strength is sufficient. However some users such as the elderly or disabled may still required fixed devices. However, these may still be able to be provided using mobile networks.

Remote end users who rely on the NBN Satellite for broadband will still require access to local terrestrial networks (copper, fixed wireless or mobile) or access to existing low earth orbit satellite phone systems (such as from Iridium or Globalstar)  to ensure sufficient “safety net” network availability and call quality due to the inherent delay in geo-stationary satellite networks.

Most importantly there needs to be contestability for service providers to access to any USO subsidy. A reverse auction for the subsidy should be used to establish the most efficient means of providing USO services. The last resort provider at the retail level should be able to leverage more of the existing NBN and Mobile Network infrastructure to provide the standard telephone service and thus reduce the overall cost. Furthermore any savings in the USO subsidy should be re-directed to extend the NBN Fixed Wireless and Mobile Network coverage further to reduce the need for specialised networks wherever possible.

The Productivity Commission inquiry is an opportunity to look closely at the USO from a 21st century perspective rather than perpetuate old paradigms and thinking.

For more information please refer to the Productivity Commissions issues paper and read my detailed submission.