Fifield needs to take the lead on Universal Service

Senator Fifield's new role as Communications Minister provides an opportunity for him to take leadership and ownership of a broad review of Universal Service provision in Australia but the review foreshadowed by the former Parliamentary Secretary to the Minister for Communications, and former Optus executive, Paul Fletcher has yet to materialise and in Business Spectator the focus is on why it is time for Fifield to step up and take charge.

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Speaking at an Australian Communications Consumer Action Network (ACCAN) forum held in Sydney in March 2015 the former Parliamentary Secretary to the Minister for Communications, and former Optus executive, Paul Fletcher highlighted the need for an urgent review of the Universal Service Obligation (USO).

The government’s recent silence on the timing of the “urgent” USO review could be attributed to Malcolm Turnbull’s recent ascension to Prime Minister and the resulting reshuffle of Parliamentary leadership roles but Communications Minister Mitch Fifield is yet to do anything of substance since taking on the strategic telecommunications portfolio.

Turnbull is fully aware the ongoing cost blowouts and rollout delay revelations about the Coalition government’s multi-technology mix (MTM) National Broadband Network (NBN) is a significant weakness in his platform as a technology savvy Prime Minister that sponsors technology innovation.

Independent communications analyst Paul Budde stated that “Turnbull has inexplicably decided to pursue a short-sighted policy that, as the Optus [HFC cable] blowout highlights, is likely to deliver more pain that gain.”

Delaying the USO review until after the next election could be considered to be putting a cap on the potential for a very public brawl as the telecommunications industry negotiates a new approach to the USO.

There will be no quick and easy fix to the USO as the government looks to find a way to incorporate the provision of broadband infrastructure for voice and data into the USO and to remove the internal cross-subsidy currently being used by NBN Co to fund the provision of broadband in regional and remote areas.

After the former government’s last review of the USO, held in 2012, it signed a twenty year contract with Telstra for USO provision that effectively put the USO into a holding pattern.

Fletcher was scathing when he said "under the contract Telstra would continue to do essentially the same things it was already doing; it would continue to receive broadly the same amount of money from the rest of the industry for doing them; but it would in addition receive $100 million a year that the government would now pay in each year."

Last month the government’s Bureau of Communications Research (BCR) recommended a $6 per month levy on all high-speed broadband connections to pay for what it calls non-commercial services which includes satellite and fixed wireless in regional and remote areas.

Whilst the BCR’s public consultation into how to pay for the non-commercial services is important work there is a need for this activity to be incorporated into a broader review of the USO in its entirety.

BCR’s proposal for an industry levy that would remove the need for NBN Co to have an internal cross-subsidy for the provision of satellite and fixed wireless in regional and remote areas would make it easier for the government to disaggregate and sell off the NBN but has brought the ire of telecommunication companies that would be forced to contribute to the levy.

Companies wishing to leverage their existing fibre networks to compete with NBN Co in urban areas, including TPG Telecom and Vocus Communications argue that by shifting the $6 cost onto their customers would improve NBN Co’s bottom line whilst making it harder for them to compete.

In its submission TPG Telecom argued that "the tax [levy] proposed by the BCR recommendation will be such a distorting incentive."

"If the cost of supplying fixed-line services is artificially inflated by a tax, there is every reason to believe that spectrum owners will seek to increase their returns by selling mobile services in more strident competition to fixed-line.”

TPG Telecom correctly highlighted the BCR proposed $6 levy may not be applied to wireless services in an effort to gain the support of Telstra, Optus and Vodafone. A decision to exclude wireless services would be flawed and must be avoided if for no other reason than at some point NBN Co will offer wholesale wireless products including mobile cellular and Wi-Fi. Failing to include wireless services in an industry levy to pay for regional and remote telecommunications could make the NBN unviable.

"If the position is that the tax [levy] will not be on wireless services, TPG may choose to make greater investments into the wireless service market. There is no reason to believe that, given an incentive to do so, the mobile network operators will not be able to increase their effectiveness as a substitute for fixed-line broadband, particularly with technological developments progressing rapidly."

In an effort to refocus attention on the need for a broad USO review theTelecommunications Society has called for papers about the USO for a special December issue of its Journal covering telecommunications and the digital economy. Of interest will be the paper from ACCAN whose CEO Teresa Corbin was the 2015 recipient of the Telecommunications Society’s Charles Todd Medal for excellence in communications.

Trying to carry out changes to the USO piecemeal utilising government bodies like the BCR will only get major industry players offside, as has happened with TPG Telecom and Vocus Communications and it is right to argue that the 20 year Telstra USO deal must be revisited before a new USO can be put in place that incorporates broadband service provision.

If the government is to successfully complete a public review of the USO and gain industry acceptance before the next election then it needs to act to commission the broad review immediately so it is time for Fifield to take the first step.

Mark Gregory is a senior lecturer in the School of Electrical and Computer Engineering at RMIT University.