The Productivity Commission has released its draft report on the Universal Service Obligation (USO) and it has recommended sweeping changes. However, there appears little opportunity for government to make changes without Telstra’s agreement. Read in InnovationAus why changes to the USO might be put in the too hard basket.

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The Productivity Commission has released its draft report on the Universal Service Obligation (USO) and it has recommended sweeping changes. However, there appears little opportunity for government to make changes without Telstra’s agreement.

The key outcomes of the Productivity Commission’s review are the recommendations that the Government immediately wind-up the existing system and introduce a new framework in which the “universal service policy objective can be reframed to provide a baseline [minimum quality] broadband service to all premises in Australia, having regard to its accessibility and affordability.”

“This would encapsulate access to the internet and to voice services, given that the internet will increasingly be the medium through which voice communication is delivered.”

In 2012, the government signed a twenty-year deal with Telstra for the ongoing provision of the USO and for Telstra to be the fixed-line telephone service provider of last resort.

The National Broadband Network (NBN) is being built to replace Telstra’s fixed-line access networks and the Productivity Commission has identified that “the service level provided by NBN infrastructure will be more than adequate to meet a baseline level of broadband (including voice) service availability for the vast majority of premises across Australia — specifically for at least the 97 per cent of premises that fall within the NBN’s fixed-line and fixed wireless footprints.”

With the completion of the NBN rollout expected to be completed in 2021, there is anticipation that NBN Co in concert with Mobile Network Operators (MNO) could provide a universal service solution that incorporates voice and data.

The Productivity Commission argues that there is a need for the revised framework to be consistent with the international practice that a minimum quality service be provided.

“This recognises that there are costs to the Australian community in providing universal services, primarily where these services would not ordinarily be provided by the market. Conceptually, a baseline level of service refers to a minimum acceptable level of service for broadband and voice that enables basic telecommunications-enabled functions to be undertaken successfully.”

It appears that one of the key reasons that Telstra was awarded a twenty-year contract in 2012 to provide an ongoing USO was the realisation that the NBN would not adequately meet the quality of service requirements consistent with the USO until some years after the NBN rollout was completed.

Whilst the Productivity Commission’s recommendations are consistent with the broadly supported need for a regime, there remains a strong concern that the new framework will incorporate a quality of service for data and voice far lower than is acceptable.

The Productivity Commission incorrectly identifies that the post-September 2013 NBN “infrastructure is planned to provide universal access to high-speed broadband services to all premises across Australia by 2020 — at a quality that is far superior to what is currently available.”

For many Australians, the Turnbull Government’s preferred FTTN technology will provide marginally improved broadband for data, and no improvement to voice services delivered over existing copper infrastructure.

In addition to this, the Productivity Commission paints an unreasonably rosy picture of mobile cellular voice services.

The Productivity Commission takes a straightforward approach when it comes to highlighting how vested interests, the short-sighted and selfish view the need for the equitable provision of telecommunications.

“Historically, the principle of equity with respect to a basic telecommunications service has been an enduring cornerstone of policy. A wide range of participants argued that there continues to be a strong equity rationale to provide a universal service of the same quality to all who reside in Australia, irrespective of where they choose to live or work,” the report says.

“They also argued that some people may experience difficulties accessing or affording available services. However, support for equity in pricing (that is, uniform pricing across all locations) was challenged by some participants on the basis that people’s decisions about where to live involve inherent tradeoffs.”

Australian’s living and working in regional and remote areas provide a valuable contribution to the national economy, and they do so in some of the most inhospitable conditions found in any nation.

Australians in regional and remote areas do so without the ready access to essential services enjoyed by those living in urban communities. It is unthinkable in a social democracy that the myopic views of the selfish should be entertained by a parliament that is meant to represent everyone.

In the emerging global digital economy access to high quality, reliable broadband for data and voice services is a key enabler. So it is reasonable for government to ensure telecommunications infrastructure investment drives national economic growth, and this means investment beyond the urban regions.

The Productivity Commission has recommended that “the Australian Government should reframe the objective for universal telecommunications services to provide a baseline broadband (including voice) service to all premises in Australia, having regard to its accessibility and affordability, once NBN infrastructure is fully rolled out.”

The question of accessibility and affordability should be addressed by the government in a follow-up review of the telecommunication consumer safeguards, including “the future role of accessibility and affordability measures, including the Telephone Allowance, the National Relay Service and relevant elements of the National Disability Insurance Scheme.”

It is vital for the Government to take this opportunity to introduce universal access to telecommunications and to ensure that everyone, irrespective of where they live or work, has access to Government services online.

For this to occur the government should introduce a consolidated federally administered funding scheme that supports an expanded universal access regime that creates opportunities for increased productivity, competition and ensures that government information and services are available to everyone wherever they work or live.

What this means is the government should setup a federal program to provide free or subsidized access to telecommunications (data and voice) to the socially disadvantaged.

The Productivity Commission has set the scene to make this outcome possible, but there are hurdles that remain before an outcome that is in the national interest is achieved.

Until the Government has taken the initiative to introduce a universal access regime, there is the possibility that any changes introduced to the existing USO could be detrimental to the economy and social cohesion.

Increased participation and universal access to broadband based data and voice services will ensure that Australia’s participation in the global digital economy increases and at the same time the nation will benefit by ensuring that no-one is disadvantaged.

Dr Mark Gregory is a Senior Lecturer in the School of Engineering at RMIT University