Time to ditch the USO, Productivity Commission says

New universal service framework needed, draft PC report argues

The current Universal Service Obligation under which Telstra receives a subsidy to ensure every Australian has access to basic telephony services is “anachronistic and needs to change,” argues a draft report released by the Productivity Commission.

The USO is intended to ensure that people have access to a ‘standard telephone service’ regardless of where they live. Telstra’s rivals have described the scheme as outdated, with Australians increasingly relying on mobile phones and Internet-based communications services.

Telstra has argued that the USO should be retained at least until the rollout of the National Broadband Network is completed, but acknowledged that the scheme should be updated.

“People’s preferences for ubiquitous connectivity, their seemingly insatiable appetite for data and the high value of digital data to businesses and governments generally provide a strong case to revise Australia’s universal service policies,” the Productivity Commission’s draft report states.

The Australian government “should phase out the existing telecommunications universal service obligation as soon as practicable,” it recommends.

“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 report argues.

The report states that the government should move to explicitly enshrine in legislation the role of NBN “as a universal service provider of wholesale broadband services”.

Mobile black-spot scheme

Labor’s regional communications spokesperson, Stephen Jones, said that the draft report indicated a need for the government to revise its approach to the mobile black-spot program, which helps co-fund base stations in areas with poor coverage by mobile networks.

The draft report said that the PC “is concerned that there is a risk that Australian Government funding is directed at expanding mobile coverage in locations for political reasons rather than to locations where overall community wellbeing might be better served”.

“In Round 1, of the funding promised to deliver 499 new and upgraded mobile base stations across Australia, more than 80 per cent of the locations for new mobile phone towers announced were in Liberal or National electorates with less than seven per cent in electorates held by Labor members, and one in four of the base stations did not extend coverage,” Jones said in a statement.

“In Round 2, announced just last week, again we see that 80 per cent of locations are in Liberal or National Party electorates, with around 11 per cent in electorates held by Labor members.”

The government has argued that the disparity of funding between Coalition- and Labor-held electorates reflects the former’s relative strength in regional areas.

The draft PC report recommends that the next round of the program should “prioritise areas for funding based on community input — rather than nominations from Members of Parliament”. However, the report also notes the Australian National Audit Office report on round one of the program stated that the “coverage of MP priority nominations was not a significant factor in the success of individual base station proposals”.

The South Australian government yesterday called for an “urgent investigation” by the auditor-general into the second round of the program. The ANAO audit of the first round found that it “did not sufficiently target funding toward the expansion of coverage where coverage had not previously existed”.

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Tags universal service obligation (USO)USOTelecommunications

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