Industry players have welcomed legislation to cap USO (universal service obligation) costs at $252 million for 1997-98 and the following two years.
Under the legislation, voted on last week in the federal Senate, Telstra can recover $252 million for providing the USO during 1997-98, an amount significantly less than the carrier's claim of $1.8 billion.
The amount is also less than the preliminary analysis of USO costs from the Australian Communications Authority (ACA), which suggested Telstra's $1.8 billion net USO cost claim for 1997-98 should be closer to $600 million.
In 1996-97, the USO costs were $251.6 million. The USO is a requirement that telephone services are of a "reasonable" standard for customers throughout Australia.
The federal government has appointed Telstra as USO provider, but the costs of the service are shared amongst all the carriers.
Telstra estimates the cost of providing services within Australia each year. Following a review by the Australian Communications Authority (ACA), the costs are shared between Telstra and competing carriers, based on market share.
Alan Horsley, managing director of Australian Telecommunications User Group (Atug), welcomed the legislation, saying it allows the government and industry to focus on other issues, such as the possibility of putting the USO out to tender.
The senate's decision to cap Telstra's net universal service cost (NUSC) at $252 million comes weeks before the Australian Communications Authority's recommendations on the USO are due to be presented to federal ministers.
Neill Whitehead, manager of USO for ACA, told Computerworld that, despite the legislation the ACA "intends to come out with . . . the best estimate of the real USO cost.
"A possible outcome is that we might say that the USO cost number is a higher number but because of the capping legislation only the $252 million is included in the assessment."
Whitehead said the ACA will also issue an assessment notice to say what the USO cost amount is and how much each carrier must contribute.
He added that the legislation provides a "level of predictability" for the industry that may be beneficial for competition.
A spokesperson for the Minister for Communications, Information Technology and the Arts, Senator Richard Alston, said the government believed that Telstra's $1.8 billion claim would have had an "extremely damaging" effect on other carriers.
Commenting on the Senate's ruling, David Lording, Telstra's national media manager, said: "[Telstra] believes the ACA's assessment process should form the basis for USO assessments . . . rather than adopting the arbitrary figure of $252 million as the USO base.
"It is critical that the ACA completes a rigorous assessment in relation to the 1997/1998 claim."