NBN worried about the cost of USO changes

NBN wary of any new obligation to provide voice services in remote areas

NBN has reiterated its concerns about the potential costs involved in any changes to Australia’s telecommunications Universal Service Obligation (USO or TUSO) scheme that could leave the network operator ­responsible for delivering voice services in remote areas.

Currently the USO is based on an agreement between the government and Telstra that obliges the telco to ensure that all Australians can access basic telephone services over the copper network. The USO is funded by the government and an industry levy.

The scheme has been source of irritation to Telstra’s rivals, which see it as both antiquated because of its focus on fixed-line voice services and an unfair subsidy for Australia’s largest telco.

The government last year sought a Productivity Commission review of the scheme

In December, a draft report from the commission condemned the scheme as “anachronistic”.

Among its recommendations, which focused on the increased importance of broadband to Australians, the draft PC report contemplated the use of NBN’s fixed wireless service to deliver voice services as part of new-look USO-style arrangements.

“Voice services offered to premises in the NBN fixed-line and fixed wireless footprints will be of a high quality and equivalent to the standard offered under the TUSO,” the draft stated.

A draft PC finding was that, due to latency, NBN’s satellite service was unlikely deliver higher quality voice services than people in regional areas currently receive over the copper network.

However, the commission invited inquiry participants to submit evidence “on the adequacy of NBN’s satellite voice services in relation to defining an acceptable baseline for a universal service.”

“Information on practical and cost effective alternatives to NBN’s satellite voice services in areas that currently have no mobile coverage, and their relative merits and costs is also sought,” the draft added.

In an initial response to the draft, NBN expressed reservations about it accruing any additional responsibilities for delivering voice services.

“nbn’s original SOE [statement of expectations issued by the government] in 2010 contemplated that nbn would only support voice services in its fibre footprint,” a submission by NBN to the draft report stated.

“By way of contrast, in nbn’s wireless and satellite footprints, the original SOE stated that the Government would fund Telstra to continue to provide voice services for a 10 year period,” NBN said.

The company noted that under a 2011 agreement between Telstra and the government, the telco would continue operating its copper network outside of NBN’s fixed-line footprint and deliver a USO voice service potentially out to 2032.

NBN said that a particular concern it held was the “costs associated with any expansion of nbn’s scope of activities beyond those that arise from current Government policy and consumer behaviour”.

NBN also noted that the draft PC report argued that “a moderate increase in demand for fixed wireless and satellite services may not necessarily impose a higher net cost on nbn”.

In a second submission by NBN to the PC inquiry, lodged this month, NBN reiterated that it “is concerned that to date, the Commission has not appropriately acknowledged the additional costs that nbn will face if the Commission’s draft recommendations were to be implemented”.

NBN said that estimating possible additional costs to the company was impossible without a further fleshing out of any extra obligations it would incur in regards to delivering voice services.

The submission, by NBN chief regulatory officer Caroline Lovell, states:

To accurately quantify the cost implications of the Commission’s draft recommendations, nbn would need to at least know:
• The circumstances in which nbn would be expected to deliver services beyond our current planning assumptions;
• The specifications of the baseline voice and data service;
• The number of current “USO” services being supplied by Telstra, and where these services are;
• The timeframe over which policy changes would be implemented.
Any final recommendations made by the PC need to recognise the cost implications to NBN and ensure that “the costs should be appropriately funded,” Lovell wrote.

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Tags universal service obligation (USO)National Broadband Network (NBN)national broadband networkTelecommunications

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