Telecommunications universal service obligation

A new approach to telecommunications universal services

The Productivity Commission is recommending a modernised and forward-looking approach to the subsidy and support arrangements that form universal telecommunications services in Australia.

The current Telecommunications Universal Service Obligation (TUSO), which ensures all Australians may receive fixed-line voice services, is outdated and should be replaced by a more targeted approach that recognises the substantial public investment in the National Broadband Network (NBN), expected to be fully rolled out by 2020.

In its draft report on the TUSO released today, the Commission points to the rapid evolution of Australia's telecommunications environment, including the shift in consumer preferences to broadband and mobile communications, as the impetus for recommending reforms to the voice based TUSO, which is fast becoming outdated.

'In a digital age, the current obligation — requiring Telstra to provide all Australians with access to basic fixed line telephones and payphones — is anachronistic and needs to change,' said Commissioner Paul Lindwall.

'Once rolled out to all Australians, the NBN will be the foundation on which a future broadband based telecommunications universal service policy should be built. A completed NBN, which provides broadband and voice services to all Australians, will make the current TUSO obsolete,' said Commissioner Paul Lindwall.

The Commission is proposing that the TUSO be replaced with a universal service policy objective to provide a baseline or minimum broadband (including voice) service to all premises in Australia, having regard to its accessibility and affordability, once NBN infrastructure is fully rolled out.

For vulnerable members of the community who may have difficulties accessing NBN services or a mobile phone service, the Commission is urging the Government to adopt a policy approach that closely targets their particular needs instead of providing a blanket 'one-size-fits-all' solution, as is currently the case under the TUSO.

The Productivity Commission received the terms of reference from the Government in April 2016 and will present its final report on this inquiry to the Government in April 2017.

Public hearings for this inquiry will be held in January and February of 2017 in Sydney, Melbourne, Launceston, Dubbo, Cairns and Port Augusta. More details on hearings can be found on the Productivity Commission website.

Chapter 1 provides relevant background to the study.

Chapter 2 provides an overview of the evolving landscape of telecommunications.

Chapter 3 reviews and evaluates the current TUSO against a number of criteria.

Chapter 4 identifies other government programs that are broadly designed to meet telecommunications universal service objectives.

Chapter 5 examines the considerations that should frame a new telecommunications universal service policy objective.

Chapter 6 assesses the extent to which the market and NBN might address the various dimensions of universal telecommunications services.

Chapter 7 considers some policy options to address any 'gaps' identified in chapter 6.

Chapter 8 discusses the relative merits of alternative funding models for telecommunications universal service policies.

Chapter 9 canvasses issues and options associated with transitional arrangements.

The following appendices support the analysis in the main body of the report.

Appendix A outlines the conduct of the inquiry, including consultations undertaken and submissions received.

Appendix B provides further information on the NBN.

Appendix C presents an overview of approaches to telecommunications universal service policies in OECD countries.

Appendix D touches on the relative affordability of NBN services.