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Wind up USO scheme by 2020 says Productivity Commission

The current scheme that guarantees access to voice telephony to all Australians should be wound up by 2020 according to the Productivity Commission – a date clearly designed to dovetail with the scheduled completion of the NBN roll-out. 

In the meantime, Telstra would continue to be the national provider of last resort for the standard service and payphones while government works out how to unstitch the 2012 NBN deal which cemented Telstra in the role for 20 years. 

The Commission’s final report, released 19 June, describes the Universal Service Obligation (USO) as a “blunt” instrument of “declining relevance”.  Perhaps –but it has provided a high degree of certainty about access to certain fundamental services for over 25 years. 

The question is what will be put in its place- and how any sharper and more relevant scheme will be funded. 

The delivery and the cost of the telecommunications Universal Service Obligation (USO) has been the subject of intense debate ever since it was formally established in the early 1990s.  

Since that time, companies such as Vodafone and Optus – both now wholly foreign owned – have never stopped complaining about their contributions to the costs of funding loss-making services in Australia. 

More recently, changes in technology have put more pressure on the USO scheme, which covers voice services only together with the provision of payphones. Increasingly there has been a demand for a universal broadband data service while Australians are also coming to expect universal access to mobile services, both voice and data. 

Last but not least, the NBN project has further complicated the issue by creating a national fixed broadband network provider on a structurally separated basis. 

The NBN will in future be the logical (and in most places the only available) fixed network provider and under legislation now before parliament will have a statutory obligation to provide a base line broadband service of Mbps 25/5 nationally. 

But this is at the wholesale level. The NBN will not actually offer end (retail) services, nor as Australians are now learning, can it guarantee retail service speeds or service quality. 

All this adds up to a perfect storm – and navigating will not be easy. No wonder the Turnbull government has responded cautiously, saying that any changes will implemented in a “constructive, careful and considered manner.”

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