As NBN And Mobile Networks Roll Out, The Productivity Commission Wants To Scrap Landline-Access Program

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The Telecommunications Universal Service Obligation was set up to ensure that all Australians have access to a landline. The Federal Government's Productivity Commission just a released a report calling the $3 billion over 20 years initiative "anachronistic and costly", recommending it should end by 2020.

The report points to the "sizable public investment" in NBN infrastructure that will provide high-speed (voice-capable) broadband "to all premises (on request) across Australia by 2020 at a quality that is, for the most part, superior to what has been available" as one of the reasons for ending the program.

"Rapid developments in telecommunications technology are transforming people's lives," the report reads. "The growing demand for ubiquitous digital connectivity provides a strong case for reform that reflects evolving policy, market and technological realities."

The Productivity Commission says the NBN has been designed to narrow the city–country digital gap - with cross-subsidies from commercial to non-commercial services within a funding envelope.

"Australians are also well served by mobile networks," the report concluded. "With over 99 per cent of people having access to mobile telephony (and to a slightly lesser extent, broadband) where they live."

"Leveraging off the NBN and mobile networks means that the objective of universal service can be reframed to provide baseline (or minimum) broadband and voice services to all premises in Australia once the NBN has concluded its rollout phase, having regard to the accessibility and affordability of these services. Increasingly, broadband will be the main medium for voice services."

The commission says that for the vast majority (more than 99 per cent) of premises, the combination of the NBN and mobile networks is likely to meet or exceed minimum standards for universal service delivery. And as such, the TUSO is no longer needed.

As for the idssue of cost, "Current market trends and policy settings suggest that telecommunications services will continue to be affordable for most people," the Productivity Commission says. "To the extent that there are any remaining availability, accessibility or affordability gaps, current trends and policy settings suggest that these are likely to be small and concentrated."

"The TUSO can therefore be terminated once the NBN is fully rolled out."

Vodafone is just one telco who has spoken out about the findings of the report, urging "immediate action" by the Federal Government to ensure regional Australia receives the voice and broadband services it needs.

Vodafone Chief Strategy Officer Dan Lloyd said the report was the final nail in the coffin for the current USO model which provides almost $300 million in public and industry funding each year to Telstra, supposedly to fund its copper network and payphones.

"Regional Australia deserves better. The calls for USO reform have been growing louder and stronger over recent years, and the need for change is now urgent," Lloyd said. "The final report has confirmed it’s all over for the USO, and the transition to a 21st century framework needs to start now. Almost $1 million per day is currently going into a black hole. This is a staggering sum of money which could be delivering real benefits for regional Australia."

Lloyd says the final report not only confirms the fact the USO is well past its use-by date, but highlights the alarming lack of transparency, accountability and controls around the arrangement.

"It is scandalous that no one outside of Telstra has any true idea how nearly $300 million a year, which includes $100 million of direct taxpayer funding, is being spent," Lloyd says. "It is unacceptable to taxpayers, and to the rest of the industry which contributes tens of millions of dollars a year to the scheme, that there are no accountability obligations on Telstra even to report on how much of the copper line and payphone infrastructure it has actually been shutting down, let alone the actual costs of services supplied under the USO."

Lloyd said the final report sets out a clear plan and timetable for delivering 21st century voice and broadband services to regional Australia.

"The time for debate and reports is over, and the Federal Government must act quickly to adopt and implement the Commission's recommendations," he said. "Regional Australia can't afford for any more time to be wasted with this report sitting on a desk in Canberra gathering dust."

[Report]