Earlier this week the Productivity Commission released an Issues Paper in relation to its inquiry into the telecommunications Universal Service Obligation (USO). The Productivity Commission is seeking submissions on the Issues Paper by 21 July 2016. The paper covers a wide range of issues and is the first fulsome review of the USO since the 1990s.

Background

In April 2016 the Australian Government asked the Productivity Commission to undertake a 12 month inquiry into the future direction of the USO. In particular, the Productivity Commission was asked to determine to what extent, in the evolving Australian telecommunications market, Government policies may be required to support universal access to a minimum level of retail telecommunications services. The Terms of Reference for the inquiry require the Productivity Commission to have regard to the report of the 2015 Regional Telecommunications Review and the Government’s response to that report, both of which highlight the need to examine the existing USO regime.

Issues and trends identified

The Issues Paper notes a number of interesting issues and trends in the telecommunications market:

  • mobiles are now the most common means of voice service and internet access;
  • although the demand for voice calls has fallen (and fixed-line voice call minutes have significantly declined) there remains a demand for voice calling through some means;
  • the trend of Australians disconnecting their fixed-line telephones and going ‘mobile only’ is expected to continue;
  • the overall demand for data is growing significantly and this is expected to continue;
  • public and home-based Wi-Fi is increasingly ubiquitous;
  • use of payphones continues to decline;
  • offline Australians are becoming fewer in number;
  • the Government continues to roll out the National Broadband Network (NBN), which is intended to deliver broadband to all Australian premises, effectively providing universal access to fixed broadband services (and therefore to voice over internet protocol services);
  • voice over internet protocol and other internet-based communications provide close substitutes to traditional forms of telephone and messaging services on fixed-line and mobile networks;
  • Facebook and Google are investing in telecommunications infrastructure that may challenge the established telecommunications infrastructure providers in Australia; and
  • particular sections of the Australian community may have differing telecommunications needs (eg regional users, people with disability, older users, indigenous users, low income users).

Importantly, the Issues Paper notes that any new policy could take advantage of the strong consumer preference for, and the ubiquitous use of, mobile phones or leverage off the NBN as the current universal service wholesale provider of broadband services.

Input from industry sought

The Productivity Commission seeks input on the following wide-ranging issues:

Click here to view the table.

The Issues Paper notes that the main agencies with responsibilities relating to the current USO are the Department of Communications and the Arts, the ACCC and ACMA, and indicates that the USO roles and responsibilities of these existing institutions may need review as part of any new universal services policy.

The Productivity Commission intends to conduct its own analysis of data, but will draw heavily from inputs by participants. It has also indicated that, where relevant, it will draw on previous research and initiatives from Australia and internationally, as well as government reviews such as the Vertigan Report, the 2015 Regional Telecommunications Review, and the Spectrum Review report.

The Productivity Commission has called for submissions on the Issues Paper by 21 July 2016, to assist it in the preparation of its Draft Report which it plans to release in early December 2016. Participants will have a further opportunity to comment on the Draft Report once it is released. The Productivity Commission is required to release its Final Report by 28 April 2017.