Areas and Services
Primary and Competing Universal Service Providers
Contestability Arrangements
Subsidies and Funding
Untimed Local Calls
The Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) established the Universal Service Obligation (USO) regime. The main objective of the USO is to ensure that all Australians have reasonable and equitable access to the standard telephone service (voice telephony), payphones, prescribed carriage services and digital data services, irrespective of where they live or work.
Key elements in the achievement of this objective include: (i) charging of local calls on an untimed basis, and (ii) the Customer Service Guarantee (a set of performance standards in relation to appointments, connection and rectification that must be met when providing the standard telephone service).
Telstra Corporation Limited (Telstra) is the national universal service provider for Australia. Telstra's charges for the provision of the standard telephone service are price-controlled. Accordingly, the provision of this service to high-cost areas results in financial loss. The act provides for all participating carriers to share in the loss incurred by Telstra in the provision of these loss-making services, in proportion to their eligible revenue (ie, the revenue measure used to calculate a person's contribution to the USO).
On March 23 2000, the government announced a number of proposed amendments to the USO. The major proposals included:
- enabling the minister to determine a universal service provider's net universal service cost in advance for 2000 and 2001, and subsequent financial years (up to three years in advance) to enhance industry certainty;
- undertaking a tender process to award A$150 million allocated to the provision of untimed local calls in remote Australia, with the successful tenderer becoming the universal service provider for that area;
- amending the USO regime to improve its general operation, especially in relation to contestability, costing and funding;
- undertaking two pilot schemes in regional Australia to trial the competitive supply of USO services; and
- extending the funding of the USO to include carriage service providers as well as carriers.
To effect these changes and to improve the quality of telecommunications service particularly in regional Australia, the government introduced the Telecommunications (Consumer Protection and Service Standards) Amendment Bill (No 2) 2000 (Cth) into Parliament on June 29 2000. The bill does not seek to alter the composition of the USO, but will affect the delivery and funding arrangements.
The following outlines the key changes introduced by the bill.
With regard to areas and services, there is no change from the current situation, whereby all of Australia is the default USO service area. However, the bill will enable the USO to be divided into different service obligations and smaller universal service areas. The minister will be empowered to determine areas to be universal service areas in respect of one or more service obligations. Areas not determined will be deemed a default service area.
Primary and Competing Universal Service Providers
For each universal service area and each service obligation, the minister must declare a primary universal service provider (PUSP) or 'carrier of last resort'. Telstra is deemed to be the PUSP for all service areas until such time as another PUSP is declared. A PUSP must always supply a standard telephone service. In addition, a PUSP may also seek the approval of the Australian Communications Authority to supply alternative telecommunications services in fulfilment of the USO.
A competing universal service provider (CUSP) will be a carrier or carriage service provider who seeks to supply services in respect of a contestable service obligation in a specified service area. Such a carrier or carriage service provider must apply to the communications authority for approval. A CUSP will be able to seek approval to supply standard USO services as defined in the act, and/or alternative telecommunications services in fulfilment of the USO.
Both PUSP's and CUSP's will need to lodge policy statements and marketing plans with the communications authority for approval. In addition, a PUSP will need to consult publicly in relation to its policy statement and marketing plan.
Carriers and carriage service providers are also eligible to become universal service providers.
The minister will be empowered to determine that the supply of a service obligation in an area is contestable. In the first instance, this arrangement will be limited to the pilot areas, with progressive extension into new areas at a later time.
On August 23 2000, the government announced the pilot areas for USO contestability. The two pilots will be conducted in: (i) the Greater Green Triangle of south-west Victoria and south-east South Australia, expanded to include the Central Goldfields; and (ii) Greater Bendigo and north-east New South Wales and the Queensland Downs. The government has indicated that the two pilots should be in place by the end of 2000.
All USP's will have access to subsidies for the provision of USO services. The minister will determine the universal service providers subsidy entitlements for up to three years in advance. Subsidies will be able to be determined in respect of one or more service obligations under the USO, in respect of one or more service areas.
Carriage service providers as well as carriers will be required to contribute to funding the USO cost. The communications authority will be responsible for determining the eligible revenue of each carrier or carriage service provider.
Passage of the Telecommunications (Consumer Protection and Service Standards) Amendment Bill (No 1) 2000 through Federal Parliament on June 30 2000 was an important step in the implementation of the competitive tendering of the A$150 million allocated for untimed local calls in Telstra's 'Extended Zones' in remote Australia. The successful tenderer will become the universal service provider for the extended zones and will be obliged to (i) provide everyone within the zones access to the standard telephone service, and (ii) provide payphones.
For further information on this topic please contact Claudine Tinellis at Blake Dawson Waldron by telephone (+61 2 9258 6942) by fax (+61 2 9258 6999) or by email ([email protected]).
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