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Government releases Productivity Commission report into the Universal Service Obligation

Joint media release

The Hon Mitch Fifield, Minister For Communications, Minister for the Arts
The Hon Fiona Nash, Minister for Regional Communications

The Turnbull Government today tabled the Productivity Commission's (PC's) report into the telecommunications Universal Service Obligation (USO). 

The USO is a longstanding consumer safeguard that ensures all Australians have access to voice-only standard telephone services and payphones. USO arrangements were put in place in an era before the widespread availability of mobile and broadband services. 

The Australian telecommunications sector has undergone significant changes in the last two decades, including the rollout of the $49 billion National Broadband Network, which will provide communications coverage to every premises in Australia.

Given these major advancements in the Australian telecommunications market, a major review of the USO was long overdue, to ensure that the significant taxpayer investment is achieving value for money and providing appropriate consumer protections.

The PC report found that the USO is “anachronistic and costly” and should be “replaced by a new framework to reflect changing policy, market and technological realities”. The 20-year USO contract entered into by the previous Government in 2012 comes at a cost of almost $300 million per year. Of that amount, the Commonwealth contributes $100 million per year while the remainder is funded through a levy on telecommunications operators.

The PC report found that the USO arrangements put in place by the previous Government suffer from a “lack of transparency and accountability” which “makes the continuation of current arrangements difficult to justify.”

The PC USO inquiry was first flagged in the Government's response to the 2015 Regional Telecommunications Review, tabled in Parliament in February 2016. Terms of Reference for the PC inquiry were released in April 2016, and the PC presented its final report to Government in April 2017.

The final report also provides a range of recommendations regarding communications service delivery in regional and remote Australia, which the Government is now considering in detail. Targeted consultation will be undertaken over coming months to inform the Government's response.
Any changes to the USO regulatory environment and contractual arrangements will be implemented in a constructive, careful and considered manner, and will be mindful of the particular needs of regional and remote communities, industry and other stakeholders.

The Government's response will also take into account the significant investment made in the rollout of the National Broadband Network (NBN), which is on-track to make high-speed broadband services available to all Australian premises by 2020. 

As the Commission's report notes, the Government will shortly introduce legislation establishing a new ‘Statutory Infrastructure Provider' obligation on NBN Co (and other providers) so that people across Australia are able to access super-fast broadband services into the future. The legislation will also establish the Regional Broadband Scheme to provide ongoing funding for the loss-making NBN fixed wireless and satellite networks serving regional and remote Australia. 

The Government has established a USO taskforce, within the Department of Communications and the Arts, to give consideration to the PC's report. The release of the PC USO report delivers on the Government's response to the 2015 Regional Telecommunications Review. The Government thanks the Commission for its comprehensive report and consultative approach during the inquiry. 

The Commission's report is available at: www.pc.gov.au/inquiries/completed/telecommunications/report

Media contacts:
Fifield: Geraldine Mitchell | 0407 280 476 |  Geraldine.Mitchell [at] communications.gov.au 
Nash: Les White | 0409 805 122 | Les.White [at] regional.gov.au