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Is the USO an expensive irrelevance?

The Telecommunications Legislation Amendment (Deregulation) Bill 2014 is before the senate. If passed it will end the short life of the Telecommunications Universal Service Management Agency, the body established to administer the Universal Services Obligation. It did a particularly good job of ensuring that Telstra is paid by the rest of the industry to provider a standard phone line to whoever wants it.

In the past, having Telstra as a carrier of last resort made sense. As Iain Little, Telstra’s Regulatory Director, Operations and Economic Analysis, says on this week’s CrossTalk, in regional Australia you only see Telstra vans out in the field working on infrastructure. But that’s changing – NBNCo will be the provider of the infrastructure.

Professor Reg Coutts, speaking at the CommsDay Summit in Melbourne back in October, asks whether NBNCo is really the provider of the USO. If that’s the case, why is TUSMA showing an estimated contract value of $253 million paid to Telstra each year to provide the USO through to 2032. By then, won’t the concept of a standard phone line be a little irrelevant? And, given that NBNCo had a remit to provide high speed broadband to every household, isn’t the concept of the USO now irrelevant?

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