The eclipse of the universal service obligation: Taking broadband to Australians

The purpose of this paper is to evaluate the success and continuing relevance of the universal service obligation (USO) in delivering voice telephony, basic digital data capability and broadband services to all Australians. The paper outlines the background to the National Broadband Plan being implemented by the Labor Government elected in November 2007. The costs of this plan and other funding programs implemented since 1996 are annualized and compared to the cost of the USO. The paper reveals that the USO has been eclipsed as a policy tool for making basic telecommunications services universally available in Australia, at least for the time being. It survives as a policy mechanism, but is contained to fixed line telephony, payphones and basic digital data capability. Its declared costs have fallen. The proposed national broadband network continues the trend towards using government funding to achieve telecommunications policy goals. This trend was initiated by the previous government with some of the proceeds from privatizing the former government monopoly, Telstra. The national broadband network also supplements this trend with a reversion to a degree of state participation in a facility (a fibre-to-the-node network serving 98 percent of the population) likely to have strong natural monopoly characteristics. The paper considers the USO as just one of many tools available to ensure basic telecommunication services are universally available and the debates about it in Australia less as arguments about where an old concept should go in the future, and more about what a very young concept really means.