Auction subsidies and the Universal Service Obligation: the case for remote Indigenous communities

Results from a 4-year ARC-funded research project (LP110200440, led by Rennie1) reveal how the current Universal Service Obligation (USO) is failing to meet the needs of Indigenous Australians living in remote communities. The consumer preferences of this group differ significantly from other groups, leading to a situation of digital exclusion in areas without mobile reception. Current regulatory measures designed to protect basic access to telecommunications are in fact working to restrict new retail offerings from emerging. We contend that Australia's USO requires adjustment in order to enable the emergence of new services that fit minority group preferences. Subsidy auctions, together with changes to the definition of services provided under the USO are a possible solution, and likely to be achievable within the terms of Telstra's current 20-year USO contract. In the final section of this submission we provide international examples of the kinds of services that might arise under our proposed changes.