Telecommunications universal service obligation

Productivity Commission Inquiry Report no.83

19 Jun 2017

Telecommunications is fundamental to any modern society. It plays an increasingly important role in the delivery of private and public sector services across the economy. Access to telecommunications services is also a key enabler of social inclusion — allowing people to connect with family, friends and communities, and call for assistance in emergencies.

The telecommunications universal service obligation (TUSO) is one of several policy instruments to meet the Australian Government’s universal service objectives. It was introduced in the 1990s (when the sector was being deregulated) to ensure ‘reasonable access’ to a standard telephone service and payphones for all Australians on an ‘equitable’ basis, regardless of where people reside or work. At that time, telecommunications was centred on basic telephones, and the TUSO was enacted to benefit consumers by affording them a ‘provider of last resort’ for voice telephony.

Today, it is nearly impossible for most Australians to imagine life without smartphones, modems and WiFi. Connectivity has pervaded homes and businesses, allowing almost instant access to information, services and people globally. The proliferation of internet protocol‑based networks is enabling ‘convergence’ to take place — with different services now integrated over a single network, accessible through all‑in‑one devices, and increasingly through common appliances such as smart televisions. In view of the economies of scope and scale on offer, service providers are increasingly in the business of providing telecommunications for all media (data, video and voice) simultaneously.

From the perspective of users, some defining trends are also emerging (figure 1). Australian consumers are revealing a growing preference for mobile devices. One in three Australian adults across both capital cities and regional areas now rely solely on their mobile phones for voice services, with 99.3 per cent of the population covered by at least one mobile network. Notwithstanding some variation across regions, income levels and age groups, Australians are also avid internet users. They send some 190 million emails through Gmail each day and 15 million of them use Google Search each year.

At the same time, telecommunications services are becoming more affordable — thus lowering the cost of economic and social transactions — with large benefits to individuals, businesses and governments. Prices of telecommunications services have fallen substantially over the past decade, in absolute terms and even more so relative to other essential services. Over that time, quality has also continued to improve. Unlimited voice calling and messaging are now standard inclusions in many mobile and home phone plans, while data allowances and speeds continue to increase.

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