 | Issue: | Asia-Pacific II 2001 |
| Article no.: | 2 | |
| Topic: | Universal Access – Setting the Regulatory Priorities | |
| Author: | Dr. Bob Horton | |
| Title: | Deputy Chairman | |
| Organisation: | Australian Communications Authority | |
| PDF size: | 24KB |
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Article abstract
A communications infrastructure that provides Australia’s highly thinly distributed population with access to the opportunities is fundamental for Australia’s future survival and prosperity. To avoid the emergence of a ‘digital divide’ the government must create mechanisms that guarantee its citizens universal access to telecommunications. This must be done in a way that compensates the carriers and encourages competition. This is true in Australia. It is true in all developed and developing markets.
Full Article
Two of the fundamental assets, which will provide for future survival and prosperity within the region, are human resource skills and the communications infrastructure, which will allow access to the opportunities available. The article deals largely with the latter, though the two are intertwined. Today’s environment is presently driven by technological change, convergence of markets and industries, and policy responses which see competition as providing the supply side of the equation. The social and economic consequences, however, also need some attention through a balancing force which can cope with the emergence of the ‘digital divide’ and to facilitate universal service in a way which is harmonised with the competitive tension of today’s markets. This is true in Australia. It is true in all developed and developing markets. How we in Australia intend to cope with this challenge is as follows. Australia – a case study Australia is a vast continent with a relatively small and concentrated population of around 19 million people. Large areas of Australia are sparsely populated and characterised by extreme and challenging terrain making them financially unattractive to most telecommunication providers. In addition, many of these areas are quite remote from urban centres, emergency services and other community and business services that people in densely populated regions may take for granted. It is important that people in these areas have access to telecommunication services that are comparable to those enjoyed by their counterparts in the more populated parts of Australia otherwise Australia’s version of the ‘digital divide’ will manifest itself more severely. This is especially relevant in an increasingly competitive telecommunications sector. Government policy makers and legislators in Australia have sought to address this issue with the universal service regime. For many years now, the universal service regime has been an important aspect of telecommunications policy in Australia. The main objective of the universal service regime is to ensure that all people in Australia, wherever they reside or carry on business, have reasonable access, on an equitable basis, to standard telephone services, payphones, prescribed carriage services and digital data services. A key concept underpinning the success of Australia’s universal service regime is that of the universal service obligation (USO). This is the obligation placed on a designated universal service provider (USP) to ensure that defined telecommunications services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business. The USP is compensated for providing any loss-making services under the regime. The USO policy recognises that in the absence of legislation there would not be universal access to telecommunications services across Australia because most profit driven telecommunication carriers would not provide services to the numerous loss-making areas. Loss-making areas have historically been located outside urban areas, where the costs of supplying and maintaining services are not fully offset by the revenues generated by services. In an increasingly competitive telecommunications market, residents in these areas have not generated the revenue required to justify the expensive rollout of infrastructure. Profit-making areas are referred to as the standard area. The USO ensures that loss-making areas will always have a USP who receives a subsidy to offset any loss. Funding for USO subsidies is obtained from the carriers; all of whom contribute proportionately to the cost of fulfilling the USO based on their share of the total eligible revenue. This contribution is distributed to USP’s in the form of a subsidy that is calculated using an established methodology. The introduction of USO contestability Since 1989, the Australian telecommunications market has been gradually transformed. Previously, a government-owned monopoly provider, Telecom Australia, dominated the Australian market but now some 70 licenced carriers and more than 600 service providers operate in the market. With the opening of the telecommunications market to competition over the past 10 years, it has been important to ensure that loss-making services are still provided for. Hence, universal access has become an evolving area of public policy that is reflected in revisions and amendments to the relevant telecommunications legislation. Current legislation, on the universal service regime, includes new USO contestability arrangements, which can be found in the Telecommunications (Consumer Protection and Service Standards) Act 1999, as amended. USO contestability will allow carriers to compete to become USPs and receive a subsidy in designated areas. After evaluating the success of contestability in these areas, contestability may be extended to other parts of Australia. The key policy objectives for introducing USO contest-ability are to: o Increase consumer choice. o Increase benefits to consumers in terms of pricing, service innovation and service quality. o Improve infrastructure and regional investment, including employment; and o reduce the underlying costs of delivery of USO services over a period of time. As indicated above, USO contestability involves significant changes to the delivery of the USO. The main changes to the USO arrangements are as summarised as follows: o USO contestability is to be tested in two regional areas of Australia, known as the pilot projects. Carriers and carriage service providers will no longer be limited to supplying the tightly defined standard telephone service to fulfil the USO. A range of alternative telephone services will also be considered. o USO subsidies will, on advice of the Australian Communications Authority, be determined by the Minister for up to three years; and o Untimed local calls and upgraded services will be provided in Telstra’s extended zones (charging zones in remote areas of Australia) Contestability trials in two pilot areas Arrangements are under way for the introduction of competition in the delivery of USO in two pilot areas in regional Australia. These trials are expected to commence in mid-2001 and will be undertaken in: o The Greater Green triangle region of south-west Victoria and south-east South Australia, expanded to include the Central Goldfields and Greater Bendigo regions; and o North-East New South Wales and inland South-East Queensland (stretch-ing from Kempsey in New South Wales inland to Caloundra Shire in Queensland). Potential USPs in these pilot areas will be required to submit draft policy statements and marketing plans to the Australian Communications Authority for approval. These documents must reflect legislative requirements for entry into the pilot areas and include relevant feedback stemming from a 30-day public consultation period. The introduction of contestability arrangements in the pilot areas will be accompanied by a consumer awareness and education campaign, designed to ensure that customers are aware of their choices and rights under the new arrangements and the potential benefits available depending on their needs. Conclusion: Untimed local calls in the extended zones Most of Australia’s telecommunications users enjoy untimed local calls within their local area. This does not occur in what are known as extended zones, and the application of timed calls has implications for users who would like to participate in internet services, for example. The potential exists for the ‘digital divide’ to take root if not acted upon. The extended zones cover over 80 per cent of Australia’s landmass and approximately 40,000 services. In February 2001, the Government announced that Telstra had been selected as the preferred tenderer for the provision of untimed local calls in the extended zones. This followed a competitive tendering process for US$150 million for the provision of the following services to customers in the area: o Untimed local calls at a maximum local call charge of 22 cents per call within the extended zone or to an adjacent extended zone. o Calls from extended zones to ‘community service towns’ will be charged at the preferential rate of 27.5 cents for 12 minutes; and o An untimed maximum 22 cent local rate dial-up access to the internet in all extended zones. The introduction of untimed local calls within the extended zones will commence on 31 July 2001.
