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Competitive tendering for universal service obligation worth exploring on a regional basis

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M E D I A S T A T E M E N T Stephen Smith MP Member for Perth Shadow Minister for Communications

24/99 Wednesday 7th April 1999


Shadow Minister for Communications, Stephen Smith, today welcomed the call by the Government for expressions of interest by telecommunications carriers in tendering for the Universal Service Obligation (USO). Mr Smith also welcomed the release of the Government’s consultation paper on competitive tendering.

Mr Smith said that competitive tendering for the provision of the USO, particularly on a regional basis, was well worth exploring.

The Telecommunications Act 1997 provides for the appointment by the Minister of not only a National Universal Service Provider, but one or more regional universal service providers as well. At present Telstra is Australia's only Universal Service Provider, responsible for ensuring that all Australians regardless of where they live, have access to a standard telephone service and payphones.

Mr Smith said he supported the notion of exploring competitive tendering by Telstra's competitors for a role as Regional Universal Service Providers in respect of specified geographical regions. These Regional Universal Service Providers would operate

alongside and in tandem with Telstra, as the National Universal Sendee Provider.

Telstra would always retain the title of National Universal Service Provider under such a notion of competitive tendering of the Universal Service Obligation, Mr Smith said.

Mr Smith also said that one of the most important telecommunications issues currently under scrutiny was the calculation and cost of providing the Universal Service Obligation.

Last week in the House of Representatives the Opposition supported the Government’s legislation to cap Telstra’s recoverable cost of the USO for up to three years at an indexed rate of $253million for each of the financial years commencing 1997/98.

The Opposition has previously expressed its consternation at the $1.8 billion Universal Service Levy claim lodged last year by Telstra for the 1997/98 financial year. Mr Smith said he saw competitive tendering as one way of ensuring that the size of a USO claim was reduced.

“Telstra's competitors claim that they can provide a universal service in regional, rural and remote areas of Australia at a cost far less than Telstra currently asserts. The process announced yesterday by the Government asks them to demonstrate how and why, no

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doubt with a view to identifying one or more regional universal service providers to operate alongside and in tandem with the National Universal Provider.”

“If another carrier is able to demonstrate the capacity and a willingness to provide a - service to a particular region for a significant lesser cost then Telstra, they should put their bid forward.”

“Competitive tendering on a regional basis will also provide carriers with the opportunity to put forward alternative technologies for the provision of USO services. This may mean that regional areas could benefit from customised technology, such as satellite networks, wireless local loops, and other terrestrial delivery systems, being implemented at the local level.”

Media contact: Patrick Bindon (02) 6277 4108 or 0415 694 878

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