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Review of the operation of The Universal Service Obligation and Customer Service Guarantee.



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1 December 2003 23/03

Review Of The Operation Of The Universal Service Obligation And Customer Service Guarantee

The Australian Government will conduct a review of the Universal Service Obligation (USO) and the Customer Service Guarantee (CSG) as part of its comprehensive response to the Regional Telecommunications Inquiry.

The review also fulfils the Government's responsibilities under section 159A of the Telecommunications (Consumer Protection and Service Standards) Act 1999.

The USO ensures that all Australians have reasonable access on an equitable basis to the standard telephone service and payphones.

The CSG ensures that telecommunications companies meet minimum standards for connecting, repairing faults or service difficulties, and attending appointments with customers.

The Regional Telecommunications Inquiry (RTI) found that the existing framework of legislated consumer safeguards is effective and provides a strong level of protection for telecommunications consumers. It also found that compliance with legislated safeguards by carriers and service providers is generally high.

The review will address two specific recommendations from the RTI. These relate to the current arrangements for costing and funding the USO and whether network extension and trenching costs are impeding access to USO services.

The terms of reference for the review are attached and submissions addressing the terms of reference are invited from interested parties by 6 February 2004.

Submissions may be emailed to usoreview@dcita.gov.au. Alternatively, submissions may be faxed to 02 6271 1886 or sent on disk or hard copy to:

USO Review Regional Communications Policy Department of Communications, Information Technology and the Arts GPO Box 2154 CANBERRA ACT 2600

The Department proposes to post all submissions on www.dcita.gov.au unless otherwise indicated.

Review of the operation of the Universal Service Obligation and Customer Service Guarantee

(Parts 2 and 5 of the Telecommunications (Consumer Protection and Service Standards) Act 1999)

Terms of Reference

The Australian Government is committed to ensuring that all Australians have reasonable and affordable access to telephone services, wherever they live or carry on a business.

Australian telecommunications consumers are protected by one of the most comprehensive frameworks of consumer safeguards in the world. These safeguards cover almost all aspects of a consumer's interaction with a telecommunications company, and ensure affordable and timely access to basic telephone services.

Key elements of this comprehensive consumer framework are the universal service obligation (USO), and the customer service guarantee (CSG), contained in Part 2 and Part 5 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act).

The USO ensures that all Australians have reasonable access on an equitable basis to the standard telephone service (STS) and payphones. The CSG ensures that telecommunications companies meet minimum standards for connecting, repairing faults or service difficulties, and attending appointments with customers in relation to the STS. The General Digital Data Service Obligation (GDDSO) ensures that 96 per cent of Australians have reasonable access on an equitable basis to ISDN-based digital data services. The Special Digital Data Service Obligation (SDDSO) ensures that the remaining four per cent of Australians have reasonable access on an equitable basis to digital data services with a one-way minimum data speed of 64 kilobits per second. The USO and SDDSO are funded by means of an industry levy which is used to subsidise the costs to providers of these services.

In 2000 the Parliament amended the Act to enable there to be multiple USO providers. At this time section 159A was also passed which requires the Minister for Communications, Information Technology and the Arts to cause a review of the operation of Parts 2 and 5 of the Act to be commenced by 1 December 2003. The review is required to consider these 'contestable' USO arrangements, within the context of a broader consideration of the operation of Parts 2 and 5. As Part 2 also addresses the digital data service obligation regime (DDSO and SDDSO), the review will also need to examine these arrangements.

Since the contestability arrangements were passed by the Parliament, there have been two major independent reviews of regional telecommunications services (the Telecommunications Service Inquiry (TSI) and the Regional Telecommunications Inquiry (RTI)). The most recent report - that of the RTI - found that the existing framework of legislated consumer safeguards is effective, and provides a strong level of protection for telecommunications consumers, and that compliance with legislated safeguards by carriers and service providers is generally high.

The RTI made a number of other findings and recommendations which bear directly on the issue of provision of USO services. It strongly supported the consumer protection provided by the universal service regime in relation to the STS, but found that the regime is not an effective mechanism for providing broad consumer access to a range of services in the future. The Report made a number of recommendations as to how other advanced services should be supported and promoted in the future. The Government has accepted the recommendations of the RTI.

Against this background, the Minister for Communications, Information Technology and the Arts has, in accordance with section 159A of the Act, directed the Department of Communications, Information Technology and the Arts to review, consider and report to the Minister on or before 31 March 2004 on the following matters in accordance with section 159A of the Act:

1. The operation of Parts 2 and 5 of the Act and whether those Parts best promote the objects of the Act and of Part 2 (as set out in section 3 of the Telecommunications Act 1997 and section 8A of the Act)

2. Whether the contestability regime, and the ability of providers to offer alternative telecommunications services, has resulted in an improvement in technologies and services available to people in rural and remote Australia compared with what is on offer to people in metropolitan Australia.

In examining these matters, the review must examine and report on each of the following specific issues. In relation to Part 2 (USO), the review must specifically consider the following issues identified by the RTI:

3. The efficacy of the current statutory arrangements for the costing and funding of the USO, including whether current arrangements are impeding the development of competition in regional, rural and remote Australia.

4. Whether network extension and trenching costs are impeding access to USO services for subscribers, and whether such costs should be removed from subscribers, and either borne by Telstra as part of its USO provision, or supported by the Government through subsidies.

The Government has accepted the Regional Telecommunications Inquiry (RTI) finding 7.3 that the USO 'is not an effective mechanism to provide broad consumer access to an increased range of services into the future'. Therefore the review is not required to consider whether the scope of the USO should be expanded to include services other than fixed telephone services and payphones.

As part of the Government's response to the RTI, the Australian Communications Authority is currently reviewing payphone policy and service provision under the USO. Therefore the review is not required to consider arrangements in relation to the provision of payphone services under the USO.

In its consideration of Part 5 (CSG) issues, the review's considerations should take account of:

● the review undertaken in 2001 by the ACA of the operation of the CSG in a multi-carrier

environment, and initiatives put in place by the Government in response to that review; and ● other initiatives put in place by the Government, including in response to both the

Telecommunications Service Inquiry and RTI reports, to enhance the operation of the CSG.

The review must include an opportunity for the public to make written submissions.

If the review considers that the current arrangements in Parts 2 and 5 are not optimal then it should recommend changes to those arrangements for consideration by the Government.

Media Contact: Carina Tan-Van Baren (02) 6277 7480 or 0419 423 965