“Beating Around the Bush”Time to Reboot the USO

Comms Day ConferenceMelbourne

8th October 2014

Telco Subject Matter Expert

Presented byProfessor Reg Coutts

Telecommunications Subject Matter Expert

Professor Reginald Coutts

ITC Consulting – wireless, telephony and broadband specialist

Subject matter technologies advising in the following fields:

• Wireless technologies and spectrum management• Teclo regulation and policy• The Australian broadband industry• IP strategies, innovation and commercialisation• Expert witness• Board advisor

Summary – beating around the bush

USO Evolution Mobile in the USO? – coverage is key

Claimed mobile coverage

The Vertigan report observations The NBN and mobile – the new USO context Review of International Experience Let’s ‘stop beating around the bush’ Reform journey

History of USO Reform Legislated USO in 1991

Standard telephone service (STS) Public payphone

Iterative changes from 1995 to 2008 ‘Attempts’ to quantify the USO cost ‘Attempt’ to introduce contestability USO service inclusions

• Access to 64kbiti/s• Disability service access

2009 the NBN – ‘fixed broadband USO’! The USO - Retained the STS and invented TUSMA

Evolution phases of the USO

280 page report in 2004 concluding that Telstrashould continue as the USO Provider!

Include ‘mobile’ in the USO?

Telstra says•>99% of the population•30% of the land area

Optus, Vodafone•96-98% of the population•< 15% of the land area

Mobile BlackspotsProgramme•Strong demand!

THE essential service!

Vertigan Report – and the USO? No overt mention (‘beating around the bush’) Net $4 billion loss on the bush

‘equivalent broadband USO’ Not legislated like the current USO $230 million (estimate) per annum to be funded by:

• Internal NBN Co cross subsidy• (further) industry levy ($29 million in 2013)

• Budget appropriation ($100 million currently)

NBN Co the broadband wholesaler?• Legislated uniform whole-sale pricing – rural competition

The NBN, Mobile - the new USO context NBN Co and Telstra Negotiation

NBN Co to ‘take-over’ the Telstra copper Telstra NOT the ongoing USO provider? NBN Co can provide STS via satellite/fixed wireless

Fixed and Mobile Broadband Fixed broadband and mobile broadband

• Competition AND complementary

Backhaul critical for both Shared infrastructure NOW encouraged

Literature & Overseas Experience Literature

International• OECD, ITU/InfoDev, World Bank• Academic, EU Directives• Country case studies

Australian• TJA articles• Government – ACA, Department• Regional Reviews

Chile and ‘Smart Subsidies’ Competition reduces the required state funding Leverage private and community investment Clear transparent processes

Administrative USO costing (ie Australia) unusual!

Draw from history/experience!

‘Stop Beating Around the Bush’ Market trends

Fixed to mobile voice Broadband mobile growth

Regional telecommunications reviews! Esten’s Review (2002) Glasson Review (2008) Sinclair Review (2012)

NBN Co – Telstra negotiation USO role change

NBN and the bush - bipartisan ‘equivalent broadband USO’

• Vertigan report - $230 million per annum (estimate)

Is Government deaf?

Stage 1 – NBN STS Variant NBN Co – the USO wholesaler

Modify the STS and payphone (Free WiFi) • LTSS satellite and fixed wireless• Competitive USO retail (USO funded)• Copper retirement plan!

Mobile Black-spots program Review un-met coverage demand Opportunities for reduced cost

• Backhaul opportunity assessment• Shared infrastructure

Option – Combine through NBN Co

Greater industry acceptance!

Stage 2 - Mobile - Broadband Fund

Review of stage 1 NBN Co the USO wholesaler Mobile Black-spots Program

• Consider ongoing fund

NBN Co synergy with MNOs

Universal Service Fund Regional diversity Funding alternatives Role of NBN Co?

Observations NBN is a “game changer” including the USO

“equivalent broadband USO”

Mobile service MUST be an objective Coverage is key for ‘access’

USO Reform is a Staged Journey Stage 1 – NBN STS variant

• NBN Co becomes the USO wholesaler with retail competition

• Mobile Black-spots deliver, audit & review

Stage 2 – Mobile - Broadband Fund• Includes mobile• ‘smart subsidies’• Regional

Acknowledgements

Views The views expressed are my own but I acknowledge the

Vodafone Australia commissioned me to think about ‘essential in the bush’.

Sources of Advice John de Ridder and his ‘Economuse’ articles

Detailed report soon!