The federal government yesterday announced the introduction of legislation to cap the Universal Service Obligation (USO) cost at $253.32 million for 1997-98 and next two years.
The USO is a requirement that ensures telephone service across Australia adequately meet the needs of people wherever they are. The government has appointed Telstra as USO provider, but other service providers contribute to the costs based on market share. Each year Telstra lodges a claim for the USO which is reviewed by the Australian Communications Authority.
For 1997-98, Telstra lodged a claim of $1.8 billion for the USO cost. This is around seven times more than the 1996-97 cost of $251.6 million.
According to officials, the government recognised a need to impose a cap on the 1997-98 USO cost because the industry had operated on the presumption that the USO cost would be around $200 million.
Government spokesperson for the Department of Communications, Information Technology and the Arts, Terry O'Connor told Computerworld, it is in the best interests of consumers and the telecommunications industry to cap the 1997-98 cost to prevent the smaller carriers from "going under".
Although the ACA is in the process of assessing Telstra's 1997-98 claim to determine "a more realistic figure" for other carriers, O'Connor said the legislation provides a USO figure if Telstra, other carriers and ACA cannot agree.
O'Connor also said contained in the legislation is the power to vary the USO figure, if necessary.
According to O'Connor, the ACA's recommendation regarding the 1997-98 USO is due to be released in the next few weeks.