A market based solution, supplemented by targeted government intervention, will replace the $300 million a year USO contract with Telstra sometime after 2020 when the National Broadband Network (NBN) roll out is due to be completed.
The new policy, dubbed the Universal Service Guarantee, follows separate investigations by the Productivity Commission and National Audit Office that labelled the USO poor value for money which could be replaced by new technology such as mobile networks.
The commission found that the USO was redundant because 99 per cent of Australians are better served by their access to universal voice and data services over the NBN and/or mobile networks.
It recommended government encourages market competition and use targeted funding through programs such as the Mobile Black Spots Program, to eliminate coverage gaps.
A competitive tender for baseline voice services, using a any viable technology, could be employed to “address any gaps in voice services within the NBN satellite footprint”.
Setting out its guarantee policy in its response the commission’s report, government said the “vast majority of mobile coverage” provides voice and mobile broadband connectivity which duplicates the fixed line networks and exceeds the current fixed line-requirements of the USO.
More than 99 per cent of Australians have access to at least one commercial mobile network, and more than 96pc can access three.
But turning off the USO tap will have most impact on rural and remote residents with patchy or no mobile coverage, who rely on voice based communications, and live outside the footprint of fixed line connections to the NBN.
This connection is a likely solution if the fixed line copper network is not maintained.
They access NBN through fixed wireless connections from Sky Muster satellites, which could potentially provide voice services through Voice over Internet Protocol (VoIP).
But questions remain over VoIP’s reliability.
Isolated Children’s Parents’ Association president Federal president Wendy Hick said that VoIP was not reliable enough for emergency and business communications.
“A voice service over satellite internet could be the only alternative for these families and would be severely compromised by poor weather, power outages,” Ms Hick said.
National Farmers Federation president Fiona Simson offered qualified support for the policy.
“We will need to consider the path forward for guaranteed voice services very carefully,” Ms Simson said.
“The response indicates a heavy reliance on mobile services, something that we have been saying for a long time needs fixing in the bush.
“It is imperative that, should the Federal government move away from copper technology for voice services, the reliability of new alternative technologies are first proven beyond doubt.
“Voice services are literally a lifeline for many rural Australians.”