The universal service obligation cost

[Stewart Fist]

George writes:
 
> If the USO is capped as a function of an <event> on the general telecoms pool
> of billable <events> then as long as the number of billable <events> rise the
> size of the USO budget can rise.
> 
> So is the USO capped as a $million stated sum, or as a % of a transaction
> that has to be set aside, eg 0.00001c per phonecall?

The USO was originally capped at a figure derived by calculations done by the
Bureau of Transport and Communications Economics at the request of the
government some years ago. They were given the brief to work out the 'true
cos't of non-profitable services. 

Telstra had calculated the cost of USOs to be about $800 million using a
percentage allocation method (full distributed cost approach), and the BTCE
calculated it at $215 million (from memory) using a different methodology
(avoidable cost addition approach).

Both types of calculation are equally justified and equally open to challenge,
as probably is the new way of calculating USOs developed by Bell Corp. under
an industry agreement.

Now Telstra, using the Bell methodology, has calculated that the new national
USOs should total $1.8 billion, which would make the pro-rata amount to be
paid by Optus $180 million (up from $23 m last year) and Vodafone $54 m (up
from $2 m).  

These figures would put Optus, Vodafone and AAPT further into the red -- and
Optus would have problems with the float.  So the minister has decreed that
USO payments will be capped at about the old level.  

This then raises the question, who pays for the rural digital upgrades, and how?


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