After a short break – (other commitments have kept me busy for the last week) – here is the next and fifth instalment of my series on the recently signed Telstra/NBN Co deal. Today I will highlight what I believe are the interesting and/or important parts of the first of the agreements between Telstra and the Commonwealth – the TUSMA Agreement (TA).
All descriptions are taken from the Telstra release to the ASX.
In part, the TA as described is:
“The intention of the Government is to implement USO reform so that delivery of universal service outcomes and other public interest services will progressively transition from a regulatory model (with obligations imposed directly on Telstra and other service providers), to an open competitive contractual model. TUSMA, a Government statutory agency, will progressively assume responsibility for delivery of the USO and other public interest obligations and will fulfil its statutory functions by contracting with Telstra and third parties on behalf of the government.”
Firstly, a definition of the USO. Under the USO – (with Telstra currently being the default, and in most cases, only provider) – all Australians are required to have made available to them, access to a standard telephone service (STS), as defined in the Telecommunications (Consumer Protection and Service Standards) Act 1999. For most people this includes:
- Local, national and international calls.
- 24 hour access to emergency service numbers, free of charge.
- A unique telephone number with a directory listing, unless the customer requests otherwise.
- Operator assisted services.
- Directory assistance.
- Itemised billing, including itemised local calls on request.
For protecting the USO in the NBN world, where Telstra will no longer be the owner of the majority of the carriage network, the government will form the Telecommunications Universal Service Management Agency (TUSMA).
Currently, Telstra looks after almost all USO requirements in Australia, but TUSMA will take over this, and seek to ensure that STS and payphone services remain accessible on a reasonable and equitable basis to all Australians, just as happens how through Telstra’s USO obligations.
This lays down a key point – basic services are protected. Many had a fear that with a shut down Telstra copper network, this would disappear.
Frankly, that was never going to happen – any government would be committing suicide by taking that protection away. The TA also ensures that in non-NBN fibre areas, the existing copper network would be maintained to allow for the continuation of an STS to people in those areas.
Many people also feared that the copper would be switched off in non-fibre areas, forcing people onto latent wireless and satellite services for basic telephony. This further reiterates – as did the NBN Subscriber Agreement (SA) – that copper network services will be maintained in the 94th to 100th percentile of the NBN coverage areas.
If you are out there in that 7%, you are not losing your copper. It stays. Full stop.
The TUSMA agreement will be in place on 1 July 2012, and overall will be in place for 20 years – though some modules may be assigned shorter time frames. The 20 year period appears designed to map neatly against the 20 year agreements between Telstra and NBN Co for Telstra to exclusively use the fibre network for premises connections.
For ongoing STS purposes, Telstra retains its position as the ROLAR – the “retail provider of last resort” – for customers wishing to take up an STS only, whether that be over a fibre connection in the 93% fibre footprint, or on the coppper in the last 7%.
Indeed, in that last 7%, Telstra is likely to remain the only possible provider of a default STS.
For the 20 year life of the agreement, Telstra remain obliged to supply, install and maintain payphone services. This will include all existing payphones in operation at the commencement date of the agreement, and any new phones required over that time.
To achieve this, TUSMA will pay Telstra $40m a year – an amount that can be altered if the number of payphones increases or decreases within a specified range.
As the NBN fibre is being rolled out, it is TUSMA who decides whether individual payphones are migrated to the fibre network, altered to operate using an alternative technology – (such as wireless) – or whether the payphone is offered to another provider to operate instead of Telstra.
This is an interesting one for me.
I would envisage that the majority of payphones in fibre areas will be migrated to the fibre, and things will carry on as per normal. However, that they are allowed to use an “alternative technology” for deployment – (presumably wireless) – suggests that Telstra might already consider that really low volume sites are going to be cheaper to operate over wireless connections.
That other providers might be offered some sites also suggests that Telstra still has a lot of existing, less-profitable payphone sites they really want to close down completely.
This agreement appears to provide the mechanism for all of these potential outcomes to occur.
As a region – (approximately 3000 premises) – is rolled out with NBN fibre, and it is within six months of the copper services in that region being shut down, TUSMA will fund Telstra – (or another service provider) – to migrate that customer onto the NBN fibre for STS only customers.
This appears to be a mechanism to allow people who do not understand what is going on – (most likely pensioners in particular) – to not be left out of pocket or without a telephone should they just wish to continue with their basic telephone only.
Under the TA, Telstra will be contracted for a period of 20 years to provide emergency call services, and be entitled to funding up to $20m a year for providing that service – with that funding coming from TUSMA. The interesting thing here is that within 5 years of the commencement date of the agreements, TUSMA must issue a tender for the supply of ongoing emergency call services.
This means other companies could come in and win that tender out from underneath Telstra, and take over that role. Presumably, the winning tenderer will also be limited to that $20m of annual funding from TUSMA.
Obviously, the 20 year agreement to provide the emergency call services with Telstra would cease if another company won the tender.
As with the agreements between Telstra and NBN Co, the TA between the government and Telstra also provides standard sorts of penalties and remedies for non-compliance, and early termination of agreements, should there be material reasons that affect the continuation of the contract, or individual services over which the agreement has jurisdiction.
Overall, for me the TA is not a lot more than a basic housekeeping document, to make sure that service standards that are expected by Australians now, are maintained in the post-NBN world.
Telstra could not reasonably be expected to maintain those services given the loss of their monopoly copper network in most areas, without an agreement like this in place – given that the goal of the structural separation of Telstra is to pull them away from the control of the network.
This makes sure that there is still a mechanism in place – whether it be through Telstra or someone else – to ensure everyone has continued access to a basic service.