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Productivity Commission – Submission on USO

The Productivity Commission is taking submissions on the policy for the universal service obligation (USO). Submissions are due by 21 July. The draft report is expected in December with a final report to the Commonwealth bu April 2017.

My thoughts on the future of the USO are expressed at length in my Occasional Paper for ACCAN (see my publications page). But, I have submitted some key point in this 3 page submission USO-Prod.Com.July-2016

The NBN and competitive neutrality

In my previous column, I said I would explain how the discount rate might be set for a company with neither debt nor equity. The NBN is not quite the same but the same solution was used for it both by the ACCC and the BCR. Combining that information with the BCR’s estimate of the economic loss that the NBN incurs in supplying fixed wireless and satellite services, I find that that there is some evidence that the NBN is breaching competitive neutrality – i.e. competing unfairly. This issue was first raised by the NBN’s competitors in greenfield fibre sites and the issue is likely to arise again.

The most logical solution, it seems to me, is to write-down assets (and the corresponding amounts in the ICRA) so that the overall internal rate of return becomes commercial.

For more, see Economuse 2016-06-06

USO levy study – Final paper

This opinion piece looks at the final consultation paper on funding options for the NBN’s fixed wireless and satellite services. The focus of the critique is on the continued under-estimation of mobile broadband, neglect of asset write-downs as another funding option and lack of consideration about how the recommendations fit with future privatisation of these services.

To read the column, click Economuse 2015-10-20

Mobiles and the USO

The “Rethinking the USO” report by Prof. Reg Coutts this week does not go far enough.

Yes, the universal service obligation (USO) needs reform and a universal service fund will be part of that. The changes that have driven the need for reform and why I think Reg Coutts has stopped short of the conclusion that leaps out of his analysis are discussed in Economuse 2015-07-15

The USO is very complicated and more reflections on possible approaches for the future will be published in these columns before the end of the year.