ACMA - Funding of the USO

Background

The universal service obligation (USO) is the obligation placed on universal service providers (USPs) to ensure that standard telephone services, payphones and prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.

USPs are subsidised for providing these services. Telstra is currently the sole USP. The Minister may declare additional providers in the future.

Provision of the USO is funded by the telecommunications industry. Currently this includes licensed telecommunications carriers that have been defined as 'participating persons' in accordance with the Telecommunications (Consumer Protection and Service Standards) Act 1999. The Minister may expand the funding base to include carriage service providers, however he has not done so to date. Telstra files claims for USO subsidies (levy credit) with the ACMA at the end of each financial year.

The subsidies are determined by the Minister based on advice from the ACMA. These determinations may be made up to three years in advance.

Funding

To determine each participating person's contribution to the USO levy, the ACMA uses the concept of ‘eligible revenue’. Eligible revenue is the formal expression of the telecommunications earnings of a participating person and its related parties. Participating persons are required to lodge their eligible revenue returns (ERRs) to the ACMA for each year that they hold a telecommunications carrier licence. The ACMA then assesses the ERRs and advises these carriers of their eligible revenues for each financial year.

Information for the 2011-12 ERR period will be available from the Eligible revenue portal in August 2012.

The ACMA uses the eligible revenue to determine each participating person’s contributions to the USO subsidies. The contributions are based on the proportion of a participating person’s eligible revenue, compared with the total eligible revenue of all the participating persons. The sum of a participating person's contribution to the USO subsidies is generally referred to as its USO levy.

In April 2012, the ACMA made a written assessment of each participating person’s eligible revenue for the 2010-11 period.

The eligible revenue assessment from the 2010-11 period will be used to determine each participating person’s contribution to the USO levy for the 2011-12 period in September/October 2012.

Subsidies

In 2000, an important amendment to the legislation was introduced – the formula for calculating the Net Universal Service Cost, which was previously the fundamental element of USO subsidy calculation, was not included in the amended legislation. The amendments do not prescribe any methodology for calculating, or otherwise establishing, USO subsidies. Rather, the legislation simply provides for the Minister to determine USO subsidies, having regard to advice of the ACMA. The Minister may determine subsidies for the supply of services under the USO in a universal service area for up to three years in advance.

For further information regarding these amendments, refer to Part 2 of the Telecommunications (Consumer Protection and Service Standards) Act 1999.

Details of the current and previous years’ subsidies can be found below.

Claim and levy assessment

The USP is able to submit a levy credit claim to the ACMA for the USO subsidies at the end of the financial year. The ACMA is required to make a written assessment, in respect of each person who submits a levy credit claim.

An assessment may include information such as:

the universal service subsidy to which the universal service provider is entitled;
the total of all levy credits which the universal service provider is entitled; and
the universal service levy liability in respect of each participating person in the last eligible revenue period prior to the end of the subsidy claim period.

The USP has 45 days after the end of the claim period to give the ACMA written claims for a levy credit.

When the Levy Credit Claims for the 2011-12 claim period (based on the 2010-11 period) becomes available they will be published on the ACMA 2011–12 USO Subsidies and Funding arrangements webpage. Details of the Universal Service Assessment for 2011-12 (based on the 2010-11 period) are available from the ACMA 2011–12 USO Subsidies and Funding arrangements webpage.

USO funding and subsidies arrangements by year

The following table is a summary of the subsidies for 2008-09 to 2011-12:

	2008-09	2009-10	2010-11	2011-12
Extended Zones	$17,131,189	$17,131,189	$17,131,189	$17,131,189
Extended Zones Payphones	$2,183,183	$2,183,183	$2,183,183	$2,183,183
NSW/Qld and SA/Vic pilot areas	$10,412,164	$10,412,164	$10,412,164	$10,412,164
Payphones excl Extended Zones	$11,674,286	$11,674,286	$11,674,286	$11,674,286
Standard Area	$103,675,415	$103,675,415	$103,675,415	$103,675,415
TOTAL	$145,076,237	$145,076,237	$145,076,237	$145,076,237

The following links contain all available information regarding USO funding and subsidies assessments for the relevant year. It should be noted that the processes involved in determining subsidy amounts have changed over time, and the process used for each year is detailed in the relevant section.

Relevant legislation

For further information, please refer to the following legislative instruments.

Legislation

Current subsidy levels

The following Determinations set out the subsidy levels for 2011-12:

Eligible revenue

Refer compilation and amendments to the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 for the calculation of eligible revenue. More information is available from the Eligible revenue portal.

Funding of the USO

Contacts