Vodafone gets behind calls to scrap Telstra phone subsidies

Vodafone gets behind calls to scrap Telstra phone subsidies

Telco urges immediate action by Federal Government

Vodafone has attacked the country’s current telecommunications Universal Service Obligation (USO) following the release of a report from the Government's Productivity Commission calling for the arrangement to to be round up.

Vodafone chief strategy officer, Dan Lloyd, said the report was the final nail in the coffin for the current USO model, which provides almost $300 million in public and industry funding each year to Telstra for the telco to maintain fixed line voice services and public payphones.

“Regional Australia deserves better,” he said in a statement. “The calls for USO reform have been growing louder and stronger over recent years, and the need for change is now urgent.”

“The final report has confirmed it’s all over for the USO, and the transition to a 21st century framework needs to start now.”

In its report, the Productivity Commission described the current system as “deficient” and called for it to be wound up by 2020.

The final findings follow the commission’s draft report which was released on 6 December. 2016.

The funding arrangement, introduced in the 1990s, sees Telstra receive a combined total of around $297 million worth of subsidies per year, from both public and private funding, to maintain fixed line voice services and public payphones.

Lloyd argued this meant that almost $1 million per day was currently going into a “black hole”.

“This is a staggering sum of money which could be delivering real benefits for regional Australia,” he said.

“The final report not only confirms the fact the USO is well past its use-by date, but highlights the alarming lack of transparency, accountability and controls around the arrangement.

“It is scandalous that no one outside of Telstra has any true idea how nearly $300 million a year, which includes $100 million of direct taxpayer funding, is being spent," he said.

He described the situation as “unacceptable to taxpayers, and to the rest of the industry which contributes tens of millions of dollars a year to the scheme.”

Lloyd said there were no accountability obligations on Telstra even to report on how much of the copper line and payphone infrastructure it has actually been shutting down, let alone the actual costs of services supplied under the USO.

He added that the final report sets out a clear plan and timetable for “delivering 21st century voice and broadband services to regional Australia”.

“The time for debate and reports is over, and the Federal Government must act quickly to adopt and implement the Commission’s recommendations,” he said. “Regional Australia can’t afford for any more time to be wasted with this report sitting on a desk in Canberra gathering dust.”

Lloyd said Vodafone acknowledged the government has established a USO taskforce to examine the report’s findings.

“This taskforce must get to work immediately so that the Government can soon release detailed plans about how it will transition to a model which delivers the best outcomes for regional Australia, taxpayers and the telecommunications industry.”

It should be noted that, Vodafone, like many of Australia's other telco players, could stand to save a substantial amount of money if the current USO scheme is, indeed, scrapped.

The government provides about $100 million of the Telstra’s subsidy annually, and the rest comes from an industry levy. 

As such, if the Government takes on the Productivity Commission's recommendations, Vodafone and the nation's other telcos would be liberated of the levies they pay for the scheme.

At the same time, the scheme may well be replaced with yet another arrangement that sees the implementation of a new industry levy.

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Tags VodafoneTelstratelstra wholesaleUSO

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