Vodafone CEO calls for govt action to boost telco competition

USO rethink could boost choice for Australians in regional areas

Vodafone Australia's CEO, Iñaki Berroeta, has repeated his call for changes to be made to the Universal Service Obligation (USO) scheme in order to boost telco competition in regional areas.

"In metropolitan areas, there are three strong 4G networks," Berroeta said in remarks prepared for an event hosted by the American Chamber of Commerce in Australia.

"This has set the scene for aggressive competition between the telcos, which means customers have access to not only great coverage but also good value deals through choice of provider.

"But in regional and rural Australia, it is very different story. In many areas, there is no competition meaning customers are forced to pay the high prices of the sole provider."

Vodafone-commissioned research "found customers across Australia are paying a $3.1 billion price premium each year because there is no effective competition in many areas," the telco CEO said.

"That's equivalent to a 15 cents per litre increase in petrol prices across Australia.

"It's $3.1 billion which could be driving growth in other areas of the economy, boosting productivity and improving our living standards.

"It's a $3.1 billion drain which is threatening the government’s aspirations of a digital economy."

The USO helps subsidise standard telephone services and payphones in remote areas of Australia. The cost of delivering the USO is offset by an industry levy.

Under the scheme, some $253 million is used to subsidise the delivery of standard telephone services and $44 million funds payphone services. Telstra is the designated universal service provider for the scheme.

"Every year, around $300 million in taxpayer money is spent through the Universal Service Obligation to provide outdated fixed voice services, mostly in regional areas," Berroeta said.

"At the same time, hundreds of millions of dollars of public funds is being spent on the NBN, including launching a satellite into space and building fixed wireless networks, to deliver superior services to the same areas.

"The current Universal Service funding scheme is therefore an unnecessary, wasteful duplication – and it simply doesn’t make sense."

Both Vodafone and Optus have previously called for a rethink of the USO's design and operation.

"I believe it would make more sense for the pool of funds to be streamlined in a way that delivers modern services which provide increased competition, as well as coverage," Berroeta said.

Earlier this year Vodafone told a government inquiry into regional telecommunications that the USO could be replaced by a scheme centred on the National Broadband Network, with NBN designated the 'Universal Infrastructure Provider' for Australians.

A new Universal Service Fund could potentially fund a broader range of communications solutions, including mobile coverage and public open access Wi-Fi.

The government's Mobile Black Spot Program "is a great step forward towards giving customers in regional areas better coverage and, often for the first time, the opportunity to choose a mobile provider", Berroeta said.

Under the $100 million program, Telstra and Vodafone will receive government assistance to boost their regional mobile infrastructure. Seventy new Vodafone base stations are slated to be built as part of the program.

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