Vodafone sees ‘growing momentum’ for USO overhaul

The Australian Infrastructure Plan says government should consider modifying the Universal Service Obligation

Vodafone has lauded a recommendation contained in the newly released Australian Infrastructure Plan that advocates the government look at alternatives to the existing Universal Service Obligation (USO) arrangements.

The government should consider a major overhaul of the USO scheme, which is intended to make sure that all Australians can get access to a basic telephone service, said the 15-year Australian Infrastructure Plan, which was released today

Under the USO scheme, which is co-funded by the government and a telco industry to the tune of $250 million, all Australians are guaranteed access to a 'standard telephone service' (STS).

The USO is delivered by Telstra under contract with the government.

The scheme has drawn the ire of Telstra’s rivals, which view it as an unfair subsidy for Australia’s largest telco and outdated in light of the rise of mobile and the roll out of the NBN.

The Infrastructure Plan, which was released today by Infrastructure Australia, said that the government should consider the merits of modifying the fixed-line USO with an eye to improving regional mobile coverage, as part of a broader recommendation looking at boosting regional telecommunications competition.

“There is now a strong and growing momentum from government, regional and telecommunications industry stakeholders for reform to the Universal Service Obligation to get a better deal for Australia’s country communities and agribusiness,” said Vodafone’s chief strategy officer, Dan Lloyd, in response to the Infrastructure Plan's recommendations.

“Vodafone has long advocated changes to the USO, which currently gives $253 million to one player each year to maintain an outdated copper network in regional areas which will be connected to the NBN, entrenching its market dominance in those areas,” Lloyd said.

The telco has been a vocal critic of the scheme in its current form. Optus, too, has criticised the USO.

The Regional Telecommunications Review 2015 concluded that the STS was “of rapidly declining relevance” given the rise of mobile and Internet-based communications.

“The cost effectiveness of the USO agreement between the Australian Government and Telstra is questionable,” the review stated.

“We’re pleased to see Infrastructure Australia has added its support to this growing chorus for change,” Lloyd said.

“We agree strongly with its findings that USO funding would be better spent on modern telecommunications technology such as mobile and that increased telecommunications competition is needed in regional and rural areas,” the Vodafone executive added.

The government should commit to a full review of the USO as part of its response to the Regional Telecommunications Review, Lloyd said.

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