Government’s USO plan a ‘massive missed opportunity’, says Vodafone

Government to keep Telstra USO contract

The government’s planned successor to the Universal Service Obligation (USO) is “a massive missed opportunity” that will allow Telstra “to continue to line its own pockets at the expense of Regional Australia and taxpayers,” according to a Vodafone executive.

Vodafone has long been a critic of the USO scheme.

The government today released details of its plans for the Universal Service Guarantee (USG), which will replace the USO. The USO is a scheme intended to make sure that people in remote parts of Australia have access to basic telephone services.

The USO, first introduced in the 1990s, is delivered under a federal government contract with Telstra. The 20-year contract, which covers the delivery of services over the copper phone network and the maintenance of payphones in regional areas, was signed in 2012 and is worth around $300 million a year.

A 2017 Productivity Commission report described the USO as “anachronistic and costly” and said it should be wound up by 2020. “Consumer needs are instead overwhelmingly being met by a wide range of digital technologies and applications,” the PC report said.

The Australian National Audit Office concluded that the USO contract did not reflect value for money principles, 

In December, the federal government said it would introduce the USG as a replacement to the USO.

The USG, the government said at the time, “will provide all Australian premises, regardless of their location, with access to both voice and broadband services delivered on a commercial basis by the market in the first instance, and where this cannot be achieved, options will be developed for targeted Government measures”.

“A Universal Service Guarantee will also ensure access to payphones or equivalent community voice services in targeted areas with specific needs, for example in communities with no mobile coverage or in remote Australia,” the government said.

The government today released research on implementing the USG.

The report concluded that the broadband component of the USG should be delivered via the NBN, but the voice component should be delivered under the existing Telstra USO contract.

“Given the USO contract has a limited life, a more robust long term USG solution is needed,” the report said. “In the interim, there will also be a sustained focus on continuing improved management of the USO contract.”

“The government has decided to continue to pay Telstra over a million dollars a day while admitting that Telstra has in fact drastically reduced the number of copper lines and payphones,” said Vodafone’s director of strategy and corporate affairs, Dan Lloyd.

“This is the fourth government report in a row which confirms overwhelming evidence that Telstra is merely shutting down services in regional Australia and pocketing a larger and larger windfall gain.”

“Regional Australians will remain in the copper age and be left further behind their city counterparts following the Government’s decision to wave the white flag on reforming the outdated USO,” the Vodafone exec argued.

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Tags VodafoneTelecommunicationsuniversal service obligation (USO)

More about AustraliaAustralian National Audit OfficeNational Audit OfficeProductivity CommissionUSGVodafone

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