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Telstra: 'Absolutely no chance at all' government will remove USO

Telstra has expressed doubt that the Australian government will remove the USO, despite the government's previous statements about the system being outdated.
Written by Corinne Reichert, Contributor

Telstra group director of Corporate Affairs Tony Warren has said the telecommunications provider sees "absolutely no chance" that the government will remove the Universal Service Obligation (USO) at the conclusion of its review into the matter.

"Telstra is supportive of any changes to the USO -- if they can improve the experience of regional and remote communities," Warren said at the CommsDay Congress on Tuesday in Melbourne.

"On this point, we agree with others in the industry, as well as many community groups. While it is easy to ... pontificate about alternative network solutions and contestability, the reality is that many people in the bush still want guaranteed access to a fixed landline.

"With the composition of the current federal Parliament, I see absolutely no chance at all that the government will remove the USO any time soon."

In spite of this, Regional Communications Minister Fiona Nash said a day later that the government is seriously considering making changes to the USO, given the prevalence of mobile services as well as the rollout of the National Broadband Network (NBN).

"A key point of contention when discussing the USO relates to the declining use of fixed-line telephones by Australian consumers; with the rollout of the NBN, Australia is seeing a reduced demand for fixed-line voice-only services and increased demand for data across all technologies. There is also an increase in the demand for mobile services and the use of smartphone technologies," Nash, also speaking at the CommsDay Congress, said on Wednesday.

"The impact of the NBN ... cannot be understated in the context of the USO. In this regard, some argue the government funding of the USO in regional and remote areas at the same time as investing in NBN's satellite and fixed-wireless solutions is duplication."

Nash said 58 submissions have been received on the matter, with the Productivity Commission's final USO report due in April 2017.

"It is premature to determine the appropriate model for new regulatory and funding arrangements," she added.

The USO -- which mandates Telstra as the fixed-line phone service provider of last resort, giving the telco hundreds of millions of dollars each year for the installation and maintenance of fixed-line services -- is now facing government reform thanks to the Regional Telecommunications Independent Review, which made 12 recommendations on how the government can improve regional access to telco services to leverage connectivity for business, education, health, and personal purposes.

In April, the government released a terms of reference statement detailing the process by which the funding and regulatory arrangements for the USO will be reviewed, with Treasurer Scott Morrison formally requesting that the Productivity Commission undertake an inquiry.

In response to that report, the government acknowledged that the USO is outdated due to the prevalence of mobile services, and consequently needs to be reviewed.

The scope of the inquiry will see the Productivity Commission address the USO's nature, scope, and objectives, and whether the retail market can deliver "appropriate outcomes" in terms of competitively priced ubiquitous access to services without government involvement.

The commission must consider what arrangements should be made to ensure all sections of the community are provided for, who should bear the cost of this, the funding model best suited to such intervention, and arrangements from transitioning from the present USO model.

Rival telco Vodafone Australia has been calling for an end to the USO for years, saying the AU$250 million in government and industry funding should instead be spent on such initiatives as the mobile blackspot program.

"The blackspot program in 2015 will deliver 500 blackspots with AU$100 million of public money. Last year, the USO, which is the universal service obligation that the incumbent gets to provide fixed copper services and payphones as well, [received] AU$250 million," Vodafone Australia CEO Inaki Berroeta said in April.

"If we would be putting this USO [funding] on top of the blackspot [funding], just imagine how many more blackspots would be covered in this country. We really think that having the USO today as a way to use public money to invest on copper network, fixed network, voice network, at the same time that the NBN is doing these fantastic investments for fixed broadband, it really doesn't make any sense. And any day that we leave this USO running the way it is, I think that we are wasting our money.

"We really want to collaborate with industry but also the government and urge the government to make a decision around how to do a better usage around the USO."

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