USO funding should be redirected to blackspots: Vodafone CEO

The hundreds of millions of dollars given to Telstra each year to maintain fixed-line services could provide funding to build out mobile coverage to thousands of blackspots across Australia, Inaki Berroeta has said.
Written by Corinne Reichert on

Vodafone Australia CEO Inaki Berroeta has again criticised the federal government's Universal Service Obligation (USO), saying the AU$250 million in government and industry funding should instead be spent on such initiatives as the mobile blackspot program.

The USO -- which Communications Minister Mitch Fifield on Monday conceded is outdated -- mandates Telstra as the fixed-line phone service provider of last resort, giving the telco hundreds of millions of dollars each year for the installation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.

Berroeta, speaking at the CommsDay Summit in Sydney on Tuesday, argued that the National Broadband Network (NBN) is already providing fixed-line services to all areas, and the funding should therefore go towards the blackspot program instead, which provides both mobile coverage and a choice of providers for customers living in regional areas.

"The blackspot program has been a fantastic achievement by the government, and I think it has been a clear example of how you can do a much better usage of public money," Berroeta said, adding that Vodafone plans to participate in round 2 of the 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.

"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."

The USO 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 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 current consumer safeguard regime is increasingly outdated, given the evolution of the telecommunications markets, including the rollout of the NBN," the report said.

"Current concepts and interventions reflect a fixed-line voice telephony environment delivered through a vertically integrated Telstra, which provides access to its wholesale networks to other carriers."

The government also recognised that telco services are no longer delivered solely by fixed-line infrastructure.

Vodafone welcomed the news at the time, with chief strategy officer Dan Lloyd calling it "long overdue".

Earlier on Tuesday morning, Vodafone revealed its full rollout schedule for the 70 base stations it is building as part of the federal government's mobile blackspot program.

"We believe the Mobile Black Spot Programme is a great way to encourage competition and choice of mobile provider, which is something many people living in regional and rural areas have never experienced," Lloyd said in a statement.

"Vodafone's rollout of mobile black spot sites is progressing well, with the first location at White Rock Mountain, west of Glenn Innes, in New South Wales switched on in December 2015. A further 28 sites in New South Wales, Queensland and Tasmania will follow this year, with all 70 sites to be completed by the end of 2017."

Vodafone had switched on its own first cell tower at White Rock Wind Farm, in the New England region of NSW, in December, and in February revealed the locations that it would construct and switch on by the end of July.

The first round of mobile blackspot funding was opened in December 2014, with Telstra and Vodafone securing AU$185 million in government funding to build or upgrade 499 mobile towers across Australia.

In total, Telstra will build out 429 cell towers, while Vodafone builds out 70, with the full rollout to be completed within three years.

On Monday, Vodafone announced that its 4G network now covers 95.3 percent of the Australian population, or 23 million people. By comparison, Vodafone said Telstra 4G covers 96 percent of the population, while Optus said its 4G network reaches 92 percent as of January. Berroeta said this signalled a 40 percent rise in Vodafone's network size over the past four years.

Vodafone has been expanding its 4G network nationwide by purchasing AU$68 million worth of 1800MHz spectrum in February, and refarming its 850MHz spectrum band in November to bring coverage to regional and metropolitan Queensland.

In the wake of the three Telstra outages over the last six weeks, Vodafone also launched its "Network Happiness Guarantee" on Monday, offering new customers 30 days to cancel their contract if they are unhappy with the service.

"We have spent billions of dollars over recent years to build a high-performing 4G network throughout Australia for our customers. Now available in more places, our 4G network is faster and more resilient than ever before," Vodafone CTO Benoit Hanssen said.

According to Berroeta, Vodafone will additionally launch its voice over Wi-Fi (VoWiFi) network in the near future, which he said would effectively extend its network to anywhere.

"Voice over Wi-Fi seems like a gadget, but in reality, it's much more than that. I think that voice over Wi-Fi will make possible to extend the Vodafone network to any place where the device is and there's Wi-Fi coverage anywhere in the world," the chief executive said at CommsDay.

"I really think this is a significant technology breakthrough for the customer."

Berroeta also pointed towards the rise of 5G by 2020, saying Vodafone's AU$1 billion deal with TPG for the latter to build out an extra 4,000km of fibre to connect Vodafone's cell towers across Australia by mid-2018 will provide leverage for the new network technology.

"TPG will be providing fibre to almost all our sites, and this will be a fundamental part of our network design to get our network ready for 5G."


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