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Government needs to act to deliver real regional benefits: Vodafone

Welcomes PC final report into USO


Vodafone is urging immediate action by the Federal Government to ensure regional Australia receives the voice and broadband services it needs and deserves following the release of the Productivity Commission’s final report into the Universal Service Obligation (USO).

Vodafone Chief Strategy Officer Dan Lloyd said the report was the final nail in the coffin for the current USO model which provides almost $300 million in public and industry funding each year to Telstra, supposedly to fund its copper network and payphones.

“Regional Australia deserves better. The calls for USO reform have been growing louder and stronger over recent years, and the need for change is now urgent,” Mr Lloyd said.

“The final report has confirmed it’s all over for the USO, and the transition to a 21st century framework needs to start now.

“Almost $1 million per day is currently going into a black hole. This is a staggering sum of money which could be delivering real benefits for regional Australia.

“The final report not only confirms the fact the USO is well past its use-by date, but highlights the alarming lack of transparency, accountability and controls around the arrangement.

“It is scandalous that no one outside of Telstra has any true idea how nearly $300 million a year, which includes $100 million of direct taxpayer funding, is being spent.

“It is unacceptable to taxpayers, and to the rest of the industry which contributes tens of millions of dollars a year to the scheme, that there are no accountability obligations on Telstra even to report on how much of the copper line and payphone infrastructure it has actually been shutting down, let alone the actual costs of services supplied under the USO.”

Mr Lloyd said the final report sets out a clear plan and timetable for delivering 21st century voice and broadband services to regional Australia.

“The time for debate and reports is over, and the Federal Government must act quickly to adopt and implement the Commission’s recommendations,” he said.

“Regional Australia can’t afford for any more time to be wasted with this report sitting on a desk in Canberra gathering dust.”

Mr Lloyd said Vodafone acknowledged the government has established a USO taskforce to examine the report’s findings.

“This taskforce must get to work immediately so that the Government can soon release detailed plans about how it will transition to a model which delivers the best outcomes for regional Australia, taxpayers and the telecommunications industry.”


Key findings:

  • “The USO….is anachronistic and costly. It should be wound up by 2020” (page 2)
  • “The weight of evidence suggests that the costs of the TUSO are likely to outweigh its benefits” (page 8)
  • “The Commission’s assessment is that the TUSO is a blunt instrument and is not fit for purpose against the evolution of telecommunications needs and solutions” (page 8)
  • “Telstra’s contractual obligations under the agreement with the Australian Government lack transparency and accountability. The basis for its funding (a total of around $3 billion in net present value terms over 20 years to 2032) is unclear and disputed.” (page 20)

Media Contact

Jen Zemek

For journalists with enquiries about this media release, please email Jennifer.Zemek@vodafone.com.au. View our media contact page for more information. The Vodafone media team cannot assist with customer enquiries.

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