Vodafone calls on Govt to act following yet another damning USO report

STATEMENT FROM VODAFONE CHIEF STRATEGY OFFICER DAN LLOYD

The ANAO Report is the latest in a long list of reports and reviews which has come to the same alarming conclusion – government is blindly handing $6 billion of what is ultimately taxpayers’ money to Telstra with no checks or balances.

The Universal Service Obligation is an outrageous anti-competitive subsidy to Telstra, and has to go.

A light is finally being shone on this murky backroom deal.

The ANAO Report also reveals that the government holds in its hands the power to bring an end to this situation.

Government must act 

The Government has an obligation to act given the consistent damning findings in the ANAO and Productivity Commission reports of the gross misuse of taxpayer funds.

Government needs to move urgently to a model which delivers the voice services regional Australians want, need and deserve.

Every day that passes is a waste of nearly $1 million which could be spent delivering real value for Regional Australia.

We have no objection to the maintenance of copper lines in some rural and remote areas as we fully understand the importance of these services to rural Australia.

However, as the ANAO recognises, much of this infrastructure has already been shut down, with Telstra pocketing the difference.

There are much smarter ways to spend the bulk of the $300 million per year in taxpayer and industry funding.

Next steps 

As a first practical and obvious step, Telstra should no longer receive USO funding for copper lines and payphones which it has shut down.

Government does not need to wait until the NBN rolls out to make this change as there is no negative impact on regional Australia.

Based on available data, it appears approximately 50 per cent of payphones and over 40 per cent of regional copper have been decommissioned over the last ten years.

This represents a saving of at least $135 million per year, or over $2 billion over the remaining 15 years of the current USO.

Every year, the savings could be used to build nearly 300 mobile towers and expand total mobile coverage by up to 70,000 square kilometres.

Over 15 years, that could see over 4,000 new mobile towers built, which would see nearly half the country provided with additional mobile coverage.

The USO is a tragic anti-competitive waste of $6bn of taxpayers’ money which is selling regional Australia short.

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Key points from report:

Introduction 5 – “Due to short-comings in the Department’s record keeping system, particularly in relation to records relating to the policy development process between April 2009 and April 2010, the Department has not been able to provide assurance that it had identified, located and provided all records relevant to… the establishment of the TUSOPA.” (page 7)

Conclusion 7 – “key aspects of the TUSOPA do not reflect value for money principles” (page 8)

Conclusion 8 – “The annual fixed payment of $297 million for standard telephone and payphone services provided under the TUSOPA is consistent with external advice commissioned by the Department in 2011. There is no evidence that this advice was designed to provide guidance on Telstra’s likely costs to deliver the USO over the life of the contract, and therefore whether the value of the fixed annual contract payments to compensate Telstra for the provision of these services is appropriate.” (page 8)

Conclusion 9 – “Since assuming responsibility for the TUSOPA in July 2015, the Department has been a relatively passive contract manager. The Department has not utilised the flexibility mechanisms within the contract which have the potential to reduce the annual payment amounts.” (page 8)

Conclusion 10 – “Existing performance reporting provides limited transparency as to whether contract services are achieving the stated policy objective. More specifically, because reporting provides no information on the quantity of standard telephone services that Telstra supplies solely on the basis of its universal service obligations, it is not possible to determine the extent to which the TUSOPA contributes to Australians having reasonable access to such services on an equitable basis.” (page 8)

Background

The Productivity Commission’s Final Report into the Universal Service Obligation, released in July 2017, found the USO is “anachronistic and costly”, and “should be wound up by 2020”.

https://www.vodafone.com.au/media/government-needs-to-act-to-deliver-real-regional-benefits-vodafone