With the rapid development of technology in the past few decades, it has never been more important for all Australians to have access to reliable and affordable mobile services. However the current Universal Service Obligation scheme is leaving regional Australia behind, and changes need to be made to ensure all Australians are catered for.

USO Payments To Telstra

Every year almost $300 million * is provided to Telstra to maintain its copper wire network and payphones in regional areas:

Total USO payments to Telstra since July 2012

Payment Rates

Between 2012 and 2032, Telstra will receive almost $6 billion in USO payments.

Payment Rates

  • $24,750,000 a month
  • $813,699 a day
  • $33,904 an hour
  • $565 a minute
  • $9 a second

In order to be seen as a viable living alternative to capital cities, regional areas need access to the same services as their metropolitan counterparts. Advancements in agriculture, industry, business, education and health will not occur without access to the same reliable mobile and high speed internet networks currently enjoyed in capital cities and metropolitan areas around the country.

In the same way, the move to decentralise government departments and relocate key offices to regional areas will not be successful unless the necessary telecommunications infrastructure is put in place. The Victorian and New South Wales governments have already begun this process with the relocation of the Australian Pesticides and Veterinary Medicines Authority to Armidale. In addition, over 600 government positions have been moved to Ballarat in regional Victoria, with plans to move another 150 positions to the Latrobe Valley.

Moves such as these have a huge spill-over effect on the economy of the towns. In Armidale, an extra 618 jobs will be created as a result of the move, with an estimated $200 million boost to the local economy across a wide range of areas including retail, education and training, health care, hospitality and amenities. While the nbnTM rollout will progressively service regional areas and open up new opportunities, regional communities will continue to suffer from inadequate mobile services unless some fundamental changes to government policy occur.

Mobile Towers That Could Have Been Built

Based on available data **, almost 22% of Telstra’s regional copper services and 9% of payphones have been shut down despite Telstra’s USO funding remaining the same. The total number of regional mobile towers that could have been built with these savings since July 2012 ***:

Mobile Towers

Total Towers

Rate of Increase

Between 2012 and 2032, USO savings could fund the construction of up to 2,385 regional mobile towers

Rate of Increase:

  • 119 towers a year
  • Almost 10 towers a month

One example of this is the Universal Service Obligation (USO), which was the brainchild of a 20th century government, conceived with the intention of ensuring Australia’s most isolated could be connected via the latest technology of the day – copper wire. When the idea of a USO was first considered, no one could have predicted how quickly technology would advance and become integrated into the lives of almost all Australians.

Now, rather than protecting Australia’s regional communities, the USO is endangering them, leaving them at risk of falling behind both domestically and internationally. Every year under the USO, Telstra receives around 300 million dollars to fund its legacy copper and payphone networks in the same areas being serviced by the nbnTM. 100 million dollars of this funding comes directly from taxpayers.

However, many of the services Telstra is being paid to maintain no longer exist, with available data suggesting that around half of pay phones and the regional copper network have been decommissioned over the past 10 years.

Mobile Coverage This Could Have Provided

Based on available data, almost 22% ** of Telstra’s regional copper services and 9% of payphones have been shut down despite Telstra’s USO funding remaining the same. The total number of farms that could have been provided mobile coverage with these savings since July 2012 ****:


Total Farms

Rate of Increase

Between 2012 and 2032, USO savings could fund mobile coverage for up to 14,547 farms

Rate of Increase:

  • 31,479 square kilometres a year
  • 2623 square kilometres a month
  • 86 square kilometres a day
  • 2 farms per day

Despite the reduction in services, Telstra still collects the full amount of USO funding from Australian taxpayers. If the government were to stop paying Telstra for delivering services which no longer exist, they could save around $144 million a year, or nearly $2.2 billion over the remaining 15-year term of the current USO agreement. These savings could be used to fund more than 288 new mobile towers each year, or more than 4,300 new mobile towers over the next 15 years, at no extra cost to the Australian taxpayer.

In comparison, the total amount of funding allocated for the first two rounds of the government’s Mobile Black Spot Program was just $600 million. The Australian National Audit Office, the Productivity Commission and the Regional Telecommunications Independent Review Committee have all published reports highly critical of the USO.

The Productivity Commission concluded that the current agreement no longer serves the best interests of the Australian community, whilst the Australian National Audit Office found that the USO agreement does not reflect value for money.

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