Telstra USO scheme needs reform: Infrastructure Australia

Infrastructure Australia has called for reform of the scheme that compensates Telstra for its phone services to the bush.

One of the last Telstra public phone boxes in Tasmania, in Lileah, Circular Head.

The Turnbull government’s infrastructure tsar has added its voice to the chorus calling for reform of the scheme that compensates Telstra for providing basic phone services to the bush.

In a further blow to Telstra’s push to have the “universal service obligation” retained at least until the National Broadband Network is rolled out, Infrastructure Australia has declared the scheme should be reviewed and exposed to greater competition.

Under an obligation that is bankrolled through an industry levy and government money, Telstra gets about $300 million a year to deliver payphones and a standard phone services to the bush.

But Infrastructure Australia has told a Productivity Commission review into the USO that the structure of the scheme makes it difficult to work out if there is value for money, and calls for increased reporting of financial performance.

“The importance of these services and the government’s historic role in providing them should not preclude public scrutiny of the way in which they are delivered, or how much it costs to provide them,” IA chief executive Philip Davies says in a new submission.

“Ensuring the USO delivers value for money is particularly important in the context of the substantial public investment in the National Broadband Network, which could help improve the efficiency of delivering telecommunications services currently provided under the USO.”

The comments come as Telstra’s competitors have also urged reform of the scheme.

Vodafone Australia, Optus and TPG Telecom have all rounded on the USO in its current form.

The NBN Co has also called for reform of the USO, arguing that a “technology agnostic” approach should be adopted given that at least 98.5 per cent of the population have access to voice services from mobile carriers.

IA says the USO should ensure people have access to telecommunications on a “technology-neutral” basis.

The Australian Infrastructure Plan, released in February, called for an overhaul of the USO, saying the government should consider phasing it out and diverting the funding to improved mobile coverage.