Carriers gun for Telstra deal

07 Feb, 2013 04:21 AM

TELSTRA'S rivals have united in a fresh protest against billions of dollars in taxpayer and industry-funded payments the company is scheduled to receive to supply essential fixed-line services for the next two decades.

Vodafone Hutchison Australia’s chief executive, Bill Morrow, questioned universal service obligation (USO) payments Telstra locked in nearly two years ago as part of its $11 billion deal to surrender its fixed-line monopoly to the government’s national broadband network, claiming they are obsolete as mobiles replace landline phones as the dominant form of telecommunication.

“Over the last 10 years telecommunications companies have paid more than $660 million to a universal service scheme that subsidises the fixed-line phone network because the fixed phone was viewed as an essential service,” he wrote in a thinly veiled ­reference to Telstra. “As mobile becomes the more versatile and preferred service, we should revisit this fixed line-focused policy.”

The claims, made in an opinion piece for The Australian Financial Review on Thursday, were supported by SingTel Optus, which said USO costs should be monitored carefully.

“Optus has consistently advocated appropriate regulatory and policy initiatives designed to encourage competition and network diversity within regional Australia,” a spokesman said.

The government’s Telecommunications Universal Service Management Agency (TUSMA) last year formally awarded Telstra a $6.38 billion tender to June 2032 to, among other things, supply thousands of payphones, transfer calls to emergency services and maintain its copper network for telephone access in remote areas that will not get the fibre-optic NBN.

In 2011, Telstra said the net present value of the USO payments was $700 million, based on a discount rate of 8 per cent.

The USO agreements were viewed by sections of the industry as a sweetener to secure Telstra’s participation in the NBN.

Both sides of politics have said ­Telstra is underfunded for these ­obligations. But rival carriers claim the funding can be used to give Telstra an unfair advantage in extending its mobile coverage. They claim any ­subsidies should be conditional on open access to infrastructure.

Telstra declined to comment on Wednesday.

The criticism comes after Telstra suffered mass outages to both its mobile and fixed-line networks in flood-affected parts of central and northern Queensland in recent weeks.

In Parliament on Tuesday, Independent MP Bob Katter called for a comprehensive inquiry into telco ­services after areas from Gladstone to Cairns and Mount Isa had only intermittent access to the “triple 0” emergency service during the floods.

Vodafone’s network was also down throughout most of Queensland during the natural disaster. Optus, however said its network was available in the major population centres throughout that period.

Taxpayers will contribute at least $50 million this financial year to the TUSMA and $100 million a year thereafter. Telstra’s rivals in both fixed line and mobiles also contribute payments based on their revenues, estimated to total $57 million this year.



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