Business

Telstra deal costing taxpayers millions will be scrapped

Telstra has turned many of its inner city payphones into free Wi-Fi hotspots for customers.
Telstra has turned many of its inner city payphones into free Wi-Fi hotspots for customers. Andy Rogers

A DEAL that sees Telstra receive millions of dollars a year from the taxpayer to ensure all Australians have access to a telephone line should be largely scrapped in the next few years.

That's the recommendation delivered today by the government's Productivity Commission, which called the Universal Service Obligation (USO) deal "anachronistic and costly" and said "it should be wound up by 2020" to coincide with the completion of the National Broadband Network.

The suggestions made in the final report are hardly surprising given that a draft report published in December called on the government to abandon parts of the current agreement, calling it "anachronistic" and "obsolete".

The 20-year contract, which has a net value of $3 billion, is set to run until 2032, and means the country's major telco receives millions in funding to ensure those who aren't catered to by the market have access to a standard telephone service.

As part of the agreement - which was first introduced in the 1990s - Telstra also provides payphones to all Australian towns.

About half the funding comes from taxpayers while an industry levy is used to subsidise the rest, meaning the likes of TPG, Optus and Vodafone subsidise Telstra to deliver phone services to Australians in the bush.

The commission's report said the impending completion of the NBN and improving mobile network coverage meant "more than 99 per cent" of premises would have access to reliable and affordable voice services effectively making the USO agreement unnecessary.

"The commission's assessment is that the service level provided by NBN, combined with existing mobile networks will be more than adequate to meet a baseline level of broadband and voice service availability for the vast majority of premises across Australia - particularly for all premises in the NBN fixed-line and fixed wireless footprints, and those in the satellite footprint with adequate mobile coverage," it said.

The report called the current agreement a "blunt instrument with a one-size-fits-all approach to universal service provision" and called on the government to renegotiate and scrap much of the deal with Telstra.

"While Telstra may have acted with goodwill in fulfilling its contractual obligations, these arrangements no longer serve the best interests of the Australian community," it said.

The deal has long been a source on contention for the telco industry. Complaints from competitors such as Vodafone typically centre on the fact that there has been very little oversight as to exactly how Telstra spends the money it receives each year.

Vodafone led the charge against the current USO deal, calling it "opaque, inefficient, inflexible and (an) outdated model which delivers poor outcomes for consumers at the cost of substantial distortions to competition," in its report to the Commission's inquiry.

Senior lecturer in political science at the school of government and policy at the University of Canberra, Michael De Percy, told news.com.au last year that it was clear the agreement was "leftover from the past".

"It's fairly obvious that it needs to be more transparent," he said. "Because it's opaque and Telstra wants to keep it, it's obvious that it's to their advantage."

Telstra has previously said it remains supportive of changes being made to the USO but points out that it will take some time to properly consider all the implications for remote Australians.

"We need to make sure that we fully understand the impacts this could have on customers before taking any action that could see remote customers left without a reliable service," the company said.

As the Productivity Commission's report points out, transitioning away from the current USO could take "a few years" but the "transition process needs to start immediately," it said.

"The fundamental roadblock posed by the opaque contract with Telstra, and the surrounding legislative architecture, should be addressed promptly and systematically."

But it remains to be seen how aggressively the government will pursue the recommended changes.

"Implementing the recommendations put forward in this inquiry will clearly require a major renegotiation of the contract," the Productivity Commission noted.

News Corp Australia

Topics:  editors picks productivity commission telstra


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Work gearing up on $2.2 million transport upgrade

UPGRADE: Bongaree is in for a makeover

Bongaree is set to recieve a massive makeover on it's transport link

Vital Queensland service needs your help

THEY help 40,000 people by providing more than 140 services.

Shock as toddler's accused killer walks free on bail

Ryan Hodson was released from prison on bail.

THE teen accused of killing toddler Mason Lee has been set free.

Local Partners

Gunmen rob Deception Bay man after night out

Police are investigating an incident where a man was robbed at gun point after leaving a licenced premises in the early hours of Sunday morning.

Bundy mum blogging to get families offline

FAMILY FUN: Deonie Crowther is holding family craft sessions at the Windmill Cafe in Bargara.

Crafty projects a hit with parents and children

Take luxury food, wine tour around Toowoomba

FOODIE CULTURE: Emily Moon (left) and Cheryse Bliesner with the Hummer used for Toowoomba's Luxury Food and Wine Tour.

It is designed to highlight the best produce the region has to offer

Country music stars coming to Ipswich

Ipswich will get it's country on when The Country Superstars Tribute Show hits town on Friday, June 30 at Brothers Leagues Club.

A UNIQUE tribute show will bring a bit of country into the city.

Game of Thrones: Crucial details you probably forgot

IT’S been a while since we’ve been to Westeros. But there are some crucial story points you need to remember before we head back there for season seven.

Pregnant Serena Williams nude on cover of Vanity Fair

"My heart dropped. Like literally it dropped,”

Wonder Woman sequel underway

Gal Gadot in a scene from the movie Wonder Woman.

IT’S no surprise plans are already underway for Wonder Woman 2.

MasterChef: Fish fry feast too much for Ipswich cook

Willowbank native Nicole Stevenson has been eliminated from MasterChef.

NICOLE Stevenson narrowly misses out on MasterChef's Top 10.

Thor on holiday: Chris Hemsworth is here!

If you didn't know who he was - you'd think he was a local

Agent judged among the world's best

Century 21 on Duporth principal Damien Said with team members Ryan Tomlinson, Jamie Smith, Kristie Cannon, Andrew Richardson and Sarah Beckman at the Maroochydore office.

Sunshine Coast real estate agent named in world-wide group's top 25

Island caretaker has weeks to live, abandons paradise

St Bees managing director Phil Webb, has been struck with illness and it has prompted the sale of the island.

His health has deteriorated in the past couple of months

Prime CBD site sold as laneway culture progresses

The Longs building Ruthven Street has been purchased by a group of investors to be renovated into a series of shops/eateries.  June 2017

How investors and council plan to transform the Toowoomba CBD

Gateway opens to $3b Coast mega estate

VISION: An artist's impression of the Palmview development 'Harmony' and its linear park.

New road provides link from the past to the future

Major German supermarket set to open in southeast Queensland

German supermarket giant Kaufland is understood to have approached southeast Queensland councils about a possible distribution centre, which would kickstart the establishment of new supermarkets.

Supermarket giant Kaufland has its eyes firmly on Queensland.

Ready to SELL your property?

Post Your Ad Here!