Telecom New Zealand is calling for the government to increase the level of subsidies paid by rival operators under the Telecommunication Service Obligation (TSO) scheme which covers network rollouts in uneconomic rural areas. The incumbent currently pays around two-thirds of the TSO, with most of the remainder covered by the two largest alternative providers, Vodafone and TelstraClear. Telecom has now called for a judicial review into the way the TSO is funded. Vodafone, meanwhile, says the TSO system should be scrapped altogether, with the cost of supplying basic fixed line services to rural areas now outweighing any benefits received. The cellco says that a more cost-effective alternative should be introduced, perhaps centred on mobile or satellite networks which can already offer virtually nationwide coverage. The cost of the TSO for the year to June 2008 has been provisionally set by the Commerce Commission at NZD70.7 million, up from NZD62.8 million in 2006/07.