Telstra refutes claims regarding exploitation of USO payments

6 Feb 2012

Australian fixed line incumbent Telstra has reportedly rejected claims by rivals that it is taking advantage of universal service obligation (USO) payments in order to generate additional revenue. According to ZDNet Australia, under the country’s USO legislation – which is currently being reviewed by the government – Telstra has agreed to maintain its existing copper network for the 7% of the country not expected to be covered by the rollout of the country’s National Broadband Network (NBN). With the incumbent agreeing to provide a minimum voice service in these areas, it will be paid AUD50 million (USD53.8 million) in the first two years, and a further AUD100 million per annum for a further 20 years, and should the telcos costs exceed this, the telecommunications industry will be required to pay a levy to make up the difference.

Such a levy has been the source of contention however, with the country’s second largest fixed line operator by subscribers, Optus, and alternative telco Macquarie Telecom both having voiced opposition to the plans; the pair claim that Telstra has overestimated the cost of providing services over its copper infrastructure.

Commenting on the matter at a Senate hearing, Telstra’s director of government relations, James Shaw, rejected such claims, noting: ‘The competitors, I have to say, don’t pay the invoices that we pay, so we do know the costs involved in providing services to remote and regional Australia.’ Further, Yolanda Chorazyczewski, Telstra’s group regulatory manager, has argued that the 7% of the country under discussion had been particularly expensive for the telco to roll out services, adding: ‘It is no coincidence that the NBN rollout stops at 93%. It’s that last 7% that is uneconomic for the NBN to roll out … and it is very costly to provide any other sort of infrastructure.’

Australia, Optus, Telstra (incl. Belong)