New government report could mean trouble for Telstra

Photo: James Alcock/Getty Images

Telstra’s monopoly in regional areas might be about to change, with Infrastructure Australia calling for a reform in the Universal Services Obligation.

Currently Telstra is paid $253 million by the government to maintain the old copper network across the nation, the same network which will be covered by the NBN as it rolls out. As a result, Infrastructure Australia is proposing the government change how the USO works to remove barriers to entry for other mobile network providers in regional Australia.

They want to do this by:

– Where possible and appropriate, making National Broadband Network backhaul and towers available to mobile network providers; and
– Taking steps to encourage mobile network providers to co-locate their mobile infrastructure.

The aim is to spread the USO funds and give access to carriers to use the NBN as the backhaul to their regional networks, which would make it financially viable for both Optus and Vodafone to enter into more regional areas.

This will hopefully facilitate improvements in coverage, service quality and most importantly, competition.

Vodafone has been lobbying the government hard for USO changes for a few years now, and their chief strategy officer Dan Lloyd welcomed the new report with open arms, saying:

“There is now a strong and growing momentum from government, regional and telecommunications industry stakeholders for reform to the Universal Service Obligation to get a better deal for Australia’s country communities and agribusiness.

Vodafone has long advocated changes to the USO, which currently gives $253 million to one player each year to maintain an outdated copper network in regional areas which will be connected to the NBN, entrenching its market dominance in those areas.

There are now two major government reports supporting USO reform, and we urge the Federal Government to implement a full review of the USO when it responds to the Regional Telecommunications Review report shortly.”

The report is also calling for the privatisation for the NBN in line with comments from the ACCC chairman Rod Sims, saying, the NBN should “be split into distinct business units to encourage infrastructure competition, promote private investment, and allow for specialisation in managing different networks”.

“NBN Co could be split along technology lines: one company selling services over the Hybrid Fibre Coaxial cable networks (technology developed by the cable television industry), one over Fibre to the Premises or Fibre to the Node networks, and others through the satellite and wireless networks,” the report states.

“Alternatively, NBN Co could be split along geographical lines: for example, by major city. Remote and regional services covered by satellite services could be managed separately through CSOs [community service obligations], where there is insufficient commercial appetite to deliver services through a private model.”

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