Vodafone CEO just blasted Telstra for pocketing $300 million each year to reduce services

Vodafone’s Iñaki Berroeta. (Source: Vodafone)

Vodafone Australia chief executive Iñaki Berroeta has ripped into Telstra’s spending of the $300 million it is given each year to ensure basic public services are met.

Telstra is the holder of the universal service obligation (USO) contract, for which it receives about $100 million directly from the federal government each year plus just over $210 million in levies collected from all telcos, including from Telstra itself. The deal makes Telstra responsible for ensuring every Australian has reasonable telephone and payphone access.

Berroeta, in a speech at an industry conference this morning, said it was “troubling” that there are “no proper controls” or transparency on how the money is spent.

“The Productivity Commission pointed out that fixed lines and payphones are in fact being shut down. Disturbingly, even they couldn’t get precise numbers, but they think that around 25% of fixed lines and 50% of payphones appear to have been shut down.”

In December, the Productivity Commission handed down a draft report that recommended a major overhaul of the USO, criticising the arrangement for its lack of transparency. The report also recommended an immediate cancellation of the payphone servicing requirements, citing that the country had now largely moved on to mobile phones — and flagged the NBN as a new candidate to take over a reformed USO.

“It’s now getting to the point where it’s become almost impossible to defend the current set up,” Berroeta said at the CommsDay Summit in downtown Sydney. “The report reveals that what makes reform so urgent, is the lack of transparency, accountability and controls.”

Dismantling or overhauling the USO would free up funds to possibly devote towards the Regional Broadband Scheme, he said, which takes a cut from NBN rivals in order to subsidise the expensive rollout of broadband coverage to remote areas.

“When the Productivity Commission’s final report is released later this month, it is critical that action is taken. Government subsidies in any form must be transparent, and ensure a level playing field.”

Telstra has previously resisted calls to scrap the USO, citing the immaturity of the NBN rollout and the 1.5% of the population that does not have mobile coverage, but has supported the rollback of payphone responsibilities.

“As we’ve said before, we are supportive of changes to the USO if they improve the experience for customers, particularly those in rural and remote Australia,” a Telstra spokesperson told Business Insider.

“Any change to the USO must also ensure that rural and remote customers continue to have confidence in the availability of a voice service and know that any USO transition will be planned and executed carefully.”