Vodafone CEO laments ‘missed opportunity’ to boost regional telco competition

Calls for USO to be replaced

Vodafone’s chief executive, Iñaki Berroeta, has described the USO scheme, under which Telstra is subsidised to guarantee access to basic telecommunications in regional areas over the copper network, as “hugely inefficient” and “obsolete”.

“It is an enormous missed opportunity that $250 million taxpayer dollars is spent every year on the Universal Service Obligation to maintain an outdated copper network in regional areas which will be connected to the NBN,” the Vodafone Australia CEO said in remarks prepared for the Digital Transformation in Agriculture Breakfast hosted by the telco and the National Farmers’ Federation.

The scheme is designed to make sure that all Australians have access to a 'standard telephone service' (STS) regardless of where they live.

Telstra delivers the USO under contract with the government, with the scheme funded partly by the telecommunications industry through a levy and partly by the government.

The USO has been a long-standing bugbear of Vodafone. Berroeta has previously criticised the scheme, and Berroeta’s predecessor Bill Morrow (now CEO at NBN) also slammed the USO during his tenure at the telco.

Berroeta in his remarks today cited the government’s independently prepared 2015 Regional Telecommunications Review, which was released in October.

That report argued that the cost effectiveness of the USO agreement is “questionable”.

“The present STS is of rapidly declining relevance,” the review concluded.

“Within the next few years the majority of consumers, and notably those in regional Australia, will not be using voice calls over the PSTN, but will be using mobiles, Voice over Internet Protocol (VoIP) and other social media applications, as their primary communication method.”

As the roll out of the National Broadband Network continues, the universal fixed network infrastructure will be broadband, not the copper network, the report stated.

“The historic nature of the STS and the accompanying USO funding arrangements means it fails to target the areas of greatest need or deal adequately with inequality of outcomes in regional Australia.”

The review committee recommended a new safeguard dubbed the “Consumer Communication Standard” which would cover voice and data and have technology-neutral standards relating to availability, accessibility, affordability, performance and reliability.

“With the government set to respond to this report shortly, I’m optimistic that decision-makers will listen to regional communities and will adopt the Independent Review Committee’s considered recommendations,” Berroeta said today.

“This will ensure the digital divide between metropolitan and regional Australia finally starts to close rather than continuing to grow.”

The Vodafone CEO praised the government’s mobile blackspot program. Under the first round of that program, Telstra and Vodafone will receive subsidies to help bring mobile coverage to regional blackspots. The government is preparing for a second-round of funding.

M2M and the Internet of Things

Berroeta said machine to machine (M2M) services and the ‘Internet of Things’ offered huge opportunities for regional areas.

“One of the sectors where M2M can make the biggest difference is in agriculture,” the CEO said.

“This is why Vodafone has partnered with the National Farmers’ Federation to capture the opportunities for communications technologies to drive agricultural productivity, especially through M2M.

“Australia has a substantial natural competitive advantage in traditional agriculture, with much of our produce renowned for its extremely high quality.”

“If Australian agriculture is going to step into the 5G world, M2M is a pre-requisite for enabling farmers to work smarter and faster, with more precision and accuracy,” Berroeta said.

“In the future, M2M will become as important to farmers as a top farm dog, ute or reliable tractor by enabling them to work smarter and faster with more precision and accuracy,” the Vodafone chief executive said.