Carriers demand cheaper USO costs

Competing carriers are happy to lobby for cheaper costs for the Universal Service Obligation (USO), but are not willing to take responsibility for the service, a Telstra spokesperson told Computerworld.

Rob Lomdahl, spokesperson for Telstra's regulatory and external affairs, said Optus is "backing away" from the position of USO provider despite making claims it can provide the service for around $200 million, as opposed to Telstra's $1.8 billion estimate for costs incurred over 1997-1998.

"They are saying they should only pay on the basis of $180 million, but they are not volunteering to take over the USO," Lomdahl said.

The USO is a requirement that ensures telephone services across Australia adequately meet the needs and demands of people wherever they are. The government has appointed Telstra as USO provider but other carriers also contribute to the costs.

Each year, Telstra is asked to assess its costs for the service. The Australian Communications Authority (ACA) reviews the cost estimate and bills the other carriers for a portion of the costs.

Telstra's 1997-98 estimate came to $1.8 billion compared with $251.6 million for 1996-97.

Neill Whitehead, ACA's manager for USO, said: "When Telstra lodged its $1.8 billion claim, a lot of people went white. We weren't expecting a number of this magnitude."

"We took into account what we thought was the best technologies for use within the framework that we had to estimate the cost of the USO . . . we still believe that our original technology choices are appropriate," Lomdahl said.

According to Lomdahl, in 1997-1998 Telstra generated around 85 per cent of telecommunications revenue in the industry. Telstra therefore picks up 85 per cent of the USO bill with the remaining costs divided between other licensed carriers in the industry.

Optus and Vodafone officials have announced claims that the costs of the USO are closer to $250 million.

Vodafone said its own estimate of a $290 million USO will be below $250 million once figures are processed through the federal government's new costing model, first used this year. Optus estimated a cost of $200 million for the USO based on a combination of technologies including satellite.

"From where we stand [Telstra] thinks there's a great deal of pressure from the industry for the regulators to minimise the size of the claim" Lomdahl said.

"As far as we can see it is purely a negotiating ploy on their behalf in order to drive down what they pay for rural and regional Australia . . . we've already incurred these costs by having to deliver the service and we are really trying to get a fair return."

Lomdahl said a key aspect of the issue is being able to meet the service standards for customers.

"If other people can provide the USO on a more economic basis and still meet the service standards, then it's really up to the regulator and government to get that [carrier] to do it. We've got no objection to competition but what we're seeing at the moment is a lot of lobbying to cut down costs of other people's contributions to the USO," Lomdahl said.

"Our basic position is that we're out there delivering the service to customers, we're not going to stop doing that but the industry should recognise the real costs of doing it and we can't have a lot of lobbying that might affect customer services."

According to Whitehead, the ACA is currently reviewing Telstra's claims and is awaiting industry comment. Whitehead said he expects the final USO Assessment notice will be issued to carriers no later than June 30 this year. Carriers then have 14 days to make payment.

Vodafone and Optus officials were not available for comment at press deadline.

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