Telstra could lose USO responsibilities

Telstra’s obligations for delivering telephony services under the Universal Service Obligation (USO) could cease under a planned "modernisation" of the scheme.

The government launched a consultation today, noting that while Telstra holds most USO contracts for supplying landline-based voice services, most such services now run over the NBN, with just a handful still relying on Telstra’s aging copper network.

The country's largest carrier has held responsibility for delivering USO services ever since the sector was deregulated, under a scheme funded by carrier license fees.

However, with the NBN to be available to around 97 percent of the population, mobile coverage around 99.6 percent, and services like Starlink able to deliver low-latency, high-bandwidth services to remote locations, the government has decided it’s time to “modernise” the USO.

The government declined to comment on whether Telstra exiting its USO delivery role is a likely outcome of the review.

“The government has not yet made any decisions on how to modernise the USO, and will be guided by the feedback we receive as part of this important consultation," communications minister Michelle Rowland said.

A Telstra spokesperson told iTnews: “Keeping people across regional Australia connected is a top priority for Telstra. We are excited by the opportunities reforming the USO can bring, including connecting people with the latest technologies like satellite and fixed-wireless."

Like most of the industry, Telstra has long called for reform of the USO.

The multi-phase consultation will be accompanied by technical trials during 2024 to gather data about the capabilities of alternative services, the discussion paper stated.

As well as the initial consultation launched today, the government will seek advice from the Regional Telecommunications Review throughout next year; consult on USO funding arrangements between February and April 2024; and provide a report on stakeholder feedback by July 2024.

The USO funding consultation will also incorporate a review of the Regional Broadband Scheme.

Rowland said the government wants to ensure the USO “is fit-for-purpose and encompasses new and emerging technologies like quality fibre connections and satellite services.”