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Telstra believes that Universal Service Obligation – and the $297 million it receives to support it – is still needed to provide basic telecommunications services to all Australians.
The USO ensures access to a basic voice service for all Australians, largely over Telstra's fixed-line copper network. Telstra has a 20-year contract to deliver standard telephone services and maintain public phones for $297 million per year – $253 million for phone lines and $44 million for payphones.
The government provides $100 million of this funding. Levies are placed in telecommunications carriers with revenue of $25 million or more.
In 2014-15 the levy raised $215 million, with $142 million coming from Telstra.
Australia's largest telecommunications provider will provide its submission to the Productivity Commission on Thursday as part of a government review into the current USO.
Still needed
The Turnbull government announced the review in April – a draft report from the Productivity Commission is due in December, with the inquiry report due in April 2017.
While other telco providers, such as Optus, have argued that there is no need for a USO, Telstra executive director of regulatory affairs Jane van Beelen told The Australian Financial Review in the current environment the agreement is still needed.
She said while some have argued "'what about NBN? They're rolling out infrastructure that can support voice telephony', the reality is NBN is not expected to complete the rollout of the network until 2020 and the USO is an obligation to provide a service, on a request, to an acceptable level."
"NBN is not in position to do that today," Ms van Beelen said.
She instead argued that it would be better to review the purpose and scope of the USO in around four years' time, when the NBN rollout is close to complete.
"We do think that it may be appropriate when they have completed their network, if they are in a position to provide infrastructure to provide voice on request to an acceptable standard," she said.
"In the current political environment in Australia, I don't see any great will to get rid of the USO that guarantees all Australians a fixed line service."
Ms van Beelen said there were still areas of the country where mobile coverage was not strong or consistent enough to assure consumers of service.
Pressing issue
"There is still 1.5 per cent of the population that does not have mobile coverage ... the overwhelming USO costs is focused on delivering services to those customers," she said.
However, Telstra would be open to changing the payphone obligation. Ms van Beelen suggested that the money saved there could be used to provide infrastructure in areas that don't have mobile coverage.
Vodafone chief strategy officer Dan Lloyd said the USO was a pressing issue to making sure Australia had the right telecommunications policy moving forward.
"Many Australians in regional and rural areas are being disadvantaged due to limited or no access to reliable, competitive mobile services enjoyed by people living in the major cities. The commission's review of the USO is the biggest opportunity in decades to start bridging the communications divide between metropolitan and regional Australia," Mr Lloyd said.
"It simply does not make sense to continue with the current arrangement which sees around $300 million per year in public funding given to the incumbent to maintain outdated copper services and payphones in areas which are being connected to the NBN."