News and Media About Optus Satellite Satellite Network Services
Satellite demonstration shows 90% reduction in USO possible
22 Feb 1999

Using financial information derived from the satellite telephony demonstrations and the industry agreed Bellcore model, Cable & Wireless Optus believes the average subsidy per line would fall 85 per cent from $3,600 to $540. The highest single line subsidy - which Telstra claims to be $83,572 - would fall to only $1,100 when using satellite.

In addition, the number of lines Telstra claim require a subsidy would be reduced from 493,000 to 330,000 simply through the use of more advanced and cost effective technology.

"Cable & Wireless Optus has always believed the true cost of delivering USO services to be somewhere in the vicinity of $200 million.

"Telstra's $1.8 billion USO claim is based on aging and inefficient technology with a particular reliance on copper networks. The claim fails to incorporate more advanced network technology, such as satellite, which can be deployed at substantially lower costs," said Mr Gillespie.

In October 1998, Telstra claimed the cost of delivering standard telephony services to Australians living in remote and rural areas was $1.8 billion. This claim represented a 714 per cent increase on previous year's agreed figure of $252 million.

"The demonstration conducted by Cable & Wireless Optus not only shows satellite to be an effective means of delivering USO services, but illustrates the need for both the competitive tendering of the USO and ACA enforced transparency of the USO cost claim," he added.

Conducted in the outlying areas of the Western Australian townships of Pingelly and Bedford Harbour, the demonstration began on 1 February and has shown satellite to be a reliable and cost effective method of delivering telephony services to people in remote and rural areas.

The demonstration involves 15 remote residences in the Pingelly area which are serviced by Telstra's copper network and five residences in Bedford Harbour which currently rely on the DRC (Digital Radio Concentrator) system for the delivery of telephony services.

"Pingelly and Bedford Harbour were selected for the demonstration as they represent a typical sample of the areas likely to attract a subsidy under the USO. Both townships have different experiences in the delivery of standard telephony services and can provide critical feedback on the use of satellite as a delivery mechanism," said Mr Gillespie.

The demonstration uses readily available, off-the-shelf technology which has been in use for a number of years in other countries, such as Canada. The demonstration includes fax and data services, and will be extended to show high speed internet & satellite television.

"Satellite is an ideal technology for the delivery of USO services as it is distance independent. It also represents an effective platform for the delivery of all communications, information and entertainment services to rural and remote Australia, including enhanced services, such as data, fax and multimedia.

"It is important to realise that many people living in remote and rural areas in Australia are comfortable receiving services via satellite, having received free-to-air television services in this fashion for many years," added Mr Gillespie.

Cable & Wireless Optus has commissioned an independent market research firm to gather qualitative and quantitative information from participants in the demonstration. Information collected will be made available to the Federal Government and the Australian Communications Authority.

Editor's note:

The figures provided by Cable & Wireless Optus are modelled on the lowest cost method of servicing the USO. The model relies on the use of forward looking technology which includes:

7 the use of copper for customers less than 4km from an exchange (approximately 5,000 customers);

7 the use of wireless local loop for customers living between 4km and 10km from an exchange (approximately 77,000 customers); and

7 the use of satellite for customers living more than 10km from an exchange (approximately 250,000 customers).

The remaining 161,000 customers (mainly living in townships serviced by existing copper networks) of Telstra's claimed 493,000 loss making lines become profitable when appropriate technology is used to service all customers. Using this more realistic data in the industry agreed Bellcore model results in a claim amount of $178 million.

For more information:
Glen Thomas
Cable & Wireless Optus
Phone: 02 9342 6064
Mobile: 0411 254 380