USO REVIEW POTENTIALLY MISLEADING

Cable & Wireless Optus today said it was disappointed with the Australian Communication Authority's review of the cost of Telstra's Universal Service Obligation (USO) claim for 1997-98.

Stephe Wilks, Cable & Wireless Optus' Director, Regulatory and Public Affairs said that modern technology meant telecommunications services could be provided at much cheaper rates - which meant the USO costs should be much lower than the suggested $548 million.

Although the current review is a purely academic exercise (the Government has capped the USO claim for the 1997-98 year at $253 million), it raises the possibility that the cap put in place for future years may mistakenly come under challenge.

"Unfortunately, the ACA has completed its review on the basis of a number of assumptions which we have shown to be simply wrong. These include key variables such as the appropriate mix of technology used - for example, satellite rather than wireline in remote locations - the cost of equipment, and Telstra's weighted average cost of capital.

"Using the correct variables, Cable & Wireless Optus has clearly demonstrated that the USO should be as low as $180m per year" Mr Wilks said.

In a trial successfully completed in Western Australia this year, Cable & Wireless Optus proved that satellite was a very efficient way of delivering a suite of communications services, including basic telephony. The use of satellites would save considerable money on laying and maintaining outdated copper wire. Satellite technology also allowed the introduction of advanced services to all Australians, not just those in the cities.

"We believe that as the USO is put up for competitive provision, real competition will again lower the price of communications for remote and rural Australia - and USO costs should fall. New services, such as high speed data, are also likely to be introduced in the same way that Optus introduced competition and innovation in other markets.

"We believe the Minister should confirm that the present caps on future USO payments will remain in place until subsequent working groups examining the USO can take into account the modern technology being adopted in Australia and around the world, and until the USO is put up for competitive provision. Australian consumers should not be penalised simply because the major carrier refuses to adopt new ways of delivering services," Mr Wilks said.

For more information:
Stephen Woodhill
Phone: 02 9342 7850