Productivity Commission says Govt. should stop spending $44 million a year on payphones

20 June 2017

Telstra payphone

The humble payphone looks set to go the way of the dodo, with Australia's Productivity Commission recommending that government funding be cut "as soon as practicable" in a new report on the Telecommunications Universal Service Obligation.

The Universal Service Obligation is a law designed to ensure all Australians have access to landlines and payphones on equitable basis regardless of location. Telstra is the responsible for fulfilling the Universal Service Obligation, and receives a number of government subsidies in order to maintain loss-making services. These are funded through a combination of government money and the telecommunications industry levy.

As it stands, the government is spending $44 million per year on payphones, which is estimated to equate to an annual average subsidy of $2,600 to $50,000 per payphone.

"In an age where basic telephones and payphones are rapidly becoming obsolete, the lack of transparency and accountability makes the continuation of current arrangements difficult to justify from the point of view of those who contribute to its funding," wrote the Commission in its report.

While Telstra supports the Commission's recommendation, a spokesperson told WhistleOut that some communities still find value from payphones.

"We support the view that the government should consider whether the ongoing payphone obligation is delivering the best value to Australian consumers and communities," said the spokesperson. "However there may be payphones in some areas that are still valuable to communities so alternative solutions for these areas will need to be a part of any change."

The Commission did however acknowledge that approximately 90,000 premises around Australia do not have sufficient mobile coverage, and suggested the government should establish a funding program to provide telecommunication services for these communities - potentially involving payphones.

Looking broader, the Commission recommended ending the Universal Service Obligation entirely by 2020, describing it as "anachronistic and costly". The Commission cited the proliferation of mobile networks and the National Broadband Network rollout as key reasons to re-evaluate be the Universal Service Obligation before its scheduled expiry in 2032.

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