Australian telco customers in some regional areas pay $3.1 billion extra each year because there is no effective competition, according to Vodafone.
"Currently, in metro areas we have very strong competition and good volumes, but in regional Australia the story is very different," Vodafone Australia chief executive Inaki Berroeta said at an industry event in Sydney.
"In many areas there is no competition and customers are forced to pay the high prices of a single provider. This is money that could drive growth in other areas of the economy, boosting productivity.
"It's a $3.1 billion strain that is threatening the government's aspiration of a digital economy.
"That is equivalent to raising the price of fuel by 15 cents across the country."
Mr Berroeta said lack of money was not the problem, as regional communications receive more than $1 billion in public funding each year.
The issue is how the money gets spent.
Mr Berroeta slammed the government's universal service obligation (USO) scheme, which provides around $300 million of public money for fixed telephony services, mostly in regional areas.
He said this amounted to duplication as hundreds of millions of dollars that are already being spent on the national broadband network to develop a fixed wireless network for these same areas.
"I believe that the current USO scheme is outdated, unnecessary and wasteful duplication and it doesn't make sense that in the 21st Century Australia still invests on fixed telephony," he said.
Earlier this month, the Australian Competition and Consumer Commission ordered Telstra to cut the price it charges other telcos to access its copper wire network.
The consumer watchdog has told the telco giant to cut the price by 9.4 per cent from November 1.
Mr Berroeta welcomed the ACCC decision, saying the price reductions would encourage telcos such as Vodafone to make investments in regional Australia.
The company is investing in the region through the government's mobile black spot program, and plans to increase its network across most states.
Vodafone Australia expects to shift its entire network to 4G services by the first quarter of 2016.
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