The evidence from the ACCC today that Telstra has pocketed regulated price cuts for calls from fixed to mobile phones shows again that Telstra’s market power is beyond the control of standard regulatory tools.

The ACCC decided four years ago to regulate the wholesale price of calls from fixed line phones to mobiles, and over time pushed down the wholesale price dramatically.

The ACCC said at the time that it believed that these price reductions would flow through to the retail prices paid by consumers.

But the ACCC has today in effect admitted it was wrong in this hope. Telstra’s dominance of the fixed line market means it is effectively immune from competitive pressures that the ACCC had hoped would see price cuts flow to residential consumers.

“In any properly functioning market, a cut in wholesale prices would be expected to flow to retail prices almost immediately,” CCC executive director David Forman said.

“However, as the CCC and others have been saying for years, fixed line telecommunications in Australia is not a properly functioning market.

“Telstra is so dominant and is so ruthless in exploiting the market power it derives from owning the monopoly fixed line access network that runs to all homes in Australia that it has been able to simply pocket reduced regulated costs when connecting customer calls to other mobile networks.

“This situation will become even worse if Telstra is able to win the right to build the national broadband network without separating its network from its retail business, as it is demanding,

“If the Government needs any more convincing that the time has come for structural separation of the telecommunications industry in Australia, consumers should use today’s new data from the ACCC to drive home the message,

“Australia has the highest or near highest prices for communications services from simple phone calls to broadband,

“We have the world’s most powerful and profitable telecoms incumbent in Telstra, and the weakest competition in the developed world.

“Real reform is overdue and the Government has the chance to make it happen when it makes it decisions about the NBN.”

Contact:

David Forman
Executive Director
CCC Inc
0438121114