ACCC gets set to slash mobile charge

ACCC gets set to slash mobile charge

Summary: The Australian Competition and Consumer Commission (ACCC) has forged ahead with plans to drop the current rate that mobile companies pay to connect calls between mobile networks, despite calls from Optus and Vodafone to maintain the status quo.

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The Australian Competition and Consumer Commission (ACCC) has forged ahead with plans to drop the current rate that mobile companies pay to connect calls between mobile networks, despite calls from Optus and Vodafone to maintain the status quo.

The ACCC regulates the price that telcos charge one another for fixed line and mobile calls that are made over each other's networks, known as the domestic mobile terminating access service (MTAS). The charge is incurred against the telco of the user originating the call. It first became a declared service in 2004 and the price was set at 21 cents per minute, but has been reduced over time to the current rate of 9 cents per minute.

Following a review that commenced in June, the competition watchdog has today announced its draft determination: the cost will be dropped from 9 cents per minute to 6 cents per minute from 1 January 2012, and will drop again on 1 January 2014 to 3.6 cents per minute.

The 3.6 cents per minute charge, however, is in line with the suggestion made by Macquarie Telecom and Primus that the charge be dropped to 3.5 cents. However, others were less happy. The price drop would ultimately benefit Telstra, according to Vodafone, which had previously argued in its submission to the discussion paper that Telstra had not kept its fixed-to-mobile call charges in line with the MTAS charge.

Optus too argued in its submission that the rate should be kept the same, and that any reductions would have a significant impact on its revenues.

In a statement today, Vodafone general manager of public policy Matthew Lobb said that customers would not see cost savings from the MTAS price reduction.

"We’re disappointed that the ACCC is proposing this reduction in the wholesale price Telstra pays for calls using other mobile networks when there’s been little evidence that this benefits their customers. We believe that if it were to be made final, this draft decision would be a missed opportunity to deliver real savings for fixed-line customers," Lobb said in a statement.

Lobb added that Telstra had gained about $1.1 billion between 2004 and 2010 by not passing on MTAS savings to consumers.

Optus general manager of interconnect and economic regulation, Andrew Sheridan, said that the ACCC's draft determination was "disappointing".

"Optus believes cutting mobile termination rates will not benefit competition or consumers," he said. "Based on past experience, Telstra will reap all the benefit from a cut to rates."

The ACCC appears to have at this stage abandoned the idea of the "bill-and-keep" method that would have seen telcos not charge each other for calls made across their mobile networks.

ACCC chair, Rod Sims, said that the proposed charges were a conservative estimate of the costs associated with providing MTAS.

"The ACCC considers that these proposed price reductions reflect efficient costs and also provide regulatory certainty for the industry over the next two and a half years," he said in a statement.

The watchdog is calling for industry comment on the draft determination by 21 October 2011, and will make a final access determination by the end of 2011.

Updated at 5:12pm, 23 September 2011: comment from Optus and Vodafone added.

Topics: Telcos, Government, Government AU, Optus, Telstra

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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