Carriers issued varied responses to ACCC decision

Summary:Telecommunications operators have released apparently contradictory responses to an Australian Competition and Consumer Commission draft decision that would see operators reduce the cost of calls terminating on their networks. Vodafone Australia described the competition watchdog's decision as "misguided," saying customers would be the big losers as they continued to "pay through the nose" for fixed-to-mobile calls, while AAPT welcomed the decision as addressing that very issue.

Telecommunications operators have released apparently contradictory responses to an Australian Competition and Consumer Commission draft decision that would see operators reduce the cost of calls terminating on their networks.

Vodafone Australia described the competition watchdog's decision as "misguided," saying customers would be the big losers as they continued to "pay through the nose" for fixed-to-mobile calls, while AAPT welcomed the decision as addressing that very issue.

Vodafone's general manager for public policy, Peter Stiffe, said in a statement: "With four mobile carriers and six mobile networks in Australia, providers must deliver great prices and innovative services to remain competitive. Developments in the rapidly evolving mobile market have been driven by competition, not regulation."

Stiffe also said that the regulation of termination charges was unnecessary because mobile prices have fallen consistently. "Vodafone's average termination rate has dropped by 45 percent in real terms, over the last five years," he added.

Stiffe said the ACCC draft decision "failed to address the real issue," which is "customers paying through the nose for fixed-to-mobile calls."

"With a virtual monopoly on these charges, Telstra has no incentive to change them and has openly acknowledged that it doesn't pass on saving to customers in the form of lower fixed to mobile prices. The ACCC's claim that it will do so is plainly incorrect," he said.

Stiffe believes that forcing mobile operators to cut charges further will hurt mobile-only operators, while Telstra will make even more money on fixed-to-mobile calls.

"Reducing the competitive dynamics of the mobile market, which the ACCC's draft decision is doing, will ultimately lead to a worse outcome for consumers in both the short and the long term. The ACCC must address the situation immediately to give customers a fair go," Stiffe said.

On the other hand, AAPT welcomed the decision by the ACCC to move to regulate mobile termination prices to address "punishingly high fixed to mobile call prices."

AAPT head of regulatory affairs David Havyatt, said "the [ACCC] has taken a long time to thoroughly review all the matters involved. The mobile operators involved in this decision need to move on from their lobbying and focus instead on the welfare of customers in the market. The [ACCC] has clearly decided to move to a phased approach so that there would be no need for a sudden price change on other mobile phone charges."

Havyatt added that "with the benefit of lower mobile termination charges passed onto consumers, the likelihood is that the number of fixed to mobile calls made will increase as a result. Therefore, the [ACCC's] decision should have minimal effect on the revenue streams of mobile operators."

Havyatt stated that the Australian fixed line customers have been subsidising mobile sector growth and profitability for too long and that mobile operators should realise the benefits of the [ACCC's] decision.

"There will be benefits to consumers if they can move both faster and further than the [ACCC] has outlined. High prices of fixed to mobile calls remain the biggest impediment of mobile for fixed substitution," said Havyatt.

The Competitive Carriers Coalition (CCC) also released a statement saying that, although they welcomed the ACCC's decision, the price reductions the commission proposed were too slow and should be implemented immediately rather than being phased in over three years.

CCC believes that since the ACCC had already determined that the wholesale price of fixed to mobile calls was double than it should be, there is no need to wait for 2007 to allow the mobile operators to cut their charges to an acceptable level.

"This means that from the beginning of the inquiry last year to the implementation of the final price cut in 2007, consumers would pay in the order of AU$1.6 billion too much," CCC estimated.

The CCC said the primary task of the [ACCC] was not to "minimise the pain for dominant mobile phone companies as they were weaned off their inflated charges but to act on behalf of consumers and end the rip off as quickly as possible."

"The ACCC's slow timetable for starting action was particularly galling given that the inquiry has already run six months over schedule. At the very least, the ACCC should have taken this into account and delivered the 12 cent rate to consumers sooner," the CCC said in its statement.

Topics: Telcos, Government, Government : AU, Mobility

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