Mobile call costs under ACCC spotlight

Summary:The underlying cost for connecting mobile phone calls between Australian telcos is in the spotlight as part of a new discussion paper released by the Australian Competition and Consumer Commission (ACCC).

The underlying cost for connecting mobile phone calls between Australian telcos is in the spotlight as part of a new discussion paper released by the Australian Competition and Consumer Commission (ACCC).

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.

The discussion paper, released by the ACCC yesterday, examines a number of issues surrounding the charge, and whether it is still appropriate given the changing telco market and evolving network technologies, such as Long Term Evolution (LTE).

"The changes include the merger of two smallest network operators, increasing mobile voice call volumes, sustained migration to more efficient 3G networks and plans to employ Long Term Evolution networks, continued reductions in network equipment costs and the increased importance of data on mobile networks," ACCC chair Graeme Samuel said. "These changes are likely to significantly impact the regulation of the MTAS."

Noting the reduced costs for operators to provide calls, the ACCC has asked whether the MTAS price should be decreased, what rate it should be decreased to and how frequently the price should be changed. The ACCC has also raised a concern that fixed-to-mobile cost savings have not been passed onto consumers. It questioned whether a separate regulatory approach was needed for this type of call.

As the mobile-to-mobile market was fairly competitively priced, according to the ACCC, the regulator questioned whether MTAS was needed at all. The ACCC said, in the paper, that calls between the three major mobile carriers — Telstra, Optus and Vodafone — would be largely symmetrical, so the operators could potentially adopt a "Bill and Keep" payment model, where the telcos don't bill each other for calls made across their networks. According to the regulator, this would increase efficiency and eliminate the need for mobile industry record-keeping rules.

The ACCC yesterday also released its final discussion paper on the charges for the domestic transmission capacity service (DTCS), essentially backhaul. The ACCC is seeking an approach that will result in a range of prices for backhaul routes, based, in part, on the prices for services on competitive transmission routes in metropolitan areas of Australia. These areas are exempt from ACCC regulation, and generally have three or more transmission providers offering services.

Both papers are open for comment until 27 July 2011.

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

About

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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