ACCC slashes mobile, SMS prices

Prices that mobile network operators and fixed-line network operators currently charge each other for receiving calls and SMS could be slashed by nearly half.

Under a draft decision, the Australian Competition and Consumer Commissioner (ACCC) has proposed that prices of termination calls on Australian mobile networks should be 1.61 cents per minute, instead of the current rate of 3.6 cents per minute.

The ACCC has also proposed, for the first time, that the price for an Australian mobile network to receive an SMS should be 0.03 cents per SMS. The ACCC said this price is well below current commercial rates.

ACCC commissioner Cristina Cifuentes said the proposed rates are based on benchmarking the cost of the same services overseas.

"While Australian mobile network operators are transitioning to 4G technology and have announced plans to roll out voice-over-4G technology, voice over LTE, later this year, the take-up of this technology and the effect upon the costs of terminating calls on Australian mobile networks is currently uncertain," she said.

"Until voice-over-4G technology is rolled out, it is appropriate to reflect the costs of terminating calls and SMS messages using the predominant mobile technology in Australia."

Although the ACCC has suggested that the savings will be passed onto consumers, the telcos have argued in the past that call and SMS rates are often offered as unlimited services on plans.

The draft decision is part of an ACCC inquiry examining non-price terms, including commercial and operation matters, such as billing and notification, general dispute resolution processes, and some ordering and provisioning processes for certain regulated services.

In March, the ACCC ruled that non-price terms for regulated services, including proposed connection charges for fixed-line services, would not be applicable to Telstra. The ACCC claimed that Telstra has the ability to manage its own external contracts.

The ACCC warned that should the draft decision be adopted, it plans to cut Telstra's pricing across seven fixed-line wholesale services by 0.7 percent, which should see a decline in real terms for retailers of 12 percent over the next four years.

The ACCC has proposed the draft rules to take effect from January 1, 2016, to June 30, 2019, and expects the final decision on mobile termination prices to be released in July 2015, following considering submissions on the draft report.

The proposal is in addition to the ACCC's ongoing consultation on the primary prices for fixed-line services. The ACCC has had to delay the draft decision on these services.