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ACCC cuts call, SMS charges for telcos

The ACCC has made the final decision on how much telcos can charge each other for receiving calls and text messages on their networks.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has published its final decision on wholesale price regulation for receiving calls and SMS messages across Australia, saying that mobile network operators can charge each other and fixed-line network operators 1.7 cents per minute for calls, and 0.03 cents per SMS.

The rate to be charged for calls was reduced by more than half, from 3.6 cents per minute down to 1.7 cents, with the ACCC saying that it had based its decision on comparative charges around the world.

"In Australia, the majority of mobile calls and SMS are carried on 3G networks, which are more efficient than the 2G networks which are used to a larger extent overseas," ACCC commissioner Cristina Cifuentes explained on Monday afternoon.

"The mobile networks in Australia also carry a much larger amount of data traffic than overseas networks. These features reduce the cost of terminating calls on Australian networks and have been taken into account in the decision."

Cifuentes added that this price could drop even further once voice-over-LTE (VoLTE) technology services are rolled out in the future.

"The ACCC will monitor the planned rollout of voice over 4G technology, which could be as soon as later this year. If there is evidence of voice over 4G take-up which affects the costs of terminating calls on Australian networks, the ACCC may review the regulated rates," she said.

Vodafone Australia last week announced that it intends to bring VoLTE and Wi-Fi calling to its network soon.

"We are launching, very soon, voice over LTE and also Wi-Fi calling," CEO Inaki Berroeta confirmed last Wednesday.

Optus earlier this month also announced a Wi-Fi calling app, enabling its customers to make and receive calls and texts to landline and mobile numbers globally via a Wi-Fi connection rather than through the use of 2G or 3G networks.

The ACCC also decided to regulate for the first time the wholesale cost that network operators can charge each other to receive text messages across networks, stating that this would be 0.03 cents per SMS.

"This price maintains the rate proposed in the ACCC's draft decision. It is based on the network capacity and equipment used to carry SMS messages on Australian networks, and is well below current commercial rates for SMS termination," Cifuentes said.

The ACCC had announced its public inquiry into the Mobile Terminating Access Service (MTAS) in May last year, after a lengthy review into the service.

The consumer watchdog revealed its intention to regulate SMS pricing at the time, with Telstra and Vodafone objecting to this.

"We see little benefit in regulating wholesale SMS as our customers already have access to unlimited SMS on our most popular plans and can choose from a host of alternatives with the emergence of smartphones, message applications and social media," a spokesperson from Telstra said.

While Vodafone's general manager for public policy Matthew Lobb added that SMS regulation would mean "unnecessary red tape", Optus, on the other hand, welcomed the decision.

"Optus has been the leading advocate for lower SMS termination. Optus welcomes the decision of the ACCC and looks forward to substantially lower termination rates, which should increase retail price flexibility for mobile providers," a spokesperson for Optus said in a statement at the time.

"In particular, the ACCC's decision will help Optus to continue to offer unlimited SMS to customers on our market leading My Plan Plus plans. The trend is clear: Customers want simpler, more transparent telecommunications pricing. This decision will help deliver that outcome."

In September, Vodafone highlighted in its submission to the ACCC that Telstra had benefited by not passing on MTAS reductions to its customers after wholesale costs had fallen from 21 cents per minute to 3.6 cents per minute during 2003 and 2014.

"Telstra has introduced Telstra Home Phone Pinnacle which does offer unlimited fixed to mobile calls. However, this plan costs $85 per month! We calculate the increased margin on retail FTM calls has contributed to Telstra accruing AU$1.4 billion in unrealised consumer benefits from the lack of retail FTM pass-through," Vodafone said [PDF].

"Unequivocally, the major beneficiary from lack of (or delayed) FTM pass through is Telstra due to its still dominant share of fixed voice subscriptions.

"By contrast, MTAS reductions have disproportionately adverse impacts on Telstra's competitors in the mobile services market -- again an outcome that benefits Telstra and is detrimental to the LTIE [long-term interests of end users]."

Optus, in its submission [PDF], also raised concerns that an inconsistent MTAS decision could benefit Telstra to the detriment of others, as the incumbent telco did not have to pay access charges for calls between its own fixed and mobile networks.

"Providing further regulatory assistance to Telstra will not promote the LTIE, and is likely to result in further cementing Telstra's dominance in the mobile market and across other communications markets," Optus said.

Telstra, however, had argued [PDF] that a consistent approach would be inappropriate and unnecessary, as the current regulations were "working well" for consumers.

The ACCC published its draft decision on the matter in May 2015, saying at the time that calls would be charged at 1.61 cents per minute, and text messages at 0.03 cents.

The new pricing will take effect from January 1, 2016, and will remain valid until June 30, 2019.

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