ACCC: Telco market shows investment and lower prices for consumers

In two of its annual statutory reports tabled in parliament the ACCC said overall prices for telecommunication services fell in real terms by 2.7 per cent for the period.

“Average prices for fixed-line services fell by three per cent and average prices for mobile services fell by 2.3 per cent,” said Graeme Samuel, chairman of the ACCC.

According to Samuel, the fall in prices for fixed-line services was not reflected evenly across the residential and business segments. Average prices paid by residential and business customers fell by 1.6 per cent and 5.3 per cent respectively. As in previous years, price falls for businesses continued to exceed price falls for residential consumers in 2006-07.

Average prices paid by consumers for retail mobile services fell by 2.3 per cent in 2006-07, prices for GSM services decreased by 2.7 per cent, while prices for CDMA services increased by 2.6 per cent.

"The decline in average prices could have been influenced by several factors, including productivity gains in the telecommunications sector and greater price competition faced by providers of fixed line services," Samuel said.

In the ACCC’s reports, 2006-07 saw the highest level of investment in telecommunications in the 10 years since the introduction of open competition. During the period, carriers announced or commenced investment in expanding the footprints and/or improving the data capability of their 3G mobile networks, increasing speeds over HFC networks and investing in wireless networks and competing backhaul transmission capability.

“The period was also significant in terms of take up of regulated unbundled services, with the number of unbundled lines increasing to over half a million by June 30 2007,” Samuel said.

Increased investment has enabled access seekers to differentiate their downstream product offerings to compete more vigorously for retail customers. According to the ACCC, end users are now able to access the internet using faster connections with increasing theoretical maximum speeds over ADSL2+ technology or upgrades to both Telstra's and Optus's HFC networks.

"At the same time it is important to recognise the ability of fixed-line networks, such as Telstra's customer access network, to evolve to meet ever-increasing consumer bandwidth requirements may be difficult for alternative technologies, including wireless, to match, particularly in densely populated metropolitan regions. Accordingly, alternative networks appear to be at best imperfect substitutes given the coverage and functionality which can be delivered over fixed-line networks," Samuel said.

He claimed this emerging state of competition has not occurred without pressure on regulatory mechanisms. Industry has been progressively forced to rely more on ACCC processes to resolve impasses in commercial negotiations for access to regulated services.

“In 2006-07, the highest number of access disputes notified in a single year, and continues the increasing trend for arbitration as a mechanism for resolving industry disputes,” he said.

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