Cheaper phone calls and texts are on the horizon after the consumer watchdog cut by more than 50% the fee telcos charge one another for receiving calls from other networks, and capped the fee they can charge for receiving cross-network SMS messages.
The Australian Competition and Consumer Commission’s (ACCC) decision followed a 2013-14 inquiry into “mobile termination” prices, the cost a network such as Optus charges for connecting a call or text message from a Telstra or Vodafone customer to one of its subscribers.
Australia’s three major networks – Telstra, Optus and Vodafone – charge one another a fee for this service, which is passed on to the customer.
In a draft decision the ACCC proposed that the fee charged between operators for calls be set at 1.61 cents per minute, down from the current rate of 3.6 cents. The price to receive a text should be 0.03 cents, it said.
“The proposed rate reflects the cost of terminating calls on Australian networks and is based on benchmarking the costs of this service overseas,” the commissioner, Christine Cifuentes, said.
“We would expect that the savings will be passed onto consumers either in the way of lower charges or through improved call and SMS inclusions in retail plans.”
An inquiry last year heard that it cost the major networks about 1c to send 100 text messages.
But the consumer group Australian Communications Consumer Action Network (Accan) told the inquiry that some telcos were charging customers about 15c a text.
“This level of profit margin is astronomical,” Accan’s deputy chief executive, Narelle Clark, said at the time.
Research the consumer group published with Anglicare Victoria in 2013 showed that high-cost SMS deals were more likely to slug poor or older Australians.
“Many of these consumers don’t own a smartphone so they’re not able to take advantage of relatively cheap data messaging services like Whatsapp or Viber, leaving them stuck with these unreasonable prices,” Clark said.
Accan said on Wednesday it welcomed the draft decision. “The proposed changes will have a positive effect on competition in the telco market which will also benefit consumers,” it said.
The regulated prices would be reviewed once enough consumers took up 4G technology, for which the cost of facilitating calls from other networks remained uncertain, Cifuentes said.
The ACCC is seeking submissions on the draft price but is expected to announce a final decision in July. The new cost will come into effect on 1 January.
A spokesman for Telstra said the company was “reviewing today’s decision and will be providing a response as part of the ACCC’s process”.
He said the decision to regulate the termination price of text messages would “add unnecessary costs and complexity to our business, with limited benefit for consumers”.
“Mobile prices are continuing to trend down and the majority of mobile service plans now include unlimited SMS,” he said.
“Also consumers already have choice when it comes to messaging, with the emergence of smartphones, message applications and social media. Given this range of choice and unlimited SMS plans, there are no grounds for regulation.”
An Optus spokeswoman said there was an “emerging disconnect” in the way the ACCC was tackling the pricing of mobile versus fixed line services, “when both businesses are in a state of transformation and face quite different competitive dynamics”.
Vodafone said the regulator needed to ensure that Telstra – the largest provider of fixed line services – passed on the money it saved to customers, and asked whether it had done so in the past.
“Telstra has the highest fixed prices in the OECD. The standard price Telstra charges its customers to call from a fixed phone to a mobile has barely moved for a decade,” Vodafone’s general manager for public policy, Matthew Lobb, said.
If Telstra did not pass on the savings, Lobb said, “the ACCC’s draft decision, if implemented, would only help Telstra not customers”.
