Telecommunications Prices Falling but Concerns Remain – ACCC

The ACCC has found that the real price of telecommunications fell in 2010-11 by an average of 6%, but that there are still issues which stifle the industry achieving its full potential for consumers.

In their latest report on the telecommunications industry the ACCC found that increasing levels of competition, better regulatory oversight, and the increasing demand for and development of telecommunications services is leading to better results for the majority of customers.

It has been two decades since competition was introduced to the telecommunications industry, and the ACCC found that ‘There is little doubt that this has been an overall success, with consumers better off by most measures’.

The report found that in 2010-11 the average real price of telecommunications services fell by 6%. The largest decrease in real prices was fixed line services which fell by 7.3%, however mobile services also fell by 4.6%, and internet services by 3.6%.

The decrease in real prices has been consistent for almost 15 years now, with the fall in the real price of mobile services amounting to 50.6% since 1997-98, and fixed line services 42.6%.

There is little doubt that decreasing costs for services is a good thing, however the ACCC notes that there are still significant issues within the industry which need to be resolved.

The ACCC noted that ‘Structural impediments such as the vertical and horizontal integration of Telstra have, to an extent, acted as a restraint on competitor activity and the emergence of a fully effective competition’.

High levels of customer dissatisfaction with the industry remain, with 4080 complaints being received by the ACCC in 2010-11. The ACCC said that they remained ‘concerned about the number of complaints and the high level of customer dissatisfaction in the telecommunications industry’.

A large number of complaints were also received by the Telecommunications Industry Ombudsman (TIO) who recorded 52,231 complaints from January 1 to March 31 2012. This was an 8.6% rise from the previous quarter.

The report noted regulatory responses designed to promote consumer welfare. The problem of the structural integration of Telstra has been removed as part of the creation of the National Broadband Network (NBN), the regulatory framework for the the NBN co monopoly is supposed to ensure it operates in the national interest and does not abuse its market position, and  reforms  to the telecommunications access regime allow the ACCC to set prices for regulated services upfront.

The continuing decline in the real price of telecommunications is good news for consumers, however there are still significant concerns whilst impediments to competition, and high levels of customer dissatisfaction remain.

For more information find the ACCC’s report here.