ACCC findings provoke mixed response

4 Apr 2005

The Australian Competition Consumer Commission’s (ACCC) release of its final recommendations from its public inquiry into price control regulations for telecoms services have led to former monopoly operator Telstra openly slamming the report’s findings. The main bone of contention appears to be the ACCC’s belief that price caps should remain in place for the next three years, even after the impending full privatisation of Telstra. ACCC Commissioner Ed Willett said that the inquiry found that competition for consumer residential services was still patchy and insufficient, and that the cap of AUD0.22 on the price of local calls and dial-up internet calls to ISPs should be kept. He also indicated that services to businesses with more than five lines should be exempt from price controls since competition in this sector was relatively healthy.

Telstra’s Group Managing Director of Regulatory, Corporate and Human Resources, Bill Scales, hit back by issuing a statement saying that the ACCC’s methodology in assuming a lack of competition was flawed, and that competition amongst providers was fierce. He went on to say that if the report was accepted by the Australian government, the result would in fact be reduced competition while ‘impacting on the ability of operators to make appropriate returns to justify investing in new technologies for consumers’. The managing director of the one of Telstra’s rival ISPs, iiNet, had a rather different view, saying that he was satisfied with the methodology used by the ACCC and the recommendations made.

The report also proposed that a basket containing line rental, local, domestic and international long-distance, and fixed-to-mobile calls should decrease in price by 4% per year in real terms. It is unknown whether the government will fully take up the inquiry’s findings.