ACCC telecommunications reports show continued investment and lower prices for consumers

Two annual statutory reports prepared by the Australian Competition and Consumer Commission on telecommunications competitive safeguards, and changes in the prices paid for telecommunications services were tabled in parliament.

"These reports show that end users continue to reap the benefits of competition through increased carrier investments, product innovation and lower prices," ACCC Chairman, Mr Graeme Samuel, 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.

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," Mr Samuel said.

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.

Increased investment has enabled access seekers to differentiate their downstream product offerings to compete more vigorously for retail customers.  As a result, 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. The increased accessibility of mobile broadband internet is another recent innovation that is likely to contribute to future changes in consumer behaviour. 

"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," Mr Samuel said.

"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.  2006-07 saw 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.

"Consumers are starting to reap the benefits of the investments and innovations made by carriers. There is now a range of communications services available to consumers through an increasing number of access providers, over a range of different technology platforms, at competitive price points.  As the industry continues to evolve, it is important that the benefits of competition are preserved."

The reports will be available on the ACCC's website.

Background

Part XIB of the Trade Practices Act 1974 requires the ACCC to provide to the Minister for Broadband Communications and the Digital Economy annual reports on:

• the competitive safeguards within the Australian telecommunications industry, and
• changes in the prices paid by consumers for telecommunications services.

The Telecommunications competitive safeguards for 2006-07 report consider the competitive developments that occurred in the telecommunications industry as well as an overview of regulatory activities.

The Changes in the prices paid for telecommunications services in Australia 2006-07 report documents trends and changes in the prices paid by consumers for telecommunications services.