Telco competition: Signs of life but yet to thrive

While consumers have been rewarded with greater competition and investment in telecommunications, the current structure of the industry is likely to limit future pay-offs, the Australian Competition and Consumer Commission has concluded in its annual reports on competition and pricing in the industry.

The Telecommunications Reports 2007-08 shows that service prices declined universally in that year. Fixed-line service prices fell by 5.5 per cent, mobile voice services by 5.4 per cent and internet services by 6.2 per cent. There was also ongoing investment in the industry, including:

• increased take-up of regulated unbundled services, enabling companies to invest, innovate and compete more strongly for broadband customers
• enhancements to the coverage and data capability of 3G networks, and
• increases in the peak network speeds of Telstra and Optus' cable networks.

"End users continue to reap the benefits of competition through ongoing investment, innovation and price competition in the telecommunications sector," Acting ACCC Chairman, Mr Peter Kell, said today. "However, Telstra has retained enduring market power. As a consequence, the industry remains highly concentrated and regulatory mechanisms are heavily relied on to promote competition.

"In addition, the industry continues to have an extremely high level of disputation and litigation. At the same time, the level of consumer complaints has reached new heights."

In 2007-08, the ACCC was notified of 28 new access disputes and 18 of its determinations were subject to judicial review by the Federal Court. The industry also received its largest number of consumer complaints in 10 years while consumer protection investigations in the sector rose by 70 per cent.

The report was tabled in the Australian Parliament yesterday and will be available on the ACCC's website.