ACCC decision may lead to lower prices for SMS services

17 June 2014

The Australian Competition and Consumer Commission has concluded its inquiry into the regulation of mobile terminating access services (MTAS). The ACCC has decided to continue to regulate mobile voice termination services for a further five years, and to regulate SMS termination services for the first time.

To make calls using a mobile phone it must be connected to a mobile phone network. Whenever a call or SMS is made across different networks, the receiving network may charge a fee to carry (or terminate) the call. The ACCC has decided to regulate these fees for SMS services.

“The ACCC expects to see SMS termination rates reduce which should lead to lower SMS prices for consumers” Ms Cifuentes said.

During the inquiry the ACCC found that charges for terminating SMS services have not changed for over a decade. It also found that SMS termination rates are many times higher than the cost of providing the service and that commercial negotiations have not been successful in lowering rates. The ACCC also found higher costs for sending SMS for consumers that do not have an unlimited plan or that spend less on a mobile service.

“The ACCC is concerned that mobile network operators are able to keep wholesale SMS termination rates significantly above cost.” Ms Cifuentes said.

“The ACCC considers that this is having a negative impact on competition in wholesale and retail markets. In particular we are concerned that these rates are affecting SMS prices available to low income consumers. ”

The ACCC will continue to regulate mobile voice termination until 30 June 2019. Since 1997 this regulation has promoted competition and ensured that calls can be connected to different networks.

“The regulation of mobile voice termination services will continue to promote competition in mobile markets and benefit consumers by leading to lower prices and greater choice” ACCC Commissioner Cristina Cifuentes said.

Further information on the MTAS declaration inquiry and a copy of the ACCC MTAS Declaration Inquiry Final Decision are available on the ACCC’s website.

The ACCC has commenced a public inquiry into making a new final access determination (FAD) for mobile termination access services. It will release a discussion paper on the pricing of MTAS shortly and will consult widely with industry during the inquiry. The ACCC has extended the current FAD for mobile termination access services until it makes a new FAD.

Release number: 
NR 146/14
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