Consumers pay more for faster broadband and extra mobile data but may not need it

10 December 2021

Australians are paying more for their broadband and mobile phone services than they were a year ago but are receiving faster NBN speeds and more data allowances in their mobile plans in return, the ACCC’s 2020-21 Communications Market Report shows.

The report presents significant trends and developments in the markets for fixed broadband and mobile phone services, and on the state of competition in the telecommunications sector.

It shows that, generally, telecommunications networks met the demands of Australian households and businesses that relied heavily on their broadband services for work, education and entertainment during the second year of the COVID-19 pandemic.

However, consumers are now on average paying more for home broadband and mobile phones in exchange for higher speed services and additional data. For people who had an existing plan that already met their needs, it is unclear if the higher speed or extra data is sufficient trade-off for the higher price.  

The report shows that in 2020-21 an average mobile consumer on a post-paid contract used only 11.8 GB of data per month, compared to a median data allowance of 35 GB per month.

Mobile consumers pay more for more

The mobile network operators, Telstra, Optus and TPG, increased prices across a range of their flagship products this year. The price of entry level pre-paid mobile services rose by 16.2 per cent on average in 2020-21, as a result of increases to the cost of basic plans and reductions in the expiry periods.

“Reducing the expiry periods on prepaid plans from 35 and 42 days to 28 days is a price increase by stealth. Over a year, it means consumers are recharging more often, and therefore paying up to 25 per cent more for their mobile phone service,” ACCC Commissioner Anna Brakey said.

While average mobile prices rose, Telstra, Optus and Vodafone have moved towards a ‘more-for-more’ model in which they offer 50-100 per cent more data across their plans at a higher cost.

“While consumers are getting more data allowance than before, it is unclear if they want or need it, as an average person isn’t currently going anywhere near using the average mobile data allowance,” Ms Brakey said.

The ACCC is concerned that since the merger of TPG and Vodafone in 2020, consumers are paying more for mobile phone plans. With the market now heavily concentrated with just three players, prices on many popular plans have risen as price competition is muted.

Telstra, Optus and Vodafone now account for over 91 per cent of the total retail mobile phone market, and almost 95 per cent of the post-paid market.

Broadband services more expensive but faster

The report reveals that the price of broadband services also increased in 2020-21. While many households trialled higher speed NBN plans at no extra cost through promotional offers, those who agreed to move their service onto a higher speed plan paid between six and eleven per cent more compared to 2019-20.

However, consumers did not pay more for entry level, lower speed NBN plans than they did in 2019-20.

“Higher speed NBN plans cost consumers about five to ten dollars more per month than the most popular speed plans, but it is not yet clear how many consumers will consider this is good value as their promotional offers end,” Ms Brakey said.

“We encourage consumers to weigh up their internet needs and choose their broadband plan based on what they think represents better value, given the higher prices being charged for some plans.”

“Retail service providers are required to have fact sheets available to assist consumers identify the broadband plans that are relevant to them,” Ms Brakey said.

The total volume of data downloaded over broadband networks increased by nearly 20 per cent in 2020-21, and fixed broadband accounted for almost 90 per cent of total downloads.

An increasing number of Australians continue to go ‘mobile only’ for phone calls, or use over-the-top voice applications such as Skype and WhatsApp. The volume of calls made from traditional phone lines decreased a further 13 per cent in 2020-21.

The NBN requires new regulatory framework

The report also looks at the work of the ACCC, NBN Co and the telecommunications industry in developing a revised long-term regulatory framework for the NBN, to ensure the economic benefits of this significant public investment are realised.

“We are particularly interested in providing a stable, long-term regulatory framework that promotes a sustainable and competitive NBN market. This is essential as the NBN infrastructure will underlie much of the economic and social activities of Australians in the decades to come,” Ms Brakey said.

“Strong regulatory settings will provide greater certainty for industry, enhanced choice for consumers and more opportunities for businesses.”

The report also highlights the ACCC’s enforcement activities in the telecommunications sector to help protect the interests of consumers. In 2021, a $50 million penalty, the second highest under Australian Consumer Law, was imposed against Telstra for engaging in unconscionable behaviour.   

“Australian businesses have a responsibility to comply with Australian Consumer Law and not to mislead or deceive consumers. There are very significant penalties for those that do,” Ms Brakey said. 

The ACCC’s report is available at Communications Market Report 2020-21

Background

The ACCC is required to report annually on competition in the Australian telecommunications sector and price changes for telecommunications services in Australia.

The ACCC was required to provide this report to the Minister annually for tabling in Parliament. However, following legislative changes in December 2019, the ACCC is required to publish this report on its website by 31 December of the relevant financial year.

Release number: 
209/21
ACCC Infocentre: 

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Media enquiries: 
Media Team - 1300 138 917, media@accc.gov.au

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