Telstra complies with Government conditions to increase line rental charges

10 July 2002

Under the terms of the Federal Government's new price control rules, Telstra has complied with the conditions set by Government for applying to increase its residential line rental charges from 1 August 2002.

"The Government’s 2002 Price Control Determination, which took effect from 1 July 2002, provides the ACCC with little discretion in assessing Telstra's application", Acting Australian Competition and Consumer Commission Chairman, Mr Ross Jones, said today.

"If Telstra has complied with the procedural requirements set out by the Determination, the ACCC is obliged to accept the application".

Historically Telstra has charged its residential customers less for line rental on a phone line than it has cost Telstra to provide the service. This difference, known as the access deficit, has been recovered by Telstra through higher call charges. In April the Government signalled it would allow Telstra to remove the access deficit over the next four years.

"The ACCC expects Telstra to provide substantially cheaper telephone calls in real terms over this period as the access deficit is eliminated. The ACCC will be closely assessing call costs when it examines Telstra's price control report at the end of each financial year.

"The ACCC notes that Telstra will introduce a package for low-income earners. This accords with the ACCC's recommendations in its February 2001 report to Government on Telstra's price control arrangements. This report supported changing the focus in the arrangements from protecting low-use consumers to protecting the more vulnerable in the community based on income".

The Determination and changes to Telstra's carrier licence require Telstra to offer a low-income package to its customers. This package must be approved by the Low-Income Measures Assessment Committee (LIMAC), comprising consumer advocacy groups appointed by the Minister for Communications, Information Technology and the Arts. This group has endorsed Telstra's package.

Release number: 
MR 172/02
ACCC Infocentre: 

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