ACCC concerned about competition threats

Stuart Corner
Wednesday, 21 June 2006 15:50

IT Industry - Strategy

The ACCC says that competition in telecoms continues to increase and prices continue to fall, but has warned that competition remains under threat.
The conclusions are contained in the ACCC's annual reports on Telecommunications Competitive Safeguards and on the Changes in Prices Paid for Telecommunications Services in Australia 2004-05.

ACCC chairman, Graeme Samuel, said: "The changes observed in the industry over the past year signal that the industry is on the verge of making significant advancements in service delivery. However, in spite of the positive developments observed, the ACCC remains concerned that various threats to existing and future competition exist.

"Key features of 2004-05 included the decline of high margin voice revenues across the industry, as substitution occurred between fixed and mobile segments, and within the fixed-line segment."

The ACCC found that the overall average price paid by consumers for telecommunications services fell in real terms by 6.6 percent in the 2004-05 financial year resulting from a fall of 1.2 percent in prices paid for PSTN services and a decrease of 13 percent in prices paid for mobile services. The average prices paid by residential and business customers decreased by 0.3 percent and 2.9 percent respectively.

The price index for small business increased by 15.8 percent while the index for larger businesses fell by about 18 percent. The ACCC said that the disparity was due to a decline in traffic volumes in this segment, rather than actual price changes in the carriers' tariff and small business pricing plans.

"The strong bargaining power and tendering processes used by larger businesses to negotiate discounts with suppliers of PSTN services seem to have led to the significant fall in prices for this group".

The reports should be available here on the ACCC website but had not been posted as the time of writing.