The Australian Competition and Consumer Commission has put a cap on fees telecommunications companies charge each other when handling calls and text messages from other networks. The consumer watchdog cut the telco fee by more than 50%, and capped the fee they can charge for receiving cross-network SMS messages. This decision comes on the heels of the 2013-14 inquiry into “mobile termination” prices.
Australia’s three major networks, Telstra, Optus and Vodafone, charge each other for connecting calls and text messages, such as a call from an Optus customer to a Vodafone customer.
The ACCC proposed in its draft decision that the fee charged between operators for calls drop from 3.6 cents per minute to 1.61 cents per minute. They also proposed the price to receive a text be set 0.03 cents.
“The proposed rate reflects the cost of terminating calls on Australian networks and is based on benchmarking the costs of this service overseas,” said Commissioner Christine Cifuentes. “We would expect that the savings will be passed onto consumers either in the way of lower charges or through improved call and SMS inclusions in retail plans.”
A 2014 inquiry found major networks spent about 1 cent to send 100 text messages. Yet the consumer group Australian Communications Consumer Action Network (Accan) reported some telcos were charging customers about 15 cents per text.
“This level of profit margin is astronomical,” Accan’s deputy chief executive, Narelle Clark, said at the time.
High-cost SMS deals affect older and poor Australians the most, as many of these consumers don’t own smartphones and are therefore unable to enjoy relatively inexpensive data messaging services such as Viber and Whatsapp. This means older and poor consumers are left dealing with outlandish calling and texting prices.
“The proposed changes will have a positive effect on competition in the telco market which will also benefit consumers,” the team at Accan noted.
The ACCC is expected to reach a final decision by July, and put the new cost into effect on January 1st, 2016.
Not everyone is jumping on the bandwagon, however. A Telstra spokesperson said that while the company was “reviewing today’s decision and will be providing a response as part of the ACCC’s process,” the decision to regulate text message termination prices would “add unnecessary costs and complexity to our business.”
“Mobile prices are continuing to trend down and the majority of mobile service plans now include unlimited SMS,” he said, noting “limited benefits” for customers. “Also consumers already have choice when it comes to messaging, with the emergence of smartphones, message applications and social media.”
This range of choices combined with unlimited SMS plans is not cause for regulation, the spokesperson added. Telstra is Australia’s largest provider of fixed line services.
Vodafone said regulations had to make certain Telstra put the money it saves into consumer wallets.
“Telstra has the highest fixed prices in the OECD. The standard price Telstra charges its customers to call from a fixed phone to a mobile has barely moved for a decade,” said Matthew Lobb, Vodafone’s general manager for public policy.