Regional consumers slugged as telco competition divide exposed

Telstra mobile premium = $1.4 billion per year

An independent report has revealed Telstra customers in regional areas are paying significantly more for telecommunications services than their metropolitan counterparts.

The “Telstra Price Premium” report by the Centre for International Economics also revealed the total premium paid by Telstra customers each year is $1.4 billion for mobile services and $1.8 billion for fixed services, which is equivalent to an increase in petrol prices of 14 cents per litre.

Vodafone Chief Strategy Officer Dan Lloyd said the report has exposed the extent of the telecommunications competition divide which exists in Australia.

“This latest report reinforces the need for urgent telecommunications policy and regulatory reform in Australia to finally bring competition and choice to regional and rural areas,” Mr Lloyd said.

“For the first time, we know the true cost of lack of telecommunications competition in regional Australia, and it’s nothing short of staggering and grossly unfair.

“For example, the price premium paid by a Telstra mobile customer in regional Australia is $10 per month for pre-paid services and more than $4 a month for post-paid services. The difference in mobile premium is more than twice of that paid by a customer who lives in Sydney.

“Australian households with Telstra services are being slugged up to $450 extra per year. That’s especially unfair for customers in regional areas who are forced to pay the premium because they don’t have a choice of provider.

“The report found the higher premium in regional Australia is due to Telstra’s greater market share in those areas where no or limited competition exists.”

The report also revealed the premium being collected by Telstra for its telecommunications services has increased over from $3.1 billion to $3.2 billion in the past 18 months.

Mr Lloyd said the report confirms there are serious barriers to competition within the telecommunications sector which are hurting regional and rural customers.

“The ACCC is currently looking at whether a domestic roaming declaration could benefit competition and consumers, and we believe these findings highlight the importance of this inquiry,” Mr Lloyd said.

“Domestic roaming is a common solution internationally in countries with large geographies and dispersed populations, and it makes sense in areas where it is economically unviable to duplicate infrastructure.

“Importantly, the report notes the significant price premium does not exist in other international markets and concludes structural issues in Australia are limiting the ability for competition to drive market prices down.

“The current regional telecommunications subsidy model, which currently sees $300 million each year go to the incumbent for its exclusive use through the Universal Service Obligation (USO), is only exacerbating the problem.

“The Productivity Commission this week released a damning report which found the USO is outdated, lacks transparency and accountability and needs to be brought to an end as soon as possible. This is clearly a major concern.”

-ends-

Notes to editors:

A report by the Centre for International Economics, “Telstra’s Price Premium”, was released on 9 December, 2016.

Key findings of 2016 report:

  • This premium paid by Telstra customers amounts to a total of $3.2 billion each year above the average price charged for the same services by other carriers ($1.4 billion extra each year for Telstra mobile phone services and $1.8 billion extra each year for Telstra fixed line services);
  • The price premium paid by a Telstra customer is $10 per month for a post-paid mobile plan, $5 per month for a post-paid SIM-only mobile plan, $17 per month for a pre-paid mobile plan and $18 per month for fixed line services;
  • The premium paid by Telstra customers is equivalent to a 14 cent per litre increase in fuel prices;
  • In regional areas, Telstra’s premium has a greater impact because Telstra holds a greater proportion of mobile services market share and a greater proportion of services are pre-paid rather than post-paid.

A report by the Centre for International Economics, Australia’s telecommunications market structure

The price premium paid by consumers, was released on 15 June, 2015.