ACCC queries mobile phone charges

The Australian Competition and Consumer Commission (ACCC) has released a preliminary decision arguing that current mobile termination charges are too high.

Ed Willett, ACCC commissioner, said that the watchdog's investigations had “suggested” that current termination charges were at least twice the cost of delivering the mobile termination service. "These above-cost charges are passed on to consumers in the retail prices they pay for fixed-to-mobile and mobile-to-mobile calls,” he said.

"The decision includes a new approach to regulating the price of the mobile termination service, ensuring a closer correlation between the price and the cost of delivering the mobile termination service," said Willett.

The watchdog has recommended a pricing system which would require mobile operators to gradually reduce the price of the mobile termination service to 12 cents per minute by January 2007.

According to a statement issued by the ACCC, the mobile termination service allows a mobile subscriber to receive incoming calls from a network other than their own service provider. “The service is provided by the receiving network and paid for by the calling party's network,” it stated.

However, not everyone is happy with the findings of the preliminary report. Vodafone Australia today lashed out at the ACCC's draft decision, branding it as “misguided” and arguing that customers will be the losers in the process.

Peter Stiffe, general manager of public policy at Vodafone Australia, said that the telco would keep pushing for regulation to be limited to areas “where there are real problems in the market”.

“Regulation of termination charges is unnecessary when mobile prices have fallen consistently in this market,” Stiffe said.

The Competitive Carriers Coalition (CCC) has also issued a statement commenting on the ACCC's preliminary decision.

It has argued that the price reductions proposed are too slow, and should be immediately implemented rather than being phased in over a number of years.

The CCC has estimated what this phased approach will cost consumers. “Between the beginning of the inquiry last year and the implementation of the final price cut in 2007, consumers would pay in order of $1.6 billion too much,” it stated.