Retail internet costs fall five percent

The average cost of internet services fell 4.9 percent over the 2008-2009 financial year as a result of an increasingly competitive wireless market, according to the competition watchdog.

The prices, collated from the published plans of Australia's largest service providers, indicated the most significant price drop came for wireless services, which fell 14.7 percent year-on-year.

The Australian Competition and Consumer Commission's annual telecommunications report, tabled to Parliament late last week, registered a drop in the price of DSL services by two percent over the financial year while cable prices fell 1.1 percent.

Dial-up, however, increased in price by 13.1 percent, nearly offsetting a 13.8 percent decrease registered in the previous financial year.

Drops in internet pricing came in contrast to mobile services, which increased by 1.8 percent over the financial year, despite an decrease of almost 7.8 percent in the previous reporting period.

The largest increases came for standard GSM services, which rose 10.5 percent over the year despite a 3.6 percent drop in the price of 3G services over the same period.

The cost increases came as the number of mobile services in Australia increased by almost two million to 26 million subscribers during the financial year.

The ACCC said mobile voice services had cut into fixed line voice services, the latter decreased from 94.6 billion minutes during 2008-2009, to 45.6 billion minutes during the reported financial year.

Mobile voice minutes totalled 28.2 billion. The watchdog pointing out that "while fixed call minutes are still greater than mobile call minutes, the trend indicates that this may change in the coming year".

The report found competition had increased markedly in the internet and mobile markets due to continued investments by numerous players in both spaces.

The increase of bundled services across both realms, however, showed a consolidation between the markets, which the ACCC indicated was a "new telecommunications landscape heralded by the National Broadband Network".

The ACCC used the events of the financial year to reaffirm its position in regulating competition for the sector as continued increases in telco complaints to the ombudsman indicated there were "inadequate incentives for telecommunications providers to deliver good customer service".