ACCC reviews Telstra's prices

The competition watchdog is reviewing Telstra prices, just months after the federal
government aired concerns about a lack of competition in the telecommunications
sector.

But the Australian Competition and Consumer Commission says it's a periodic review
and will be as much about ensuring Telstra's bottom line as it is about delivering
cheaper phone bills.
The watchdog announced on Thursday that it had begun investigating the price control
arrangements that apply to Telstra on a request from Communications Minister Stephen
Conroy.
The price control arrangements, designed to bolster competition in the market,
include caps on the prices Telstra can set for telephone calls and line rental, as
well as other services.
The current arrangements are due to expire in June.
Submissions from the public and stakeholders are now being sought, ahead of the
ACCC's final report, which is due before the minister by March 12.
The new arrangements will cover Telstra from July this year until mid-2012.
Competition law expert Frank Zumbo said the review was standard - the last occurred
in 2005 - but comes amid an interesting episode in relations between the government
and the telco.
While the government says it remains committed to bolstering competition, it won't
want to get Telstra offside amid the raging battle over Australia's future broadband
network.
Any changes to the price control arrangements, if they do happen, "won't have enough
teeth," Prof Zumbo predicted.
This despite the latest government report found that competition in Australia's
telecommunications sector was still not up to scratch.
"The incumbent (Telstra) retains substantial market power," according to the June
2009 report.
It maintains government regulation is required to ensure competition grows.
The review will take in the current state of the market, ACCC chairman Graeme Samuel
told AAP.
Stakeholders will be invited to assess whether Telstra prices are adequately
regulated, he said, adding there was no suggestion the regulations would be thrown
out altogether.
"We are looking at the design and level of possible price control arrangements for
Telstra in the future," he said.
"The level itself is set by the minister."
The last review of price control arrangements came in 2005.
It set certain requirements that allow Telstra to change the prices of individual
services, while ensuring there is no overall rise in costs.
Telstra said it welcomed the latest review.
"Telstra will be participating in the review of price controls, keen to ensure that
any controls take into account the increased level of competition in the
marketplace," a spokesman said.
Meanwhile, the telcos in general got a tick of approval in the latest assessment by
the Australian Communications and Media Authority.
It found Telstra, Optus and AAPT had delivered general improvements in
telecommunication services in the financial year ending 2008, although some
benchmarks had yet to be met.