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The current Telstra retail price controls expire on 31 December 2005. The Government will introduce the new price controls on Telstra, to commence on 1 January 2006 and expire on 30 June 2009.

The retail price controls on Telstra are designed to drive efficiency improvements and lower overall prices for consumers in markets where competition is not yet fully developed.

Competition has proven effective in driving telecommunications price reductions for larger business customers, so price controls will no longer be required on telecommunications services provided through individual contracts to business customers. Removing these services will focus the benefit of price controls on residential and small business customers.

Under the new price control arrangements, a basket of Telstra’s line rentals, local calls, STD, international and fixed to mobile calls will be subject to an overall price freeze (Consumer Price Index (CPI) minus CPI).

Consumers will be provided with a line rental safety net through a price cap that will allow Telstra’s basic line rental products to increase only by the rate of inflation (CPI minus zero).

The Government has committed to maintaining the principle of local call pricing parity in rural and regional areas. These arrangements will be re-focussed to require parity in the local call prices offered to regional and metropolitan consumers. Telstra will be obliged to offer the same local call prices (including those in service packages) to metropolitan and regional areas.

The 22 cent cap on untimed local calls will be retained and extended to dial-up internet calls using the 0198 number range. The current price controls for connection services, extended zones, line rental offerings to schools and directory assistance charges will be retained.

The local call cap on payphones will be increased from 40 cents to 50 cents. This increase, the first price rise in ten years, is important to maintain a viable payphone industry.

Telstra will be required to continue to offer a package of services targeted at low income consumers, including targeted support for low income customers disadvantaged by the payphone price increase.

A review of the new price controls will be initiated in 2008 for completion in early 2009.

• Document ID: 30315 |
• Last modified: 5 February 2008, 7:19pm