LABOR MISUNDERSTANDS TELSTRA PRICE CONTROLS

30 April 2004
52/04

Once again Labor is deliberately scaring Australian consumers by only telling part of the story in relation to telecommunications price controls.

An important fact that Opposition communications spokesman Lindsay Tanner fails to admit is that Labor opposed Australian Government moves to put in place existing price controls, supporting instead a regime in which there were no limits at all on Telstra prices.

Against Labor wishes, the Government has imposed price controls on Telstra which require the carrier to reduce average prices for a variety of calls and restrain its ability to increase line rentals to cost.

Most importantly, the price controls require Telstra to develop pricing packages, endorsed by peak welfare organisations, specifically designed for low income consumers.

Telstra is legally required to comply with the price controls and the Australian Competition and Consumer Commission (ACCC) is responsible for monitoring and, if necessary, enforcing compliance with those controls.

There is a number of factors that influence pricing changes in the telecommunications industry. The two key factors are the retail price controls imposed on Telstra and competition. Ownership of Telstra is not a factor.

The Government is committed to price controls and last week directed the ACCC to review the price controls and how they should apply when current controls expire in June 2005.

Since the introduction of competition under the Howard Government, the ACCC has continued to report that overall prices paid by consumers for telecommunications services, made up of call charges and line rental fees, have come down .

The telecommunications market is complex and sophisticated.

The introduction of competition has given consumers much greater choice of telephone provider and much greater choice of product.

If customers do not like their current phone company they are encouraged to shop around and find a provider offering services that better suit their needs.

According to Mr Tanner, if Labor wins government it will freeze line rental and force Telstra to give more back in terms of lower call prices. This is an irresponsible policy that will have two possible consequences. Either it will cut into Telstra's value at the expense of all shareholders, including the Government, or Telstra will be forced to compensate by increasing prices of other services.

Once again Labor has shown it has no understanding of Australia's telecommunications environment and how best to protect consumers' interests.

Media Contact: Carina Tan-Van Baren (02) 6277 7480 or 0439 425 373