SMS Rates Expected to Drop on ACCC Regulation

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By Athena Yenko | June 18, 2014 1:32 PM EST

Australians may soon be enjoying drops on SMS rates following the decision from the Australian Competition and Consumer Commission (ACCC) to continue regulating the mobile terminating access services (MTAS) until June 30 2019.

The ACCC concluded its inquiry into the regulation of MTAS and decided to continue its regulation on mobile voice termination services for 5 years and, in an unprecedented move, to regulate SMS termination services.

"The ACCC expects to see SMS termination rates reduce which should lead to lower SMS prices for consumers," ACCC Commissioner Cristina Cifuentes said in a statement.

A receiving mobile phone network charges a fee to carry or terminate a call or deliver SMS when users place a call or send an SMS. The ACCC decided to adjust these fees for the benefit of the consumers.

On May 27 2013, ACCC started an inquiry on whether it should extend, change or annul the MTAS declaration. During the inquiry, the ACCC learnt that mobile phone networks did not change charges for terminating SMS services for 10 years. SMS termination rates are much higher than the fees charged for services provided. Furthermore, the ACCC found that consumers who do not have unlimited plan or those spending less on mobile services were being charged even more.

"The ACCC is concerned that mobile network operators are able to keep wholesale SMS termination rates significantly above cost. The ACCC considers that this is having a negative impact on competition in wholesale and retail markets. In particular we are concerned that these rates are affecting SMS prices available to low income consumers," Cifuentes explained.

"The regulation of mobile voice termination services will continue to promote competition in mobile markets and benefit consumers by leading to lower prices and greater choice," Cifuentes added.

For Vodafone's general manager of public policy Matthew Lobb, the ACCC's decision may result to "unnecessary red tape."

"What we believe needs urgently addressing is the impact from Telstra's high fixed-to-mobile voice rates. These have not fallen in line with the substantial [mobile terminating access service] reductions of the last decade and have already cost consumers more than $1.4 billion. We look forward to the ACCC's focus on this in the next stage of the review, " Lobb said.

The ACCC argued that Telstra, Optus and Vodafone Hutchison Australia could not bargain lower terminating fees out of each other. Without its regulation, retail prices will remain "inefficiently high."

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