Telecommunications industry won't thrive despite decreased costs: ACCC

Although phone service prices are declining, the current structure of the industry is likely to limit future consumer benefits.

Australian consumers are paying less for their phone services, but the Australian Competition and Consumer Commission (ACCC) has warned that the current structure of the telecommunications industry will limit future benefits.

In a telecommunications report tabled in the Federal Parliament yesterday, the ACCC revealed that fixed-line service prices fell by 5.5 per cent, mobile voice services by 5.4 per cent and Internet services by 6.2 per cent in 2007-08.

The report also noted "increased take-up of regulated unbundled services, and enhancements to the coverage and data capability of 3G networks".

However, the ACCC warned that the current structure, particularly the market power of Telstra in the industry, is likely to limit future consumer benefits.

"End users continue to reap the benefits of competition through ongoing investment, innovation and price competition in the telecommunications sector," said acting ACCC chairman Peter Kell.

"However, Telstra has retained enduring market power. As a consequence, the industry remains highly concentrated and regulatory mechanisms are heavily relied on to promote competition. In addition, the industry continues to have an extremely high level of disputation and litigation."

Kell revealed that the industry received its largest number of consumer complaints in 10 years, while there were 28 new access disputes in 2007-08, 18 of which were subject to judicial review by the Federal Court.

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Ross Catanzariti

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