Telstra price controls extended

Retail price controls for Telstra extended by two years

The Federal Government has chosen to extend the retail price controls (RPCs) placed on Telstra's fixed-line services for two more years, saying it will continue to benefit Telstra customers.

Local calls will continue to be capped at $0.22 per call and $0.50 from payphones. Other controls that will remain include caps on long-distance and international calls as well as fixed-line rental fees.

Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, said that extending the controls, which have been in place since 2007, until 30 June, 2012 is necessary to protect consumers.

The decision by Conroy to avoid making changes to the existing controls was based on a review by the Australian Competition and Consumer Commission (ACCC). The ACCC made other recommendations that the Government chose not to implement. These recommendations included changing how schools would be charged for fixed-line rentals, which the ACCC said should be subsidised directly by the government.

Optus, one of Telstra’s main competitors, wrote a submission in response to the ACCC's report stating that the controls should be removed altogether: "The first-best policy response is for the Commission to remove RPCs on all fixed line services immediately as there are no efficiency gains to be made by continuing the regime." Telstra also called for the removal of RPCs: "As competition has grown in the market to deliver these benefits, price controls have been successively relaxed. If the price controls arrangements are not removed completely, they should be relaxed further."

Conroy said that another review of RPCs would be needed in 2011 as the National Broadband Network (NBN) begins to take shape.

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