The Australian Competition and Consumer Commission (ACCC) today released a draft proposal for regulating the price mobile network operators charge one each other when a call is placed or an SMS is sent, with a major reduction in order for both.
Known as Network Termination Fees, these are costs that the telcos bill to one another when a subscriber on one network calls a subscriber on another — off-net calls, in the industry jargon. This is one of the major components in the cost of making a call, and is the reason many telcos offer “free calls” to other customers on the same network — “on-net calls”.
Currently the telcos charge 3.6 cents per min for calls, but the ACCC believes this figure should be as low as 1.6 cents per min — a more than 50% reduction in the per minute pricing.
Similarly, the ACCC believes the cost of an SMS message should be 0.03 cents for the telcos, based on what is required to send and receive them, and says that this would be “well below current commercial rates”.
“We would expect that the savings will be passed onto consumers either in the way of lower charges or thorough improved call and SMS inclusions in retail plans,” aid ACCC Commissioner Cristina Cifuentes in statement.
The ACCC is now calling for submissions from the industry, but expects that the pricing regulations should be in place for January 1, 2016.
So, cheap calls incoming?
It does seem like cutting into the internal costs of calling and messaging should make an impact on the price or phone plans, but it is difficult to gauge how much of the current product pricing offsets these costs.
When introduced next year, we expect to see the savings passed on in the per-unit pricing of low-cost plans. PAYG plans and Pre-Paid plans currently charge about 15c per minute for calls and 10c per SMS. While you’ll probably still need to top up with $10 or $20, you should see your credit last longer with lower per-unit pricing.
If you’re on an $80 per month contract plan with a new smartphone, it is unlikely you will notice the difference. Calling and SMS are now most offered as unlimited inclusions in Postpaid phone plans, and it is the price of data where both the cost and value lie.
Still, this is great news for low income families, or phone users on the fringe, like young kids and the elderly. If the ongoing cost of owning a phone has been a struggle in the past, this decision could make it better value, if not cheaper overall.
Family on Phones via Shutterstock
Joseph Hanlon
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