Analyst: Telco competition irks consumers
- 24 June, 2009 11:35
- Comments 2
Increased competition in the telecommunications market has fuelled consumer fury, according to an analyst.
The issue has come to light in an Australian Competition and Consumer Commission (ACCC) paper titled Telecommunications Report 2007-08, which showed service retail prices were down across the board with fixed-line telephony dropping 5.4 per cent and Internet services falling by 6.2 per cent. This was partly attributed to the proliferation of regulated bundled services.
At the same time, disputation and litigation in the telecommunications sector continued to rise. Customer complaints skyrocketed to a 10-year high. Consumer protection investigations in the sector also rose by 70 per cent.
Layer 10 founder and telco analyst, Paul Brooks, said competition abundance is a double-edged sword and a major contributor to consumer exasperation. He pointed to the popularity of bundled services blindly leading smaller ISPs to join the telephony game.
“These ISPs are starting to bundle fixed phone services with Internet products they traditionally offered,” Brooks said. “Some of them don’t have the resources and experience to provide professional services like the bigger telcos, which leads to more problems and more complaints. “Customers can put up with a level of flakiness with the Internet but are less forgiving when it comes to voice services.”
The ACCC report also indicated the wholesale telco market was still heavily concentrated and regulatory mechanisms relied upon driving competitive outcomes.
Brooks said this regulation dependency was exacerbated by Telstra.
He blamed the telco's former management, under Sol Trujillo, and its disdain towards other service providers.
“Telstra once had a healthy wholesale division which actively developed products that smaller service providers would want to use,” Brooks said. “But the previous management treated wholesale customers like lepers and parasites so service providers had no choice but to go through the regulatory route.”
While Brooks could not comment on whether Telstra’s new management would take a different approach to wholesale, he reiterated the opportunity for the NBN to abate the telco’s iron grip on that market.
“The company can probably see the writings on the wall as alternative networks start to come in the works.”
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Comments
Anonymous
Re: The bigger Telcos any better?
I beg to differ:
'Some of them don't have the resources and experience to provide professional services like the bigger telcos, which leads to more problems and more complaints'
All are as bad as one another. Poor service and being directed towards the emptiness of space when the problem becomes insolvable at the consumer enquiry level is now the norm. I am currently going through the ombudsman complaint process for one of these Telco's - in addition to my arm length list of complaints this company has the audacity to send me an email telling me I can get a 'free' upgrade and then go on to tell me that I would have to pay an extra $20 per month. Since when does paying $20 = Free.
I won't stand for this treatment and false advertisement - I hope alot of other Australians will also stand up to be counted - I know I am not alone in this.
Anonymous
I don't agree the twist this author has given to competition. He has written something where there is nothing to write about. Any company that does not satisfy customer expectations will be closed. That is the nature of any competition. Competition is good. But bigger companies who fleece customers are not any better. At least these smaller companies are better even if they have issues. This looks like a ploy paid for by the big companies.
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