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Analyst: Telco competition irks consumers

Analyst: Telco competition irks consumers

Increased competition from novice home phone carriers causes trouble in the industry

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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Tags TelstraacccTelecommunications Report 2007-08Australian Competition and Consumer Commission

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