Mobile charges rise as competition fades

Mobile charges rise as competition fades

While telecommunication charges around the world fall as a result of increased competition, Australia is heading in the opposite direction with dominant carrier Telstra sharply increasing mobile charges on Friday.

The connection cost of a mobile call has risen 25 per cent to $0.25 and the cost of an SMS (short message service) text message has risen 14 per cent to $0.25. In August, Telstra raised the cost of connecting a call from $0.18 to $0.20.

The rise reflects the general lack of competition in the Australian telecommunication market as smaller players have gone out of business or scaled back their operations, according to independent telecommunication analyst Paul Budde.

"Competition has clearly ended in the Australian mobile market," Budde said. "It is back to the good old duopoly days."

Telstra said in a statement that prices were adjusted "to reflect growing costs and pressures on infrastructure" as the company spends $200 million annually on enhancing its mobile phone network, having seen a 1000-per cent increase in SMS traffic since April 2000.

The move is a sign of a monopoly situation, Budde said. "In normal economic situations prices go down when demand goes up, not so in our monopolistic telecommunications market."

Telstra's main competitor is Optus, which was recently acquired by Singapore Telecommunications (SingTel). According to Budde, Optus will "dramatically increase" mobile charges in January 2002.

Competition for Telstra was supposed to increase with the October introduction of mobile number portability (MNP), whereby subscribers can change mobile carriers easily while keeping the same phone number. But Telstra, easily the largest mobile operator, said that it actually gained market share following the introduction of MNP.

"It is a further indication that competition in the mobile market is at an all-time low," Budde said. "Telstra's competitors are failing to grab this once-in-a-lifetime opportunity to increase their market share. This is a missed opportunity for companies like SingTel/Optus and Vodafone."

Vodafone Pacific, Australia's third-placed mobile operator, has around 20 per cent market share, compared to around 45 per cent for Telstra and 35 per cent for Optus.

A fourth operator, Hutchison Telecommunications Australia, sold its subscriber base to Optus in October to concentrate on providing 3G (third-generation) mobile services in the future.

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