Home > Latest News > Telco’s Who Are Marking Up Messaging Costs By Over 90,000% Set To Be Hit By ACCC

Telco’s Who Are Marking Up Messaging Costs By Over 90,000% Set To Be Hit By ACCC


Currently Telco’s charge customers $0.15 cents a message with tens of millions sent every day. The cost to the telco is 1/6th of a cent or $0.00016.

Looking at it another way the Telco’s are marking up the cost of sending a text message by over 90,000%.

“Its good news for consumers because we expect any savings from these lower prices will be passed on,” ACCC commissioner Cristina Cifuentessaid. “The benefits are either in the form of lower prices as part of their mobile phone plans, or better allowances for say SMS.”

For calls, the ACCC proposed to cut the termination rate from 3.6? per minute to 1.61?, bringing it into line with overseas levels.

For SMS, it proposed to cap it at 0.03? per text.

An ACCAN spokesman welcomed the draft decision: “The proposed changes will have a positive effect on competition in the telco market, which will also benefit consumers.”

Telstra who for years have price gouged Foxtel customers said the ACCC’s decision on the wholesale SMS rate for the first time would add unnecessary costs and complexity to its business, with limited benefits for its customers.

Telstra, Vodafone and Dodo actually charge 29? or 30? per message, when the cost is deducted from the included credit in monthly smartphone plans.

Vodafone’s head of industry strategy and public policy, Matthew Lobb, told Fairfax Media the ruling would actually benefit Telstra and not its customers.

He questioned the ACCC’s claim that Telstra passed on price reductions to consumers, as it had some of the highest fixed prices in the Organisation for Economic Co-operation and Development.

He pointed out that Telstra’s standard price for a call from a fixed phone to a mobile had barely moved for a decade.

“If this is the case, the ACCC’s proposed wholesale price reduction would merely improve Telstra’s bottom line and hurt mobile competition,” he said. “We call on the ACCC to undertake a more transparent and detailed assessment before a final decision is made.”

An Optus spokesman said: “We note there is an emerging disconnect in how the regulator is tackling pricing of Australia’s mobile and fixed line services, when both businesses are in a state of transformation and face quite different competitive dynamics.”

The ACCC is seeking submissions and plans to announce its final decision in July. The new termination rates will take effect from January 1, 2016, and remain until June 30, 2019.