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CIE Report Finds Telstra Customers Being Slugged With $3.1 Billion Price Premium

CIE Report Finds Telstra Customers Being Slugged With $3.1 Billion Price PremiumThe report, prepared by the Centre for International Economics (CIE), claims that the “Telstra prime premium” totals $3.1 billion per year, the equivalent to a 15 cents per litre increase in petrol prices across Australia.

“The premium for Telstra reflects both limited competition and differences in service quality, both of which have emerged from structural issues within the Australian telecommunications market,” the report states.

“There are many areas where Telstra is the only provider of services, particularly in regional areas. This means regional consumers are heavily affected by Australia’s telecommunications market structure.”

The report claims “better access to competitive mobile telecommunication services” could benefit up to 3.5 million regional consumers.

Vodafone director of strategy and corporate affairs Dan Lloyd stated the report has “highlighted a commitment to real and rapid change in telecommunications policy in Australia is required”.

“It’s clear that millions of Australians, especially those in regional areas who have no effective choice, are getting a raw deal from the telecommunications market structure in this country,” Lloyd commented.

“We have a situation where policy decisions have discouraged competition and protected the incumbent. This means customers in many areas, particularly regional Australia, simply have no alternative to paying high prices because there is only one service provider.”

Lloyd added that Vodafone encourages Telstra customers in metropolitan areas “to look around for the better deals already available from other providers”.

“When you look at mobile data to download and stream content, Australians are paying 50 per cent more per gigabyte of data with Telstra than they would with other providers,” he stated.

The report states that Telstra has historically received, and continues to receive, subsidies such as the Universal Service Obligation and NBN Co. agreement, which it has not used to provide lower prices for Australian consumers.

Lloyd stated the report “identifies serious structural barriers to competition and reduced prices”, stating “it is clear that existing reform programs need to move faster”.

“There is also an urgent need for a comprehensive review into the way in which existing subsidy regimes such as the Universal Service Fund create serious roadblocks for effective competition in Australian¬† telecommunications,” he commented.

In response to the report, Telstra has told Fairfax Media it confirms the superiority of its offering.

“This simply confirms that over several years Telstra has been attracting more customers because we offer the things they value most, better network coverage and more innovative products and services,” a Telstra spokeswoman told Fairfax.

“The experience of the Australian market makes it clear, the companies willing to invest in their network are able to attract more customers and drive increased consumption, while under-investment results in the opposite.”