Price control arrangements applied to Telstra (or its predecessors, Telecom and the Overseas Telecommunications Corporation) since 1989. They were originally introduced at a time when Telstra was the only telecommunications provider and fixed line telephony was the predominant telecommunications service, giving Telstra significant market position. RPC and other regulatory measures were viewed as a means to appropriately balance this dominant position while the market was deregulated and competition increased through new players and services.
RPC were reviewed every two to three years since their introduction and were kept in place to address potential ongoing structural and social equity issues in the telecommunications market. These issues have declined with improved access to telecommunications infrastructure, including the National Broadband Network (NBN), the increasing availability and use of alternative services to fixed lines (such as mobile services) and increased retail competition.
In February 2014 the Centre for International Economics (CIE) was engaged to undertake an economic analysis of RPC to provide advice on the future of RPC in the context of the Government's broader deregulation agenda.
CIE found that the development and growth of a competitive retail market for telecommunications services has made retail price controls redundant. Because retail price controls are not leading to any discernible changes in prices relative to what would have otherwise occurred, retail price controls no longer address their original objective.
Differentiated pricing between metropolitan, regional and rural areas has not occurred. Analysis of RPC across Telstra and 16 other providers of voice services showed no regionally differentiated prices.
The findings of the CIE analysis confirmed the trends identified in previous reviews and reinforced the decreasing relevance of RPC in the current telecommunications market.
The full CIE report and a summary of consultation conducted by the Department on RPC are available here:
Repealing RPC allows a reduction in industry reporting requirements for Telstra and will deliver a net economic saving of approximately $246,000 per annum due to reduced administration and compliance costs.
Monitoring of price movements will continue on an annual basis through the legislative requirement on the Australian Competition and Consumer Commission under the Competition and Consumer Act 2010 to review and report on prices paid by consumers for telecommunications services.
Legislative powers to reintroduce RPC remain in place should significant price increases or differentiated pricing in regional areas occur.
Extensive consumer safeguards remain in place, including the Universal Service Obligation, and as part of its carrier licence conditions, Telstra is required to provide the 'Access for Everyone' package targeted at low income consumers.