079/05 29 June 2005

Telstra’s price control arrangements to be extended

To allow consideration of price controls in the context of competition regulation the Australian Government is extending Telstra’s current price control arrangements for up to six months, the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, announced today.

“The Government acknowledges the importance of the price controls and the impact they have on certain services and on consumers,” Senator Coonan said.

“There is an obvious link between price controls and broader regulatory decisions I am looking at that are designed to facilitate and encourage competition in the telecommunications market.

“Retail price controls play an important role in ensuring Telstra passes on efficiency improvements and lower prices for business and residential consumers where competition is not yet fully developed.”

To ensure that the next price control arrangements interact effectively with the competition regulatory regime, the current determination for Telstra’s retail price controls will be extended to 31 December 2005.

In the meantime the Government will be considering price controls in the wider context of regulatory reform.

“The Australian Government has committed to retaining price controls on Telstra, to retaining untimed local calls and to retaining a cap on local call costs. The Government has also committed to maintaining a scheme to protect low income consumers,” Senator Coonan said.

“The design of the next set of price control arrangements is a complex process, given the need to balance competing views about what the price controls should look like against the broader examination of the telecommunications competition framework.”

The Government has been consulting stakeholders including Telstra, other affected telecommunications companies, the ACCC and consumer groups, on the new price control arrangements.

“I am mindful of the need for regulatory certainty for both Telstra and its competitors going forward so I will look to introduce the new price control arrangements as soon as possible following a decision,” Senator Coonan said.

“This may mean that the full six month extension of the current price controls is not required.”