01.Is this the end of telco SMS price gouging?
The Australian Competition and Consumer Commission (ACCC) will regulate SMS termination services for the first time, which could lead to cheaper SMS charges by Australian telcos. The move is in line with recommendations made in submissions to the consumer watchdog’s inquiry into the regulation of mobile terminating access services by consumer advocacy groups.
Currently, when an SMS is sent from one mobile network to another, the telco of the receiver of the message may charge a fee to carry (or terminate) the text. When Australian Communications Consumer Action Network (ACCAN) looked at how much telcos were charging for these text terminations, they found the charges were often way out of line with the actual costs incurred. As a result, ACCAN argued telcos were gouging some consumers by 90,000% on the costs of texts.
The ACCC has said it will “declare” SMS pricing, meaning they will regulate wholesale SMS pricing to prevent anti-competitiveness. They’ve already done this with voice calls - the ACCC stepped in and set the price a network can charge another network to pass on a call – and will continue to regulate pricing for voice calls for the next five years.
“The ACCC expects to see SMS termination rates reduce, which should lead to lower SMS prices for consumers,” ACCC Commissioner Cristina Cifuentes says. “In particular we are concerned that these rates are affecting SMS prices available to low income consumers.”
During its inquiry the ACCC found that commercial negotiations have not been successful in lowering termination rates. Consumer groups have argued this is a case of telcos shifting the cost of doing business around – offsetting the loss of profit margins on voice calls and cap plans by making SMSes more expensive, especially on pre-paid products.
Unsurprisingly, Vodafone and Telstra were strongly opposed to SMS price regulation, while Optus, ACAAN and telco resellers were in favour of regulation.