Unfinished business – 20 years of competition in Australian telecoms sector

MELBOURNE, AUSTRALIA: On the eve of the 20th anniversary of Optus being awarded Australia’s first competitive carrier license, Ovum has released a report on the impact of competition in Australia’s telecommunications sector over the last two decades.

The report found that the average mobile voice price declined by almost 50 per cent since the introduction of full competition (in 1997). However, in the fixed market, progress has been much less even. While significant prices declines have occurred in the areas where competitors could compete head to head, the basic access price (i.e. fixed line rental) saw prices rise 68 per cent in real terms between 1998 and 2010.

Kennedy added: “The last 20 years can be categorized as a tale of two markets: a mobile market, where lower barriers to entry have led to a level playing field and a fixed market where the legacy of a vertically integrated incumbent has slowed the growth of competition. Kennedy continued, in the fixed market, progress has been much slower. Lower prices were not the only benefit of a competitive telecoms market. Innovation, investment and better customer service were also the by-products of competition.

“The industry has produced sustained investment over the last twenty years while innovation in new products and pricing, such as the introduction of mobile cap plans in 1994, has delivered huge consumer benefits. In recent years the telecoms industry has moved from not just providing innovations, but to becoming the platform for innovation across the economy.”

The importance of telecommunications as a platform for innovation will grow in the next chapter in Australian telecoms history with the National Broadband Network (NBN). The rollout of the NBN will usher in a new phase of competition that will deliver new benefits to customers.

David Kennedy added: “While the National Broadband Network and the structural separation of Telstra will usher in a new wave of competition and deliver new benefits to customers, obtaining a truly level playing field in the Australian telecoms sector will demand perpetual vigilance.

“Vigilance that the transitional separation arrangements for copper promote genuine transparency and equivalence of access, rather than leaving it to be achieved in the long-term by fibre, that new sources of market power do not arise in areas like content; and that the NBN is also bound to transparency and equivalence, and is subject to continued regulatory oversight.”