Competition watchdog calls for drop in wholesale mobile prices

Australia's competition watchdog has announced it will require wholesale mobile termination service prices to fall at the same rate as retail services.

Australian Competition and Consumer Commission (ACCC) chairman Allan Fels today said he expected the price falls, after determining a final approach to pricing for the wholesale global standard for mobile telephony (GSM) mobile termination service.

The service has been the subject of a number of access disputes between fixed-line and mobile carriers in the domestic market.

Professor Fels said the approach will be relatively light-handed and resulting in the wholesale GSM mobile termination service being regulated less extensively than fixed line services.

"The ACCC will require price falls for the wholesale GSM mobile termination service at the same rate as price falls in the corresponding retail market," he said.

"On the other hand, the retail segment of the mobile market has shown signs of increased competition, despite One.Tel going into receivership, with falling retail prices and a wide variety of products on offer."

Fels said the introduction of mobile number portability between carriers on September 25 should further increase retail competition between mobile carriers.

He said the ACCC would be further discussing with industry players ways to increase competition and reduce the need for ongoing regulation.

The mobile services market more generally, will be reviewed by the ACCC in two years.

Under the ACCC pricing principles each mobile carrier's price for wholesale GSM mobile termination will initially be set at the lowest price agreed between an access seeker and access provider. This will be the start of a retail benchmarking approach.

Fels said while the pricing principles only apply to wholesale GSM mobile termination services, the ACCC would conduct an enquiry to determine whether the regulation should extend to CDMA services. - AAP

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