Set calls leave Telstra in a fix

Government throws out pleas for control drop

The Federal Government is set to shoot down Telstra’s attempt to abolish caps for fixed-line calls.

Telstra had submitted that the caps, in place since 2007, should be abolished or relaxed due to the increase in competition between telcos.

But the Australian Competition and Consumer Commission (ACCC) review had found the fixed-line call caps are still necessary consumer protections.

Federal Communications Minister, Stephen Conroy, said the government has proposed the cap be delayed by two years to 2012.

"Extending the controls to 2012 will ensure that consumers continue to benefit from these protections," Conroy said in a statement.

"The ACCC reviewed this matter earlier in the year and recommended the controls be extended by two years, and that their overall scope and composition not be changed. [and] also made a number of suggestions for streamlining the current arrangements, which the Government has considered but decided against implementing."

Local calls will remain capped to 22 and 50 cents from residences and payphones respectively, along with caps for long-distance and international calls, and monthly line rental, under the proposal.

The government has shunned a recommendation by the regulator that it should cease 'carry-in' payment credits used to buffer cap increases, along with further advice that it should reduce certain redundant regulations.

"The ACCC also made a number of suggestions for streamlining the current arrangements, which the government has considered but decided against implementing," Conroy said.

Thinktank the Australia Institute senior research fellow, David Richardson, said in its March submission to the ACCC that Telstra “takes something of the order of $4.4 billion more from consumers than would be possible if it were operating in a competitive market in telephones”.

“As if that figure were not bad enough, as it happens the impact on consumers is also very regressive since, on average, low-income groups spend proportionately more on phones than high-income groups,” Richardson said in the submission.

The government will conduct a further assessment of the influence of the NBN on the caps next year, including the abolition of the caps if Telstra is structurally separated.

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