'Harsh land' unique reason for high costs

The Australian Telecommunications Users Group (Atug) has slammed claims by Telstra that geographical and population characteristics unique to Australia justify charging significantly higher prices for services than many overseas counterparts.

Telstra announced last week that an 'independent study' by the Productivity Commission supported its high charges because the cost of providing telecommunication services in Australia is more expensive than overseas due to population distribution and natural geography.

Telstra regulatory director Deena Shiff said the report recognises the real-world costs of providing services to all Australians because a large proportion of the population (and hence phone lines) is in areas with low population densities.

Shiff accused the Australian Consumer and Competition Commission (ACCC) of not taking such factors into consideration when determining industry price guidelines.

"The Productivity Commission has brought some balance to what has been a one-sided, ill-informed, Telstra-bashing exercise designed to promote the short-term interests of rival telecommunications companies against the long-term interests of Australian consumers," she said.

However, Atug managing director Allan Horsley was quick to point out that the study was not officially endorsed by the Productivity Commission nor was it the 'opinion of the commission' as it was simply a research paper prepared by staff.

Horsley said the paper was prepared with the assistance of staff from Telstra and the Australian Communications Authority (ACA) with no invitation extended to user groups or industry representatives.

He said Shiff's comments are 'pathetically inappropriate' and accused her of engaging in a 'bash everybody else' exercise at a time when Telstra should be more conciliatory toward industry instead of inflammatory.

Pointing out there is no reason to celebrate Telstra's high pricing simply because of population distribution, Horsley said most of Australia's population is on the east coast anyway.

He said Telstra is in no position to be trumpeting the merits of this paper as a justification for its pricing structures.

"Nobody wants to prevent Telstra from making a profit and a reasonable return; the issue is what's reasonable?" Horsley said.

While local and international call prices have dropped Horsley said costs for data communication services were still high and users were being "ripped off".

He said Atug was also disappointed in ADSL pricing announced this week.

Communications infrastructure manager for Baulderstone Hornibrook, Vincent Schultz said the company used Telstra as there is little price difference between most carriers.

"Price would matter if there was a significant difference but the last time I did a comparison Telstra was competitive; we get good deals with significant discounts because we are a large organisation," Schultz said.

Elgas IT manager, Jim Lynch said Primus is the company's primary service provider for corporate data transmissions.

Lynch said he hadn't noticed any significant shift in charges over the past two years at Telstra, claiming charges have generally remained the same.

"The thing that has made the difference for us in costs is greater use of the Internet as opposed to fixed data lines," Lynch said.

Regional IS director for Australia/New Zealand at Reckitt Benckiser, Mark Apolony said it is difficult to assess trends in its communication costs because of its recent merger - between Reckitt & Colman and Benckiser.

Apolony said its global contractor is Infonet and Telstra is the local carrier but most cost management is handled globally rather than locally.

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More about ACAATUGAustralian Communications AuthorityAustralian Competition and Consumer CommissionAustralian Telecommunications Users GroupHorsleyInfonetPrimus AustraliaProductivity CommissionTelstra Corporation

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