Telstra to Raise Fixed Line Prices

In a move not calculated to inspire goodwill in the average citizen, Telstra has insisted that it has no choice but to raise the wholesale costs of fixed line services by 7.2 per cent.

It ‘must’ do this because of the anticipated churn of customers away from Telstra-owned copper services to the NBN. Telstra argues that although some of these losses would be offset by the decreased strain on the copper network (and as large parts of it are decommissioned), it wouldn’t be enough.

In its submission to the ACCC's Final Access Determination (FAD) inquiry, Telstra claimed that it expects demand for fixed line services to fall by about 62 per cent by 2019. They argue as that their network costs are largely fixed (this is debatable going forward), with fewer remaining users the cost per user must rise.

On the other hand, it could be argued – indeed it has been argued – that the payments Telstra is to receive from NBN Co already cover this churn. NBN Co is already paying both for the use of the last-mile copper (for FttN etc), and per customer that churns away from Telstra. Surely this last payment covers the issue over which Telstra is crying poor? Are Telstra just trying to double-dip on subscriber-loss payments?

Not so according to Telstra, and not so according to the Department of Communications, who concurred that NBN Co’s current payments (which are being renegotiated, anyway) are ‘irrelevant’ to his matter:

“Payments by NBN Co to Telstra are generally irrelevant to the ACCC’s determination of [fixed line service] FLS access prices because the costs these payments relate to are not included in the cost of FLSs provided by Telstra.

“Consequently, the costs of the Telstra assets used by NBN Co should be recovered separately from NBN Co (unregulated sale or lease proceedings), and the costs of the assets used to provide FLSs should be recovered separately from the access seekers that use the FLSs.”

The Department also warned that setting the fixed line access price too low, Telstra might inadvertently slow down the churn of customers to the NBN, which kind of sounds like an endorsement for Telstra’s price-rise. But given that fixed line services aside from those provided by the NBN are switched off two years after NBN services are installed in an area, I don’t see how this matters. You have to churn, anyway. 

It seems relevant to us, especially when the customers whom this will most effect are those who can least afford it.