ACCC rejects Telstra price hike

The Australian Competition and Consumer Commission (ACCC) rejected Telstra’s application to increase charges on line rentals unless the carrier improved its pricing for low-income earners. Telstra plans to raise its monthly line rental charges by $2.40 to $19.90 up from $17.50 on September 1 and this would inevitably be passed on to other service providers using Telstra’s network.

The ACCC Chairman, Professor Allan Fels said that Telstra was in breach of its obligation to low-bill customers and had not done enough to make eligible customers aware of the low-bill plan.

The HomeLine Budget plan was designed for customers with low phone bills – they are offered discounts on line rental if less than $20 a week is spent on calls. However, the ACCC claims that only 7,000 out of 700,000 eligible customers have signed up for the plan since its introduction in February.

Professor Fels said, “Telstra cannot introduce increases until it has made or will make available products, or other arrangements, to ensure that the average telephone bill of low-bill customers does not increase in real terms.”

Telstra responded that the changes include increased discounts, five free local calls per month and lower STD charges. However, despite reductions in some phone call prices, Telstra admitted that it would boost revenue and the ACCC’s intervention could spare householders $29 a year on their bill.

The ACCC says there is still time for Telstra to change its mind about the price rise.

Click here to see further information on Telstra's price changes.