Bid to raise Telstra rentals

The Communications Minister, Richard Alston, is expected to ask Cabinet to approve an increase in Telstra's line rentals within three weeks which would allow the telco to cut retail call charges.

The Minister will propose a “moderate” increase in the Government's price cap, under which most people pay $19.95 per month per line currently. Telstra estimates that its costs are running at around $31 per month per line and wants line rental charges to move closer to this figure. Higher line rentals would allow the telco to cut call charges and also lead to lower wholesale rates, which would help carriers such as Singtel Optus.

It's believed that Senator Alston is also considering removing retail mobile charges from the current price-cap regime. Vodafone's Peter Stiffe agrees with the move, saying that it's hard to see why mobiles should be included in the price-cap regime, as all it does is allow Telstra to hold up some other prices. The price-cap regime requires Telstra to reduce prices relative to inflation on a broad basket of services, including local calls, connection, line rental, long distance, international and mobile calls.