Internet prices to fall

The Australian Competition and Consumer Commission (ACCC) handed down a draft decision yesterday that will see the price of internet access fall for millions of users. The decision may see the price that Telstra can charge its wholesale customers (iiNet, Optus, TPG, Dodo, etc) for use of its copper network, decrease by 9.6 per cent from 1 October 2015 until 30 June 2019.

The ACCC’s original draft decision in March called for a 0.7 per cent price reduction, but this has now been overturned by the newly proposed 9.6 per cent price reduction. Chairman of the ACCC, Rod Sims, suggested that the original decision was based on outstanding issues that weren’t finalised at the time, causing the sudden change in price reduction.

“Users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs,” Mr Sims said.

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Opinion: Will you see the reduction?

The ACCC’s decision to decrease Telstra’s charges to wholesale internet service providers (ISPs) should see a dramatic shift in the internet pricing landscape, allowing for more wriggle room for those playing with finer margins. Once approved and in place, the changes will see different price reductions from all ISPs.

Companies such as TPG that have been making a name for themselves through lower prices would be close to the top of the list to pass on the full price reduction, while a company such as Optus or iiNet may be less likely to pass on the full reduction.

While the wholesale price reductions may not seem like a win for Telstra customers, if its main competitors, Optus and iiNet, pass on some or all of the savings, then it is reasonable to assume that Telstra may also lower its retail prices. But as with the big banks passing on any reduction in the official interest rate, we will just have to wait and see.

What do you think? Is the ACCC’s decision a positive step for internet users? Should the ACCC force wholesale internet service providers to pass on all or a minimum per cent of the decrease to their customers?