Telstra reaps profit at customers’ expense

The base cost of calling mobiles from landlines was cut from 9c to 6c in January this year, yet Telstra has decided not to pass this saving on to its customers. 

The Australian Competition and Consumer Commission (ACCC) has gradually reduced the terminating rates (the amount charged for calls terminated in the first minute) from 21c in 2004 to the current 6c per minute, with further reductions to 3.6c per minute due by mid 2014.

While Telstra has passed on the previous price reductions, it has decided not to pass on this 3c cut, netting the telco an extra $18 million in revenue to date. Telco analyst Justin Diddams estimates Telstra will save $84 million in this financial year if it does not pass on the next cut due in January 2013.

Telstra has also raised the cost of calling mobiles on its basic home phone plans from 35c to 36c per minute.

A spokesman for Telstra claims that the telco has passed on savings through price cuts to other services.

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Opinion: A nail in the coffin of the landline

If you study your home phone bill closely enough, the largest proportion of costs is likely to be the landline rental. This is a non-negotiable cost of having a home phone service, even if you only make one or two calls per month.

Of course, most people are also paying a mobile phone connection fee on top of a home phone, but why? Is it time to get rid of the landline and simply have a mobile phone? The latest figures released show that although the cost of calls from landlines to mobiles has actually decreased, Telstra has decided to increase its standard rate.

Many people are already making the switch to mobile-only homes. The Australian Communications and Media Authority (ACMA) reported last year that the demand for landlines fell from 11.88 million in 2003-04 to 10.67 million in 2008-09. This figure continues to fall while the demand for mobile services increases. Coupled with the growing market for mobile broadband services, there will soon be no need for homes to have a fixed connection of any kind.

If cost was the only factor which determined whether homes were connected to landlines, the humble home phone would long since be a museum relic. As a means of communication when compared to the packages and plans offered by mobile providers, the home phone simply cannot compete on cost. However, having a landline still offers some comfort to those who have not quite adapted to mobile technology or can’t get a consistent mobile service. And if you have to contact government agencies such as Centrelink on a regular basis, then calling its 1300 numbers from mobiles can prove costly. So, these are the customers who are being held to ransom by Telstra. Even the basic home plan on Telstra costs a customer $22.95 per month and this is before a call is made.

So, if your landline is there simply because it always has been, perhaps now it’s time to reconsider whether it’s really needed.

Do you rely on your landline? Or have you ditched your landline completely? 

Written by Debbie McTaggart