Major Australian telco providers have clapped back at the Australian Competition and Consumer Commission (ACCC) following a report that accused Telstra, Optus and Vodafone/TPG of jacking up prices.
In a statement on Monday, ACCC chairman Rod Sims went so far as to blame the TPG and Vodafone merger as a reason for the increase in prices, asserting that this was why the ACCC opposed the merger in the first.
“The ACCC opposed the merger of TPG and Vodafone because we were concerned it would lead to higher mobile prices, and result in three similar providers with little incentive to compete strongly,” Sims said, calling out the Federal Court for approving the move last February.
“Despite evidence showing the three mobile network owners reacted strongly to the potential competitive threat of a new TPG network, the court considered that the merger would be pro-competitive, allowing Vodafone to compete more effectively against Telstra and Optus.”
Basically, the lack of competition in the Australian telco market has resulted in consumers paying higher prices for the services we all depend on, according to the ACCC.
“When markets end up with a smaller group of large look-alike players with stable positions, competition is muted and consumers pay more,” the report stated.
According to the ACCC, Vodafone has seen the sharpest increase, with prices for postpaid plans jumping by $5 to $40 per month. Meanwhile, Telstra prices have jumped by $5 to $15, with Optus also hiking prices by $6 per month.
However, it’s worth noting that Vodafone also offers “heavy discounting and temporary bonus inclusions” with those plans, which impacts the perceived value of the deals.
Additionally, both Telstra and Vodafone have reduced the length of prepaid plans down to 28 days, effectively resulting in a price increase of 25 to 50 percent for Telstra customers, and 25 percent for Vodafone customers.
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Interestingly, Optus didn’t make any significant changes to postpaid plans.
TPG/Vodafone has since fired back at the ACCC’s comments, telling Gizmodo Australia that it has not raised mobile prices since the merger and labelling the comparison as “simplistic and misleading”.
“The ACCC has chosen to use data that doesn’t reflect what our customers are actually paying. It has ignored the ongoing promotions for Vodafone and other brands, which are one of the main methods to provide customers with better discounts or inclusions,” a TPG spokesperson told Gizmodo Australia, adding that the report didn’t factor in the rising cost of handsets, or the investment in enhancing the mobile network in Australia.
“The ACCC’s conclusions even contradict its own Communications Market Report which found prices paid by customers are down 16.7 per cent in 2020 compared to 2019.
“The ACCC is out of touch to suggest that mobile providers, as commercial businesses, are not competing hard for customers every day. The bottom line is, we are offering better value and a better network experience because we’re able to compete harder for customers after the merger.”
Telstra has echoed a similar sentiment, stressing to Gizmodo Australia that the market has never been more competitive.
“The mobile market in Australia offers consumers a huge range of choices across different plans and prices points in a very competitive environment,” a Telstra spokesperson told Gizmodo Australia.
“We’re making significant investment in the capability and coverage of our mobile network right across the country, including in regional Australia.
“Our new simplified plans offer no lock in contracts and allow customers to move up and down plans and price points depending on their usage and budget.”
Optus, which copped the least of the criticism in Monday’s report, issued a statement to Gizmodo Australia.
“Optus continues to raise the bar for customers on value and service, while investing to deliver a world class mobile network that provides Australians with true competition and choice in the cities, regions and rural areas,” an Optus spokesperson said.
“Plan inclusions have improved with data increasing (e.g. on $39 to $45 the data has doubled from 10GB to 20GB) and other benefits included (e.g. Optus Sport on the $45 plan worth $14.99/mth retail), while excess data charges have been removed — saving consumers money and giving them confidence in what they spend.”
“The industry is building out the future of mobile connectivity and investing billions of dollars in building 5G networks. With significant investment in networks, innovation, and new products and services, we believe our prices remain the best value in market and importantly support a sustainable and competitive sector for all Australians to enjoy.”
The ACCC claimed that customers could be saving up to $25 per month for similar plans by switching to other providers.
“Companies like Aldi, Gomo, Belong, Amaysim… have mobile phone plans for about $25 a month, which is roughly half the big players’,” Sims said in an interview with 2GB‘s Jim Wilson.
However, the ACCC stressed that consumers should do their research before making the switch because, as we know all too well at this point, Australia is a huge country and not all providers have the same geographic coverage.
“Before changing over, we encourage consumers to compare different providers’ geographic coverage, and consider their individual needs, as not all providers offer the same coverage,” the ACCC said.
The three companies’ responses cited that it costs a considerable amount of money to make the upgrades and improvements we all want from a telco provider.
Ultimately, the situation just reiterates the point that it’s worth shopping around and doing your research before committing to a mobile phone plan, regardless of whether you opt for a major provider or not.