ACCC report: Aussies paying more for mobile plans
Millions of Australians could have to pay more for their mobile phone plans after price increases by Telstra, Optus and Vodafone, according to new analysis by the ACCC. Since 2020, the three telcos have increased the price of several postpaid plans and have also effectively increased the price of a range of prepaid plans by reducing their expiry periods, forcing customers to recharge more often. Telstra, Optus and Vodafone collectively hold 87% of the total retail mobile phone market, and have more than 95% of the postpaid market.
“Our analysis shows that consumers will now be left paying significantly more for a range of mobile phone plans at Telstra, Optus and Vodafone. The behaviour of the three big telcos would suggest they are not concerned about losing customers to rivals,” said Rod Sims, ACCC Chair.
During the past 12 months, Telstra has increased its postpaid mobile plan prices by between $5 and $15 per month. Telstra also reduced the recharge expiry on 35 and 42 day prepaid plans to 28 days, which equates to a price increase of between 25 and 50% over a year. In May, Optus raised the price of all of its postpaid plans by $6 per month, marking an increase between 8 and 15%. However, Optus has not increased the cost of its postpaid plans.
Vodafone has also increased the cost of its postpaid plans by between $5 and $40 a month; however, the increases are currently accompanied by heavy discounting and temporary bonus inclusions. In December 2020, Vodafone reduced the customary 35-day expiry of its prepaid plans to 28 days, for the same monthly cost. Over a year, this equates to a 25% price increase. These mobile price increases follow the merger of TPG and Vodafone in 2020.
Sims noted that the ACCC opposed the merger of TPG and Vodafone because of concerns that it would lead to higher mobile prices and result in three similar providers with little incentive to compete strongly.
“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. When markets end up with a smaller group of large look-alike players with stable positions, competition is muted and consumers pay more,” said Sims.
The ACCC has encouraged Telstra, Optus and Vodafone mobile customers to compare the prices and features offered by smaller providers that resell services on the networks of the three mobile network operators. Small providers offer cheaper alternatives for consumers. Although their plans don’t usually include extras such as access to content, their voice calls, SMS and data packages are similar to those offered by Telstra, Optus and Vodafone. Customers of the three mobile networks could save between $5 and $25 per month by moving to a different provider with comparable data inclusions.
Following Telstra, Optus and Vodafone’s decision to offset recent price increases with higher data allowances, the ACCC has also encouraged consumers to check how much data they typically use and choose a plan that covers only the data they need. According to the ACCC’s latest Internet Activity Report, the average mobile phone user in Australia consumers less than 15 GB of data per month. Plans that include at least 15 GB of data, as well as unlimited national calls and texts, can be found for as little as $25 per month.
“We suspect many customers who have recently had their mobile provider justify a price increase with higher data usage would prefer the previously available lower monthly fee in exchange for a lower data allowance,” said Sims.
Sims reminded customers that switching to a new provider is a simple process, with the new provider able to move the customer’s existing number over for them.
“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. There are still ways to find a cheaper mobile plan but, ultimately, dynamic competitive markets deliver best for consumers,” said Sims.
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