Telstra increases mobile, fixed phone costs


news The nation’s biggest telco Telstra has broadly increased its charges for fixed-line telephony services, a move that comes on the back of similar price increases unveiled at the beginning of this month for mobile customers.

In a blog post late last week, the company’s executive direct of customer service (Telstra consumer), Peter Jamieson, wrote that from 1 October, the company would be increasing monthly access fees on half of its HomeLine plans. The company has previously offered customers price points from $22.95 to $69.90, but will now broadly increase its prices (apart from its entry level $22.95 plan), with the top-range plan now topping out at $89.90, for example, and a new $49.90 plan introduced as a $41.95 plan exits its range.

In addition, Jamieson noted, the price of local calls would increase by 2 cents per call, calls to 13/1300/1345 numbers would increase from 30c to 35c, and monthly access charges for not-for-profit and charity customers will increase.

In early July, Telstra revealed that a number of its mobile capped plans would change, with the costs broadly increasing. For example, the company abolished its $29 plan in favour if a higher value $40 plan, and most of its other monthly plans up to $130 received price increases of around $10 a month, although some usage inclusions were also included. This week, Jamieson noted that Telstra’s Member, Phone and Casual mobile plans would also start billing customers in 60 second instead of 30 second blocks, as Telstra’s other mobile plans already do, and there are also changes to some of the company’s fixed, mobile and ISDN business plans.

The telco attempted to placate annoyed customers by noting that it had invested significantly in its network infrastructure over the past few years — especially in its Next G mobile network, and by noting that some charges hadn’t changed in around a decade. “We know there’s never a good time to make changes to prices but, like all companies, we need to periodically review our prices to ensure they reflect the cost of running our business,” Jamieson wrote. “Some of these fixed line prices have been unchanged for nine years, meaning they’ve fallen by more than 19 % in real terms (when adjusted for CPI).”

“At the same time, we’ve invested billions of dollars in what are recognised as Australia’s best networks. For example, we’ve spent more than $3.5 billion on our Next G mobile network, plus our investment in upgrading to 4G, at the same time as traffic doubles each year. We completed about 5,000 capacity upgrades in 2011/12 and upgraded over 1,000 sites with 4G technology. We plan to do about 50% more again (1.5x) in 2012/13, recognising the need to continue to increase the investment to ensure our customers maintain access to a world class mobile network.”

However, the majority of customer responses published on Telstra’s blog were negative. “Is that a 100 percent increase for a 20 second call?” asked one customer with respect to the new 60 second rule. “Outrageous – so much for technology driving prices down,” wrote another. “I see this rise as nothing more than a profit grab. Compared to other places in the world we pay ridiculous prices for basic telephony services & data. The sooner there is real competition in the sector the better. It really is time to look for another provider methinks.”

And a third added: “What a load of crap, Telstra. First you cease on the misfortune of Vodafone and grab as many customers as you can, lock us into contracts then amend your charges.”

Despite Jamieson’s comments, Telstra continues to enjoy high levels of profitability. In the six months to 31 December 2011, for example, the company booked revenue of $12.42 billion, with profits being $1.47 billion. Telstra is also currently adding around 900,000 new mobile connections to its flagship Next G network every six months, especially taking market share from ailing competitor Vodafone and signing up customers to its new 4G network.

Great. After years and years of falling telephone costs, now that most of its competitors have exited the market and the remainder of its rivals in fixed-line and mobile telephony (Optus and Vodafone in mobile, Optus, iiNet and TPG in fixed) are seeing only small amounts of growth in those areas, Telstra has decided it’s time to tighten the noose around Australians’ wallets and take some fat profit while it’s ahead.

In my opinion, this month’s price increases is the start of a long process which will see Telstra to continue to tighten its stranglehold over the Australian fixed and mobile telephony markets for some time to come. In mobile, as I’ve previously noted, Telstra is far ahead of its rivals and getting further ahead, while adding a huge number of new customers. The company can afford to do whatever it likes with respect to pricing in mobile — as for many customers, it has the only realistic network and easily the fastest and most capable.

In the fixed segment, Telstra has more competitors — companies like iiNet, Optus, TPG and even Primus and Dodo. But I don’t view most of those companies as having significantly differently priced PSTN fixed-line telephony services than Telstra. Most of the real competition in fixed-line telephony is coming from fixed to mobile substitution and Internet telephony.

I guess Telstra figures that if people are prepared to pay it for fixed-line PSTN telephony and switch to a company like iiNet for Internet telephony instead, it might and well charge them more for the privilege while the PSTN still exists. Because unless those customers are willing to test out Internet telephony, they’re not going to find significantly different PSTN prices from rivals, meaning they’re disincentivised to switch, despite Telstra’s price increases. And there’s a good reason for this. Most of the non-Telstra PSTN telephony services sold in Australia are just resold Telstra lines anyway.

To be honest, this month’s Telstra price increases aren’t actually all that bad. In some areas they’re overdue and in others the big T has delivered increased value to customers as well. However, if we see another round of price increases from Telstra within the next six months or so, I think quite a few people might start to question the company’s prices. It will be interesting to wait and see what happens next.


  1. Thank you Telstra. I’ve been umming and ahhing for a while now about transfering my fixed phone service to TPG, where I have my internet. Doing so saves me that little bit more per month now, making the decision easier.

    With the NBN coming to my area in the next 12 months, it also encourages me to bypass Telstra/Bigpong at that point as well.

    Bravo Telstra, bravo. Playing your hand now only shows your customers what you think of them, and encourages many to seek more cost effective ground sooner rather than later.

    • I changed from Optus postpaid to tpg in jan 2010 and have not regretted it. I get 10x the value for 1/3 the cost, identical coverage, etc. I went over a few times with Optus, never with tpg despite increasing call usage.

      I only have a Telstra homeline budget for tpg adsl2+: if tpg home phone was available back then I would have used that. But I don’t use it anyway, it’s cheaper to use the mobile! And I get mates rates at maxotel VoIP for the wife to call her mum.

      • Forgot to mention I changed from Telstra mobile to Optus in 2001, back when you had to change phone numbers to change companies. Never regretted that either.

  2. I recently upgraded to a ‘smartphone’ which I still have little idea how to use properly / fully and I’m a little bothered by privacy concerns of a lot of the doings. But hey… anyway I noted at the time that the call charges were quite a bit higher than my old plan, but offset by the included amount.

    I also have a home phone. I think I shall explore a bit more closely the ‘naked’ option elsewhere and mutter just a bit about my mobile. I am not impressed Telstra


  3. Once a portable VOIP service with local DID and a simple an integrated/powerful smartphone app can be delivered to customers, competitors will be able to effectively compete against PSTN services using NBN Infrastructure.

    I’m thinking a single box/router that an RSP sends to a customer (perhaps free, or “3 months free”) plugs into a data outlet and into which they can plug in their phone. Attached to which is a VOIP service and DID, the consumer however needn’t be bothered with this jargon or technical detail.

    The smartphone app could manage the service (with a ‘for dummies’ interface) and allow users to place/receive calls via wifi whilst at home, with an option to divert calls to voice-mail, mobile or 3G VOIP when the mobile is out of the house.

    I am fully aware that this technology and functionality is around now, but once it is cheap/free to a consumer and so simple to use things will change.

    ISP’s need to stop marketing jargon which require more boxes and configuration and just pitch a ‘local line’ service where your parents can call you for the cost of a local call and you can order pizza free. Send out a free local line box like AOL did in the 90’s to get people onto something they didn’t even realise they wanted.

    It will be an interesting 2-5 years, I cant see telstra continue the provision of non mobile phone services for $49+ a month once the NBN is fully rolled out.

  4. Just like to add this:
    Fixed line … I have no answer for.

    Mobile however?
    Guys, welcome to the market.
    Year 11 Economics says this: There is Supply and there is Demand. Supply is limited in mobile phones. A mobile phone network can only accomodate so many customers. And then there is Demand. Demand is driven by “Value”.

    Telstra has 2 choices to avoid crushing its network with too many customers.

    Reduce Supply. (cease letting people sign up).
    Reduce Demand. – Value in this case is derived from the perceived quality of the product, divided by the cost of the product.

    So, Telstra aren’t stupid, they aren’t going to stop selling people mobile phones.
    That leaves Demand. To reduce Demand, Telstra can do one of two things to alter the equation.
    They could lower the perceived quality of the product
    Or they work at the other variable in the equation. Increase the price.

    It’s a no brainer. They have too much demand, and it will outstrip their capacity to supply. They have seen what happens when your mobile network gets crushed under its own weight. Increasing the price kills 2 birds, gives them more money to spend on upgrades, and gives them some slight breathing room to actually spend it on. Extra profit is just some delicious icing on top.

    Fixed line? Probably just a last minute pre-nbn cash grab. Possibly even a plan to maximise the money Telstra would have on hand when structurally seperated by the Liberal government to make Telstra Wholesale a viable FTTN operator. Maybe Telstra retail will use that money to overbuild with a fibre network in all the most profitable areas and suck the value out of the government funded wholesale arm.

    I seriously can’t wait to see the Liberals vaunted market solution to the NBN, it is going to be the most fun to watch. I just hope the wasted billions wont pile on too high for the sake of future internet prices. (I mean, we are going to have to pay of 2 or 3 wired networks with all that infrastructure competition! Stay tuned for more price rises).

  5. One thought: Does Telstra know something we don’t?

    Are they increasing prices as a ‘pre-NBN’ grab….or are they increasing them KNOWING they’ll be handed the NBN for a pittance if the Coalition gets in (likely at this stage) and they’ll therefore have an even stronger monopoly position….?

    Im devoutly hoping for the former….but the latter scares the bejesus out of me…

    • Sorry 7T
      I suspect the latter, as Abott has recently suggested he will sell off (be rid of) the NBN at the earliest opportunity as he believes our National Communications infrastructure is best served by the private sector. With massive taxpayer subsidies of course

      “Mr Abbott also refuses to rule out selling the National Broadband Network if his party wins government: “We don’t need nationalised broadband, we need better national broadband.. we believe in the free market,” he says.”

      Jon Faine interview today

      Opposition Leader Tony Abbott is in Melbourne today, and speaks to Jon on route to the Mornington Peninsula

      • Indeed Abel

        This was precisely my point. Turnbull can say all he likes about “cheaper, faster and better”….but the result with Tony at the head will, quite obviously be “Here, have this, we don’t want it….here’s a few Billion. Do whatever and keep it out of my hair cause I don’t get it or the need for it”

  6. Telstra’s doing what any company does – maximising profit. While providing the end user (most of us, at least, who don’t believe the blind mantra that the private sector always does things better) a clear view of what will happen when Tony and his mates sell off the NBN.

    This is why Telstra should never have been sold off at mate’s rates on some ideological wish and a prayer. Rolling multiple cables down some streets while neglecting most of Australia, spending just enough to drive any potential competition away, and now cashing in. Thanks Johnny.

  7. Telstra is essentially just maximizing the returns of a rapidly diminishing cash cow (huge drops to fixed line connections/calls year after year). Anybody who has the knowledge or non-lazy enough to switch away from Telstra landlines would’ve done it regardless whether Telstra raised or kept the prices.

    And there isn’t even any monopoly concerns because the underlying wholesale price of fixed line voice (WLR) has actually gone down (as set by ACCC). That is, the cost base of potential competitors has actually gone down. So there’s no argument really that Telstra’s monopoly ownership of copper is bleeding out customers here.

    • @Thrawn

      Do you live in the city? Or do you live in a regional/rural area?

      I can tell you right now they’re still gouging with a monopoly. I don’t want a landline phone. But to get broadband I have to pay line rental to iinet because they pay it to Telstra to use the line. So I’m being gouged $30 a month I don’t want to pay. I use VOIP. I want naked broadband but Telstra have the monopoly in regional areas, so they charge line rental cause they can.

      • I second this….live in a regional area and you’re screwed. I have a fixed line for exactly that reason – purely so I can have broadband. I can’t get naked (broadband that is! lol) and even the NBN roll out in my area won’t reach where I happen to live for an indeterminate amount of time despite it covering the whole of the city as of next year (I live 15 minutes drive north of this city! it’s ridiculous!). I imagine it could potentially get worse if the Coalition wins the next election (I’m not adverse to that – but their stance on broadband/security, etc., scares the hell out of me).

  8. “The company can afford to do whatever it likes with respect to pricing in mobile — as for many customers, it has the only realistic network and easily the fastest and most capable.”.

    That’s certainly what it boils down to in Tasmania. Sure I could go with Optus or Vodafone, but as soon as I’m 20k’s out of the CBD, I’ll likely drop back to 2G, struggle to download an email, or have no coverage whatsoever.

    Telstra could raise their prices by 3x and I’d still have no choice but to stay with them, if I want to continue to use my phone as a phone. This is why commercial monopolies suck!

  9. Folks,
    I moved to Naked DSL when Optus released it. Used Mynetfone as my voip provider and never had to look back.

    Moved houses last year & Optus moved me to Cable at my new location . I continued to use voip for my home phone. Best part was my number didnt change and because i have a DID i dont even get marketing calls.

    If i travel, i can run a voip app on my smart phone from ANYWHERE in the world and have my home phone ring there.

Comments are closed.