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​ACCC cracks down on SMS charges

Australia's competition watchdog is set to regulate SMS fees amidst concerns that telcos are charging far more for their customers' texts than it actually costs to provide the service.

Image by Jorge Gonzalez, CC BY-ND 2.0

The Australian Competition and Consumer Commission will begin regulating SMS termination services for the first time after an inquiry found charges for texting have not changed in over a decade.

The ACCC launched an inquiry into the costs of messaging services and the fees telcos charge to carry (or terminate) calls and texts between different networks. As part of the inquiry, the regulator raised concerns that SMS pricing for customers was not in line with what it costs the networks to deliver the service.

"The ACCC is concerned that mobile network operators are able to keep wholesale SMS termination rates significantly above cost," said ACCC Commissioner Cristina Cifuentes.

"The ACCC considers that this is having a negative impact on competition in wholesale and retail markets. In particular we are concerned that these rates are affecting SMS prices available to low income consumers.

"During the inquiry the ACCC found that... SMS termination rates are many times higher than the cost of providing the service and that commercial negotiations have not been successful in lowering rates. The ACCC also found higher costs for sending SMS for consumers that do not have an unlimited plan or that spend less on a mobile service."

The ACCC will continue its regulation of mobile phone call costs, first introduced in 1997, saying this has "promoted competition" and ensured calls can be connected between networks.

The introduction of SMS regulation is also expected to promote competition in the mobile space and lead to "lower prices and greater choice" according to Cifuentes.