New Telstra ripoff: Telco increases prices to combat NBN threat

Telstra in new Aussie ripoff
Telstra is increasing phone line rental fees for households, businesses and charities as it tries to squeeze profit out of its copper network before the national broadband network replaces it.

Telstra will also increase local call costs on fixed phone and start charging some mobile calls in 60-second blocks instead of 30-second blocks.

We have not had an increase for quite a long time and we have to reflect the cost of running our business

The cost of a local call on Telstra's Complete, Plus and Advanced home phone plans will increase by 2¢ from October 1 to 22¢, 20¢ and 17¢ respectively.

Monthly rental fees will increase by about 6 per cent from $2 to $3 per month on these three plans to be $31.95, $33.95 and $44.95 respectively. The Together plan will rise by $5 per month, taking it to $74.90 per month.

Four business rental plans will increase by $2 per month. Charity and non-profit organisations will also see 1¢ per minute increase in calls to mobiles and a $2 monthly rental increase to either $14.40 or $21.50, depending on their concession.

The cost of calling 13 numbers from any fixed line plan will increase from 30¢ to 35¢.

There will not be any increases for customers on HomeLine Budget plans or people who use Telstra's pensioner discount scheme.

"We have not had an increase for quite a long time and we have to reflect the cost of running our business," a Telstra spokeswoman said.

However Telstra did increase monthly rental for five home phone plans by $1 or $2 on October 1st last year.

And from October 1 pre-paid mobile customers on casual plans will be charged in one-minute blocks. Telstra's blog says the new price increases will help pay for upgrades to Telstra's mobile network. Telstra moved most mobile customers, long-distance calls and international calls to 60-second blocks in early 2011.

Telstra moved from charging customer per second to 30-second blocks in 2009.

Telstra recently increased prices across its post-paid mobile phone plans as well.

Revenue from the copper network has decreased from $6.6 billion in 2007-08 to $5.3 billion in 2010-11 as Australians choose to use mobile phones instead of fixed phones. GoldmanSachs analysts estimate this will fall to $3.6 billion by 2013-14 as the copper network is replaced by the national broadband network.

Telstra enjoys a 59 per cent profit margin on the services provided over the copper network compared to a 35 per cent profit margin on mobile services.

Executive Director of customer service at Telstra, Peter Jamieson, said this was the first change to local call costs in nine years. However regular line rental increases were necessary to cover increasing costs and make up for declining fixed-line connections.

"The dynamics of the [copper network] are changing over time as less customers use it and they use less of it, but it is still critical for all of our broadband customers. There are a set of dynamics in there that have to be balanced up and that is what we have done here to make the decision to increase prices at this time," Mr Jamieson said.

"It is not so much about costs increasing, it is about continuing to invest in that network as customers continue to decline over time...We see that continual decline and we just have to make sure that our revenues associated with that network and customers using that network continue to be in line with the cost of running it."

"The fixed network is still a very big part of the telecommunications infrastructure of Australia and we need to continue to maintain it for both our retail and our wholesale customers."

He would not say whether prices would increase again in the future.