John Linton ....to increase prices of low end services.....as you do when you're a monopoly with no incentive to be reasonable because no-one competes with you.(SMH 16/8/08 - page 5).
It was interesting to read that Telstra's annual profits increased 13%, Telstra's top eight executives personal pay increased at a higher percentage than that to well over $A50 million a year and, obviously, this meant it was time to increase the telephone line rental charges for all low end users so their next round of very big salary increases can be again justified by linking them to increased profit. Nothing wrong with that as it's what any monopoly does - it can charge what it likes because you can't get the service from anyone else and it's so easy to meet profit forecasts when you can set any price you like.
The charges that will increase are low end line rental (estimated to affect 5.5 million customers), calls to 1300 numbers (to 30 cents a call affecting all customers) and mobile call charges which will increase due to Telstra moving from charging per second to charging in 30 second 'blocks' (affecting all customers). It always surprises me that so many mobile services buyers don't take into consideration the very significant additional cost a 30 second billing 'interval' imposes on their monthly bills - typically around 12 -13%.
The reason given...well no reason was given other than to 'snarl' "the increases are less than the rate of inflation". Big deal - the communications industry is not materially affected by 'inflation' and is in fact a net beneficiary of increased end user spending and lower operating costs via new technology efficiencies without taking in to account the leveraging of additional revenues (and profits) from new services.The ONLY reason the prices increased was to ensure more money for the top Telstra executives.
In ISP Land there appears to be a general expectation by customers that prices will fall, continually, for reasons unknown to me. It's true that most company's wages bills, even very, very efficient ones, increase year on year or month on month as the volume of transactions and services they manage increases as their revenues grow. All efficient companies keep the additional costs incurred from increasing volumes (as well as the cost of things like rent and utilities) well below the additional profit they earn from increased revenues and the greater ongoing efficiencies all commercial enterprises try to build in to their businesses.
While prices may not fall from ISPs they generally remain fairly static in terms of data delivered per dollar and data delivered per increase in speed - in general terms an ADSL user oday is paying less per byte delivered and the speed of delivery is more than ten tmes greater than 3 - 4 years ago. The most common monthly charge of $45.00 for an ADSL service deliversfar more in both download and speedterms than it delivered a few years ago and that price point has remained prety constant over the years (and Telstra take note: has never increased in 'real terms' - CPI, COL or anything else)
A basic tenet of effective business management is that the cost of doing anything directly under your control (i.e. not involving services or products bought from outside sources) should reduce over time by developing economies of scale in both buying in and prosessing internally. As Telstra controls every aspect of its provision of wire line and mobile services it's hard to see how the cost of providing such services can have increased and, indeed, it can only be assumed that the costs of providing the services have decreased. (other than the salaries paid to El Sol and his friends).
So the only conclusion that can be reached is that Telstra are increasing prices because they are a monopoly and no-one else can provide the services and therefore the management can increase their own salaries based on them making more money for the shareholders and thus rewarding themselves with a share of the profits - it's always the same story when any monopoly is involved.
....and this is the company that, with CK's willing assistance, wants to lock up the future provision of internet services across Australia?
As CAG said to Maveick towards the end of Top Gun: "God help us all!"