Telstra’s ‘Covid price hikes’ under attack

Telstra has come under fire for increasing its mobile plan prices at a time when Australian families are doing it tough because of the COVID-19 pandemic.

Telstra has lifted prices on all of its plans by between $5 and $15 a month.

Telstra has come under fire for increasing its mobile plan prices at a time when Australian families are doing it tough because of the COVID-19 pandemic.

Earlier this month, Australia’s biggest telco lifted prices on all of its plans by between $5 and $15 a month, a move it said was because of the company’s extra investment in 5G networks.

Telstra’s new plans mean a customer will have to spend a minimum of $65 a month to ­access 5G services, up from $50.

The telco said customers would get more data under the revamped offerings, but Telsyte analyst Foad Fadaghi questioned whether consumers really needed more mobile data, given so many people were staying at home during the pandemic.

He said customers often wanted to spend less, not more, particularly during a pandemic.

“With economic headwinds, some consumers will be looking to consolidate their spend if their data caps are starting to far exceed their regular or irregular usage,” he said. “Telsyte research shows although data usage is growing, data allowances are growing much faster. The average data utilisation rate in a given month … was 30 per cent in 2019, down from 41 per cent in 2018 and 50 per cent in 2017.”

The price hike comes despite a recent survey from the Australian Bureau of Statistics that found 3.5 million people had financial ­actions to support their basic ­expenses between mid-May and mid-June, including drawing from their savings.

Finder.com.au editor-in-chief Angus Kidman warned customers to check the fine print of their mobile plans, saying light users were going to be forced to upgrade their plans in order to enjoy 5G speeds. “Stick with month-by-month deals so you can easily switch when something better comes along. And remember, you don’t need a huge data allowance if you’re working from home,” he said.

A Telstra spokesman said customers who switched to a new plan before September 30 would not experience the price rise for 12 months. “It’s important we find the right balance between adapting to market circumstances and ensuring we are a sustainable business for the future,” he said.

Australians can expect even more price pain, with broadband prices also tipped to soon increase across the board. Since March, NBN Co has offered 40 per cent extra capacity for free to retailers to help them deal with demand stemming from COVID-19, but that is set to end in August.

The boss of internet provider Aussie Broadband, Phil Britt, said a price rise was inevitable.

Broadband demand remains about 10 per cent above pre-COVID levels, and retailers will be forced to adjust their plans.

“We don’t believe traffic levels will return to original forecasts even without areas of the country going in and out of lockdown,” Mr Britt said. “While usage continues to rise every year, and NBN still charges for bandwidth volume in the form of CVC [connectivity virtual circuit], providers have little choice but to raise retail prices or reduce service levels.”

He said Australians had become used to using their internet for more things on more devices.

“I believe we need to scrap CVC and move to a single access charge based on the speed tier chosen, with no usage or CVC component. Not only does it simplify everything, it also gives telcos more certainty in how they can set prices,” he said.

“Many other countries operate this way, including New Zealand. CVC is something that appears to be unique to the Australian market. Something has to give.“

Telstra has also called for the additional capacity from NBN Co to be extended.

“Given many people will continue to work and study from home for the foreseeable future, we think it makes sense to extend the 40 percent free allocation of CVCs for the locked down geographies for the time being or, as we and others in the industry have called for previously, for NBN Co to look at removing the CVC pricing structure altogether,” Telstra’s spokesman said.

An NBN spokeswoman said the company would provide an update on extra capacity “in the days ahead.”

“The network has handled the increased demand very well and we are very proud of the role we have played to help Australians connect with their work, education, friends and families during this difficult time.”