Price movements in the PSTN business index

The PSTN business services index is derived from ‘small business’ and ‘other business’ sub-indices. As is the case for the PSTN residential index, each PSTN business sub-index is comprised of five PSTN services components: basic access, local calls, national long-distance calls, international calls and fixed-to-mobile calls.

It should be noted that reporting carriers’ definitions of ‘small business’ and ‘other business’ vary. For example, certain types of consumers categorised as small business by one carrier may be treated as other business by another carrier. In addition, some carriers may change the definitions they use over time, which would result in revenues and/or usage being shifted between consumer categories and between time periods. Given these factors, it is difficult to compare either year-on-year price changes for each business category or prices across business types and/or carriers.

Given this, the ACCC considers that the aggregate PSTN business index is the most relevant indicator of price changes for business consumers, as the index accounts for revenue and usage data for all business consumers regardless of the definitions used by carriers. However, the ACCC does recognise that the ‘small business’ and the ‘other business’ sub-indices provide additional useful information on price trends between business consumers of different sizes and so has included information on these sub-indices in this report.

The PSTN business index has declined each year. Table 4.6 shows the annual price index movements for small and other business services over the past decade. Although small business customers faced a price increase during 2004−05, this was offset by the significant decline in prices for other business services that year.

Average real prices for every component of the PSTN business services index declined during 2013−14 (table 4.7). The greatest price decline during the reporting period was for fixed-to-mobile services, which had a real price decline of over 10 per cent.

Average real prices for small business voice services fell by 4.0 per cent during the reporting period. Figure 4.10 shows the movement in the service components of the small business PSTN sub-index over the last five years.

Real prices fell across all small business call services in 2013−14. The magnitude of price decline for fixed-to-mobile, national long distance and local calls for 2013−14 was much bigger compared to the previous year’s price movements for those services. PSTN small business international and fixed-to-mobile prices decreased by more than 10 per cent in 2013−14.

Average real prices for PSTN other business voice services declined by 6.1 per cent in 2013‑14. Figure 4.11 shows the movement in the service component of the other business PSTN sub-index over the last five years. Real prices fell across every component of PSTN services in 2013−14 except for national-long-distance services, which increased slightly for the first time in five years. This increase was compensated to some extent by the greatest price decline in basic access services in five years.