Cabinet to decide on phone rate hike, Agum says

P.C. Naommy, The Jakarta Post, Jakarta

Minister of Communications Agum Gumelar said on Monday the government had yet to decide whether to raise phone rates by an average of 10 percent this year as proposed by the country's telecom regulatory body.

"I have received a proposal from BRTI (the Indonesian Telecommunications Regulatory Body) to increase telephone rates by 10 percent this year, but of course I wouldn't be able to decide that myself," said Agum on the sidelines of a ceremony to mark the opening of the new Lion Air headquarters.

Agum said he would bring the BRTI proposal to a Cabinet meeting for debate. "We will discuss it at a closed Cabinet meeting when Ibu (President Megawati Soekarnoputri) has returned."

Megawati will leave for Iran on Tuesday to attend a summit and is expected to return on Friday.

The BRTI, which was set up in late 2003, last week recommended the government raise phone rates by about 10 percent this year, lower than what the government initially planned. The BRTI said a lower hike was possible because of a lower inflation environment during the past year. The regulatory body also suggested a decline in long-distance call rates.

But a final decision lies in the hands of the Ministry of Communications.

The government received approval from the House of Representatives in 2002, prior to the establishment of the BRTI, to raise phone rates by 45.49 percent over a three-year period, or about 15 percent per year. The approved rate hike was justified as necessary to boost investment in the telecommunications sector.

The government raised phone rates by 15 percent in 2002 and another 15 percent in early 2003. But the last increase, coupled with hikes in fuel and electricity prices, was later postponed due to public protests. A proposal late last year to raise phone rates again was widely protested.

In a bid to appease the public, Agum said late last year the government might not increase phone rates this year ahead of the general elections.

Indeed, telecommunication experts and consumers groups have protested the government plan to increase rates.

"The plan to increase telephone rates by 15 percent is unreasonable. Even a 1 percent increase would be illogical," said independent telecom expert Roy Suryo, pointing out that state- owned telecom company PT Telkom was enjoying huge profits and could cover operational costs.

Telkom last year booked Rp 5 trillion (US$588.2 million) in revenue.

Roy added that the complex pricing formula that lead to the propose rate rise was not transparent.

"I suspect that the complicated rebalancing formula could mislead the government into making a decision that will just give a nod to the plan, while in practice it will hurt the customers," said Roy, pointing to a recent survey that said some customers had been overcharged during 2002.

Indonesian Consumers Foundation chairwoman Indah Sukmaningsih said: "I urge phone customers to oppose the telephone rate hike before Telkom explains the utilization of the profits it is making on its flexi-line operation system." She was referring to Telkom's popular new cellular service offered with a fixed-line pricing structure.

"The question is: Who wants the tariff hike? Is it the operator? Or is it the government that needs more money to fund the upcoming elections?" asked Indah.