Cabinet to decide on phone rate hike, Agum says

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.