Experts criticize government's decision to hike phone rates

Experts criticize government's decision to hike phone rates

Dewi Santoso, The Jakarta Post, Jakarta

Independent experts criticized on Wednesday the government's
decision to allow the country's fixed-line operators to raise
local telephone rates by up to 28 percent.

Sudaryatmo of the Indonesian Consumers Foundation (YLKI) said
"the government is not sensitive enough to realize that the phone
rates hike will simply be another burden on the public."

"The government should first carry out a study into the
public's capability to pay the higher rates in relation to their
incomes, before allowing the phone rate hike," he told The
Jakarta Post.

He said that this year alone, there had already been increases
in the price of six public services and commodities -- toll
roads, gas, water, railway, parking and the latest, telephones.

Telecommunications expert Roy Suryo also voiced the same
opinion, saying, "the government seems to be in a rush to make
such a decision".

Roy acknowledged that telephone rates in the country were
still relatively low when compared to rates in neighboring
countries like Singapore and the Philippines.

But he said that such a comparison was not fair, considering
that per capita incomes in Singapore and the Philippines were
higher at US$24,000 and $1,018, respectively, while the figure
was only around $969 in Indonesia.

Currently, local calls here cost Rp 195 per 1.5 minutes, or Rp
132 (1.6 US cents) per minute. In Singapore, local calls cost 25
Singapore cents (15 US cents) per minute, and in the Philippines
can be as low as 10 US cents per minute.

With an increase of up to 28 percent, domestic call rates
would be Rp 250 per 1.5 minutes, equivalent to Rp 168 (2 US
cents) per minute -- still lower than those in Singapore and the
Philippines.

Minister of Communications Agum Gumelar stated on Tuesday that
the government would allow state-owned telecommunications firms
PT Telekomunikasi Indonesia (Telkom) and PT Indonesia Satellite
Corporation (Indosat), the only fixed-line operators in the
country, to raise local phone rates by up to 28 percent, on
condition that long-distance call rates were lowered by at least
10 percent.

The decision came as a result of the 9 percent rates
rebalancing calculated by the Indonesian Telecommunications
Regulatory Body (BRTI).

Rebalancing is a form of synchronization between rates for
local and long-distance calls.

The government explained that the 9 percent rates rebalancing
was needed to eliminate the cross-subsidy from long-distance to
local calls as part of efforts to promote healthy competition in
the telecoms sector.

Telkom, which controls 95 percent of the fixed-lined sector,
said that the new rates might take effect as early as April.

Analysts have said that the higher phone rates would boost the
earnings of publicly listed Telkom, which has already enjoyed
strong revenue from years of monopolizing the sector.

Elsewhere, Roy urged the government to allow more players to
enter the fixed-lined sector to boost competition and produce
cheaper phone rates.

"With more operators participating in the sector, customers
would have more options to choose from, forcing operators to
compete by lowering their rates," said Roy.

For eyebox

Cell phone owners to pay higher interconnection fees

Cell phone users will pay a higher fee for making phone calls
to fixed-line phones following the government's decision to raise
local call rates.

Under the existing regulation, the interconnection fee payable
by cellphone users for making calls to fixed-line phones amounts
to 50 percent of local call rates. The government announced on
Tuesday it had raised the local call rates by 28 percent.

"This means that if local call rates are raised by up to 28
percent, the interconnection call fees will be as much as 14
percent more than the current rate," said Indonesian Cellular
Phone Provider Association (ATSI) chairman Rudiantara in Jakarta
on Wednesday.

Currently, local call rates stand at Rp 195 per 1.5 minutes,
or Rp 132 (1.6 US cents) per minute. This means that cell phone
users currently have to pay Rp 66 per minute in interconnection
fee plus airtime fees of around Rp 300 per minute.

With an increase of up to 14 percent, cell phone users will
have to pay up to Rp 84 per minute in interconnection fee.

Jonny Suwandi Sjam, senior vice president of telecoms firm
Indosat, which operates cellular phone service Satelindo, noted
the new phone rate policy would not affect the cost of making
calls from one cellphone to another. -- JP