Government approves phone charges hike plan

Fitri Wulandari, The Jakarta Post, Jakarta

Despite strong public protests, the government has approved an average 15 percent rise in phone charges under a new tariff structure proposed by state-owned telecommunications firm PT Telkom to take effect on Jan. 1, next year.

The increase is part of a three-year Telkom plan to raise charges by a total of 45.49 percent, or 15 percent every year, which started in 2002.

"We (the government) are set to sign the decree before Jan. 1," Minister of Transportation and Communications Agum Gumelar said as quoted by Antara on Wednesday.

Under the new tariff structure, local phone charges would rise 33 percent, subscription fees up 31.60 percent while long- distance calls would drop 3.97 percent.

Telkom said the overall average phone charges hike was 15 percent.

With the new telephone charges, local call tariffs will be Rp 259.9 (about 2 U.S. cents) per two minutes compared to the current Rp 195.

Agum added that approval for the second hike in phone charges has been calculated during a meeting with the House of Representatives Commission IV overseeing telecommunications and infrastructure.

Telecommunication experts and a number of legislators have, however, questioned Telkom's financing needs, arguing the company continues to enjoy strong profits.

The publicly-listed company argues the higher phone charges policy would allow it to subsidize fixed-line investments in otherwise low-yield regions. These were either remote or poorly populated areas, or regions mostly populated by low-income groups.

Telkom's 2002 third quarter net profit more than doubled to Rp 7.57 trillion from Rp 3.64 trillion in the same period last year. It attributed the hefty rise to the sale of a 12.7 percent stake in its mobile phone unit, PT Telekomunikasi Selular Indonesia (Telkomsel).

Its core business, fixed line services, contributed 39 percent to the third quarter net profit.

Telkom critics said the company had not met targets promised before it raised the phone charges early this year.

The targets are raising the number of new telephone lines, increasing the successful call ratio (SCR), improving public facilities and shortening the repair process.

Telkom, however, rebuffed the allegations saying it had met the targets.

For instance, the government required Telkom to install between 2.5 million and 3 million new telephone lines by 2006. This year, the target has been set at 285,464 lines, of which Telkom had already installed 237,329 lines by the third quarter.

Agum said the government had carried out field inspections to see whether Telkom had met the targets.

"The government will thoroughly check if Telkom has met the set target ... And from our observation, they have met several targets," Agum said without giving details.