Wed, 17 May 2000

Government to increase fixed-line and mobile phone rates

JAKARTA (JP): The government will increase the rates of fixed- line and cellular telephone services by 21 percent and 41 percent respectively some time in June, to meet rising telecommunication costs.

Director General of Post and Telecommunications Sasmito Dirdjo said on Tuesday the rates for fixed-line telephone services would be increased by 21 percent to Rp 226 per three minutes from the current Rp 187 per three minutes.

While the cost of using a cellular phone will increase by 41 percent to Rp 475 per minute from its current Rp 325 per minute, he said.

"We expect the new rates can be implemented before mid-July this year, soon after we meet with the House of Representatives to hear their views on the plan," he said.

Sasmito said the government decided to increase the rates for fixed-line telephone services, which are currently provided by state-owned telecom monopoly PT Telkom, to help the company cope with rising operational costs.

"The current tariff is no longer acceptable. It is not sufficient to allow Telkom to generate funds to expand its network," he said.

Telkom currently operates 6,185,793 active telephone lines across the country, which has a population of over 200 million people.

He said the government planned to further increase the rates for fixed-line telephone services by between 15 percent and 18 percent in 2001 and eight percent in 2002.

The government reviews the fixed-line telephone service rates every year. It raised Telkom's rates by 15 percent in February last year.

Sasmito said the raise in cellular phone charges was also aimed at helping cell phone operators accelerate their recovery from the impacts of the economic crisis.

The country's seven cellular phone operators, which currently serve 2.41 million subscribers, have asked the government to raise the rates several times but with no success.

The operators have said they have booked less profits since the crisis, despite the constant growth in subscriber numbers, because their rupiah earnings could not cover their dollar-based investments.

Sasmito said that in order to create a more conducive business climate for the country's telecom sector, the government was ready to allow both fixed-line and cellular phone operators to set the rates in accordance with market demands.

"Very soon, the government will hand over decisions on telecommunications rates to market mechanisms," he said, adding that the government would likely only set the structures and the ceiling price for the rates.

Sasmito also said at the briefing the government planned to increase postal rates to local destinations before the middle of this year.

The cost of delivering a document, including a letter, weighing less than 20 grams will increase to Rp 900 from its current price of Rp 500. While the rate for a doucment weighing between 50 grams and 100 grams will increase to Rp 1,600 from Rp 80 at present.

The cost of sending a postcard will increase to Rp 800 from Rp 250 at present.

Sasmito said international postal rates would be determined by the directorate of the postal service. (cst)