Govt hangs up phone rate plan

Rendi A. Witular, The Jakarta Post, Jakarta

In what might be seen as bowing to public pressure ahead of the general election, the government on Tuesday delayed plans to raise telephone rates before the end of this year.

"There will be no price hike for telephone rates (in the remaining period of) this year," Minister of Communications Agum Gumelar said, following a meeting with the House of Representatives Commission IV on telecommunications and transportation.

Furthermore, he said that even "in the early period of 2004" there would be no rate hike.

Agum, a retired army general, refused to disclose the reasons for the delay.

Director General of Post and Telecommunications (at the ministry) Djamhari Sirat only said that as the telecommunications restructuring team had yet to complete an assessment of the country's telephone rate structure, the delay had been necessary.

"The team, which consists of several ministries (coordinated by the Coordinating Minister for the Economy), is still working out the timing... There will be no change in the average price hike we initially set, it's just a matter of timing," said Djamhari.

Djamhari told the same commission a couple of weeks ago that the government would raise telephone rates by an average of 15 percent before the end of this year.

Some analysts, however, said that the delay in the rate hike was mainly due to fear of public protest in the run up to the 2004 general election. The government has also canceled plans to raise fuel prices and the electricity tariff next year, to help avoid unrest during the elections period.

Others, said that the cancellation was partly linked to the government's failure to fulfill several requirements set by lawmakers, such as the operation of the Indonesian Telecommunications Regulatory Body (BRTI) and the increase of fixed-line telephone penetration in rural areas.

The government set up BRTI in July, however, it remains unclear when the agency will commence operations. The agency will regulate, oversee and control the country's telecommunications industry, with the authority to issue licenses, settle disputes and set the benchmark for service quality standards.

As for telephone penetration, the government and fixed-line telecommunication companies have not been able to meet targets in expanding telephone networks in rural areas.

The government said that currently Indonesia has a fixed-line penetration rate of only 3.6 percent, meaning that only around 8 million fixed phone lines are available for a population of more than 220 million.

The government also said that increasing phone rates was necessary to boost the revenue of the country's fixed-line operators, to allow them to increase investment in the sector, so that more people could have telecommunications access.

The phone charge increases are part of the government's three- year plan to crank up phone charges by 45.49 percent. The first stage hike was implemented in February 2002. The second phase was supposed to be implemented in January this year, along with increases in the prices of fuel and electricity.