Govt hangs up phone rate plan

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.