Govt raises phone charges by 15 percent

Govt raises phone charges by 15 percent

Debbie A. Lubis, The Jakarta Post, Jakarta

Minister of Transportation and Communications Agum Gumelar
announced on Tuesday that telephone charges would increase by an
average of 15 percent starting Jan. 31.

He said that the hikes in phone charges were needed to attract
new investment into the country's fixed-line telecommunications
sector.

Speaking to reporters during a gathering, Agum said that the
ministerial decree authorizing the increases would be signed
later on Tuesday.

The phone charge increases are part of the government's three-
year plan to crank up phone charges by 45.49 percent. The
government initially proposed a 21.67 percent rate hike as part
of the first phase, but this was rejected by the House of
Representatives as the House claimed it would overly burden the
public. In the end, the legislature only approved a 15 percent
increase.

Agum admitted that the phone charge increase was not a popular
policy given the fact that the government had earlier raised fuel
prices and electricity rates.

But he said that the increase was essential to attract
investors to finance the expansion of the local fixed-line
telecommunications network.

He also said that although the state-owned telecommunications
firm PT Telkom had made hefty profits from its monopoly over the
country's fixed-line service, its cash flow was not sufficient to
finance the targeted installation of at least two million
telephone lines by 2004.

"Telkom's profit is only enough to install 150,000 lines,"
Agum said.

As of Sept. 30, 2001, Telkom had installed a total of 7.1
million telephone lines across the country, the equivalent of
3.24 telephone lines for every 100 people.

The government will revoke Telkom's monopoly over local
telephone services in 2002, its domestic long-distance call
services in 2003, and state-owned PT Indosat's exclusive rights
over international direct-dial services in 2003.

Meanwhile Director General of Posts and Telecommunications
Services Djamhari Sirat said that local calls would go up by 17
percent and long distance calls by 13 percent.