Govt will increase telephone rates before 2004

Sari P. Setiogi, The Jakarta Post, Jakarta

After being delayed for about 10 months, the government said on Wednesday that it would raise telephone rates by an average 15 percent before the end of the year.

Ministry of Communications' post and telecommunications director-general Djamhari Sirat said a similar hike, the third 15 percent increase, would also be implemented next year.

Djamhari was speaking to reporters after unveiling the plan at a meeting with the House of Representatives Commission IV on telecommunications.

He declined to provide details of the plan.

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. But the government was forced to cancel the utility price hikes due to strong protests from the public. The third phase will be carried out in 2004.

The phone rate hike is expected to boost the revenue of the country's fixed-line operators to allow them to increase investment in the sector so that more people can have telecommunications access.

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.

While state-owned publicly-listed telecommunications company PT Telkom has enjoyed strong profit during the past couple of years from its monopoly in the sector (the company in 2002 enjoyed a 96.4 percent jump in net profit to Rp 8.4 trillion (US$987.6 million), partly contributed by proceeds from the sale of asset), loss-making state-owned electricity company PLN has been forced by the government to cancel a plan to raise electricity prices next year amid rising political tension ahead of the 2004 general elections. The government has also said that it would maintain subsidies on fuel prices to help ensure stability in the prices of the commodity.

Djamhari said the decision on the phone rake hike would come along with a new government regulation on the duopoly arrangement in the fixed-line telecommunications sector, in which PT Indosat (also a publicly listed firm now controlled by Singapore Technologies Telemedia) has been allowed to also operate in the sector.

The phone rate hike will create new burdens on the people and businesses still struggling to recover from the impact of the economic crisis.

Chairwoman of the Indonesian Consumer Protection Foundation (YLKI) Indah Suksmaningsih said that before raising the phone rate, the government must first explain to the public the progress of providing basic telephone services in rural areas after the first phone rate hike was implemented in 2002.

She said that such a report would be important for the public to build their trust in the government as well as reduce resistance to the plan.

Analysts have also said that the government should have first forced Telkom to boost efficiency.