Govt will increase telephone rates before 2004

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.