House and government cannot connect on airtime rate

House and government cannot connect on airtime rate

JAKARTA (JP): The government has turned down a recommendation
from the House of Representatives to raise the airtime rate for
cellular telephones by 15 percent.

Minister of Communications Giri Suseno said on Wednesday the
15 percent increase, as recommended by the House, was still too
low.

"Remember, we decided earlier to increase the airtime by 46
percent," he said on the sidelines of a meeting with House
Commission IV for communications.

The meeting was held to debate the new telecommunications
bill, which will pave they way for the abolishment of exclusive
rights held by PT Telkom Indonesia and PT Indosat.

The new bill will allow local and foreign companies to freely
enter the telecommunications business without having to
collaborate with Telkom or Indosat.

In January, the Ministry of Communications announced a decree
to increase the airtime rate for mobile telephones by 46 percent
to Rp 475 per minute, from Rp 325. The move was rejected by the
House due to the economic crisis, forcing the government to delay
the introduction of the decree.

The House Commission IV recently announced that it had asked
the government to proceed with its delayed airtime raise
decision, saying the ongoing recovery in the country's economic
condition made the plan more acceptable.

The commission, however, agreed only to raise the airtime by
15 percent.

The airtime rate for cellular telephones is set by the
government based on proposals from telephone operators, but the
change is subject to House approval.

Unlike the airtime rate, operators are allowed to set their
own pulse rate.

Director General of Post and Telecommunications Sasmito Dirdjo
said the 46 percent increase in the cellular airtime was
considered by the government the most appropriate sum to help
cellular operators survive the crisis.

He said the government was likely to come up with another
suggestion for the airtime increase rate that would better suit
cellular operators' current requirements.

The Association of Cellular Telecommunication Indonesia (ATSI)
said a significant raise in the airtime rate, the main income
source of cellular operators, was necessary to offset the drop in
cellular usage.

The monthly cellular revenue per user plunged from an average
of Rp 250,000 in 1997 to Rp 190,000 in 1998. ATSI, which
previously asked the government to raise the airtime rate by over
60 percent, said this year the rate had further dropped to Rp
160,000.

Head of the industry policy division of ATSI, Rudiantara, said
the House's suggestion of a 15 percent increase was not
sufficient to help the financially impaired local cellular
industry.

"Compared to the international benchmark, which rates the
average airtime at about 11 cents, or about Rp 700 per minute, a
15 percent increase is nothing," he told The Jakarta Post on
Wednesday.

He said cellular operators expected the government to increase
the airtime rate by 46 percent, if the latter could not afford to
raise it by 60 percent.

There are currently seven cellular phone network providers in
the country, serving three systems: the Advanced Mobile Phone
System (AMPS), the Global System for Mobile Communications (GSM)
and the Nordic Mobile Telephone (NMT) system. They serve over 1.3
million subscribers. (cst)