Telkom admits rate hike reaches 167.86%

Telkom admits rate hike reaches 167.86%

JAKARTA (JP): State-owned telecommunications company PT Telkom
acknowledged on Thursday that the rise in telephone rates under a
new rate structure would reach 167.86 percent, which is far
higher than the 21.67 percent average approved by the House of
Representatives.

Telkom vice president for corporate communications Dodi
Amarudien said the sharp increase in telephone rates was caused
by the rate system changing to a single rate.

"The change in the rate system will also cause a sharp drop in
rates for certain long distance calls. But the average of the
overall increase will be 21.67 percent," he said in response to
charges that the domestic telephone provider had intentionally
manipulated the increase to avoid public protest.

Dodi said the average of 21.67 percent was calculated on the
average of all telecommunications components, including local and
long distance calls.

He said that in Jakarta there would be an increase of between
35.14 percent and 167.86 percent caused by an implementation of a
new rate system.

Under the new rate structure, all calls within Jakarta and its
surrounding area, which uses the 021 area code, will cost Rp 150
(about US$.014) a minute, Dodi said.

The existing multiple rate system calculates the cost of a
local phone call according to the duration of the call, the time
of the call and the distance between the caller and the
recipient.

In the existing rate structure, there are three categories for
distance: up to 20 kilometers from the caller, between 20
kilometers and 30 kilometers from the caller and more than 30
kilometers from the caller. The further the distance, the more
expensive the call.

The single rate system, which is scheduled for implementation
on June 10, eliminates the time and distance as a determining
factor, which will then make an increase ranging between 35.14
percent and 167.86 percent in certain cases, while decreasing to
between 48.3 percent and 89.5 percent in others, Dodi said.

Each distance category is then divided into time slots -- peak
periods, usually between 8:00 a.m. and 6:00 p.m., and off-peak
periods -- with higher rates for peak hours.

Based on the current rate, a call to someone up to 20
kilometers in the city during the peak period of between 9:00
a.m. and 3:00 p.m. costs Rp 84 a minute. During the off-peak
period, it costs Rp 56 a minute.

Under the new rate structure, the increase for a call made to
a location within 20 kilometers during peak hours will be 78.57
percent and 167.86 percent during off-peak hours.

Calls made to a location more than 30 kilometers away during
the peak period, which presently cost Rp 1,440 a minute, will
only be Rp 150 a minute under the new rate structure, or reflect
a drop of 89.5 percent, Dodi explained.

Outside Jakarta or the 021 area code, the local fixed-line
telephone rate will still be based on a multiple rate system, and
the planned increase will be 29 percent on average.

For example, a call made during the peak period to a location
up to 20 kilometers away that costs Rp 83.5 a minute, will be Rp
107.5 a minute.

Long distance calls will increase by an average of 20 percent.

Foe example, the rate for a call made to a location between
200 kilometers and 500 kilometers away during the peak hours of
between 8:00 a.m. and 6:00 p.m., which presently costs Rp 2,010 a
minute, will increase 20 percent to Rp 2,430 a minute.

The House of Representatives approved the average increase of
21.67 percent, but urged the government to review the new rate
structure as it was considered too complicated and misleading to
the public.

Dodi said he regretted the misunderstanding but that if the
government decided to postpone and review the new rate structure,
Telkom would go along with the decision.

"Telkom will be obedient and if the government says to go
ahead, we'll go ahead, and if it decides to postpone then we'll
postpone," he said.

Dodi said he hoped a postponement would not be longer than one
month as a set rate structure was crucial for users, investors
and the company as well.

"Our investors are highly apprehensive, the shareholders are
worried our shares will drop and new investors will not come on
at the present rate," he said, explaining that the existing rate
was considered too low for a profitable business operation. (tnt)