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)