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 Govt issues ruling on interconnection tariff reduction

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Registration date : 2008-01-20

PostSubject: Govt issues ruling on interconnection tariff reduction   Tue Feb 05, 2008 5:22 am

Govt issues ruling on interconnection tariff reduction

(ANTARA News) - The Indonesian government on Monday issued a regulation
on the reduction of interconnection tariffs which is expected to lower
retail telecommunication rates.

"Interconnection tariffs are one of the three price components in
retail telecommunication rates. The two others are operational tariffs
and profit margins. Hopefully, phone operators will lower their retail
tariffs given the drop in interconnection tariffs," Information and
Communication Minister Mohammad Nuh said on Monday.

The drop in interconnection tariffs for local fixed networks and
wireless local fixed networks with limited mobility was relatively
small while the reduction in interconnection tariffs for cellular
networks ranged between 5 percent and 40 percent, he said.

He said the other two price components were not the government`s
responsibility because they belonged to the business area of phone

Under the regulation, the government set April 1, 2008 as the deadline for phone operators to adjust their retail tariffs.

"According to the results of calculations made by the government, there
is a significant drop in interconnection tariffs of cellular phones
while the interconnection tariffs of fixed networks fell slightly," he

He further explained the reasons why his ministry as the regulator of
the elecommunication sector cut the interconnection tariffs at a time
when all costs were on the increase.

The first was related to the government`s wish to create an
information-based society in which people from all walks of life could
take advangate of information in their life, he said.

The second was that information itself was within the people`s reach, he said.

"The people`s reach of information covers communication cost. That`s
why the government has an interest in fixing the reduction of
interconnection tariffs which has become the center of the government`s
attention," he said.

Asked what sanction would be imposed on operators failing to cut their
interconnection tariffs, he said there was no regulation to impose

If interconnection tariffs dropped, retail tariffs would decline
accordingly or operators would run the risk of losing the competition
to other operators who had reduced their interconnection tariffs, he
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