Another bid for new phone rates

Maltacom has submitted fresh proposals to the telecoms regulator to allow it to substantially raise its fixed telephony rates and slash its international rates by half.

This is the second attempt being made by Maltacom to increase its fixed telephony rates and lower its international rates.

The first attempt, made a year ago, had been turned down by the Malta Communications Authority.

In its second attempt, Maltacom is making more reasonable demands, which however would still increase the local fixed telephony rates substantially.

The exercise, known as tariff rebalancing, will now be under the scrutiny of the technical experts within the regulatory body. A tariff rebalancing has taken place whenever the telecommunications market has been liberalised and it usually involves the dominant players in the market.

Maltacom is proposing to slash its international rates by an average of 47 per cent. For instance, the international rate to UK, which is currently 29.4 cents per minute, would go down to 13 cents per minute.

According to sources, Maltacom is now proposing that the connection rate for fixed lines should go up from Lm24 to Lm30 per year in residential cases and from Lm52 to Lm76 for business.

It is also proposing that a three-minute call will start costing 5.35 cents (inclusive of VAT) and that after the first three minutes, the figure that will be charged from Monday to Saturday between 6 a.m. and 7.30 p.m. will be of 0.047 cents per second.

This basically means that the charge for five minutes at this rate will be of around 11 cents, which is double the present rate.

For Sunday, Maltacom is proposing that the rate between 6 a.m. and 7.30 p.m. will be of five cents per 10 minutes.

An innovative proposal is for calls made between 7.30 p.m. and 8.30 p.m. on all days of the week to be free of charge. Calls made after 8.30 p.m. would be charged at five cents per hour.

Maltacom is also proposing to keep its present social rebate to some 5,000 customers.

Sources said the telecoms regulator will now be carrying out an extensive exercise on the proposed tariffs: "The exercise will involve a detailed subscribers' impact assessment, the effect of the proposed tariffs on the profitability of the company and the long term consideration on the market".

Industry sources yesterday explained the significance of the tariff rebalancing exercise: "Before the market was liberalised, it was crystal clear that the revenue generated from the exorbitant international rates was making up for subsidised local fixed telephony rates. The market is now liberalised and the rate charged for a particular service needs to be in direct relation to the cost incurred by the operator in offering that service.

"People should look long term when analysing a rebalancing exercise. In many countries, the rebalancing exercise led to an increase in the prices of local fixed telephony in the short term but a drop in the same rates in the medium and long term. If the tariff rebalancing exercise is carried out, it will facilitate the way for other operators to start offering - using the Maltacom infrastructure - fixed telephony services. In the long term this will increase competition in the sector and will be reflected in a drop in the fixed telephony rates.

"Obviously the regulator has to study in great detail the proposals put forward by Maltacom but irrespective of the particular proposals made, there is a need for the rebalancing exercise to be carried out without unnecessary delay."