The number's up for phone-charges plan

PUBLISHED : Tuesday, 09 April, 1996, 12:00am
UPDATED : Tuesday, 09 April, 1996, 12:00am

The Economic Services Branch has obviously dialled a wrong number in its unpopular attempt to tamper with the long-established pricing scheme for local telephone services.

Even though an official document on the issue for public consultation has yet to be released, the media has already been filled with noises against the move over the past couple of weeks. The community's desire to retain the current flat-rate arrangement is crystal clear.

If the Government is serious about listening to public opinion, the consultation exercise on the topic is doomed to be a waste of time and resources. The result of the Government's upcoming efforts to gauge public views on the introduction of pay-per-call or pay-per-minute charges is already a foregone conclusion.

In a brief for Legislative Councillors, the branch has outlined why it thinks there is a case for reviewing the pricing structure. Long distance IDD callers, officials noted, have been cross-subsidising local telephone users. As for domestic services, heavy local users are taking advantage of those who are making fewer connections.

The Government's motive for revising the telephone charging scheme puzzles many, including legislators. Consumers in general have not complained about the flat-rate scheme.

Meanwhile, for the six-month period ended September last year, Hongkong Telecom netted a windfall $4.8 billion as projected profit after taxation. The tally represents a 14.8 per cent increase over that of the previous year.

During the half-year period, the company's turnover in international telephone services saw a modest growth of 1.2 per cent to more than $8.3 billion. The increase in local service turnover was close to 12 per cent to reach almost $2 billion. Neither Hongkong Telecom nor its subscribers appear to be dissatisfied with the present situation.

In its briefing paper to Legco members, the branch observes that some Public Non-Exclusive Network Service (PNETS) operators, including Internet service providers, have complained that some business users were employing ordinary telephone lines for data transmission to avoid paying the nine cents per minute PNETS surcharge, and thereby have been abusing the flat-rate system.

'As technology advances,' the paper continues to warn, 'more and more new computer-based equipment and machines will be used in connection with the telephone network.

'This would increase the disparity between the heavy and light users of the telephone network, making the flat-rate charging system unfair for the light users.' Figures cited by the branch show that 40 per cent of residential customers are responsible for only nine per cent of residential useage. A minority of 17 per cent of the residential subscribers, however, use up over half of the occupancy time.

This explains why the average duration of out-going residential calls stands at 462 minutes per month, but half of the connected households only make 282 minutes of out-going calls in a month. A similar pattern of disparity exists among business line subscribers.

A new charging scheme to keep track of telephone useage, the paper concludes, would actually benefit the majority of the 1.29 million business and 1.97 million residential lines subscribers.

The light users in both categories should be paying less than the current flat-rates of $98 and $65 a month respectively.

The Office of the Telecommunications Authority has further ascertained that IDD callers are contributing a monthly subsidy of $10 and $38 for each business and residential line respectively.

Nevertheless, the paper has failed to address the likelihood that many of the so-called heavy local users are presumably also heavy IDD users. There is no denying that light local callers are subsidising frequent callers under the $65-a-month flat-rate arrangement.

Yet the heavy local callers may well be contributing to a cheaper local service for everyone through their IDD bills.

The three main political groups - the Democrats, the Liberals and the Association for Democracy and People's Livelihood - have all declared their objection. The Democrats went a step further by mounting a signature campaign over the Easter holidays. The ADPL, on the other hand, resorted to holding an opinion survey to back their case.

Some critics are sceptical that the entire review of the charging system is meant to make life easier for three newcomers to the scene - Hutchison Communications, New T & T Hong Kong, and New World Telephone, which have been granted Fixed Telecommunication Network Service licences to compete with the Hongkong Telecom group.

One theory is that a pay-per-call or pay-per-minute charging scheme will make it easier for all three to vie for a bigger share, particularly in the heavy-user sector. The charging systems of Hongkong Telecom and its sister, Hong Kong Telephone Company, are subject to government regulations.

In contrast, its three competitors are free to set their own prices and pricing structures as long as they do not emerge as a dominant provider.

The Government makes no reference to how the interests of the other operators would be affected, should a new charging scheme be introduced for Hong Kong Telephone.