Consumers are likely to bear the brunt of a proposed increase in international-direct-dial (IDD) charges levied by the mainland's telecommunications operators on calls from Hong Kong to China. Increases to 'interconnection charges' - which include charges on IDD calls - were flagged last week when China Telecom chairman Zhou Deqiang said the group had applied to the Ministry of Information Industry (MII) to raise the charges and expected speedy approval. At the weekend, local telecom operators said this could lead to a doubling of tariffs, signalling a dramatic end to the 'honeymoon period' of deeply-discounted cross-border calls. However, the operators argued that since they were likely to transfer all of the higher costs in the form of higher tariffs - and might even increase margins, at the expense of cross-border IDD volume - their own revenues would be insulated from the changes. Last week, some local IDD operators said they were told of impending changes by their mainland partners, which could involve new revenue sharing arrangements, a substantial jump in termination fees, or both. They said they had failed to renew contracts with mainland carriers and expected termination fees would be adjusted upwards by five to 10 times the current tariff of 14 fen per minute, while swapping IDD minutes would also favour their mainland partners. Mr Zhou's comment last week that existing charges levied on foreign traffic were too low only lent credibility to these fears. Spokesmen for four major IDD operators in Hong Kong told the South China Morning Post at the weekend that they had been closely monitoring developments in Beijing but had so far not been able to confirm details of the likely rise in charges. However, two operators indicated that the new tariff on mainland IDD calls was expected to be between HK$1.50 and HK$3 per minute - significantly above the prevailing average of about 50 cents per minute during non-peak periods, and about HK$1.30 in peak periods. 'I don't think any operator will bear the [additional] costs,' said an executive from a major operator. 'I am very supportive of the tariff hike because the rate now is just too low.' He pointed out that some operators, notably Wharf New T&T, which now offered tariffs of as low as 7 cents per minute for off-peak calls to China, did not cover the service's basic costs. According to industry executives, operating costs of major operators in Hong Kong are between 30 cents and 50 cents a minute, taking into account equipment, staff costs, and above all, interconnection charges. With a possible jump to as much as HK$1.40 per minute all-in after the increase in interconnection charges, they said the new charges would be at least HK$1.50 in order to sustain current minimum margins. 'This will mark the end of a honeymoon period for local consumers,' said Tony Cheung Tung-lan, vice-president of Wharf New T&T. 'We expect IDD volume to China will drop 30 per cent before stabilising in subsequent months.' Last year, outgoing IDD traffic from Hong Kong to China totalled 1.66 billion minutes, a 29.4 per cent increase over 2000. In the case of Wharf's fixed-line unit, competition has seen its IDD tariff to China fall this year to an average of 26 cents per minute from a peak of HK$3.70 in 1996, down 93 per cent. Now with the IDD tariffs about to rebound, an executive from another major operator said it would expect an improvement in overall IDD revenue, while predicting virtually no change in demand. 'IDD has become a necessity, not a consumer choice,' the executive said. 'Users still call China for business.' New World Telephone spokeswoman Agnes Chan said the company would make a corresponding price change according to market conditions, while spokesmen for Hutchison Global Crossing and City Telecom said it was too early to comment about their pricing strategies.