Hong Kong phone firms expect to pay about $1.5 billion more for IDD calls to mainland carriers in the next year as a result of higher tariffs imposed this week. On Monday, fixed-line giant China Telecom and other mainland carriers said the Ministry of Information Industry had approved a rise in the connection charge for each IDD call to US$0.17 (HK$1.32) per minute, up 850 per cent from US$0.02 (HK$0.15). The extra $1.17 will be passed to consumers, while some operators are also charging an average of 20 per cent on top of the rise. City Telecom and PCCW - both with IDD market share of about 30 per cent - stand to suffer most from an anticipated fall in traffic. Although most operators will shift the increased costs to consumers, analysts say the IDD industry is likely to lose more than $500 million a year. Last night, Wharf New T&T set its rates at between $1.77 and $1.97 per minute, while City Telecom set its rates between $1.98 and $2.88, effective today. PCCW still had not set its rates. Yesterday, New World Telephone said its new IDD rate for peak hours was up 46 per cent to $2.89 per minute, while the non-peak rate was up 105 per cent to $1.99. Leading mobile operator CSL has raised by $1.30 the price of calls that until now cost from $2.30 to $3.30 a minute, and has added $1.20 to the cost of auto-roaming services that now cost from $6.67 to $13.78 a minute. Newly established carrier 1579 said it would raise its tariff for next month and December to $1.99 a minute and $2.20 from January 1, from $0.55 for fixed lines and $0.79 for mobiles. 'It is an earthquake unseen in the history of IDD,' Wharf New T&T vice-president Tony Cheung Tung-lan said. 'IDD prices are now back to the days of 2000.' Mr Cheung said China IDD tariffs had fallen 75 per cent to around 50 cents, from an average of $2 per minute, in the past 18 months. Meanwhile, volume was up 50 per cent, with the traffic in the first eight months totalling 1.35 billion minutes. Last year it recorded 1.66 billion minutes, up 29.4 per cent on 2000. According to industry statistics verified by two IDD operators, PCCW and City Telecom had about 29 per cent and 28 per cent of the IDD market respectively. More than 80 per cent of City Telecom's revenue was from IDD. Mr Cheung said local operators would have to pay an extra $1.5 billion to $2 billion, based on the projected traffic this year. Analysts said operators' profits would fall in line with volume. JP Morgan analyst Edison Lee said the net volume, meaning outgoing minus incoming minutes, was about 45 million minutes last year. He estimated last year's profits would have been slashed by $526 million had the new tariff been in place. CSFB analyst Christopher Fang said traffic volume initially would fall but would recover over time. 'Like the case with the Cross Harbour Tunnel, traffic will fall when rates double, but it will eventually pick up,' he said. Mr Cheung, of Wharf New T&T, said operators with a large exposure to mainland traffic would feel most pressure. 'The cost increase for their IDD services may increase as much as $800 million a year,' he said. 'It could mean their costs will go up by as much as 50 per cent of their total revenue. It might be a great blow to them as it is very difficult for them to increase revenue by 50 per cent to cover the increase in costs.'