Phone company wants local rates doubled
Seeking cut in cellular calls tariff

By Gitanjali Singh
Stabroek News
September 11, 2000

The phone company is asking the Public Utilities Commission (PUC) to substantially reduce cellular phone rates and to double local phone rates as it attempts to start a re-balancing process to ensure its survival.

The Guyana Telephone and Telegraph Company Limited (GT&T) is asking the PUC to reduce the rates on plan A by $30 a minute from $76. The off-peak rate for cellular services is around $25 a minute.

The PUC is set to hear the company's case for changes in the cellular service rate as well as its request to introduce the calling-party-pays principle for cellular service on September 26 & 27.

Stabroek News understands that the company's request is backed by a survey done by university students which showed that people would prefer the service of a cellular phone once the rates were lowered and they did not have to pay for calls received only the calls they made.

On the other hand, the commission has fixed a hearing for October 3rd to look at the company's request to increase local rates.

The company is asking for more "reasonable rates", requesting that rentals move from $250 per month to $1,000 for residential service and business service from $1,000 to $2,000.

GT&T is also asking the commission to double local rates which are 20 cents per minute within exchanges but vary from $2.64 (off-peak $1.66), $3.96 (off-peak $2.64), and $6.60 (off-peak $4.42) per minute between exchanges. GT&T's attempt to lower cellular rates is an effort to broaden the base of the service so as to generate more revenue as is its move to double local phone rates. The company has submitted to the PUC a glide path on how it believes rates need to be increased and suggests that in the first instance a review be done in June, 2001 to analyse the impact of the increase/decrease on revenue flows to GT&T.

The phone company is currently faced with an imminent slump in revenue flows tied to US telephone carriers implementing an arbitrarily lowered accounting rate from US 80 cents to US 23 cents. The lowered rate was mandated by the US Federal Communications Commission as it seeks to regulate the US's balance of payments deficit.

However, because GT&T has been subsidising its local service with revenue from incoming calls, the lowering of the accounting rate will mean a revenue deficit and the company has since 1997 been seeking re-balancing of local rates but became embroiled in a heated row with the then PUC chairman, PJ Menon.

However, the situation facing GT&T has become urgent as the company faces deregulation and it was last month only able to realise a nine percent return on its investment compared to the guaranteed figure of 15% because of a lower number of calls from outside Guyana. The lower number is due to the hitches being experienced in getting through to Guyana. This is believed to be linked to the termination of the agreement between the local company and the American telecoms giant AT&T.

GT&T and AT&T could not last year agree on the lowered accounting rate and AT&T in December terminated its service agreement with GT&T. However, AT&T has not done anything to assist the transit of calls to Guyana from its customers through MCI and Sprint. This has led to numerous complaints about the telephone service between the US and Guyana especially.

GT&T is currently in negotiation with AT&T to implement a phased reduction of the rate and has proposed that it be lowered by US 10 cents in the first instance but AT&T wants this to be more like US 35 cents. In the meanwhile, audio text traffic is moving to the internet as it is more profitable in that medium. The audio text service has been a backbone revenue stream for GT&T. Last month, revenue flows from audio text moved from US$2.1M to US$600,000 for GT&T and the company recognises that in a matter of time this service will be lost entirely to GT&T.

Follow the goings-on in Guyana
in Guyana Today