Cable & Wireless (C&W) Jamaica will, beginning March 1, increase rates on some of its fixed line services by as much as 79 per cent - increases which the company says will bring the charges to customers closer in line with the actual cost of delivering land-line telephone services to them.

The new rates are:

. $1,250 per month for business line, up 25 per cent from $1,000.

. $500 per month for residential standard plan rate, up 25 per cent from $400.

. $340 per month for residential lower-user plan rate, up 79 per cent from $190.

. $1 per minute for inter-parish household calls on weekends, up 47 per cent per cent from $0.68.

. 60 cents per minute for full-rate intra parish calls, up 15.4 per cent from $42 cents.

. 46 cents per minute for week-end intra-parish calls, up 18 per cent from 39 cents.

. $54 per month for business call waiting rental, up 20 per cent per cent from $45.

. $30 per month for residential call waiting rental, up 25 per cent from $25.

. $200 per month for private or ex-directory listing, up 14 per cent from $175.

. $15 per call for national directory inquiry from fixed lines, up 50 per cent per cent from $10.

. $150 per call for telex to all countries.

However, the full and off-peak inter-parish call rate will remain for those businesses and residential customers on C&W's standard package, as well as domestic call rates for residential customers on the lower-user package arrangement.

At the same time, C&W will cut by 5 cents to $15.75 per minute, the rate for international direct calls from fixed lines. Other reductions apply to operator-assisted international calls to all destinations.

Cable and Wireless whose rates are subject to price control, had sought from the regulators increases of up to 47 per cent on a range of its land-line services, its application having been made against the background of the reduction in the revenue it earns from overseas companies that terminate calls into its network.

The Office of Utilities Regulation (OUR) to which C&W applied for the rate increases said on Tuesday that it was examining the proposal to see to what extent the level of increases being sought was legitimate.

The increases granted were generally below the level sought by the telecoms company.

"The OUR's task is really to determine that C&WJ has applied the price cap formula correctly and it is not an attempt at a general price review," said J Paul Morgan, the director-general of the watchdog and utilities regulatory agency. "The increase in rates comes as a result of a revised cap plan issued by the OUR on January 16, 2004 and the company's continuing efforts to rebalance its rates," said C&W yesterday.

The OUR manages telephone rates using a complex system that takes into account international call rates, land-line fixed charges and call rates, as well as cellular rates.

For sometime now, the OUR has placed a cap on the level of increase that C&W can impose on its land- line customers, even though the telephone firm has consistently and strongly argued that the ceiling has forced it to provide these services below costs.

But C&W has for years been able to use the income generated from its international call services to subsidise the deficit on its local land-line revenue stream - a dynamic which has been changing radically over the last two years with the reduction in its earnings from overseas telecoms firms that send calls to Jamaica.

As a result, since November 2002, C&W has been allowed by the OUR to increase its land-line fees by, 100 per cent, but remains adamant that the local land -line charges still remain more than 50 per cent below cost.

Two weeks ago, the OUR took a decision to change the fee structure - in effect allowing C&W to charge its customers the economic cost of its land-line service - thus obviating the need for the company to cross-subsidise this service from its overseas call revenues.

"We took the decision two weeks ago to remove the constraint on the local prices," explained Morgan at Tuesday's press conference at the OUR's headquarters in Kingston.

Morgan said that in any event, the revenue earned from overseas telecoms firms by Jamaica's telephone companies for terminating overseas calls here, had slipped precipitously, that it had all but eroded C&W's capacity to continue its practice of cross-subsidy.

It was against the background of changes in the fee structure by the OUR that C&W applied for the rate increase.
However, on Tuesday the OUR had cautioned that the rate increase would be granted only to the extent that it would allow C&W to restore the income lost - rather than to generate net additional revenue.

The OUR also announced that beginning January 24, it had established a flooring on the rates that local telephone firms could charge international carriers to deliver calls into
Jamaica of 8.1 US cents per minute (approximately J$4.90).

At the same time, Cable and Wireless would be allowed to charge other Jamaican carriers no more than five US cents per minute, when these firms intermediated in calls from US carriers and then terminated them into C&W's land-lines.

It means that these firms will be able to charge US carriers 8.1 cents to accept their calls into Jamaica, and then pay C&W no more than five US cents to deliver the calls to its land-based customers allowing them to make a spread on the transaction.

"We approved the C&WJ rate for termination of international calls on their fixed network at five US cents, in order for the market to work and to be sustained in its infancy," explained Morgan. "It is the only way to ensure that the market stability is protected until it is mature enough to allow the competitive force to work."

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