The announcement on Sunday of Jordan Telecom's (JTC) new tariffs brought both good and bad news to subscribers. The philosophy behind the adjustments — hikes in some fees, decreases in rates for some calls, all to become effective as of February 1 — was best spelled out by Jordan Telecom's Chief Sales and Marketing Officer Olivier Faure: “There are no secrets in economics. The money has to come from somewhere.”
The bad news was that rental monthly fees went up from 2.8 Jordanian dinars to JD3.35 for residential lines and from JD7.2 to JD8 for business lines. Also, free local calls were halved to 89 minutes per household per month, and Jordan Telecom anticipated that it is planning to completely scrap them as of next year. Charges on local calls remain unchanged at 10 fils per minute during daytime and 10 fils per 86 seconds at night and on public holidays.
The good news was that installation fees for new lines in commercial offices and homes were reduced by JD40 and JD20, respectively, becoming JD160 and JD80, in line with the company's objective to increase the country's disappointing telephone penetration rate of 12 percent. National calls were reduced from 49 to 44 fils per minute, to compete with mobile services and support inter-governorate social and business communications, the company said.
The most significant price reductions, however, involved international dialing rates and dial-up calls (subscriber calls to local Internet Service Providers). As of February 1, charges for calls to Arab countries were lowered by 25 fils per minute, becoming 425 fils per minute during daytime and 297 fils per minute from 10:00pm to 8:00am and on public holidays.
Calls to the US, Canada, most European countries as well as some Asian states became 555-fils on-peak hours and 388 fils off-peak — 45 fils cheaper than under the previous tariffs. Charges for calls to countries not included in the first two categories — Central and South America, China, and Russia, for example — were cut by 70 fils per minute, bringing the daytime rate to 730 fils per minute instead of 800 fils and the off-peak rate to 511 fils per minute.
Meeting a crucial private sector demand, long considered by information technology leaders as a precondition to develop the sector, Jordan Telecom finally reduced by 20 percent the price of dial-up calls.
Mohammad Karmash, the company's marketing director, announced yesterday that subscribers' calls to their ISPs will cost 8 fils as of Feb.1 from the Greater Amman Municipality, and as of April 1 from the rest of the Kingdom. “This comes as part of our commitment to not only help, but lead the development of IT and the Internet in Jordan,” commented Faure.
Raed Bilbeisi, CEO at Int@j, the one-year-old association representing some 50 Jordanian IT companies, expressed satisfaction at the decrease in dial-up calls rates, and told the Jordan Times it was a further step in the gradual but steady development of telecoms.
With 600,000 subscribers in a country of five million, and its exclusivity in fixed telephone services expiring in 2004, Jordan Telecom is eager to increase telephone penetration as much as possible, hence the drop in connection fees for new subscribers, explained CEO Pierre Mattei.
On the other hand, rental fees were increased “to cover operation and maintenance costs and rationalize the revenue structure,” said Karmash.
Since more than 20 percent of monthly bills are below delivery costs (the costs sustained by Jordan Telecom to enable subscribers to make their calls), rental fees had to be increased to bring Jordan Telecom's revenue structure at the levels of companies in industrialized countries, which derive 30-35 percent of their total revenues from fixed charges, Karmash added.
As for the envisaged abolition of free local calls, Karmash defended the company's choice citing a September 1999 Council of Ministers' resolution on eliminating cross-subsidies and doing away with free calls by 2001, as well as what he termed as “the need to rationalize customers' behavior.”
Displaying more pragmatism, Faure prepared to answer a likely wave of subscriber discontent: “If we maintained the current level of local calls, we would not be able to develop the network and improve the services.”
On the logic behind the increase in rental fees and the decrease in connection fees for first-time subscribers, he commented: “It is more business for us, but also more services for the people.”
Although Jordan Telecom's 2000 account has not yet been closed, Faure revealed that its estimated revenues, prior to auditing, were around JD280 million.
Privatized only last year, with France Telecom's acquisition of a strategic 40 percent stake, Jordan Telecom launched a mobile services subsidiary, MobileCom, three months ago, and is about to become an ISP.
A JD12.8 million deal for Jordan Telecom's purchase of Global One Jordan — the country's first ISP, both in chronological and market share terms — is currently cooking. According to sources involved in the negotiations, an official announcement should be expected next week. — ( Jordan Times )
By Francesca Sawalha
© 2001 Mena Report (www.menareport.com)
