COMMUNICATIONS: Consumers Battle Telephone Rates

By Marcela Valente Reprint | | Print |

Marcela Valente

Buenos Aires, Feb 11 1997 (IPS) - Argentine telephone users, who have been captive to monopolies – even after the privatization of the state-held telephone company in 1990 – have won a legal battle against rate increases.

A city court has ordered the suspension of the increases, which have been in effect since February 1, in response to a request made by the public defender’s office. Users had planned to switch off their telephones in protest against the rate hike if no action was taken on their demands for a price review.

The president of the Association for Consumer Defense, Ana Maria Luro, said that the presidential decree declaring that the increases are abusive is “good news” for consumers.

The Argentine telecommunications market is divided in two: the northern half of the country, and the northern part of Buenos Aires, is controlled by the French company, Telecom; the south, and the southern part of the capital, is the domain of the Spanish concern, Telefonica.

Users finally will gain the option of selecting their telephone company in 1999, the year in which special terms granted to the two monopolies expire.

International telephone rates in Argentina are among the highest in the world. Businessmen assert that such costly rates are a significant deterrent to foreign investment. Therefore, the Argentine business community has been trying since 1994 to lower the price of overseas calls, but their proposal also included a plan to balance this reduction with an increase in urban residential rates.

The benefits accruing from such a plan would go to those who make numerous overseas calls – principally businesses – at the expense of private individuals.

Since that time there have been a series of public hearings throughout the country, in which governmental representatives, businessmen, consumers’ organizations and individual users have been represented. These meetings halted the increases until the end of 1996 when President Carlos Menem issued a decree approving an increase in the basic rate of 41 percent for urban users, and 65 percent for users who live in the countryside.

Elinated was a “free call benefit”, a feature that permitted t subscribers to make a certain number of free calls for the basic subscription rate.

At the same time, the cost of calls made between 10:00 A.M. and 1:00 P.M. has been increased by 33 percent in order to compensate the 54 to 70 percent reduction in the cost of calls to the interior of the country as well as those made internationally.

But according to Luro, the international rate only went down for a handful of countries, among them their neighbors in Mercosur (Brasil, Paraguay and Uruguay). Meanwhile, the cost of calls to other countries has actually gone up.

Since 1990, the year in which privatization occurred, the Argentine telephone companies have billed 3 billion dollars worth of calls. Users admit that the quality of service has gone up in the time since privatization took place but they reject the need for monopoly.

In a related development, the Argentine Courts gave approval to a petition by the public defender, Jorge Maiorano, who had asked for legal authorization to block the impact of the rate increases recently endorsed by the President.

Maiorano considered that this new judgement would benefit the “common citizen” although he warned that the reductions awarded for long distance calls – both within the country and overseas – ought to be maintained now that they are more in accordance with rates prevailing around the world.

Next, the public defender plans to make a case that will result in the reduction of the recent increases, an effort which has already presented testimony by numerous unfairly victimized parties.

Maiorano concluded by saying, “We have to halt the arbitrariness of the business sector.”