State Duma Closes Free Entrance
// Only the calling party will pay for phone calls
Telecommunications
The State Duma passed in the first reading on Wednesday an amendment to the On Communication law abolishing payments for incoming phone calls. The Calling Party Pays principle may dramatically change a system of accounts between subscribers and cellular and fixed communication operators. For one, owners of stationary phones will have to pay for calls on cell phones.
The bill On Amending Article 54 of the On Communication Federal Law was passed by an overwhelming majority – 400 of 450 deputies voted in favor. The amendments were drawn up by Valery Yazev, Vladimir Gorbachev and Maxim Korobov, members of the Duma committee on energy, transportation and communications. The bill envisages that incoming phone calls are not to be paid for, except for “those through a telephone operator paid by the receiving party”. The new system may be put into practice next year as, under the bill, the amendment comes into force six months after it was adopted.
The shift to the Calling Party Pays principle will primarily affect cellular operators. Incoming calls account for 20-25 percent of the total revenues of the operators, according to estimates of experts. Hence, cell operators may lose $1.8-2.25 billion, given their annual revenues of $10 billion. However, cell companies said yesterday they favored the steps of lawmakers. “We support this initiative,” Yulia Ostroukhova, the spokesperson for VimpelCom, says. “But we will need to build a system of mutual settling of payments among communication operators. No call is free, so the question is who will pay for it.”
It literally means cellular companies will make inter-operators payments. The documents providing for it come into effect January 1, 2006. Still, cellular companies promise not to increase tariffs for incoming calls. If it is the case, owners of cell phones will benefit from the Calling Party Pays system most. Analysts are not sure, though, that operators will keep the promise.
“They are most likely to change tariffs,” Nadezhda Golubeva, analyst with the Aton investment company, gives her forecast. “Cellular subscribers will have to pay more for incoming calls because compensations for the incoming traffic within account systems among operators will not cover all costs.”
The second way for cell operators to make up for losses from free incoming calls is charging subscribers of the fixed communication. Market watchers say that that the new system of tariffs will inevitably lead to time rate payments for calls on cell phones. Operators are already going to charge their subscribers. “Operators need some three or six months to get ready. The budget of the project may amount to $50,000-300,000 depending on the size of an operator and its billing system,” Alexander Malis, vice-president of Korbina Telecom, says. Calls from stationary phones account for about 5 percent of all calls, or some $500 million. These are only relative estimates, though. More accurate calculations will be available after the Federal Tariff Service sets the cost for a minute of the call from a fixed phone number to a cell one, basing on the information of operators. The IT and Communications Ministry said this spring that subscribers of fixed communication will pay a minimal inter-city tariff for a minute call to a cell phone (1.8 ruble). However, this tariff has not been officially set anywhere.
Major operators of fixed communication comment on the amendment reluctantly. “We need to know what tariff policy cellular operators will pursue. We depend on them in this case,” Ekaterina Khustova, the head of the PR department of MGTS, says. “What is more, the document that has been passed today is not the final version of the bill.” Fixed communications operators will also benefit from the new mechanism of tariffing. “We hope that it will be at least 20-25 percent,” a manager of a Moscow alternative operator told Kommersant. “Otherwise, it will be useless to do that.”
The State Duma will continue considering amendments to the law on communication in December. Kommersant will cover the developments.
by
Valery Kodachigov, Dmitry Zakharov
All the Article in Russian as of Nov. 03, 2005
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