Top Argentina court approves controversial phone rates

And in Argentina, where the government mandates consumer telecommunications pricing, they're not very happy either. A rabid controversy over new telephone rates that has raged in Argentina for more than a year has been settled by that country's Supreme Court. The court okayed a government-imposed rate structure that lowered the cost of national and international long-distance calls and hiked the rates for local calls in February 1997. The decree applied to Argentina's two national telcos which have a monopoly on basic phone services through the end of 1999.

A rabid controversy over new telephone rates that has raged in Argentina for more than a year has been settled by that country's Supreme Court, which ratified the controversial rates this week.

With a 5-4 vote, the court let stand a government-imposed rate structure that lowered the cost of national and international long-distance calls and hiked the rates for local calls in February 1997. The decree affected all customers because Argentina has two national telcos which have a monopoly on basic phone service through the end of 1999: Telefónica de Argentina S.A., which serves the southern part of the country, and Telecom Argentina S.A., which serves the northern half.

"The Court’s decision isn't surprising. It was expected that the court would side with the government," said Alejandro Oliveros, an analyst at Trends Consulting in Buenos Aires, the Argentina representative of IT market research firmIDC.

It’s still unclear what effects the rates have had, but it’s expected that the two national telcos will profit from the new structure, since local calls represent the bulk of their business, Oliveros said.

Plus, the sole international long-distance provider, Telintar S.A., could be luring back the many callers who use cheaper call-back services for international calls. Telefónica and Telecom each own half of Telintar, which stands for Telecomunicaciones Internacionales de Argentina S.A., Oliveros said.

Finally, more consumers might give cellular phones a try now that cellular rates are closer to basic phone charges, Oliveros said.

"But we won’t know for sure until the government releases figures about the effect of the new rate structure," Oliveros said.

However, the decision did little to quash the spirit of the opponents of the new rate scheme, who are considering taking their case to an international tribunal, according to a Dow Jones dispatch. Opponents also charged that a judge who voted to keep the new rates should have abstained because his son heads the legal department of the Communications Secretariat, which drafted the rate restructuring plan, Dow Jones reported.

Since last year a variety of lower-court decisions have been rendered, both in favor and against the new rates; the Supreme Court decision exonerated the two telcos from paying hundreds of millions of dollars in fines imposed by several lower courts that had ruled against the rate scheme, according to Dow Jones.

The new rates increased the cost of a local call by an average of about 14%, cut the cost of a national long-distance call by an average of 34% and slashed prices in international long-distance calls between 24% and 63%, according to a statement put out last year by Telefónica.

International rates fell, for example, 58% in calls to the US, Italy and Spain, 56% to Chile and 65% to France, according to Telintar.

The Communications Secretariat can be reached at http://www.cnc.gov.ar/. Telefónica de Argentina S.A. is at http://www.telefonica.com.ar/. Telecom Argentina S.A. is at http://www.telecom.com.ar/. Telintar S.A. can be found at http://www.telintar.com.ar/.

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