KPN’s telephone charges to be adjusted in two stages

The OPTA Commission is planning to allow KPN Telecom to adjust its telephone charges in two stages instead of one. In this case KPN would already need to adjust its tariffs to a limited extent at the beginning of next year. A second final step would need to be taken after this in July 1999, when a price-capping system is scheduled to come into effect. It is not yet known by what percentage the charges are to be adjusted. The OPTA Commission’s plans were only revealed today. Before the Commission makes a final decision in relation to this matter, it will first ascertain the views of the parties concerned.

Initially, OPTA was planning to demand that KPN bring its tariffs fully into line with a cost-oriented approach by as early as 1 January 1999. European and national legislation stipulates that these charges need to be cost-oriented. This is to say that these tariffs must be based on the underlying costs involved while also offering some scope for a reasonable profit.

The reason why OPTA has downgraded its two-stage plan dating from early September lies in the infrastructure investments announced by KPN. The provision which the latter is required to set aside for its intended restructuring has also played a role. KPN has announced that both developments will push up its expenditure. Implementing OPTA’s previous decision would produce excessively low call charges on 1 January. These tariffs would probably then need to be raised on 1 July because of the increase in expenditure. The OPTA Commission wishes to avoid such a ‘yo-yo effect’.

In the period until 1 July 1999 OPTA will ascertain whether KPN has actually proceeded with the investments which it has announced. In addition, OPTA will develop a so-called ‘price-capping system’ with input from market parties. This system is supposed to come into effect on 1 July 1999.

OPTA will also use the period until 1 July 1999 to assess whether KPN’s competitors will actually proceed with investments and the provision of services in the local telephone market. If this is the case, the Commission will consider adjusting its original finding to the effect that no competition is expected in this market as yet. In recent weeks OPTA has heard several rumours that cable operators have concrete plans in this respect.

All of the parties involved may respond to the way in which the Commission is seeking to make allowances for changing circumstances. After this, the Commission will make a final decision about these charges. It is anticipated that this decision will be disclosed at the end of November.