Ministry: fixed line prices rose too fast

Brazilian fixed line operators have raised changes for local calls and line rental too fast, as incomes have remained flat, telecoms secretary Pedro Jaime Ziller was quoted as saying by O Estado de Sao Paulo newspaper. This accounts for the fact that there are some 10 million unused lines in Brazil, despite the fact that 38.4% of Brazilian households have no telephone lines, said Ziller, head of the telecoms unit within the communications ministry. "The truth is that the operators raised prices much more than they should have," Ziller was quoted as saying. Since privatization in 1998, the basic line rental fee has risen 90%, compared to IPCA inflation of 30% and IGP-M inflation of 60% in the same period, he said. Telecoms regulator Anatel is currently holding a public consultation on a proposal called Aice to reduce the basic fees for low-income families, cutting the line rental fee to 35% of the normal price and introducing prepaid cards for making calls. The new plan would be introduced in 2006, when fixed line operators' new concession contracts come into effect. Industry executives are concerned that Aice will simply encourage all telecoms customers to migrate to the cheaper system. "It is a threat," Joao de Pinehiro de Macedo, director at a fixed line operators' association Abrafix, was quoted as saying. "The initial proposal was that the service [Aice] would be offered to those that have never had a telephone, but the text place in public consultation would allow a mass migration," he said. Brazilian operators' experience with prepaid cards has been bad, according to the newspaper report. Rio de Janeiro-based Telemar was receiving average revenues of US$2 a month from prepaid lines, while its monthly expense was US$12 a line. Macedo suggested the government should use the universalization fund, Fust, which has accumulated some 2.3bn reais in three years, to pay for the difference between line revenues and costs.