Wednesday, May 31, 2006

The higher cost of living

Roughly ten days ago, SamoaTel, Samoa's sole landline telephony provider, announced significant changes to its pricing model. Announced right in the middle of the (ongoing) Da Vinci Code furor, it has received no attention other than its initial reporting until today, the day before the new charges come into effect. The SamoaTel press release stated that their "interim analyis" indicated savings in excess of $200 per year for domestic and international calls, yet to my eye this seems highly unlikely. The changes in pricing look like nasty. In brief:
  • International calls drop 50% in price for off-peak calls and 30% in price for peak calls for residential customers. Business customers enjoy a 30% reduction in price only.
  • All calls within each island (Upolu and Savaii) will now be charged as a local call only (instead of "inter-zone" calls).
  • All local call charges will change from 11 sene + VAGST per call to 4 sene + VAGST per minute.
  • All directory service calls will now be charged 27 sene + VAGST.
The introduction of charged calls to the directory service line doesn't really bother me. Further, any reduction in international call rates can only be a good thing. That said, the real pinch is the local call costs. Switching from per call charging to per minute charging is going to make local calls extremely expensive unless people spend less than two and a half minutes per call.

Here's some excerpts from a letter to the editor in today's Observer which I think sums up a number of my concerns and adds to them rather well:
  • Do you really believe that 4 sene + VAGST per minute reflects your slogans FAMILY FIRST and KEEP IN TOUCH FOR LESS?
  • Your new advertisement shows a Residential Access of $19 + VAGST. Was this the charge once called Rental and One-off Charges which was $10.23 inclusive of VAGST? If so, is this an increase of more than 100%?
  • My current phone bill had 129 local calls. Those calls cost me $15.96 VAGST included. With the pending charges, if I keep my calls to 5 minutes it would cost 129 x .20 = $25.80. Is that not a massive increase of 61.6%?
  • Another concern, I often work from home using the Internet. Does the 4 sene per minute also apply when I access my ISP/Internet?
  • Would the new local charges now have a greater impact on the cost of living of vulnerable people & those on minimum wage earning only $2 per hour?
...and finally a really important question...
  • Why did you not advertise your charges earlier rather than only about 2 weeks before the effective date?
I'm not sure what kind of regulatory mechanisms are in place to govern the business operations of SamoaTel (which, whilst privately operated, is government owned). If there are any, they don't seem to be functioning in the interests of transparency and accountability. Being able to make these kinds of large-impact changes with no more than two weeks notice seems to me ample evidence of that.

With SamoaTel enjoying a monopoly on Samoa's landline telephony I can't see these charges being seriously contested. Much like the budgetary changes announced yesterday, Samoans are just going to have to live with the consequences.

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