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Tariff reductions worth 1,900 billion lire over two years

12/21/2000 - 12:00 PM

Telecom Italia Wireline today unveiled its rates for 2001. Based upon real customer demand and in line with actual market expectations, this pricing structure is the latest step in company strategy, respecting the fundamental economic rules governing the telecommunications industry as a whole.

Major tariff reductions: 1,900 billion lire over two years
The increase in subscription fees to the Telecom Italia telephone network, brought in following the ruling issued by the Italian Communications Regulatory Authority, is being offset by major tariff reductions. The net result is that all customers will see considerable benefits.
Indeed, in line with EU recommendations, the way phone bills are structured is undergoing a substantial change as access and call charge costs are redistributed in a more balanced and market-oriented way. The first consequence of this major change is that Telecom Italia is able to introduce significant tariff reductions. In 2001 and 2002, these reductions will be worth almost 1,900 billion lire, leaving customers better off overall by around 700 billion lire. The biggest price cuts will affect inter-district calls and Internet traffic. There is also provision for special terms for less well-off clients.
This move is in addition to tariff reductions worth around 400 billion lire per year that come into effect on 28 December.
These changes are taking place in a competitive scenario which was recently praised by the European Union. Italy was singled out as the European nation leading the way in liberalization of the "last mile" and "carrier preselection". The EU also noted that with regard to Universal Service, the situation in Italy has improved markedly.
Between 1999 and 2000, Italy saw an almost 30% drop in fixed telephony prices. The same may not be said for other utilities: over the same period, for example, gas prices increased by 31%, and electricity by 14%.

New telephone subscription fees
Telecom Italia Wireline is now announcing its new rates for 2001, following a ruling issued by the Italian Communications Regulatory Authority regarding a rebalance of the access deficit through increased telephone service subscription fees. These increases will be phased in during February 2001 and July 2001. Subscription fees to the general telephone network for residential customers are to go up from the current 18,700 lire per month, not including VAT, to 19,800 lire per month, not including VAT, from February 2001 (+ 5.9%). From July 2001, the rate becomes 20,700 lire per month, not including VAT (+ 4.5%). For business customers, rates are changing from 26,400 lire per month, excluding VAT, to 27,000 lire per month, excluding VAT, in February 2001 (+ 2.3%). From July 2001, this becomes 28,900 lire per month, excluding VAT (+ 7%).

Rebalancing the access deficit
Increases in subscription charges to the Telecom Italia telephone network mean that a period when even inefficient competitors could prosper in Italy is coming to an end. For years now, Telecom Italia has been charging subscription fees that were below the fixed cost sustained by the company to ensure that all Italians have a telephone that works at all times. The European Union has long been pressing for resolution of this situation, known technically as the "telephone network access deficit", in all member states. What this means is that the previous incumbent telecommunications operator can now compete directly, on equal terms, without suffering an unjustified and damaging disadvantage. Access to the Telecom Italia telephone network, which is used by all other carriers, will no longer be provided below cost, bringing to an end an imbalance that until now has sanctioned a competitive scenario that was actually detrimental to consumer interests.

European access cost benchmarking
Even taking this readjustment into account, residential subscription fees for accessing the Telecom Italia telephone network are still among the lowest in Europe. Consumers in France pay 20,300 lire, 21,176 in Germany, and 24,916 in the United Kingdom.

Special deal for low income customers
In accordance with the ruling by the Regulatory Authority, Telecom Italia Wireline is offering low-income consumers a major discount on telephone network access costs, equal to 50% off standard prices. This special deal is available to around 1.5 million families that declare annual income below 13 million lire per year, and are supported either by a state pension or disability allowance, or in which the head of the family is over 75 years of age, or is unemployed.

Formula Week End: 50 lire per minute to call anywhere in Italy, any time during the weekend
From February, any call within Italy on Saturday, Sunday or a public holiday to any number in a different area code will cost just 50 lire per minute. This policy will strongly benefit residential customers, offering savings of up to 77% on calls to numbers located more than 30 kilometers away. Over 30% of residential inter-district calls take place on weekends.

Bigger cities: district call charges to go
District level call charges are being abolished from February. After this date, any call within the same district, in other words between two numbers that have the same dial code, will be billed at the local call rate. Effectively, local call areas are being extended out to district boundaries. A call between Rome and Albano will cost the same as a call within Rome, at 30.6 lire per minute instead of the current 42.3 lire during peak time, or 17.7 lire instead of 21.2 lire off-peak, a reduction of 23% and 21% respectively.

Smaller country: call charges to destinations over 30 km away reduced by as much as 30%
Starting this month, rates for long distance calls exceeding 30 km start coming down. By the second half of 2001, customers will be paying at least 30% less for this type of call.

Paying less to surf the Net
Netsurfers can also look forward to lower call charges starting in the second half of 2001: 25 lire per minute peak time, and 15 lire per minute off-peak. This will result in savings of around 1,750 lire per month for the average Net user, and twice as much for heavy users..