Reiman Wants Free Home to Cell Phone Calls

People will soon be able to call mobile phones from landlines without paying a kopek, IT and Communications Minister Leonid Reiman said.

"We will try to resolve this problem before the end of 2008," Reiman told Ekho Moskvy radio. "It will be partially resolved by March 1, when a government directive on the issue comes into effect."

Reiman said the charges for calls from landlines to mobiles were introduced because the "premium cost for a landline telephone call was far greater than the subscriber fee."

"Now we will gradually remove that imbalance," Reiman said in the interview, which was broadcast late Monday.

But analysts said Reiman's proposal, while having only a minimal effect on mobile-phone operators, could seriously hurt regional fixed-line companies, which rely on the interconnection fees from landlines to mobiles for part of their revenue.

Philip Townsend, head of research at Metropol brokerage, said the measure, if introduced, could cost regional fixed-line operators as much as 1 billion rubles ($40 million) per year each, or 5 percent of their revenues.

"Roughly 50 percent of all fixed-line subscribers have stayed on the unlimited tariff, and in theory, with the new scheme, a fixed-line subscriber could talk for 50 hours without being charged anything," Townsend said.

Fixed-line calls to mobile phones became chargeable in June 2006, when the government switched the payment system to one where the caller, not the person receiving the call, pays.

From Feb. 1, 2007, a law on telephone tariffs allowed landline operators to charge customers a variable set of fees, based on three contract options.

The first option allowed callers to pay for local landline-to-landline calls using a per-minute fee.

The second option required subscribers to pay a fixed monthly fee of up to 400 rubles ($16) for unlimited calls.

Under a third option, customers could pay in advance for a fixed number of minutes per month. Anything over that time would be charged separately at a per-minute rate.

But subscribers who opted to pay a fixed monthly fee, which now stands at 345 rubles ($14) for unlimited calls, have grumbled that the charge should also cover calls from landlines to mobile phones.

Under the unlimited option, calls from landlines to mobiles have been charged at a per-minute rate on top of the monthly fee.

Reiman hinted in May 2007 that he would seek to phase out charges for unlimited tariff subscribers calling mobile phones.

"The new measure is consistent with what ... Reiman has said all along about including calls to mobile phones in the ... unlimited tariff," said Sergei Savin, an analyst with telecoms consultancy J'son & Partners.

"It just requires [Reiman's ministry] to make this worthy idea into a workable regulation. There's no doubt they can pull it off."

The timetable for making fixed-to-mobile calls free could have to be adjusted to take account of the various interest groups affected by the measure, Savin said.

Nadezhda Golubeva, an analyst with Aton Capital, said the proposal could benefit operators by increasing the numbers of unlimited-tariff subscribers.

"There's no way to fully compensate fixed-line operators for their losses unless the [ministry] at the same time reduces the per-minute rate that regional fixed-line operators currently pay to mobile operators," Golubeva said.

A spokeswoman for Reiman, speaking on condition of anonymity, confirmed Tuesday that the ministry intended to introduce changes this year but said in a follow-up e-mail that they would not come into effect on March 1.

Yevgeny Ryabov, spokesman for fixed-line operator Moscow City Telephone Network, or MGTS, said it was not clear how to interpret Reiman's comments ahead of a ministry directive.

"Perhaps the [ministry] will suggest a number of payment plans, or at least some options," Ryabov said. "At the moment, MGTS transfers money to mobile operators for the call services. We retain only a small percentage for our services."

Yekaterina Osadchaya, a spokeswoman for mobile operator VimpelCom, said that regional operators such as MGTS or NorthWest Telecom would be hit "if such measures were introduced without clear-cut plans."

Such payment plans should include at least a blueprint from the Federal Tariffs Service on how they would work, Osadchaya said.

Tatyana Nikolayeva, a spokeswoman for NorthWest Telecom, declined to comment.