Declaring that the government was running out of time and patience, Prime Minister Sam Hinds yesterday called on the telephone company to enter into negotiations forthwith on ending its monopoly.

He said this should be done without any preconditions to allow both sides to arrive at a new agreement for the firm's operation.

The Guyana Telephone and Telegraph Company Limited (GT&T) is balking at starting the talks on the grounds that it wants urgent attention to be paid to the impact of reduced settlement rates from US carriers as of January 1 this year. The lower rates are in accordance with a ruling by the US Federal Communications Commission (FCC).

The government's position is that the settlement rates issue is being addressed by the Public Utilities Commission (PUC) and is distinct from the monopoly question.

In a five-page statement yesterday, Hinds said that there is no role for the government under the present laws to address the rebalancing of tariffs and there will be opportunities to discuss that question in the broader context of negotiations with GT&T on reforming the sector.

"(This) is one more reason why GT&T should enter into discussions with the government forthwith and without preconditions," Hinds stated.

He said that the government is firmly committed to reaching mutually satisfactory solutions which will provide the growth and development of competitive companies, consistent with a good telecommunications policy.

"Government will be tough and firm and well resourced but fair; focusing on repositioning Guyana so that Guyanese could obtain the greatest benefits from this leading sector of the economy," Hinds said.

Touching on GT&T's recent description of itself as an industry in trouble, Hinds said the industry is not in trouble but in desperate need of quick reform.

He noted that GT&T and its parent company ATN since 1991 in a statement to the FCC committed themselves to encouraging the government of Guyana to open the sector to market competition in five years.

The Prime Minister argued that monopolies are at an end and GT&T knows that. He added that Guyana is at the beginning of this transformation and there is need to begin the discussions on changes without preconditions.

The Prime Minister dealt with the issue of rate rebalancing saying it is a troubling issue but one for the PUC. His statement acknowledged the US$30 million in anticipated losses in revenues for GT&T as a result of the FCC ruling. He noted the need for cost based pricing for each service and at the same time shared the concerns of consumers on the potential hike in rates.

Hinds said he fears that there is the prospect of significant increases in local rates given the realities which face GT&T and questioned whether the company should not be more concerned about the ability of the Guyanese public to pay the cost based prices to be set by the PUC.

He said there are many who would argue that GT&T should have secured phased reductions in the US settlement rate and hence phased rebalancing of domestic rates. "What is nevertheless certain is that holding to the higher settlement rate to the last moment maximized the revenue flow to the country and to GT&T. We got the most out of it, but we are now faced with an abrupt adjustment; a tariff rebalancing shock", Hinds added.

Hinds noted the trend of rates being lowered and the threat that Voice Over Internet Protocol (VOIP) technology poses for telephone companies as well as the potential impact of free trade with companies setting up subsidiaries to handle international calls as local calls.

"By this method the USA would achieve an earlier argument which it had not pursued, that the price for terminating or originating a call in any country should be no different from the local domestic rate!" Effective international settlement rates could slide to as low as US 12 to 15 cents compared to the FCC mandated benchmark of US 23 cents.

He expressed the view that the shock in cellular rates was survived and suggested that it could be the same for landline rates. He pointed out that in the short term, there would be need for great adjustments by consumers to stay within allowable budgets for local domestic calls. He noted that in the cellular service which is booming, prices were at one time US 35 cents a minute and are now US 15 cents a minute.

"There may be many persons who have had to request cellular service because landlines were not available. For them a landline at US 2 cents to 3 cents/minute would be a great reduction from even the reduced cellular rates of US 15 cents/minute", Hinds argued.

The PUC is deliberating on temporary rates for GT&T while its rate filing application of December 31, 2001 is fully considered. Within local exchanges GT&T is seeking tariff increases on an average of 1800% and 75% between exchanges. Higher rentals and charges for internet users are also being sought by GT&T.

Responding to GT&T's charge that the government has failed to move against wireless internet service provider i-Net - which the phone company accuses of violating its monopoly - Hinds said there are grey areas where various experts in law and communications technology will give different opinions.

With the revolutionary changes in telecommunications, Hinds said there is seen to be a need to clearly separate systems and services and to define more specifically different degrees of private and public systems.

He added that issues regarding i-Net and VOIP require the reform of outdated legislation.

"The government, in order to avoid the telecom sector opening up in a chaotic manner or becoming locked up in litigation based on varying interpretations of laws and licences which have been overtaken by time, will proceed deliberately and quickly with the reform of the sector and prefers to do so with the cordial participation of GT&T", the PM added.