One phone company, Virgin Mobile, will be increasing its international rates for 20 countries from February 28.
ABC intern Louisa Wright reports
Presenter: Louisa Wright
Speakers: Melbourne woman Lydia Sper, New Zealand Tongan Advisory Council chairman Melino Maka, Senior lecturer of Political Science at the University of Canberra, Michael de Percy
WRIGHT: The latest international rate increases from Virgin Mobile will see customers paying up to 12 times more for calls made to some areas of the Pacific. The worst affected Pacific Islands include Papua New Guinea, Solomon Islands, the Cook Islands, Tokelau and Nauru, which will all cost 25-dollars per minute to call. Melbourne woman Lydia Sper chose a Virgin plan to stay in touch with her fiance who lives in Fiji.
SPER: And all of a sudden, we receive this email from Virgin Mobile saying that the international rates are going up as of the 28th. February and when I checked what the international call rates were, they became $6 a minute, which, is like 300% increase and I got such a shock, thinking well, I'm only going to be able to call my fiance about an hour an month basically.
WRIGHT: Virgin customers have been voicing their concerns through online forums on the company's support website. One customer said his wife signed up to stay in contact with her family in Papua New Guinea for $2.80 per minute, but with the new rates this will become $25 per minute. Another customer said the only international calls his wife makes are to family on Norfolk Island which will see a per minute increase of 1,250 per cent. The New Zealand Tongan Advisory Council chairman Melino Maka says the rate changes will affect Pacific Islanders living in Australia and New Zealand because phone calls are their main form of contact with friends and family in the Pacific.
MAKA: We are not a people of writing letters. On today's modern era, we are tend to be more good in communication in terms of talking to loved ones, hear their voice, and you can actually tell where things OK or not, so this will have a huge impact , in terms of their contact relations and family.
WRIGHT: A statement released by Virgin Mobile says "The price of international calls is influenced by a number of factors including market shifts, international exchange rates and foreign government regulations ." Senior lecturer of Political Science at the University of Canberra, Michael de Percy, says the cost of maintaining infrastructure is a likely factor behind the call rate increases.
DE PERCY: My understanding is that Virgin's one of the few providers that provide international credit in many of their plans and I think it's more of a regional issue. If you look at the more popular telecommunications call destinations. Often you'll see that these have decreased in price significantly, but it's where in the less popular areas and particularly within the Pacific region. We're talking about substantial investment and infrastructure for what I would assume would be little return in terms of telecommunications traffic. So I think that's the main driver of this particular issue.
WRIGHT: The increased rates could result in customers shopping around for better deals. Lydia Sper has already found a cheaper plan that will allow her to call her fiance in Fiji.
SPER: There's other ways that you can get a cheaper rate. Someone's just told me now, actually of a Sim card you can buy to ring Fiji for 19 cents a minute. I won't be using, I won't be using the credit. It'll just be sitting there now and I'll have to pay it out for 12 months and I'll be using a different service provider, buying another Sim and getting 19 cents a minute rate, which is a big difference to $6.
WRIGHT: Melino Maka says consumers will find alternatives if faced with unreasonable prices.
MAKA: At the end of the day, consumer, consumer will vote with their feet, that is, and I think that some of this company need to be more realistic about, to have a 1,000 increase is really beyond reasonable expectation for ordinary consumer about price increases.
WRIGHT: If the number of customers drops because of increasing call costs Professor de Percy says companies may have to consider the viability of providing services in the Pacific.
DE PERCY: But I think in the Pacific region, in particular, the cost of maintaining infrastructure and so on may in the past have been cost subsidised by other users of the infrastructure. But I think in Virgin's case, it's simply a case of market rationalisation, that they're basically charging the actual cost to the subscribers of offering that particular service and I think it might well be a case of looking at whether or not it's actually viable to provide those services in that particular region.