Church telephone services may not be offered below cost

KPN may not offer church telephone services below cost. OPTA, the regulatory authority for the postal and telecommunications markets, has decided this in response to objections lodged by the company Kabelfoon. This company had not agreed with a previous decision taken by OPTA on the tariffs for church telephone services. Since the Secretary of State for Transport, Public Works and Water Management does not deem church telephone services to be universal, the tariff payable for them will have to be raised.

Church telephone services are intended for people – mainly the elderly, sick and invalids – who wish to follow their religious services at home. This occurs using a special line which runs from the church to these services’ subscribers. Under European and Dutch legislation, such fixed connections need to be leased at a cost-oriented rate. This means that neither excessive profit nor rental below cost is permitted.

In a ruling handed down on 15 July 1998, OPTA allowed KPN to increase its tariff for church telephone services by 3% to NLG 6.08 per month. As such, this tariff did not cover the costs involved, but OPTA consented to such an (excessively) low tariff because of the social nature of these church telephone services. OPTA felt that it could dispense with a strict application of these rules, because there was no competition in the market for church telephone services.

Kabelfoon, a cable company from Westland, lodged objections to this decision. Its statement of objections reveals that there is indeed competition in the market for church telephone services in the Netherlands. For this reason, OPTA will need to apply the rules governing cost-oriented tariffs to church telephone services. This means that the subscription tariffs for these services will increase drastically. Since OPTA also wishes to consider the specific group of people who use church telephone services, KPN will only have to raise its tariff after 1 January 2000.

In its ruling, OPTA points out that the Telecommunications Act includes a more appropriate instrument, which makes it possible to abandon the cost-orientation rules if they result in undesirable tariffs in social terms. The Secretary of State for Transport, Public Works and Water Management can designate church telephone services as universal, or put another way, as a facility which should be available to everyone at a relatively low tariff (as in the case of the BelBudget [Budget Call] tariff). When asked, however, the Secretary of State declined to designate church telephone services as universal.