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“The price reductions will strengthen our competitiveness with regard to international calls and calls to cellular telephones,” says managing director, Stig M.Herbern of Telenor Privat (personal communications). “We will be following price developments closely in order to ensure that we are always able to offer our customers competitive prices,” he adds.
“Changes in the market have made it necessary to correct current distortions in our price system. Until now, revenues from telephone traffic have been used to cover some of the subscription cost, thereby keeping these prices artificially low. However, since Telenor operates the subscription network on behalf of all of the telephone operators in the Norwegian market, and telephone traffic revenues become a deciding competitive factor, we have had to raise our prices to levels which cover our actual costs,” says Mr. Herbern, who also points out that price increases are in line with the price restructuring programme Telenor began last year at the request of Norwegian Telecommunication authorities. Collective traffic agreements between Telenor and other players reflect the costs associated with traffic deviations, however not with regard to maintaining the subscription network.
Thus regular telephone and ISDN subscription prices will be increased by NOK 18 and NOK 28 per month respectively, while prices for international calls will be reduced by an average of 20 per cent, and calls to cellular telephones by 23 per cent. Prices for local and long-distance calls will not be immediately affected, however further reductions can be achieved through Telenors special rebate, Family & Friends, which is still valid.
Telenors directory service (Information 180) has raised its price from NOK 7.84 to NOK 9 per minute. Information 180 prices have remained unchanged since 1992. However, according to Mr. Herbern: “Despite continual streamlining and improvement of our service offer, the increase in Norwegian cost levels in recent years has made it impossible to avoid a price rise.” Todays current special rebate for the blind and the visually impaired will be maintained, and Telenor is working on improving its offer.
According to Telenors calculations, the overall effect of the price adjustments will be a 0.5 per cent reduction in telephone charges for private customers on average, and a 2 per cent reduction in telephone charges for business customers. According to Telenor, both business and private customers who use telephone services extensively, for both international calls and calls to cellular telephones, will benefit from the price adjustments. In the short term, changes experienced by Telenors customers, will depend on what services they use (three out of four business customers will see a reduction in telephone charges, the same number of private customers will see an increase in telephone charges by an average of NOK 10-15 per month).
Telenor will be introducing a mini-subscription, comprised of a lower subscription price and a higher call price, for the nearly 120 000 infrequent user customers (customers with charges totalling less than NOK 20 per month), in April 1998. “It is important to emphasise the fact that the purpose of the price adjustments is not to increase Telenors profits. They are rather a response to a new competitive environment and will enable Telenor to secure Norway a place among the leading nations within telecommunications, which is in the best interest of the Norwegian consumer and business community,” says Mr. Herbern.