International Phone Rates Continue Dramatic Drop

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BONN/PARIS/TOKYO - Telephone prices continued their dramatic tumble in the new millenium from the continent to Japan with German phone rates falling most sharply.

T-Mobil, the cellular phone subsidiary of Deutsche Telekom, the now privatized former German phone monopoly, announced a set of new price ranges late last month.

Weekend rates were cut by 54 percent, day rates more modestly. Rivals E-Plus and D2 Mannesmann quickly followed suit, and a telecom trade association predicted further cuts this year in the 20 percent to 30 percent range.

Last year, the German mobile-phone market grew by another 10 million subscribers to a total of 23 million customers, and a 28 percent penetration rate. T-Mobil boss Kay-Uwe Ricke said unfettered growth would continue for at least another 18 months.

Nor are reductions limited to mobile phones. Regular phone prices were cut by 50 percent per minute during business hours. They're still far higher than in the United States, but cuts from 60 cents per minute to a quarter remain significant. High phone prices are probably the largest barrier to much more rapid Internet shopping and marketing growth. Unlimited surfing is simply too expensive for many European shoppers.

Wanadoo, France Telecom's portal site, has 1.5 million French and 520,000 foreign subscribers. Last month, it launched a new plan to make surfing more affordable through a range of lower flat rates. Starters can surf three hours a month for 39 French francs ($6.50); 10 hours cost 59 francs, 15 hours 79 francs, and 30 hours per month cost 159 francs ($36.50). The four plans require no longer term commitment.

In Japan, the latest round of price cuts is aimed at lower international telephone rates. Japan Telecom, a carrier affiliated with Japan Rail, announced average reductions of 1.8 percent and as high as 60 percent for some overseas calls.

Other Japanese carriers have not yet responded, but they quickly followed suit when Japan Telecom first introduced lower charges in October. They included NTT, Japan's biggest telecom player.

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