Chile proposes cut to mobile connection fees

SANTIAGO, Nov 24 (Reuters) - Chile's government on Monday proposed sharper-than-expected cuts to fees mobile phone operators can charge to use each other's lines for the next five years, citing low costs and high user traffic.

Access or connection fees represent about 95 percent of what users pay for each call and the deputy telecommunications ministry (Subtel) proposed to cut those rates in half, drawing opposition from some companies.

Chile has one of Latin America's most sophisticated mobile phone markets. The market is led by Movistar, owned by Spain's Telefonica (TEF.MC); followed by Entel PCS, owned by Chile's Entel ENT.SN; and Claro, a unit of Mexican telephony giant America Movil (AMXL.MX).

The government must set new access rates for the 2009-2014 period before the current period expires.

Subtel on Monday proposed a 52 percent cut in rate charges for the operators, compared with much lower cuts proposed by the industry.

Movistar had previously proposed a 30 percent cut, with Entel and Claro proposing a 31 percent and 34 percent rate decrease respectively.

The government said a deeper cut is warranted because industry costs are sharply lower and because of a strong increase in consumer demand.

"We are deeply surprised by the government's proposal for a more-than-50-percent rate cut, which does not seem reasonable, especially in light of the prevailing uncertainty and the still unknown magnitude and depth of the economic crisis," Entel said in a statement.

The company said it would request an expert commission be formed to arrive at a proposal that "does not jeopardize the achievements of the industry to date."

The government proposal would cut connection charges for the three providers to 43.07 pesos per minute, whereas Movistar has proposed a rate of 62.17 pesos, Entel PCS of 61.82 pesos and Claro of 59.47 pesos.

Movistar charges 88.88 pesos per minute, Entel PCS 90.07 pesos and Claro 90.3 pesos. (Reporting by Monica Vargas, editing by Richard Chang)