On 14th November 2006 the Federal Rates Service of the Russian Federation (FST RF)   approved new rates for local telephone communication services and intra-areal (intra-regional) telephone communication services for all branches of OJSC North-West Telecom in the territory of the Arkhangelsk , Vologda , Kaliningrad, Murmansk, Novgorod, Pskov and Leningrad Oblasts, the Republic s of Karelia and Komi and the city of St. Petersburg*.  

The new rates will come into effect starting from 1st February 2007.

The request of OJSC N.W.Telecom and the decision of FST RF are aimed at implementing article 54 of the Federal Law "On Communication" and are based on the provision s of the Resolution of the RF Government of 24.10.2005 No. 637 and the Procedure of Calculating Rates and Rate Plans for Local Telephone Communication Services (approved by the Decision of the FST RF Board on 05.09.2006), according to which a communication operator must offer at least three obligatory rate plans to individual subscribers: with time-based, subscriber and combined billing systems (see Press Release of 8th September 2006).

According to the Calculation Procedure, each rate plan for local communication services includes two constituents:   a fixed monthly fee for the provision of the subscriber line for use, which is to be paid by the subscriber irrespective of the chosen rate plan and a fee for local telephone connection s, which depends on the rate plan chosen by the subscriber.     

In accordance with the above standard and legal document s, FST RF has approved obligatory rate plans for OJSC N.W.Telecom as limit plans with the right of the operator to fix a rate independently up to the limit value s, as well as eight extra rate plans (with a reduction of the price depending on the time of the day or night, days of week and consumption volumes), which OJSC N.W.Telecom developed taking into account the needs of various groups of subscribers and submitted for consideration by the respective regulatory authority.  

Thus, starting from 1st February , OJSC N.W.Telecom will offer to the 4 million of its subscribers in the republic an, regional and district centers of the Northwestern Federal District a new system of rates for local telephone connections, which implies the choice of the most beneficial rate plan by each subscriber.  

The basic limit price parameters of OJSC North-West Telecom 's rate offer for local communication for the population, approved by FST RF, are:

- the price of providing a subscriber line for permanent use – 125 to 130 roubles depending on the region (city of federal significance, oblast, republic);

- the price of one minute of local connection ( telephone connection inside a city or a district) – 19 to 35 kopecks depending on the rate plan and region;

- permanent monthly fee, if the subscriber chooses the limitless rate plan – 350 to 400 roubles depending on the region;

- subscriber fee, if it is technically impossible to arrange the time-based billing of the duration of connection s – 210 to 240 roubles depending on the region.

As to the 363 thousand subscribers of rural telephone communication (about 8% of the company's subscriber base), for whom the technical possibility of the time-based billing of the duration of local telephone connection s will not be provided by 1st February , OJSC N.W.Telecom will offer them to pay for the services under the subscriber payment system with indexation of the existing subscriber fee by 11.9% on the average, which does not contradict the Concept of Social and Economic Development of the RF for the Period of 2007-2009 approved by the RF Government and allowing a growth of rates for the local communication services by not more than 14%. OJSC N.W.Telecom will not provide the technical possibility of choosing the system of payment for local communication for subscribers residing in rural areas earlier than in 2008.

FST RF has also approved new rates for local communication for legal entities that are subscribers of OJSC N.W.Telecom . In accordance with the Rates Calculation Procedure they will be offered one obligatory rate plan with the time-based billing system. However, for this category of clients , OJSC N.W.Telecom has also developed and FST has approved several extra rate plans to be chosen.

Simultaneously with the rates for local connection s, FST RF has approved for OJSC North-West Telecom new "unified" rates for intra-areal (intra-regional) communication services for the population and legal entities.   The single price of a minute of intra-areal connection , irrespective of the distance of the subscribers from one another (inside a republic or region – between cities, districts, cities of one republic or region), will amount to 2.25 – 2.50 roubles depending on the region (for the population the rate is given taking into account all taxes and for organizations - without taking into account the VAT of 18%). On the average , the rates for intra-areal communication have been reduced by 15.5 %.

Detailed information on new rate plans will be published on the web-site of OJSC N.W.Telecom and in the Internet representative offices of the branches.

* The rates established to OJSC N.W.Telecom differ in different regions of the Northwestern Federal District. All in all, there are 4 groups of rates: (Northern: the Arkhangelsk, Murmansk and Komi branches; Central: the Vologda, Kaliningrad, Novgorod, Pskov and Leningrad-Oblast branches; St. Petersburg; and the Republic of Karelia).