Spain's dominant telecoms group Telefonica said this week it would cut the price of peak rate provincial and interprovincial telephone calls, but increase monthly subscription fees. Telefonica has been steadily cutting tariffs to meet regulatory caps on rates as competition in Spain's telecoms sector heats up. The new tariffs would come into effect on March 1 and would cut the cost of calls within the same province by 6.3 per cent and interprovincial calls by just under 12 per cent, Telefonica said in a statement. A Telefonica source said in February that the company planned to cut the rates by between five and 10 per cent. Telefonica must cut its basket of phone call prices by seven per cent this year under Spain's new tariff framework. Also Telefonica intends to increase its monthly subscription by 100 pesetas to 1'642 pesetas. Under the regulations, Telefonica may increase the fee by another 100 pesetas this year. Telefonica said the increase was in line with similar moves by telecoms operators in other European countries. The company has wanted to increase the monthly charge for some time, but was restricted by the government because of the impact on inflation.