Within your report, use the View, Sorting and Grouping menu option. In the dialogue box which appears, select Surname in the Field/Expression Column, "Prefix Characters" in the "Group On" option, and 1 as the "Group Interval". Also set the "Group Header" option to "Yes". This will create a new "Surname Header" section in your report. Set the "Force New Page" property of this section to "Before Section". You can close up any whitespace showing in this section if you're printing the actual letter in the Header section. The section header should force the page throw whenever the first letter changes.
Hope that this helps,
Cheers
Steve