I. Christianto, Contributor, Jakarta | Fri, 07/10/2009 3:09 PM
The rapid developments in information and communications technology and revamped regulations dealing with the industry have forced telecommunications providers in Indonesia to be smarter and more creative to gain a thicker slice of the country's lucrative telecommunications market.
Competition in the telecommunications business has become fiercer, particularly in long-distance calls (national direct dialing, popularly dubbed SLJJ in Indonesia) and international direct dialing (IDD, locally named SLI), after the government abolished in the late 1990's the exclusive rights of PT Telkom and PT Indosat, which run the domestic telephone services (including long distance dialing) and international direct dialing, respectively. The duopoly was gradually eliminated for the sake of promoting industry transparency and fair competition.
Although there has been concern over obvious political and other interests, the industry structure appears to be more beneficial for customers. Nonetheless, the fixed line teledensity in the country remains low compared to the fast growth of mobile cellular services.
Since early 2000, Indonesia, committed to the 1998 WTO Basic Telecommunications Agreement to provide fair competition, has also improved overall interconnection between the incumbents and new operators. The government has pledged to end all forms of monopoly by 2010. That's why the government granted earlier this year a license to PT Bakrie Telecom (BTel), to operate an IDD service.
The company's director of corporate services Rakhmat Djunaidi said that BTel has also obtained a preliminary license to offer long distance dialing.
"We have a two-year period until 2010 to install and arrange the network and infrastructure to run the long distance call service," he said.
With the entrance of BTel in the SLI service in Indonesia, the rivalry among the three operators has heightened. Indosat is the oldest player in the market, beginning in 1967. It uses 001 and 008 for its IDD code, while Telkom with its 007 code entered the business in June 2004. BTel this year launched its 009 IDD access code based on Communications and Information Ministry Regulation No. 59/2009.
Industry analysts believe that the government may award more SLJJ and SLI licenses in the future just to see the market grow with lower rates. There is a concern, however, that the players will experience lower revenue from such services due to the vast ICT.
Indosat, for example, has experienced lower revenue from its IDD service in recent years. The company's IDD revenue has dropped continually since the company began operations in 1967 when it was wholly dependant on the service. The IDD service presently contributes less than 10 percent to the company's total revenue which now combines earnings from cellular and Internet and multimedia services.
"To keep the company afloat Indosat works on exploring innovation. Indosat is also expecting a license for broadband wireless access *BWA*," Indosat's president Johnny Swandi Sjam recently said as quoted by news portal detik.com.
Telkom was also concerned that its SLJJ would be affected when its decades-long monopoly ended and Indosat entered the services in 2008. SLJJ is closely related with the regional or city access code (KAS). With the monopoly over, the KAS must be changed so customers can select the operator of their choice. The prefix "0" has gradually been altered specifically for Telkom and Indosat for certain cities, based on a B2B agreement between the companies. The access codes for all regions and cities across Indonesia must be completed by September 2011.
Those objecting to the code change claim that users will be confused if there are new KAS; therefore a longer period of socialization is necessary.
The IDD service looks simpler and more attractive. The government is optimistic that in the near future more domestic operators will enter the IDD business. This is based on the rapid progress in telecommunication technology and the rising demand of the market.
The large business volume or market size is also one of the reasons why many operators are interested in the IDD business. The Indonesian Telecommunication Regulation Agency (BRTI) estimates that the potential volume of the IDD market is worth Rp 7 trillion. The huge volume is partly due to the fact that more than 4.5 million Indonesian workers are employed in foreign countries, more than 50,000 Indonesian students are studying abroad as well as increased communication between local businesspeople and their foreign counterparts. In some extent, international tourists are also a factor. All these are obviously the target of IDD services.
Rakhmat Djunaidi agreed. "The IDD has good prospects. Last year international call traffic in Indonesia reached almost 3 billion minutes annually, most of which were incoming calls to Indonesia."
He added that his company had launched a program to educate consumers in Indonesia about their rights to more economical IDD rates.
BTel, established in 1993 as PT Ratelindo, has positioned itself as a budget operator. It promotes Talktime as the common measurement of communications charges instead of the so-called "pulsa". For its IDD service, the company boasts international call rates which are 77 percent less than the current standard rates.
"Although the rates are lower, BTel gives its assurance that the voice quality is crystal clear as it is channeled not through the Internet network or Voip *voice over Internet protocol*, but via uncompressed real clear channel voice connection," said Djunaidi.
The company, using the "Cheap Choice for Clear Voice!" slogan, aims to grab a 30-percent IDD market share in the next five years, he added.
For comparison, Indosat's IDD rate structure from Indonesia to the US per minute are Rp 8,300 (normal), Rp 6,225 (reduced) and Rp 9,960 (premium). To Singapore Rp 5,650 (normal), Rp 4,238 (reduced) and Rp 6,780 (premium). Telkom charges Rp 6,640 (standard) Rp 4,980 (reduced) and Rp 7,968 (premium) to the U.S., and Rp 4,660 (standard), Rp 3,495 (reduced) and Rp 5,592 (premium) to Singapore. The tariffs from BTel are Rp 49 per second and Rp 2,940 per minute (to Singapore and the US).
The three players, which operate mobile phone and fixed wireless telephone services as well, offer various promotions and combined special packages to grab more subscribers.
In any fair competition, the players should apply customer-oriented services, offering user satisfaction and not merely a business orientation that may ignore consumers' rights. And we all need to have not only fair, but real healthy rivalry.
