As the economy pushes forward, the telecommunications industry continues to make its contribution in myriad ways. While competition is making communications cheaper for existing users, millions more keep on joining the cellular world of constant connectivity. When they enter the fold, the mobile phone quickly becomes an essential part of their everyday lives. In turn, more jobs are created every month, greasing the wheels of commerce.
The Roy Morgan Single Source database for the April-June quarter is in hand. Almost 11 million new entrants in just those three months swelled the ranks to some 90 million subscribers across the country. By that we mean unique subscribers, human beings 14 years of age and older. The distinction between a human being and an “active” SIM card warrants repetition. Considering that there are some 160 million Indonesians who are 14+, there is still a long way to go. As the economy grows, as incomes rise and poverty declines, there are still many years of growth ahead for the industry as a whole. The greater the competition, happier is the consumer. With costs coming down, people aren’t talking less. Quite the opposite.
While first-timers continue to come in from the cities and towns across the country, it is rural Indonesia that is registering the highest numbers of new subscribers. Of the 11 million entrants in the April-June quarter, 7 million are kampung dwellers. Nationwide, they comprise almost half the cellular population today, more than half of the millions intending to join the community tomorrow. It is the rural phenomenon that is impacting most powerfully on the changing fortunes of the major operators. Those limited to the cities will see competition intensifying in a crowded space. For the bigger players rural Indonesia is today’s greener pastures, quite literally.
Market leader Telkomsel started by building its franchise in the hinterland, from which they entered the big cities and became the dominant player nationally. In the April-June quarter, the company repeated its formula for success. Both their major prepaid brands added millions of users, hailing mainly from rural Indonesia. Not only did it arrest the declining market share of recent quarters, it reclaimed eight points giving it a 48 percent grip of the subscriber market once again.
The other big gainer from riding the rural bandwagon is XL. Some of these gains have been lost in the last quarter, leaving it with a 17 percent share of all unique subscribers. Indosat remains a strong No. 2 in the industry with a 23 percent share, but its subscriber base is predominantly in urban Indonesia. With the market continuing to heat up in the big cities with pressure mounting from other GSM and CDMA operators, the less competitive but growing rural marketplace will become increasingly attractive to the big national carriers.
In that sense, the country’s telecom giants are now tracing the history of FMCG champions like Unilever and Indofood. When mass banking makes similar strides, Indonesia’s consumer economy will have matured into a much stronger position than what it already enjoys. Mobile money and internet banking are areas where these two major industries will get joined at the hip, over time.
That time isn’t coming fast enough for Indonesia, even though the number of internet users also climbed up in the year up to June 2010. Today, the number of regular users of the web via computers exceed more than 8 million people 14 years and older. But that number is dwarfed by the number of users accessing it via their mobile phones, primarily for social networking. Facebook alone claim over 18 million Indonesian users. There the good news ends. The high cost of downloading data at slow speeds remains a deterent, regardless of the mode of access to the internet. Applications such as mobile banking are becoming more popular, but remains in the hands of a tiny fraction of society. Bigger screens, higher speeds and lower costs are all essential to e-commerce spreading beyond airline reservations in Indonesia. In terms of average speed, Indonesia doesn’t make it to the Top 100 countries, far from it in fact. Though harder to prove, costs on the other hand are among the highest in the world.
Against that backdrop, the US$110 million spent by the telecommunications minister on anti-pornography filters is difficult to fathom. Smut wasn’t exactly the most important thing his counterparts in neighbouring Singapore and South Korea had on their list of priorities.
Had the objective been met sucessfully, some may have had reason to celebrate. But weeks after the deadline has passed, the most visible achievement appears to be even slower speeds across the web. The money would have been better spent simply by subsidising operators to improve infrastructure and reduce cost of internet access. That the country is being held back may not be a criminal offence, but is anybody accountable?
The opinions expressed are based on Roy Morgan Single Source, the country’s largest syndicated consumer survey with over 25,000 respondents annually. Interviews are conducted face-to-face each week, continuously, with results released every quarter. The findings are projected to reflect over 85 percent of the population, 14 years of age and older.
The writer can be contacted at debnath.guharoy@roymorgan.com
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