T

he telecommunications industry will have to focus on over-the-top (OTT) services as the primary growth driver while continuing a belt-tightening strategy in a bid to score impressive growth rates in 2017, experts warn.

In the last three years, the Indonesian telecommunications industry has grown between 12 percent and 14 percent per year, making it one of the most stable industries in the country.

However, many analysts say that with the availability of more OTT services such as messaging apps, social media and the increasing role of the internet and gadgets in daily life, the industry can grow much faster, at a rate of 60 percent.

“I am confident that the telecommunications industry is able to grow by double digits in 2017, because of the ingrained role of OTT services in daily life,” said Dimitri Mahayana, chief of the Telematika Sharing Vision research institution on Thursday.

He added that data revenue for Indonesia’s major telcom companies increased from 52.6 percent to 72.7 percent from 2015 to 2016, proving that the public had become more dependent on data and OTT services than ever.

In contrast, a survey report from the Indonesian Cellular Telecommunications Association (ATSI) shows that 60 percent of the respondents admit to using text messages less frequently. Voice and text messaging growth in Indonesia have been slowing steadily by 1 percent per year since 2013.

Because of the crucial role that OTT services play in driving the telecommunications industry’s growth, the government must provide balanced regulation. “A lack of proper regulation can cause problems such as an uncontrolled marketplace, the flourishing of negative content and lack of internet security,” Dimitri added.

OTT companies in Indonesia still generally earn only US$5 billion to $10 billion, while major earners such as Japanese messenger service LINE earn $14 billion and BlackBerry Messenger (BBM) $500 million.

“Operators must also try to reduce their data prices as low as they feasibly can because there will only be more OTT apps coming into fore and even more demand for them,” he added.

Indonesian telcom revenue has increased overall from 2013 with a compounded annual growth rate of 13 percent as of 2016.

Furthermore, ATSI secretary general Danny Buldansyah weighed in that the challenge for telcom companies in this case was to cut their costs efficiently, while continuing to accommodate OTT services on their platforms.

The efficiencies can be carried out through several measures such as infrastructure sharing, which in part will also benefit other stakeholders. But the onus lay with the government, as operators need the relevant regulatory framework.

Earlier in the year, telecommunications operator XL Axiata said infrastructure sharing would reduce its investment costs by 40 percent. The operator has an existing sharing agreement with fellow operator Indosat Ooredoo to share their 4G networks in four cities.

XL said that one particular radio transmitter used by the two resulted in a 20 percent expenditure reduction.

Meanwhile, Danny also pointed out that in the next two years, the Indonesian telcom industry would gradually rid itself of the 2G network. “And it makes sense, because while operators note that roughly 20 percent of their customers have 4G-enabled smartphones, next year we might see that jump to 40 or 50 percent,” Danny said.