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The perplexity of mobile internet prices
There was a strong suspicion about a lack of transparency with regard to mobile internet pricing. Why is the current mobile internet pricing so perplexing?
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With its 10 percent monthly churn rate, Indonesia has the highest percentage among the 53 countries in the BoAML database. (Shutterstock/Anna Hoychuk)
Just some weeks ago, the website of Telkomsel, Indonesia’s largest mobile operator, was hacked.
The hacker expressed disappointment over the company’s current policies offering services — music and data quotas — based on different technologies subscribers do not necessarily demand. There was also a strong suspicion about a lack of transparency with regard to mobile internet pricing.
The following day, Telkomsel’s closest rival, Indosat, became the next target. This time, the hacker conveyed a message that telecommunications companies should stay calm and stop teasing each other.
We might witness something akin to this revenge overwhelmed by the stiff competition in the current mobile industry. Hence, it is necessary to single out one among many possible roots of the problem: Why is the current mobile internet pricing so perplexing?
Back when the main telecommunications revenues were generated by voice, the analysis of pricing strategies was rather straightforward. When mobile operators lowered their prices, this triggered a massive number of calls to rival operators through off-net calls.
Therefore, operators often strategized by pretending to compete at the retail price level — the price charged to the final consumer — albeit they actually colluded among themselves when setting the prices on each other’s call terminations.
The Indonesian mobile industry experienced this phenomenon from 2005 to 2010. While operators seemed to compete fiercely in price wars by claiming to be the cheapest ones, the users were actually charged excruciatingly high fees, especially when making off-net calls outside from their own networks. As a result, the country’s anti-trust body (KPPU) ruled that all operators were involved in collusion during this period.
