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A few months back, PT Bakrie Telecom -- known for its product
Esia -- aired a TV commercial that humorously summarizes competition in
the country's mobile telecoms industry.
The commercial portrays rising young comedian Ringgo Agus Rahman trying
to make a choice from among a number of mobile telephone packages
illustrated with colors identical to those employed by a number of
operators.
While making his choice, background voices sneer at the "blue" operator
for offering a discount rate after only two minutes using the
"expensive" rate. Meanwhile, the "red" operator was mocked for offering
lower rates between midnight and dawn.
"Who would want to call at that hour anyway," the background voices say.
When Ringgo gets to the "black" operator with the "3X" logo, the
background voices squeal "endless terms and conditions!"
The operators who felt they were being represented by the use of the
colors later launched similar campaigns, indicating that the
competition among the country's cell phone operators is finally heating
up.
However, competition, analysts say, only amounts to "gimmicks" as the
advertising campaigns mostly offer cheaper rates if the calls are made
within the same network.
Despite the tight competition, the average real charges for making
calls and using other services offered by the country's mobile
operators remain high. In fact, Indonesia has the second highest tariff
average in Asia Pacific, after New Zealand.
"The growing competition has not affected interconnection charges
between operators. These have remained relatively the same for years,"
said Heru Sutadi, an expert on telecommunications and a member of the
Indonesian Telecommunications Regulatory Board (BRTI).
The competition is good for users. But it is different for the
country's mobile phone market. The charges for the postpaid services
offered by the biggest player in the industry, PT Telekomunikasi
Selular (Telkomsel) have, for example, stayed the same for almost four
years.
The reason behind the high interconnection charges, Heru said, was
partly due to the fact that they were still regulated by the
government. For instance, the minimum charge is still fixed by the
state.
"The regulations will be revised. As of January 1, we should see a new
formula for determining charges that may allow operators to offer
tariffs that are lower than the minimum," he said.
Another possible reason, he said, was price fixing by some established
operators, especially for short messages (SMS).
"As you probably know, a cartel is something that you can clearly feel,
but you can't proof, unless somebody steps up and admits
responsibility," Heru said. "We have found preliminary evidence that
operators are colluding to set text-message tariffs. We will fight this
so as to bring charges down. As for voice charges, we are still
investigating," he said.
Heru praised the recent entry of Hutchison with its "3" product, which
he said had raised the competition bar by setting a charge of Rp 100
per text message. However, he criticized the operator for claiming that
customers could get three times the value of a purchased phone voucher
without specifying that the offer was only applicable on its own
network.
With the launching of Smart Telecom by the Sinar Mas Group this week,
Heru said he hoped this would herald more intense competition between
the players, which in turn would benefit the general public.
Sinar Mas, which will formally announce its entry into the mobile
telecoms market this week, will have to go head-to-head with 10
established players, including Telkomsel and Indosat.
In contrast to Heru, Agus Pambagyo, an expert on the telecommunications
sector and its relation to public policy, says that Indonesia has more
than enough mobile telecoms players.
"Other countries have only about three or four. Having 10 players in
the industry can be counterproductive as the competition will force
some operators to lower quality in order to survive," he said.
Agus said that this had, in fact, already been happening.
"The frequency bandwidths of some operators are often full, they can't
be used. Sometimes, all of their services are down," he said Saturday.
Amid talks about creating a better competitive climate in Indonesia,
analysts and regulators alike have been mulling the introduction of
something called "Number Portability".
Under this system, a phone number becomes the property of the user, not
the operator as is the case now, and can be freely transferred to any
operator whom the user considers to be offering better services and
charges.
The absence of such a system makes users here reluctant to switch to
other operators as this would mean losing their phone numbers, which
are frequently an integral part of their identities, next only to their
names.
According to Heru, the introduction of such a system will have to wait
until the market is mature enough in terms of penetration. Right now
there are about 75 million mobile telephone users out of a population
of 220 million.
"The industry predicts that the number of users will reach 100 million
before 2010. So, when it reaches 110 million or 120 million, then we
will consider introducing it," he said.
The system has been introduced successfully in other countries such as
Singapore, the United Kingdom, Saudi Arabia and Australia.
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