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A year isn't much in the life of a nation. But in the
marketplace, it can be a lifetime. In the telecommunications market in
Indonesia much has happened in the last 12 months -- and will continue
to happen -- to the advantage of the consumer.
In the borderless world of the electronic age, it will help increase
the competitive capability of the workforce among its Asian neighbors.
Locally, the industry will continue to have a positive impact on
growing numbers of people keeping in touch, at work, at play and at
home.
Once again, it is competition that is driving these positive trends
forward. Overall, the desire for more and more new entrants to the join
the cellular club continues to grow.
From 23 million intenders a year ago, there are currently more than 35
million people planning to buy their first handset, brand-new or
second-hand.
In effect that would double the number of regular users of cellular
services. Of these, 23 million are planning to choose GSM, another 10
million say they will opt for CDMA and 2 million haven't made up their
minds yet.
It is common knowledge the number of SIM cards sold is indeed several
times the number of people actually using them. This is because of two
reasons, primarily.
Firstly, there are the 'flickers' who buy the inexpensive starter pack
to make both cheap local and long-distance calls, then give the SIM
card the flick of the finger.
In the last four weeks alone, some 3 million people will have thrown at
least one SIM card away.
Secondly, there are the 'flippers' who have several SIM cards at any
point in time, flipping them around for the free in-network calls to
fellow subscribers as well as the host of other 'freebies' increasingly
offered by networks each month. The overall demand for new SIM cards
both GSM and CDMA, has dipped and then flattened out at 38 million new
intenders. This is perhaps due to a decline in the number of 'flippers'
having hit saturation levels.
While nine in 10 people have a regular number they haven't ever
changed, both 'flickers' and 'flippers' have an impact on the fortunes
of the cellular networks. They drive up the number of 'new subscribers'
artificially and exploit the loyalty programs in ways they were never
intended.
While new networks entering the market will continue to drive down the
cost of entry as well as the per-second call rates, it is obvious the
larger numbers of tomorrow's new entrants are less well-off than the
early, more affluent converts.
This will continue to drive profitability per customer downwards, or
ARPU, in industry parlance.
Not surprisingly, 45 percent of these prospective new entrants hail
from rural Indonesia.
New network launches and increasingly competitive pricing are also
having their impact on the technologies on offer.
The CDMA advantage of lower costs and quality coverage within limited
geographies is waning, as GSM prices continue to go down each month.
The perceived twin benefit of lower price and coverage quality has lost
some of its charm among many new intenders, as witnessed by the dip
from some 14 million new intenders for CDMA dipping to 10 million in
the last quarter.
The growth rate in tandem users of both technologies will also slow
down, for the same reason.
Brands therefore will have to find unique discriminators to keep their
customers glued to their networks.
Market leaders have a historical advantage compounded by the
inconvenience faced by subscribers changing their phone numbers if they
wish to switch today.
That advantage disappears as soon as mobile number portability becomes
a reality in any country, when lawmakers flatten the historical
advantage to increase consumer freedom by allowing them to keep their
numbers when they switch networks.
There will come a time when price and coverage can no longer be weapons
of choice for competing networks. Though that day maybe far away, it
makes good sense to start preparing for that eventuality.
There are any number of directions to choose from. For example, the
interest in an internet connection at home is on the increase, with a
significant hike in the last quarter to more than 1.7 million intenders.
That is good news for a country that has been limited by the ability of
its people to access the window to the world at large.
It is also good news for networks aiming to retain their high-end
customers by offering them Blackberries and other email-empowered
handsets via bundled long-term contracts.
Or via sponsorships of sports, cultural groups and charities that bond
users with worthy causes.
These observations are based on Roy Morgan Single Source, the country's
largest syndicated survey with more than 27,000 Indonesian respondents
annually, projected to reflect 90 percent of the population over the
age of 14 years.
That is a universe of 140 million people. The results are updated every
90 days and used by more marketers, media and creative agencies than
any other syndicated survey.
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