Cellular operators vie for a niche<\/p>\n
JAKARTA (JP): A cellular phone for everyone: This may be at
\nthe heart of the campaign for cellular operators in Indonesia,
\nparticularly in Jakarta, the country's most promising cellular
\nphone market, within the next few years.<\/p>\n
Yes, there will be more operators competing in the market
\nplace for a share of this wireless sphere.<\/p>\n
By next year, the greater Jakarta area (including Jakarta,
\nBogor, Tangerang and Bekasi, also known as Jabotabek), will have
\nat least eight mobile cellular phone operators. There will be the
\nfive existing operators, including three Global System for Mobile
\nCommunications (GSM 900) operators of Excelcomindo, Satelindo and
\nTelkomsel, Komselindo and Mobisel. There is also PT ACeS which
\noperates satellite-based cellular phone system Byru.<\/p>\n
The government recently granted state-owned PT Indosat and PT
\nTelkom the right to operate a Digital Cellular Service (DCS)
\n1800, or GSM 1800, nationwide. Both companies plan to launch the
\nservice in Jakarta next year.<\/p>\n
State-owned telecommunications maker PT Inti is also allowed
\nto operate GSM 1800 in the Jakarta area after the company had to
\ncancel its project for the Personal Handy Phone (PHS, a cellular
\nsystem originating from Japan) as it was not feasible and did not
\nhave a promising future.<\/p>\n
In the meantime, the government has also licensed six new
\ncompanies to run cellular phone services to operate the GSM 1800
\nregionally, beyond Jabotabek. They include PT Aria West
\nInternational (to operate in West Java), PT Astratel Nusantara
\n(Sumatra), PT Mitra Perdana (Central Java), PT Natrindo Global
\n(East Java), PT Primarindo Sistel (Kalimantan) and PT Kodel
\nMargahayu (eastern Indonesia).<\/p>\n
The new regional operators will compete with Komselindo (West
\nJava), PT Metrosel (Central and East Java) and PT Telesera
\n(Bali).<\/p>\n
Immature<\/p>\n
The cellular phone industry has been developing well in
\nIndonesia considering that the market is immature compared to
\nother Asian nations such as Hong Kong and Singapore.<\/p>\n
Data from the Asia Pacific Telecoms Analyst (June 2000) shows
\nthat penetration of fixed-line services in Indonesia has been
\ngrowing slowly in a monopolistic environment, as real
\nliberalization has yet to start even though a new regulation was
\nimplemented last September.<\/p>\n
Meanwhile, penetration of cellular services is growing
\nsignificantly with real competition, but the growth rate of 1.5
\npercent is much lower compared to Hong Kong, Singapore, Taiwan
\nand South Korea which have surpassed 50 percent.<\/p>\n
The overall number of cellular phone users in Indonesia surged
\nby 75.6 percent to be 3.2 million users in the first nine months
\nof this year when compared to the same period in 1999.<\/p>\n
The figure is estimated to reach 3.4 million by the end of
\nthis year.<\/p>\n
The cellular market is now controlled by GSM operators. Of the
\nestimated figure, Telkomsel has some 1.7 million users, Satelindo
\nover 1 million and Excelcomindo about 670,000.<\/p>\n
GSM is the definitive worldwide standard for wireless
\ncommunications. The technological development of the cellular
\nsystem now approaches the mobile broadband multimedia (3G) level
\nwhich will operate on a higher frequency (1.8 gigahertz). GSM
\n1800 is a must for Indonesia if the nation does not want to lag
\nbehind other nations in the cellular system.<\/p>\n
The three new GSM 1800 operators will make competition in
\nJakarta much fiercer. Indosat and Telkom have allocated huge
\namounts for investment in the business.<\/p>\n
Indosat's director for business development Budi Prasetyo said
\nthat the company invested $300 million to develop Indosat Multi
\nMedia Mobile (IM3) which will include the GSM 1800.<\/p>\n
He said that the service, supplied by Ericsson, would be
\nlaunched in mid-2001.<\/p>\n
IM3, which will offer GPRS (General Package Radio Service),
\nwill have 470 Base Transceiver Stations (BTS) with a capacity of
\n420,000 service lines in nine locations of Bandung, Batam,
\nDenpasar, Jakarta, Medan, Semarang, Surakarta, Surabaya and
\nYogyakarta.<\/p>\n
Telkom said it allocated an investment of Rp 90.5 billion
\nto build the cellular service. They are hopeful that the
\noperation will be active by the last quarter of 2001 in Jakarta,
\nBandung and Bandarlampung and to grab 495,000 users.<\/p>\n
Rivalry<\/p>\n
In all probability there will be stiff competition between
\nIndosat and Telkom.<\/p>\n
The cellular service will be one of the four major lines of
\nbusinesses run by Indosat after the government permitted the
\ncompany to become a full network service provider.<\/p>\n
Budi said Indosat now possessed the \"4-in-1\" strategy,
\nmeaning that the company would run services of mobile and
\nwireless; Internet and multimedia; backbone; and fixed line.<\/p>\n
He said Indosat plans to develop at least 1.6 million cellular
\nservice units and operate 3G by 2005.<\/p>\n
The Internet service is estimated to operate in 305 cities
\nwhile services of cable TV, interactive TV and on-demand service
\nis estimated to operate in five cities by 2005.<\/p>\n
Indosat also plans to build a backbone covering Sumatra, Java-
\nBali and Kalimantan-Sulawesi by 2005 and install at least 1.9
\nmillion fixed lines.<\/p>\n
Budi said that Indosat would need some Rp 15 trillion to
\nimplement the \"4-in-1\" strategy. The funds will be generated by
\nbudget allocation, subsidiary sales, partnership, bonds issuance
\nor with commercial loans.<\/p>\n
Telkom's vice president for communications Doddy Amerudien
\nsaid the company aimed to focus on information and communications
\nservices.<\/p>\n
He quoted a report from the Boston Consulting Group last year
\nthat Indonesia had a promising future in the telecommunications
\nsector, particularly in mobile and Internet services.<\/p>\n
Telkom will provide more innovative services like the existing
\nservices of Telkom-Phone(P)net, Telkom-Mobile(M)Net, Telkom-
\nView(V)Net, Telkom-Internet(I)Net and Telkom-Service(S)Net, he
\nadded. (icn)<\/p>",
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"sponsor": "Okusi Associates",
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