Competition in cell phone services becomes fiercer<\/p>\n
By Christiani Tumelap<\/p>\n
JAKARTA (JP): Competition in the domestic mobile telephone
\nservice business is expected to become more severe next year with
\nthe expected entrance of Indosat and Telkom to challenge the
\nexisting seven operators.<\/p>\n
The government is expected to award the new license for the
\nGSM-1800 format for Indosat and Telkom in August as part of its
\nplan to transform the two firms into strong, full network and
\nservice providers before it liberates the country's
\ntelecommunications sector in 2002 or 2003.<\/p>\n
Indosat said it would launch its new business from the most
\nlucrative market, Jakarta, where it plans to sign up at least
\n360,000 subscribers in the first year of operation alone.<\/p>\n
Telkom has not made a prediction, but it is obviously
\ntargeting Jakarta also as its first market base.<\/p>\n
The two telecommunications giants will have to struggle to
\ncompete with the seven existing operators to grab as many new
\ncustomers as possible from the one million new subscribers who
\nare predicted to sign up for mobile telephone service in 2001.<\/p>\n
The existing seven operators -- Telkomsel, Excelcomindo and
\nSatelindo, which run the Global System for Mobile Communications
\n(GSM) on the 1800 format; Telesera, Metrosel and Komselindo,
\nwhich run the advanced mobile phone system (AMPS); and Mobisel,
\nwhich runs the Nordic mobile telephones (NMT) system -- currently
\nserve about 2.6 million subscribers.<\/p>\n
Indosat recently said it was optimistic about the prospect of
\nits new business mainly because the mobile telephone market had
\nshowed a constant high growth of at least 50 percent per year.<\/p>\n
The number of mobile telephone subscribers has been growing
\ndespite the crisis, which was believed to ruin customers'
\npurchasing power. The number is expected to climb from 2.05
\nmillion in 1999 to 3.2 million by the end of this year and 4.5
\nmillion next year.<\/p>\n
However, Rudiantara, head of the policy division of the
\nIndonesian Cellular Telephone Association (ATSI), said new
\nplayers would not be able to beat existing operators, especially
\nthe three GSM operators, because they were well-established.<\/p>\n
\"The competition will certainly become very tough. But it is
\nimpossible for them to really compete against us in only one or
\ntwo years of operation as we already have a strong customer
\nbase,\" he said on Saturday.<\/p>\n
The three GSM operators control 96 percent of the country's
\ntotal mobile telephone market of about 2.6 million subscribers at
\npresent.<\/p>\n
They have also showed the highest growth compared to other
\noperators of AMPS and NMT.<\/p>\n
According to data from Telkom, Telkomsel's subscribers grew by
\n98 percent to reach 1.12 million by the end of March this year
\nfrom 566,167 in the same period last year, while Satelindo's grew
\nby 43 percent to 703,783 from 491,964 and Excelcomindo's soared
\nby 121.7 percent to 468,400 from 211,200.<\/p>\n
Metrosel recorded a positive growth of 58.9 percent, while
\nMobisel and Telesera recorded a lesser growth of 29.9 percent and
\n1.7 percent respectively. Komselindo, on the other hand, saw its
\nnumber of subscribers shrink by 18.6 percent.<\/p>\n
Telkomsel commercial director Hasnul Suhaimi also voiced
\noptimism, saying Telkomsel was undefeatable because it had
\nestablished a solid customer base, especially in all major cities
\naround the archipelago.<\/p>\n
\"I'm very optimistic. They may steal some of our customers,
\nbut I believe Telkomsel will retain dominant control over the
\nmarket with at least 33 percent by then,\" he said, claiming that
\nTelkomsel now controls 46.5 percent of the domestic GSM market.<\/p>\n
Hasnul acknowledged, however, that existing operators would
\nface a serious threat if the new players could provide a much
\nbetter service at a lower price.<\/p>\n
Apart from Indosat, Telkom and the seven existing operators,
\nIndonesia has another 13 companies which have secured government
\nlicenses to do business in this sector.<\/p>\n
Five companies, including PT Selnet Nasional Indonesia and PT
\nIndonesia Telephone Cellular National, in which Telkom has a
\nstake, were granted licenses for the Digital Cordless System DCS-
\n1800 and Personal Mobile Phone Service (PHS) in 1997.<\/p>\n
In November 1998, another nine companies, including Astratel
\nNusantara Consortium and PT Ariawest International, both of which
\nare Telkom's partners in the Joint Operation Scheme (KSO), were
\ngranted licenses to operate the DCS and PHS formats in six areas
\nof the country.<\/p>\n
But due to a lengthy impact of the economic crisis, hardly any
\nof the 13 companies have started network construction, let alone
\ncommencing operation.<\/p>",
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