XL's prepares cell phone changes<\/p>\n
By Taufik<\/p>\n
Up to November 1999, Indonesia has still not fully recovered
\nfrom the economic crisis. Nonetheless, many are seeing a ray of
\nlight at the end of the tunnel. With sociopolitical advancements,
\nthis has encouraged optimism on Indonesia's economic future. This
\nis why many commitments for mid-term to long-term investments are
\nbeing made, either by local or foreign investors.<\/p>\n
On the other hand, there are companies which are not only
\ncommitting to invest but have invested, although not in a very
\nlarge sense. This is what Indonesian cellular telecommunications
\ncompanies are doing, since they have gone through a bumpy path.<\/p>\n
After a drastic decrease in 1998, cellular telecommunications
\ncompanies experienced a large rise in subscribers\/users from mid-
\n1999. This was due to high demands for prepaid cards, approaching
\nnetwork capacity limits of Indonesian cellular providers.<\/p>\n
In a normal situation, this would be very pleasing. With the
\nmarket expanding even more rapidly than expected, companies then
\nhad to respond by expanding their networks. Instead, the rise of
\ncell phone subscribers has created problems for cellular
\nproviders in Indonesia because it happened during the crisis.<\/p>\n
This is because local companies do not yet control the
\ntelecommunications infrastructure. In order to expand networks,
\ncellular providers must purchase from abroad. This is obviously
\ndifficult in the midst of a weak currency and unstable
\nsociopolitical conditions. Meantime, telecom providers still have
\nlarge debts in foreign currency. Thus, it is understandable that
\nIndonesia's cellular providers opt not to respond immediately to
\nthe rise of subscribers in 1999.<\/p>\n
With improving sociopolitical conditions and the risk of
\ninvesting in Indonesia decreasing, a wait and see attitude is not
\nsuitable. Even though Indonesia's currency is not yet strong, a
\nnumber of Indonesian companies have begun to invest. Although it
\nis not yet significantly large, it is being done selectively. An
\nexample is the expansion of network capacity by Excelcomindo
\nPratama (XL). As the third GSM provider in Indonesia, it has not
\nonly chosen locations that are high in traffic, but also where
\nthe subscribers are willing to pay more. In other places,
\nalthough high in traffic, GSM providers like XL choose to improve
\nthe managing of their network capacity.<\/p>\n
Another option is to increase high quality subscribers of cell
\nphones. This is quite acceptable since the rapid increase of
\nIndonesia's cell phone users is actually triggered by the usage
\nof prepaid GSM cards. The problem is, prepaid GSM users need more
\ncostly telecom infrastructure preparations than postpaid
\nsubscribers, yet most of the prepaid subscribers are light users.
\nWhat complicates it more is that GSM providers are unable to take
\nadvantage of the rise of prepaid card demands, due to the selling
\nsystem of these prepaid cards.<\/p>\n
That is why cellular providers are halting sales of prepaid
\nGSM cards. Meanwhile, they are trying to promote subscribers of
\npostpaid cards by giving several incentives. Nevertheless, up
\nuntil now, these efforts do not seem to have been effective; even
\nthough prepaid card starter kits have become expensive, due to
\nthe lack of supply, demand is still high.<\/p>\n
Why is this happening? Because even though the rate per second
\nof prepaid GSM cards is actually higher than postpaid cards, plus
\nthe continuing price increase of starter kits, the demand is
\nstill high, since there is already a strong notion that prepaid
\ncards have high value. Furthermore, Indonesian cell phone users
\nare mostly light user customers. The economic crisis has driven
\nmore people to become light users. Frankly, the increase in
\nsubscribers was not followed by an increase of customer quality.<\/p>\n
This is not good news for cellular providers. The high
\ninfluence of rapid technology development has effected the
\ntelecommunication business' short life cycle. That is why the
\ntelecom business needs a strong financial structure. The
\nimportant thing is to maintain a good cash flow, which may be
\nreached if cell phone users comprise more of heavy users.<\/p>\n
It has to be acknowledged that although several incentives are
\ngiven, it is difficult to drive cell phone subscribers to become
\nheavy users. Especially when most people strongly believe that
\nIndonesia's economical situation is still dim.<\/p>\n
The betterment of Indonesia's economy is why optimism is
\nemerging among cellular providers in Indonesia, not only
\ninvesting to improve their network capacity, but also to promote
\npostpaid GSM users and also increase heavy user customers.<\/p>\n
Pushing for more heavy user customers, besides supporting the
\nfinancial structure of the cell phone provider, can also be done
\nby changing the way cell phones are used. As what has happened to
\nfixed-line telephones, the usage pattern for cell phones will
\nalso shift in the future. If now most cell phones are used to
\nreceive calls and contact others, in the future they will be used
\nfor data communications or faxing. The steps toward this shift
\ncan already be seen. Among them is the availability of cell
\nphones that can be utilized for Internet browsing or for e-mail.
\nHowever, users of this kind of cell phone are still very limited.<\/p>\n
In other words, if the number of heavy users does not improve
\nsoon, the transformation of cell phone usage will be slow. This
\nwill probably not affect cellular providers too much, since they
\ncan feel comfortable with their investment in expanding network
\ncapacity. But for subscribers and cell phone businesses this is
\ndefinitely a loss. In addition, it seems, cellular providers like
\nXL prefer to have the transformation of cell phone users to
\nproceed more quickly. This can be seen from its steps to continue
\nenlarging its network capacity and improving the number of heavy
\nuser customers.<\/p>",
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