Fri, 11 Jun 2004

Analysts sees lower int'l call rates

Tony Hotland, Jakarta

State telecommunications firm PT Telkom's new international call service may give rise to stiffer competition in the sector and lead to an increase in call rates, analysts have said.

"The entrance of a new player will automatically force the old player, PT Indosat, to review many aspects of its service, especially rates," head of Perbanas STIMIK management, information technology and computer school Eko Indrajit told The Jakarta Post on Wednesday.

Eko predicted that international call rates would fall as a result of competition and operators would likely impose flat rather than variable rates -- a pricing scheme already adopted by many countries.

"Under the flat rate system, you can call as many people in a foreign country as many times as you want, at a similar rate. This can happen since the main users of international calls are corporations and they use international connections a lot," said Eko.

On Monday, Telkom launched its new dial code, 007, for international connections via cable, in addition to the dial code 017, which was launched last year. The latter, VoIP (Voice over Internet Protocol), is connected via the Internet network. Voice delivered via cable is of better quality than that delivered via the Internet.

Telkom is offering 007 users discounts of up to 70 percent until January 2005 for specific markets and destinations.

For the past few decades, international call services were controlled by Indosat with its 001 and 008 dial codes, while Telkom monopolized regional and local call services. Last year, the government deregulated the telecoms sector, opening all call services to both firms.

Indonesian Infocom Society (Mastel) vice chairman Richard Kartawijaya was also convinced that international call rates would drop, adding that Indosat had reduced its rates in anticipation of the launching of Telkom's new service.

"Even before Telkom entered the cable link sector, Indosat offered discounted rates at certain times. I'm sure significant rate decreases will occur before year-end, but I can't say by how much," said Richard.

Indosat is offering discounts of 25 percent at certain times during weekdays and around the clock on Saturdays, Sundays and national holidays.

Richard predicted the competition would not only result in lower rates, but also much improved connection quality and a wider range of services.