Boon year for telecommunications

Boon year for telecommunications

By I. Christianto

JAKARTA (JP): The country's telecommunications industry has
shown significant growth in 1994 with the development of various
facilities, including networks and satellites.

In telephone facility development, for instance, the
government has invited the participation of private firms in
telephone line establishment.

During the current Five Year Development Plan (Repelita VI)
period, the government has targeted five million new telephone
lines, of which three million lines will be installed by the
state-owned domestic telecommunications company, PT
Telekomunikasi Indonesia (Telkom), while the other two million
lines will be offered to private companies.

A total of 12 consortia, comprising of both foreign and
domestic companies and cooperatives, have been selected by the
government to install the two million lines, which will be done
in various parts of the country other than Jakarta and East Java.

After the abolition of monopoly in telephone line
establishment under Telecommunications Law No. 3/1989, it will be
the first time in the country that consortia of private firms are
invited to construct basic telecommunications facilities.
Previously, Telkom just offered a join operation scheme and
profit sharing cooperation.

Questions, however, have been raised by various parties,
asking about the openness of the government in conducting the
pre-qualification system in selecting the 12 consortia.

The parties said that the government actually chose 15
consortia in September to take part in the tenders for the
installation of two million telephone lines but then dropped
three of them for unrevealed reasons.

Secretary General of Tourism, Post and Telecommunications
Jonathan Parapak, who chaired the selection team, has been
unwilling to explain such an issue, saying that reporters should
not have been involved in their tricks.

Mobile phones

In a cellular mobile telephone project, Telkom has developed a
Global System for Mobile Communications (GSM) cellular
telecommunications system on Batam Island of Riau, which was
inaugurated by State Minister of Research and Technology B.J.
Habibie in early September.

Habibie said the rapid development of digital cellular
telecommunications in Indonesia is likely to edge out the
increasingly out-dated analog system.

The quality of GSM, one of the main leaders in digital
cellular mobile telephone systems in the world, is better than
the analog system and the European digital system and therefore
will be applied nationally, Habibie said.

Such a statement, however, has not caused a rush for the
purchase of GSM telephones. Telkom has so far sold only some
40,000 lines in Riau, while PT Satelit Palapa Indonesia
(Satelindo), a private join venture between Telkom, Indosat and
Bimantara Group, which also operates a GSM system in Jakarta,
even failed to achieve its own target of selling 30,000 lines by
the end of this year.

Minister of Tourism, Post and Telecommunications Joop Ave, in
the meantime, has announced the establishment of a new joint
telecommunication venture which will operate GSM nationally in
the next few years. The operator will be jointly controlled by
Telkom and the state's international telephone operator PT
Indosat, which has successfully sold its shares both on the
domestic and international stock exchanges.

On the other hand, existing analog cellular mobile
telecommunications operators said that both the analog and
digital systems will be complementary to subscribers, meaning
that analog system businesses are secure in Indonesia.

There are currently three analog modes operating in Indonesia,
including the advanced mobile phone system (AMPS-800) run by PT
Elektrindo Nusantara in Jakarta, West Java and North Sumatra; by
PT Centralindo Pancasakti in Central and East Java; and by PT
Telekomindo Prima Bhakti in Bali, South Sulawesi and Kalimantan.
PT Rajasa Hasanah Perkasa runs Nordic mobile telephones (NMT-450)
in Jakarta and Bandung of West Java, while the other mode is
Telkom's total access communications system, whose utilization is
decreasing.

Joop also said that subscribers still have to pay a big amount
of money to get either analog or GSM telephone lines, whose
prices are set in Jakarta at a minimum of Rp 4 million each, due
to a number of government levies.

Satellite

Indonesia will also have the Asian Mobile Satellite System,
another sophisticated mobile telecommunications project using
four satellites called Garuda, to be prepared by PT Pasifik
Satelit Nusantara (PSN). The company has finalized the
feasibility study for the system, which will make Indonesia the
world's second user of a mobile geo-stationary satellite
telecommunication system after the United States.

The feasibility study of the US$900 million project has been
completed by PSN, Hughes Communications Inc. of the United States
and two Singaporean firms.

Satellites apparently play a major role in the development of
the telecommunications industry, which will in turn accelerate
the growth of the country's economy and improve the well-being of
the population.

Satelindo, which manages the country's Palapa-C satellites,
will launch Palapa-C 1 in late 1995. A total of 21 firms from
nine countries have already reserved the satellite's 34
transponders.

Indosat has also agreed to participate in an advanced
satellite-base personal mobile communications system arranged by
the International Maritime Satellite Organization (Inmarsat).

The organization is a leading global mobile satellite
communications operator, owned by 76 signatories --
telecommunications firms -- all over the world. Indosat, becoming
a member in 1986, controls a 0.26 stake in Inmarsat, which is
based in London. The long-term $2.6 billion mobile satellite
project will use 12 satellites in the intermediate circular orbit
system for its space segment.

Services

The government said that telecommunication services will be
improved in 1995 as charges for line installation will be
lowered.

In a hearing at the House of Representatives, Parapak said
recently that the government will adjust fees for telephone line
installations and long distance calls.

Minister Joop has also warned Telkom to improve its marketing
strategy and service or lose out as the competition gets tougher.

According to Joop, only 2.5 million out of Telkom's 3.7
million telephone lines will have been sold by the end of this
year.

Joop also complained that the fiber optic telecommunications
system linking Jakarta and Surabaya in East Java is poorly
utilized. Out of the 11,940 channels provided, only 5,700, or 47
percent, have been utilized.

In the meantime, Indosat also faces tight competition with
Satelindo in international calls as the latter began offering
international telephone services three months ago.

Several star-rated hotels in Jakarta provide only Satelindo's
international dialing code of 008, instead of the international
direct dialing codes of 001 and 0010 of Indosat.

Indosat, which does not operate a satellite, will loose the
competition if such competition continues nationally.

Indosat has filed a special chapter in the country's history
by becoming the first successful state-owned firm offering shares
both in domestic and international stock exchanges. The
government will use the $799 million in funds raised from the
recent sales of Indosat's shares through the New York Stock
Exchange to speed up the repayment of its high-interest loans
from the World Bank and the Asian Development Bank. The company
raised around Rp 650 billion from the sales of another 10 percent
of its shares on the local capital market.

Telkom, meanwhile, has already been chosen by the government
as one of the next state-owned firms which will offer shares
internationally.