Callback operators defend their business

By I. Christianto

GENEVA (JP): Callback operators are defending their business as legal, profitable and prospective projects, saying that few countries oppose the services as government-regulated rates become less competitive.

Two United States-based callback operators, USA Global Link and International Telcom Ltd. (ITL), say the number of callback users has grown quickly all over the world in recent years.

"We are in the business of saving money," Michael T. Moore, managing director for product management of USA Global Link, told The Jakarta Post during TELECOM Interactive 1997 which ended here Sunday.

He said his company ran callback services by taking advantage of U.S. call rates which were cheaper than in many nations.

"We can control the cost," he said, adding that providing callback services was a multibillion dollar business.

ITL's marketing director, Eric S. Doescher, said callback was widely used by small and medium corporations as well as individuals.

ITL, which started callback services in 1992, runs the controversial business under Kallback brand.

Indonesian banned the provision and use of callback services in 1994.

The director general of post and telecommunications, Djakaria Purawidjaja, said in Jakarta last week that the government would get tougher on local firms operating as callback agents in Indonesia.

He said callback services were banned in many other nations also.

"We have submitted letters to the U.S. Federal Communications Commission (FCC) and Geneva-based International Telecommunications Union (ITU) concerning the controversial callback operations," he said.

He defined local firms which provide callback services operated by overseas provider as having "doubtful nationalism".

The government is keen to fight callback services in Indonesia to protect international calls operators PT Indosat and PT Satelindo -- the two companies which hold international telecommunications licenses until 2005.

Indosat and Satelindo suffered Rp 6.6 billion (US$2.2 million) in lost business between January and September this year because of callback services.

Ambivalent

Moore said that there are hundreds of callback operators, mostly based in the U.S.

He said that callback services had won backing from FCC.

"FCC is supporting callback services," he said, adding that users had grown significantly.

"Some 100 small and medium corporate are using our callback services."

Doescher told the Post that ITU had never certain with callback phenomenon. "ITU is ambivalent (in facing the controversial callback services)."

He admitted that there are about 25 nations in the world against callback services.

Callback services have been great for people looking for cheaper international calls. But most telecommunications operators have been puzzled as to how to survive, even though unofficial estimates say callback services have no more than 2 percent out of the world's telecommunications business.

Callback operators usually forward international calls (including data and data transmissions) from the "official" paths used by telecommunications operators to cheaper lanes which are mostly in the U.S.

The result is an international telecommunications service that is up to 80 percent cheaper than many countries' rates.

The service has become controversial because the nation from where a call is made from does not make any money.

Indosat

In a bid to compete with callback services, Indonesia adjusted some international call rates earlier this year.

But the rates are still more expensive than those offered by callback operators.

However, the rupiah's recent drop against the U.S. dollar means users will have to think twice before using callback services because they will be charged in dollars.

In another twist, Indosat has bought 20 percent of Global Link for US$20 million which will list on the capital market later this year.

"It's smart. It's better to join rather than beat us," Moore said.

This has become another controversy because of Indonesia's ban on callback services.

"Indosat's participation in Global Link is just in the multimedia business, not in the callback services" Djakaria said last week.

But Moore said over 50 percent of Global Link's revenue came from its 100,00 callback service customers.

He said his company's revenue rose more than 47 percent from $176 million in 1995 to $260 million last year.

Global Link serves several leading companies like IBM, Chase Manhattan Bank, Air France, Seiko and Grundig.

Global Link was set up five years ago and already operates in over 200 nations and territories.

It plans to offer voice over the Internet services next year, Moore said.

"We have to prepare the best quality as we still find delays, noise and echo," he said.

Headaches for telecommunications operators will probably continue as voice over the Internet will allow people to dial internationally while on the Internet which is connected using local telephone numbers.

ITL has launched its Faxaway, an e-mail-to-fax service, which enables people to send fax messages everywhere by sending the documents to one e-mail address. This would save people, particularly travelers, up to 98 percent of the cost of conventional telecopier services at luxury hotels.

ITL is a Seattle-based firm with 90,000 users in 225 countries.

The company recorded $82 million in revenue in 1996 and expects revenue to top $100 million this year.