A year isn't much in the life of a nation. But in the marketplace, it can be a lifetime. In the telecommunications market in Indonesia much has happened in the last 12 months -- and will continue to happen -- to the advantage of the consumer.
In the borderless world of the electronic age, it will help increase the competitive capability of the workforce among its Asian neighbors. Locally, the industry will continue to have a positive impact on growing numbers of people keeping in touch, at work, at play and at home.
Once again, it is competition that is driving these positive trends forward. Overall, the desire for more and more new entrants to the join the cellular club continues to grow.
From 23 million intenders a year ago, there are currently more than 35 million people planning to buy their first handset, brand-new or second-hand.
In effect that would double the number of regular users of cellular services. Of these, 23 million are planning to choose GSM, another 10 million say they will opt for CDMA and 2 million haven't made up their minds yet.
It is common knowledge the number of SIM cards sold is indeed several times the number of people actually using them. This is because of two reasons, primarily.
Firstly, there are the 'flickers' who buy the inexpensive starter pack to make both cheap local and long-distance calls, then give the SIM card the flick of the finger.
In the last four weeks alone, some 3 million people will have thrown at least one SIM card away.
Secondly, there are the 'flippers' who have several SIM cards at any point in time, flipping them around for the free in-network calls to fellow subscribers as well as the host of other 'freebies' increasingly offered by networks each month. The overall demand for new SIM cards both GSM and CDMA, has dipped and then flattened out at 38 million new intenders. This is perhaps due to a decline in the number of 'flippers' having hit saturation levels.
While nine in 10 people have a regular number they haven't ever changed, both 'flickers' and 'flippers' have an impact on the fortunes of the cellular networks. They drive up the number of 'new subscribers' artificially and exploit the loyalty programs in ways they were never intended.
While new networks entering the market will continue to drive down the cost of entry as well as the per-second call rates, it is obvious the larger numbers of tomorrow's new entrants are less well-off than the early, more affluent converts.
This will continue to drive profitability per customer downwards, or ARPU, in industry parlance.
Not surprisingly, 45 percent of these prospective new entrants hail from rural Indonesia.
New network launches and increasingly competitive pricing are also having their impact on the technologies on offer.
The CDMA advantage of lower costs and quality coverage within limited geographies is waning, as GSM prices continue to go down each month.
The perceived twin benefit of lower price and coverage quality has lost some of its charm among many new intenders, as witnessed by the dip from some 14 million new intenders for CDMA dipping to 10 million in the last quarter.
The growth rate in tandem users of both technologies will also slow down, for the same reason.
Brands therefore will have to find unique discriminators to keep their customers glued to their networks.
Market leaders have a historical advantage compounded by the inconvenience faced by subscribers changing their phone numbers if they wish to switch today.
That advantage disappears as soon as mobile number portability becomes a reality in any country, when lawmakers flatten the historical advantage to increase consumer freedom by allowing them to keep their numbers when they switch networks.
There will come a time when price and coverage can no longer be weapons of choice for competing networks. Though that day maybe far away, it makes good sense to start preparing for that eventuality.
There are any number of directions to choose from. For example, the interest in an internet connection at home is on the increase, with a significant hike in the last quarter to more than 1.7 million intenders.
That is good news for a country that has been limited by the ability of its people to access the window to the world at large.
It is also good news for networks aiming to retain their high-end customers by offering them Blackberries and other email-empowered handsets via bundled long-term contracts.
Or via sponsorships of sports, cultural groups and charities that bond users with worthy causes.
These observations are based on Roy Morgan Single Source, the country's largest syndicated survey with more than 27,000 Indonesian respondents annually, projected to reflect 90 percent of the population over the age of 14 years.
That is a universe of 140 million people. The results are updated every 90 days and used by more marketers, media and creative agencies than any other syndicated survey.
The writer can be contacted at Debnath.Guharoy@roymorgan.com
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