Cellular industry picking up again
Cellular industry picking up again
After being dragged down by the economic crisis, the cellular phone industry in Indonesia is showing signs of a recovery and the number of subscribers is once again on the up.
The total number of cellular phone users in the country is now 1,065,820. Subscribers have a choice of three different systems run by seven operators.
Cellular phone subscriptions have grown sharply in Indonesia in recent years. Data from the state telecommunications company PT Telkom shows that by the end of 1996, 562,514 people used cellular phones. By the end of 1997, this figure had almost doubled to 1,067,782.
However, the economic crisis forced many people to abandon their subscriptions and in the first quarter of 1998, the number of users was running at 815,577. The drop did not take long to bottom out, and by the third quarter of last year, subscriptions were up to 942,602.
PT Telkom data shows that 88 percent of mobile phone users subscribe to the Global System for Mobile Communications (GSM). The largest company offering this service is Telkomsel, which serves 424,525 customers. It is followed by Satelindo, which has 346,926 subscribers and Excelcomindo, which has 169,857. The remaining users are served by Advanced Mobile Phone System (AMPS) technology offered by Komselindo, who have 77,030 subscribers, Metrosel, who have 29,060 subscribers and Telesera, who have 5,549 subscribers. A further 11,873 users are served by the Nordic Mobile Telephone (NMT) system offered by Mobisel.
Telkomsel director Hasnul Suhaimi said the telecommunications industry was one of the few sectors of the economy tipped to make a quick recovery from the crisis.
"Sales of the latest handsets have been very encouraging. That is only a simple indicator, but another reason for the recovery is the introduction of prepaid GSM cards." he said, pointing out that users favored the new card because it allowed them to keep close control of their bills.
Cellular phone sales slumped after the crisis first broke and people readjusted to changes in their purchasing power.
"Consumers sought out second-hand phones because the retail prices of new cellular phones more than doubled from pre-crisis levels. However, when the rupiah stabilized, cellular phones fell in price and people came out in search of the latest models. That's the way Indonesians are, they always want the latest models," Hasnul said.
Rudiantara from Excelcomindo warned that although the number of cellular phone users had increased, network technology used here was fast becoming outdated.
"Since the introduction of prepaid GSM cards, the number of users has increased steadily. Out of all GSM users, 55 percent are post-paid users and 45 percent prepaid users. Next year, post-paid users will probably fall to around 35 percent," he said.
Despite the encouraging signs, he warned that the economic crisis would continue to hamper growth in the cellular phone industry here.
"While other countries are preparing third generation cellular phone technology, operators in Indonesia are struggling to stay afloat," he said.
Komselindo, an AMPS operator which plans to upgrade its technology to Code Division Multiple Access (CDMA), will face much resistance to this proposed change because existing AMPS users will have to change their handsets.
The company may be ready to take on the new technology, but it is completely unable to subsidize the change of handsets and users themselves will be reluctant or unable to put themselves out of pocket for an untried system.
In the spirit of combating crony capitalism, the government has canceled the licenses of three cellular providers: PT Indocomm, which offers CDMA technology, PT Selnas, which offers the Digital Cordless System (DCS-1800), and PT Indophone (DCS- 1800).
In addition to the canceled licenses, nine companies recently awarded licenses to operate DCS-1800 and Personal Handy-Phone Services (PHS) are likely to find it hard to start operating due to weak demand.
So, the dream of partaking of third generation cellular phone technology in Indonesia is still a long way off.
Rudi predicted that demand for third generation technology would remain low for the foreseeable future.
"The third generation is designed for multimedia services and we must stick to the main question: how big is the market in Indonesia? There has been no significant growth in the number of data application users or Internet and mobile phone subscribers."
Data compiled by the International Telecommunications Union (ITU) in 1997 showed that Indonesia had the lowest level of multimedia access in Southeast Asia. According to the union's data, Indonesia's telephone main line density in 1996 was 2:1, the density of television sets in 1995 was 18:3 in 1995 and in 1996, the density of Internet hosts was 0:005.