Cellular operators lack funds

Cellular operators lack funds

JAKARTA (JP): Delay in response time, interrupted connections
and blank spot areas in cellular telephone services are likely to
occur more frequently as most operators have significantly cut
spending on quality improvement.

Sources said that some cellular operators have even moved
important transmission components from one place to another
because they have not been able to buy new ones.

The secretary-general of the Indonesian Cellular Telephone
Association (APTI), YW Junardy, said several operators had to
sacrifice their services in less productive areas in a bid to
maintain their operations in more productive locations.

"They took components or infrastructure from less productive
areas and used them to replace defective equipment in productive
areas," he said over the weekend.

The relocations have degraded coverage and services in the
less productive areas, he said.

Junardy refused to reveal the areas where improper relocation
of facilities had taken place.

But a reliable source in the industry, who asked for
anonymity, said an Advanced Mobile Phone System (AMPS) operator
had cut down its coverage in Central Sulawesi, while a Global
System for Mobile Communications (GSM) was forced to do the same
with its network operation in North Sumatra.

There are currently seven cellular phone network providers in
the country, serving three systems: the Advanced Mobile Phone
System (AMPS), the Global System for Mobile Communications (GSM)
and the Nordic Mobile Telephone (NMT) system. They serve around
900,000 active cellular phone users.

Rudiantara, director for customer service and corporate
affairs of GSM operator Excelcomindo Pratama, admitted that his
company was forced to relocate some equipment, and did not
provide replacement equipment for the area it was taken from.

He said the company had taken a Base Transceiver Station (BTS)
from a remote area in Central Java to replace a BTS in Malang,
East Java, which was destroyed by lightning earlier this month.

"We were forced to do so because there is no way for us to buy
new equipment," he said.

Junardy said the cellular phone industry is now facing
financial hardships due to the decline in cellular usage to an
average of Rp 190,000 per user per month in 1998, from up to Rp
250,000 per user per month in 1997.

The average subscriber usage would continue decreasing to
below Rp 160,000 per month this year, he said.

Junardy said the industry was also badly affected by the
depreciation of the rupiah against the U.S. dollar in late 1997,
because about 20 percent of operational maintenance costs and 95
percent of investment is in dollars, he said.

"Not to mention the debts. The industry's principal loan now
stands between US$500 million and $600 million," he said.

The rupiah's fall, from about Rp 2,500 to the dollar before
July 1997 to about Rp 8,500 now, has more than tripled
expenditure on imports and overseas loan repayments.

Rudiantara, head of APTI's industry policy division, said GSM
operators now depended for their survival on the sale of prepaid
subscriber identity module (SIM) cards.

Prepaid card users represent at least 50 percent of the total
750,000 GSM subscribers, he said.

"The revenue from prepaid cards is not as much as from post-
paid ones. But it keeps us alive," he said, adding that prepaid
card users were projected to make up more than 70 percent of
total GSM subscribers by the end of 1999.

AMPS operators suffer more than GSM operators because they
don't have an alternative source of income such as the prepaid
card service, he said.

He said all AMPS and GSM operators here would enter an
agreement on collective infrastructure utilization in May, hoping
to be able to cut their maintenance and operational costs.

Junardy said another solution to the operators' problems was
to raise call tariffs.

The average tariff for cellular phones worldwide stands at
about $0.15 per minute, while Indonesia charges only about $0.05
per minute, he said.

The government announced in January a 50 percent increase in
the call rate to Rp 487.5 per minute. But the implementation of
the new tariff first needs approval from the House of
Representatives.

The chairman of the House of Representatives' Commission IV
for Telecommunication, Tourism and Transportation, Burhanuddin
Napitupulu, said on Friday he supported the increase.

He said cellular phone users, who were mostly from middle to
high income levels, would accept the reasons for the increase
demand.

He said it would be better to increase the tariff after the
June election period. (cst)