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)