Cellular operators vie for a niche
JAKARTA (JP): A cellular phone for everyone: This may be at the heart of the campaign for cellular operators in Indonesia, particularly in Jakarta, the country's most promising cellular phone market, within the next few years.
Yes, there will be more operators competing in the market place for a share of this wireless sphere.
By next year, the greater Jakarta area (including Jakarta, Bogor, Tangerang and Bekasi, also known as Jabotabek), will have at least eight mobile cellular phone operators. There will be the five existing operators, including three Global System for Mobile Communications (GSM 900) operators of Excelcomindo, Satelindo and Telkomsel, Komselindo and Mobisel. There is also PT ACeS which operates satellite-based cellular phone system Byru.
The government recently granted state-owned PT Indosat and PT Telkom the right to operate a Digital Cellular Service (DCS) 1800, or GSM 1800, nationwide. Both companies plan to launch the service in Jakarta next year.
State-owned telecommunications maker PT Inti is also allowed to operate GSM 1800 in the Jakarta area after the company had to cancel its project for the Personal Handy Phone (PHS, a cellular system originating from Japan) as it was not feasible and did not have a promising future.
In the meantime, the government has also licensed six new companies to run cellular phone services to operate the GSM 1800 regionally, beyond Jabotabek. They include PT Aria West International (to operate in West Java), PT Astratel Nusantara (Sumatra), PT Mitra Perdana (Central Java), PT Natrindo Global (East Java), PT Primarindo Sistel (Kalimantan) and PT Kodel Margahayu (eastern Indonesia).
The new regional operators will compete with Komselindo (West Java), PT Metrosel (Central and East Java) and PT Telesera (Bali).
The cellular phone industry has been developing well in Indonesia considering that the market is immature compared to other Asian nations such as Hong Kong and Singapore.
Data from the Asia Pacific Telecoms Analyst (June 2000) shows that penetration of fixed-line services in Indonesia has been growing slowly in a monopolistic environment, as real liberalization has yet to start even though a new regulation was implemented last September.
Meanwhile, penetration of cellular services is growing significantly with real competition, but the growth rate of 1.5 percent is much lower compared to Hong Kong, Singapore, Taiwan and South Korea which have surpassed 50 percent.
The overall number of cellular phone users in Indonesia surged by 75.6 percent to be 3.2 million users in the first nine months of this year when compared to the same period in 1999.
The figure is estimated to reach 3.4 million by the end of this year.
The cellular market is now controlled by GSM operators. Of the estimated figure, Telkomsel has some 1.7 million users, Satelindo over 1 million and Excelcomindo about 670,000.
GSM is the definitive worldwide standard for wireless communications. The technological development of the cellular system now approaches the mobile broadband multimedia (3G) level which will operate on a higher frequency (1.8 gigahertz). GSM 1800 is a must for Indonesia if the nation does not want to lag behind other nations in the cellular system.
The three new GSM 1800 operators will make competition in Jakarta much fiercer. Indosat and Telkom have allocated huge amounts for investment in the business.
Indosat's director for business development Budi Prasetyo said that the company invested $300 million to develop Indosat Multi Media Mobile (IM3) which will include the GSM 1800.
He said that the service, supplied by Ericsson, would be launched in mid-2001.
IM3, which will offer GPRS (General Package Radio Service), will have 470 Base Transceiver Stations (BTS) with a capacity of 420,000 service lines in nine locations of Bandung, Batam, Denpasar, Jakarta, Medan, Semarang, Surakarta, Surabaya and Yogyakarta.
Telkom said it allocated an investment of Rp 90.5 billion to build the cellular service. They are hopeful that the operation will be active by the last quarter of 2001 in Jakarta, Bandung and Bandarlampung and to grab 495,000 users.
In all probability there will be stiff competition between Indosat and Telkom.
The cellular service will be one of the four major lines of businesses run by Indosat after the government permitted the company to become a full network service provider.
Budi said Indosat now possessed the "4-in-1" strategy, meaning that the company would run services of mobile and wireless; Internet and multimedia; backbone; and fixed line.
He said Indosat plans to develop at least 1.6 million cellular service units and operate 3G by 2005.
The Internet service is estimated to operate in 305 cities while services of cable TV, interactive TV and on-demand service is estimated to operate in five cities by 2005.
Indosat also plans to build a backbone covering Sumatra, Java- Bali and Kalimantan-Sulawesi by 2005 and install at least 1.9 million fixed lines.
Budi said that Indosat would need some Rp 15 trillion to implement the "4-in-1" strategy. The funds will be generated by budget allocation, subsidiary sales, partnership, bonds issuance or with commercial loans.
Telkom's vice president for communications Doddy Amerudien said the company aimed to focus on information and communications services.
He quoted a report from the Boston Consulting Group last year that Indonesia had a promising future in the telecommunications sector, particularly in mobile and Internet services.
Telkom will provide more innovative services like the existing services of Telkom-Phone(P)net, Telkom-Mobile(M)Net, Telkom- View(V)Net, Telkom-Internet(I)Net and Telkom-Service(S)Net, he added. (icn)