Connecting more people in more liberal market

I. Christianto, Contributor, Jakarta

This special page is specially published in observance of the World Telecommunications Day which is worldwide celebrated on May 17 (today). Hopefully, this special report will give readers valuable information about the development of the country's telecommunication sector.

Indonesia's telecommunication sector has shown impressive growth during the past few years and this trend will continue in the coming years with the rapid increase in the demand either for the conventional fixed-line telephone services or mobile phones.

The high demand and the removal of the exclusive rights held by PT Telkom in domestic telephone services will undoubtedly make the competition even fiercer.

Dozens of small and large companies are now involved in the business.

With the removal of its monopoly, Telkom has to compete directly with Indosat which was previously allowed only to provide international telephone calls.

Besides Indosat, Telkom has also to compete with other operators such as PT Radio Telepon Indonesia (Ratelindo) and PT Batam Bintan Telekomunikasi (BBT) in the fixed line market.

Ratelindo and BBT, which were operating before Indosat received its permit, hold regional permits to operate in Jakarta and West Java, and Batam and Bintan respectively.

Indosat obtained the license to operate nationwide only last month. Indosat was licensed to operate its fixed network in August last year in Jakarta and Surabaya.

Having more than one operator for a huge country like Indonesia is a positive development. With such multiplayers, Indonesia -- with a population of more than 215 million but with a telephone penetration of only 3.5 percent -- will have a greater chance to have better telephone coverage.

With the introduction of the CDMA-based wireless local loop (WLL) operators will now have an easier task in increasing their coverage. Some of them plan to install more telephone lines using the latest technology/system, the CDMA2000 1X.

The CDMA2000 1X is an International Telecommunications Union (ITU) standard that supports both voice and data services over a standard Code Division Multiple Access (CDMA) channel. This technology provides up to twice the capacity of earlier CDMA systems, with peak data rates of up to 153 kbps, which could be further increased up to 307 kbps.

CDMA2000 1X, also known as CDMA Multi-Carrier (1xMC) or IS- 2000, is a third-generation CDMA version of the IMT-2000 standard family. The first phase of CDMA2000 1X supports an average of 144 Kbps packet data in a mobile environment. The second release of CDMA2000 1X, called 1xEV, supports data rates of up to 2 Mbps on a dedicated data carrier.

Indosat's director for network infrastructure, Wityasmoso Sih Handayanto, said that his company planned to install 450,000 lines in Jakarta and 250,000 lines in Surabaya in a three-year period with the new system.

Indosat appointed a consortium named Mega Asia in March, which comprises Bakrie Communications Company, Tomen Corporation, PT Asiabumi Piramida and PT Saranainsan Muda Selaras, to handle and finance the installation project.

Previously, with its fiber optic network, Indosat installed 8,000 lines in Jakarta and another 5,000 lines in Surabaya. The company has decided to focus on the CDMA-based wireless local loop (WLL)

"We're very optimistic with the development of the fixed wireless network and there will be good prospects for the future. Our target is to launch the network by August," he said.

Ratelindo reportedly plans to invest up to US$36 million to install up to 150,000 CDMA2000 1X lines in Jakarta and West Java and has appointed Nortel Networks to carry out the project.

However, the company, which received a supply from Hughes Network System for its maiden fixed wireless digital telephone system 10 years ago, refused to disclose the latest status of the project.

"We are still in the post restructuring ordeal. We will be ready to meet the media by, hopefully, mid this year," said Ratelindo's public relations executive Novita Nuzwar.

Telkom, in the meantime, has selected a number of vendors including Samsung, Ericsson and Motorola to deploy the CDMA 2000 1X networks in various cities including Surabaya, Balikpapan, Denpasar, Greater Jakarta and Sumatra.

Suryatin Setiawan, Telkom's director of network business, said the company planned to install one million lines this year, and expected to see the total phone lines in service reaching 8.8 million by the end of 2003.

"The growth in the fixed line service in Indonesia will remain slow. In the short term, new subscribers will enjoy the fixed wireless technology, while we will upgrade the copper technology to carry broadband data and Internet services. In the longer term, the fixed line network will be able to accommodate fully- integrated services," he said.

Telkom's current exchange capacity now reaches 9.25 million, with a total of 8.5 million installed lines and 7.8 million subscribers.

Out of the total subscribers, 71.7 percent are located in Java, 14.52 percent in Sumatra, 4.46 percent in Kalimantan and 9.27 percent in eastern Indonesia. Based on the economic classification, the subscribers comprise of households (80 percent), businesses (19.6 percent) and the remaining users are from the social services category.

According to Suryatin, Telkom currently faces a number of challenges in expanding its networks. The problems include the unresolved disputes with its joint-operation (KSO) contractors, the autonomy policy, rate structure and fragmented demands.

Suryatin and Wityasmoso said the development of telecommunications sector in Indonesia must be supported by solid regulations.

"The government should immediately issue regulations on some important matters such as those related to tariff rebalancing which splits the long-distance and local calls; interconnection charges; the clear implementation of the Universal Service Obligation (USO); the establishment of an independent regulatory body; and the frequency allocation for the 3G," Suryatin said.

According him, in the current business atmosphere where the monopoly no longer exists, each player in the telecommunication sector should be given a more conducive climate to carry out their business and at the same time to exercise fair competition. Players must be encouraged to complement each other and to deal with fair competition.

"This is the era to accelerate the telecommunications sector, therefore any regulations should be implemented clearly and transparently," he said.

The development in information technology and telecommunications business is apparently much faster than the revision of the regulations.

In such a multiplayer era, when regulations, particularly their implementation, are not strong, there are other potential problems threatening the country's telecommunications sector, which may include charges and installation fees, monthly subscription charges, the numbering scheme such as local phone numbers, domestic long-distance access code, international access code and the Internet telephony network (Voice over the Internet Protocol/VoIP) code.