~Consumers still left hanging in telecom development

Wed, 23 Apr 2003

It was a long time coming, but the people of Senggigi in Lombok, West Nusa Tenggara, are now able to dash off an e-mail or get in a bit of cyber surfing at one of the several warnet (kiosks offering Internet-connected computers) operating in the beach resort area. Some of the kiosks use Internet access provided by state- owned telecommunications company PT Telkom, which has partly built a nationwide core Internet Protocol (IP) network in major cities as the foundation for the company's future Internet, data and video services. It's a similar story for inhabitants of the district of Minahasa in North Sulawesi, who have been able to use the Internet since PT Pasifik Satelit Nusantara (PSN) launched its network there last year. The service, dubbed PASTI fixed telephony equipment and services, is based on the Asia Cellular Satellite (AceS) network of the Garuda I satellite. The private PSN intends to end the Internet isolation of many of the country's districts. Satellite networks are finely suited to countries such as Indonesia where telephone networks are underdeveloped. The residents of Senggigi and Minahasa are the lucky ones, as many people remain IT illiterate, mainly due to poor telecommunications networks in their areas. Even in the capital city, people cannot take telecommunications services for granted. They cannot, for example, retain their telephone number if they change office or residential address, even in such prestigious, fast-growing areas as Kelapa Gading in the northern part of the metropolis. But Telkom is implementing a new infrastructure system, enabling the transfer of use of a telephone cable from one place to another. The company currently uses the fiber optic system and HFC (hybrid fiber-coax) infrastructure, while gradually phasing out the traditional analog copper lines. Getting a new line from Telkom can prove a long and frustrating wait, including in the Golden Triangle, promoted as Jakarta's commercial hub. There is PT Ratelindo, which operates fixed wireless telecommunications for areas not covered by Telkom. The facility is still lacking although the company plans to improve its services to provide Internet access via its network. While the development of IT, communications and telecommunications as well as other information-related areas in Indonesia has mostly kept up to speed with global gains, IT-savvy Indonesians often feel they are more cursed than cared for. As service industry providers, telecommunications operators are expected to provide an entire range of services demanded by customers, in line with the most up-to-date IT developments. Not meeting the demands leaves a lasting impression. This is notwithstanding the fact that the telecommunications industry in the country has experienced significant growth in recent years with the development of various infrastructure and facilities, including networks, systems, equipment, gadgets, value-added services and related businesses and tools. In basic telephone facility development, the government has allowed the participation of private firms in the establishment and management of telephone-lines in some areas. Though almost all of the business partnerships did not reach completion, it was a breakthrough as many other countries in Asia still keep their basic telecommunications business closed to private and foreign participation. In the cellular mobile telephone business, Indonesia currently has dozens of operators running three different systems. Some of the cellular mobile telecommunications operators are partly owned by foreign firms. Subscribers of the Global System for Mobile Communications (GSM), the most popular mobile telephone system in the world, have also increased rapidly. Indonesia has proven to be the fastest growing cellular market in the Asia Pacific, with its 2002 market share exceeding 25 percent. The growth is projected to be twice as high this year, with a market share exceeding 40 percent. The overall number of users of GSM, launched in Indonesia in 1993, stands now at 12 million, with that figure expected to exceed 14 million by the end of this year. Total users will most likely remain on the increase in the next few years, especially outside Java. At present some 40 percent of cellular phone users are from the greater Jakarta area population. Investment for network expansions and service improvements to meet growing demand by the country's cellular phone operators are projected to exceed US$1 billion this year. The main companies -- PT Telkomsel (operating kartuHALO and simPATI), PT Excelcomindo (ProXL), PT Satelindo (Mentari, Mentari+ and Matrix) and PT Indosat MultiMedia Mobile (IM3 Smart and Bright) -- are competing for more users from the lucrative market, which is prodded by the poor fixed-line telephone services. There are also a number of other cellular providers operating regionally. Market penetration rates for both fixed telephone line and cellular phones remain relatively low for the archipelago's population of 215 million people. Fixed line density is about 3.8 phone lines per 100 people, while cellular density is approximately 1.67 subscribers per 100 people. Telkom, which was set up during the Dutch colonial era, has so far installed some 7.8 million lines nationwide. The company plans to install some 1.6 million lines in the period 2002-2006, much lower than the initial plan of 2.6 million lines. The company lost its monopoly on domestic telecommunications services after the liberalization of the telecommunications sector last year, when the government allowed it and Indosat to enter the international services and domestic network respectively. Indosat, previously focused on international telecommunications services, is now 41.9 percent owned by Singapore telecommunications giant Singapore Technologies Telemedia. To penetrate Telkom's stronghold, Indosat is using new technology to build some 700,000 fixed wireless access networks, initially in Jakarta and Surabaya. Faster and cheaper to build than fixed lines, these networks will be laid through a creative revenue-sharing program with a consortium of partners, with Indosat planning to install 1.4 million lines by 2010. Telkom, after gaining its international telecommunications license, will hopefully improve its services and boost its image among consumers, with competition expected to push firms to reach higher standards. Indonesia is the largest satellite TV market in Southeast Asia, with over 25 million potential customers. The satellite system is closely tied to broadcasting, telecommunications and IT, with companies seizing the opportunity to provide multimedia services. Entrenched telephone companies are preparing to roll out their own broadband services by offering technology called DSL (digital subscriber line). Its strength is simplicity as DSL uses existing copper phone lines, and all the consumer needs is to swap the analog modem for a digital one. The technology allows users to use the phone at the same time they surf the Internet. Some companies, including Telkom and Indosat, are offering multimedia or last mile broadband solutions to deliver pay TV, IP telephony and high speed Internet services, including Voice Over Internet Protocol (VOIP), to homes and businesses in some areas in Indonesia. The last mile starts at the output of the fiber-optic node, and ends at the side of the house. The government established Nusantara21, a project intended to develop the IT community in Indonesia, in 1997. It was set to cover many aspects, including last mile development, fiber optics and other IT-based telephony networks, but had to be rescheduled due to the economic and financial turmoil of the past six years. At present, however, some firms are running their business in line with last mile technology. They include PT Broadband Multimedia, with its Kabelvision cable TV, which operates mostly in Jakarta, and partly in Surabaya, Bali and several other cities. The company, which also offers fast Internet link, uses a fiber optic network and will soon operate in Bandung, Semarang, Medan as well as other cities in Sumatra and Kalimantan. There is also PT Matahari Lintas Cakrawala, providing Indovision cable TV via the Cakrawarta satellite. Telkom has prepared its own broadband services by offering DSL, and the company's subsidiary, PT Indonusa Telemedia, has multimedia services using the Telkomvision brand. The latter has the license to deploy Telkom's fiber infrastructure for broadband services and to explore future opportunities in digital cable television services and telephony. Telkomvision's coverage area is still limited in Jakarta, Medan, Bandung, Surabaya and Denpasar. Indonusa utilizes Telkom's fiber optic and HFC infrastructure. To serve collective subscribers like hotels, apartments or housing/residential complexes that cannot be reached by the HFC network, Indonusa provides SMATV services. Another cable TV operator venturing into high-speed Internet access through modified networks and end-user cable modems is Indosat's subsidiary PT Indosat Mega Media (IM2). It utilizes part of Indosat's infrastructure, such as fiber optic and microwave networks. PSN also runs Byru, a mobile handheld digital mobile telecommunications system, based on ACeS satellite and providing both voice and data services, and plans to operate a satellite- based multimedia digital telecommunications system, supporting two-way voice and data services, Internet access, fax and direct to home television services. Some companies are already planning last-mile or multimedia broadband solutions to deliver cable TV, IP telephony and high-speed Internet services to homes and businesses in parts of the country. State-owned electricity company PT PLN has set up PT Indonesia Comnets Plus to prepare for prospective business by using Powerline Communications (PLC) in an expected collaboration with Telkom and Indosat. Based on data from the Ministry of Communications, other companies operating multimedia/last mile technologies include PT Multimedia Citra Graha, PT Reasiskom Widya, PT Tanjung Bangun Semesta, PT Trans Asia Media, PT Magnus Global Telekom and PT Prima Media Interaktif. Aside from the success stories, there are also those companies that have fallen by the wayside in the telecommunications sector, with rapid IT developments rendering their services out of date or unpopular, such as the cordless fixed telephone service provider known as CT2, beeper and pager operators, analog mobile phone companies and radio trunking operators. There are also the general but no less important problems, such as lack of a legal framework governing the sector and poor consumer education and protection. The advent of autonomy has created its own legal uncertainty, with each autonomous region now free to make its own regulations. With the disparity in services creating divisions between the IT haves and have nots, it is difficult to predict what technological devices will come to prominence in the future. For the time being, those consumers fortunate enough to be part of the cyber highway are likely to find themselves in for a bumpy ride in the quest for superior service.

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