Do we really need rates hike?

By Zatni Arbi

JAKARTA (JP): It was not long ago that we were complaining of how difficult, and costly, it was to get a new phone line in our office or home.

We were at the mercy of the only public telephone service provider that we had, who constantly told us that it cost them thousands of dollars to add just a single phone line to the existing network.

That was when our telecommunications industry was under a monopolistic structure, and government policies were strongly geared toward protecting that monopoly.

Ironically, at that time, which was about 10 years ago, a lot had been done in other countries to dismantle the state monopolies of the telecommunications sector.

Highly positive results were demonstrated in countries such as New Zealand, Great Britain and others, where competition and privatization were introduced.

Yet a lack of true commitment to our national interests seemed to keep our telecommunications industry moving at a snail's pace.

As a result, we are still among the countries with the lowest telephone density in Southeast Asia.

According to data collected by the International Telecommunications Union, the number of fixed phone lines per 100 inhabitants here is 2.70, and that is just above Cambodia at 0.25, Myanmar at 0.55, Lao PDR at 0.65 and Vietnam at 2.58.

Fortunately, no one can hold us back from the information revolution.

Slowly but surely, the revolution has started to make changes to our telecommunications landscape.

New technological breakthroughs have brought us new alternatives to wired telephone services. In addition, competition among the operators and vendors have made the services, as well as the hardware that we need to utilize them, increasingly affordable.

At the same time, globalization has also demanded that services that were available elsewhere should also be made available here.

The cellular phone, Internet, broadband connectivity, Asymmetric Digital Subscriber Line (ADSL) services, satellite- based wireless communications systems and so on, have to be available here because people demand them.

Unfortunately, the pace of change is becoming faster and faster while the old, sluggish telecommunications structure that we have been subjected to all these decades is getting left further and further behind.

Worldwide, the race for 3G wireless services is becoming more heated, with none other than Japanese NTT DoCoMo and American carriers, such as Sprint, Verizon Wireless and others, competing to be the first to offer the services in the United States, for example.

In this country, we are still wrestling with the question of how we can increase our telephone density.

At the moment, Telkom is offering a new phone line installation at a reduced price. This, inevitably, leads us to think that there actually was an overcapacity of lines.

There must have been idle lines all this time that were not marketed or made available to the public for various reasons, with the most plausible being to keep the cost of installing a new line as high as possible.

If that were indeed the case, the move to market more phone lines might have come too late for a number of reasons.

It is too late, because if Indonesians were able to enjoy more widespread telephone service sooner, our society would have benefited sooner from it.

Studies throughout developed countries, as well as the developing nations, have consistently indicated a strong correlation between the availability of a public telephone network and the local economic development.

It may be too late also because consumers and users are now smart enough to see the benefits of alternatives.

Take the pager service, for example. When the cellular phone became increasingly popular and more affordable, the pager industry was squeezed.

Then as the short messaging system (SMS) became available and the price of handsets plummeted further, we hardly saw any ads from pager companies.

It may also be too late because whether we like it or not, people's lifestyles are also changing due to globalization.

In Hong Kong, for example, the South China Morning Post reported on April 28, 2001, that local fixed line subscribers were giving up the service, causing the number of residential and business fixed lines to drop beginning in November last year.

It is not difficult to presume that since people from Hong Kong are constantly on the move, the cellular phone, for which they have been associated with since the early days of this service, better suits their lifestyle as it allows them to communicate from wherever they happen to be: on the MTR, in the office, on the ferries or in shopping malls.

Dataquest reported that at the end of 2000 there were already 230 million mobile phone users in all of Asia. Of those, 35 million -- mostly Japanese and Koreans -- were accessing the Web through their cell phones.

The experience in Hong Kong, as well as in the Nordic countries where cellular phone density is high, should make us pause and wonder: What would happen if we in Jakarta surrendered our wired phone service and relied on our cellular phones instead?

Is Telkom prepared for this? Could it move fast enough and compete with other players?

The scenario is undoubtedly too farfetched, as there are still so many of us here who cannot afford the currently more expensive cell phone services.

Yet long-term planners would be able to foresee the trend, once again, as the cost of cell phone service and handsets keeps falling.

Recent reports have been highlighting the fact that industry stalwarts Nokia, Motorola and Ericsson are experiencing a slowdown in their handset sales.

This means that competition will become even tighter, and as a result, costs to the users will come down even further.

And now, as reported by The Jakarta Post last Saturday, telephone subscribers here are faced with a rate increase of 21.67 percent, which may start next month.

Life will go on as usual, because we cannot get by without the telephone. The operators and the government have successfully convinced our legislators that the hike was inevitable due to increasing operating costs, capital investments and the need to attract foreign investors.

What they are unaware of, or have simply turned a blind eye to, is the fact that our operator could actually increase its profitability by becoming a true business-oriented enterprise.

This would be a tremendous challenge, but with goodwill and the willingness to take action on the consumers' part, it can certainly be done.

A friend's story

More than a year ago, I had a casual conversation with a businessman who owned a private telecommunications company that provided telecommunications infrastructure.

He disclosed that at times he would get a lead on a business in a remote location which needed a leased line to its headquarters for data communication.

He would then follow up the lead and approach the business. When the deal was completed he would give a kickback to the person who provided the information.

This person, he said with a smile, was an employee of our operator.

Whether his story is true or not, I certainly have no interest in investigating. Such practices are far too common in the business scene here, especially in the public sector.

However, if it is true, it would demonstrate one reason why our state-owned phone operator has not been able to make the move to world-class professionalism and increase its profitability without having to raise the rates it charges to the public.

The service should have been provided by the operator and the revenue from the rent of the leased line should have helped increase the company's revenue. But if the story is true, only one person in the telephone company had enjoyed an increased revenue.

What is so sad is that as individuals in the telecommunications operator kingdom continue to reap such personal financial benefits, we as consumers have to pay more and more for the service.

Worse, a lack of consumer protection leads to practices of adding features and services that can potentially increase the consumers' expenses without their knowledge.

One of them is call waiting, which I have discussed before at great length in this paper.

A reader also reported a problem recently in the Post's Your Letters column. When she asked Telkom to disable her call-waiting feature, she ended up losing her IDD facility as well. Even worse, the burden of the error was placed on the consumer rather than the company who made it in the first place.

The decision to raise the phone rates may be irrevocable. All we can do is hope that the operators and policymakers in charge of our telecommunications will soon realize that the industry should move faster and adopt transparency and professionalism to boost efficiency and increase its profitability.

Policymakers should understand that telecommunications has long become a basic need and therefore, for the interest of the people and the nation, the telecommunications industry should no longer be treated as a cash cow.

Low and affordable phone rates will mean, among other things, a lower-priced Internet for the public. And we all know what the Internet can do, despite all of its dark side, and that is to educate the public and open their minds.

It is also the reason why the International Telecommunications Union has chosen the theme "The Internet: Challenges, Opportunities and Prospects" for this year's World Telecommunications Day.

Our question remains, however: How can we leverage the Internet for the development of our society if basic telephone service is still limited in coverage but is becoming increasingly costly?