Do we really need rates hike?

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?