DTH services to enlarge competition in Indonesia

By Antariksawan Jusuf

JAKARTA (JP): For the first time there will be competition in Indonesia's direct-to-home (DTH) industry. For years, there has only been one operator -- Indovision -- offering multichannel entertainment to thousand of homes. This year, two more players are expected to enter the market.

The first is Indonusa Telemedia, which already is offering multichannel programming via its cable service. The second would- be operator is Artha Graha Investama Sentral (AGIS), a listed company which in April said it had purchased 100 percent of the shares of SCTV from Peter Gontha's PT Datakom Asia and Henry Pribadi and Sudwikatmono's PT Mitra Sari Persada.

But why DTH? Indonusa general manager for marketing and operations, Srihanto Nugroho, said the market had great prospects.

"For the same monthly fee with Indonusa cable, customers will get the same number of channels plus Internet access," Srihanto said. The Internet access allows subscribers to log onto the Internet for an unlimited number of hours without worrying about the telephone bill.

Indonusa subscribers pay a monthly fee of Rp 195,000 (US$24.40 dollars) for the basic service of 27 channels, including HBO, ESPN/Star Sports, Star Movie, Star World, Phoenix, Channel [V], Cinemax, CNBC, National Geographic and Discovery.

The DTH service will be beamed to homes using the extended C- band frequency of the Telkom-1 satellite belonging to state telecommunications firm PT Telkom, Nugroho said.

Telkom-1, which was manufactured by Lockheed Martin and launched in August last year, carries 24 C-band and 12 extended C-band transponders.

The total earmarked investment is relatively low at Rp 2 billion ($250,000) because all of the infrastructure is already in place. "Telkom will do the uplink and they already have a subscribers management system," Srihanto said.

Indonusa shares are owned by Telkom (45 percent), RCTI (20 percent), PT Telekomindo (10 percent) and Datakom Asia (25 percent).

The other operator, AGIS, expects to launch its DTH service in partnership with a strategic investor, South African-based multimedia MIH International. MIH, listed on the NASDAQ and in Amsterdam, says in its website it is one of the first pay- television firms in the world to provide digital satellite service.

MIH has developed a number of businesses in Asia. Working with China Central Television it brings digital television to rural villages. In Thailand, it partners with UBC to bring cable and satellite television and quality programming to thousands of Thai homes.

Industry sources said AGIS' DTH service, whose total capital is projected at $40 million, is expected to commence as early as the end of this year.

The president of the AGIS board of commissioners, Rudy Tanoesoedibjo, said AGIS would cooperate with French Thomson, the producer of RCA electronics, for the project. They signed a letter of intent in July.

AGIS holds the distribution rights to RCA products in Indonesia and is Indovision's partner in distributing RCA- produced satellite dishes.

Among the shareholders of AGIS are Bhakti Capital (formerly Bhakti Investama), which owns 13.2 percent, Bhakti Capital Management Unit with 5.15 percent, Morgan Stanley with 5 percent and Morgan Stanley & Co. Inc, which owns 9.97 percent.

Aside from Indovision and the two would-be DTH operators, there is another firm which holds a license to provide DTH services -- Ekajaya. Owned by former Indovision employee Herawan Rusli, Ekajaya is waiting for more favorable economic conditions to launch its service.

In 1999, it won distribution contracts from oil firm Caltex in Riau to provide service to 2,000 homes, but subleased this deal to Indonusa.

DTH is a better choice than cable, said an official of a would-be DTH operator who wishes to remain anonymous.

"The investment for rolling out cable to connect every home is very expensive. And with such a topographic situation as in Indonesia, the scattered islands, I think DTH can be a solution," he said.

Is this true? Current DTH operator Indovision is still struggling to increase the number of its subscribers from around 30,000, far from earlier projected figure. With the return of nine channels from Rupert Murdoch's Star TV in July, it expects to increase the number of subscribers.

According to a survey conducted by a cable operator before the economic crisis, about one million of Jakarta's nine million residents can afford the pay-TV service.