DTH services to enlarge competition in Indonesia

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.