Erricson sees good future in RI telecom sector

By Christiani Tumelap

SYDNEY (JP): Indonesia's decision to abolish the monopoly on its telecommunications sector ahead of schedule in 2002 has been positively welcomed by international players, including Ericsson, the Swedish telecommunications infrastructure provider.

President of PT Ericsson Indonesia Mats H. Olsson said the government's decision on the early termination of the monopoly was a very wise move.

"We always welcome deregulation and opening up competition, since in the end the consumer and people in general will benefit from lower prices, more services and more choices," he told The Jakarta Post recently.

He said the country's incumbent operators, state-owned companies Telkom and Indosat, were both well-prepared to succeed in the more competitive environment.

However, to be able to compete with global operators, Telkom and Indosat will still need to catch up with advanced technology to provide customers with higher speed voice and data transmission capacity, said Einar Lindquist, president of Ericsson Telecom AB's division multiservice networks.

"They already have a head start with their control of public communications networks, but they are challenged to invest in the next generation of networks capable of delivering a vast array of services in a cost effective and flexible way," he said at an Ericsson campaign for its new multiservice network system designed for wireline telephone operator ENGINE access ramp held last week in Sydney, Australia.

He said Telkom would face the challenge of providing an integrated voice and data transmission service through wire and wireless telephones, the Internet and multimedia at a higher speed capacity, but at a reasonable cost.

Indosat as a new operator in the basic telephone service has the option of building its own network, which will be quite expensive, or lease an available network from an existing operator and upgrade it to the broadband system, he said.

The government recently announced its decision to lift Telkom's exclusive rights over local and domestic long-distance call services in 2002 and 2003 respectively, several years ahead of the original schedule of 2010. And Indosat will lose its control over international direct call services in 2003, one year ahead of the scheduled date of 2004.

The government said Telkom and Indosat would be made full network and service providers with integrated services of local calls, domestic and international long-distance calls, Internet and multimedia services using both wireline and wireless networks.

Telkom said it would maintain its core business in the wireline-based local telephone service while strengthening its cellular, Internet and multimedia business.

Indosat said it would utilize its wireline backbone for its local and international call services as well as Internet and multimedia services.

Lindquist said Ericsson was currently negotiating with an Indonesian operator to provide the latter with its new product, ENGINE.

"This new system will enable wireline-based operators to freely mix and migrate between wireline telephones, cellular telephones and Internet services," he said. He declined to name the operator.

He said Ericsson had signed seven contracts to provide various ENGINE systems to global telecommunications players, such as British Telecom, Telia Denmark, Diginet, KPN International, Telefonica, Irish operator Eircom, France Telecom and Chilean Telsur.

Lindquist said he was upbeat about the prospect of wireline- based telephone operators amid the current rapid growth of wireless telephone services.

Olsson shared Lindquist's view, adding that the prospect of wireline telephone operators were even bigger in countries like Indonesia where the majority of telephone users still used a wireline network for their communications activities, such as voice and fax.

He said wireline-based telephone operators could still get revenue from regular voice-based telephone services and at the same time give added value services, such as the currently popular voice over internet protocol (VoIP) service.

Although people here associate Ericsson more as a cellular phonemaker, the company has been long involved in the development of Indonesia's wireline telephone network, he said.

He said Ericsson's business in Indonesia started with the supply and installment of wireline telephone manual exchanges in 1908.

"In the 1950s, about 90 percent of all telephone manual switchboards in Indonesia were the products of Ericsson," he said.

Ericsson brought in the first automatic crossbar switchboard in 1957 in Solo, Central Java, then expanded the service throughout Java and Sumatra.

In the 1960s, it introduced the two-channel carrier system, which provided a significant cut in the waiting time for long distance calls from two hours to a few minutes.

Ericsson was also the first to introduce the wireless phone technology. It installed the analog-based NMT 470 format in 1986.

The company then introduced the more advanced digital GSM system when it won the tender to supply and install the country's first GSM network in Batam and Bintan islands in 1994.

At present, Ericsson provides various services in telephone access network systems ranging from cooper enhancement, optical fiber access networks, wireless in the local loop and radio transmission systems to the Indonesian telecommunications market.