Erricson sees good future in RI telecom sector

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.