Government to open up telecom sector by 2002

JAKARTA (JP): The government is considering lifting the exclusive rights held by state-owned telecommunications monopoly PT Telkom and PT Indosat by 2002 as part of the liberalization program of the country's telecommunication sector, a senior official said on Tuesday.

The official, who spoke under condition of anonymity, said the early termination of the monopoly was meant as a response to the new telecommunication law, effective in September.

"The new law clearly states that we have to end all the monopolistic practices in the telecommunications sector... We are thinking of lifting the exclusive rights now held by Telkom and Indosat by 2002," the official told The Jakarta Post.

Telkom currently has an exclusive right to provide local fixed line service nationwide until 2010 and domestic long-distance telecommunications services until 2005, while Indosat and its subsidiary PT Satelindo control over the international long- distance service until 2004.

Under the new Telecoms Law No. 36/1999, Indonesia will eliminate all monopolistic practices in the country's telecommunications sector. The law will allow any local and foreign firms to enter the country's telecommunication sector without having to collaborate with Telkom or Indosat.

Director General of Post and Telecommunications Sasmito Dirdjo said the liberalization in the telecommunication industry would be in line with the liberalization program set under the ASEAN free trade area (AFTA).

"However, Telkom and Indosat may have their own time frame. We are now conducting intensive talks with them on the matter. I expect we will reach agreement on the date of termination in August," he told journalists on the sidelines of a telecommunications seminar.

He said the ongoing talks also will determine the compensation the government must give to Telkom and Indosat in return for the latter's acceptance to the early termination of their rights.

Sasmito said international independent consultants would be hired to assess the liability to the government for potential losses the two companies could incur following the termination of their monopolies.

He said compensation would also be given in the form of new licenses, which for Telkom will be the license to operate international telephone calls and for Indosat to operate local fixed line service.

He said Telkom would likely be given the principle license to start building infrastructure for the new international call business in August when the government reached agreement with Telkom and Indosat on the lifting of the companies monopoly.

He reiterated the government's intention to keep Telkom and Indosat as separate business entities after both lose their monopolies.

"Telkom and Indosat will stay as separate entities. But, each will be allowed to operate not only fixed line local and international calls, but also mobile telecoms and multimedia," he said. (cst)