Government, WB in conflict over telecoms regulatory body

Government, WB in conflict over telecoms regulatory body

Arya Abhiseka, The Jakarta Post, Jakarta

Controversy over the need to establish an independent
regulatory body in the telecommunications industry resurfaced,
when on Friday the government, the World Bank and experts voiced
different opinions over the issue.

The government said the need was not urgent, but the World
Bank and many experts insisted otherwise.

The Directorate General of Post and Telecommunications at the
Ministry of Transportation, which also oversees communications,
issued a statement on Friday that the establishment of the
Independent Regulatory Body (IRB) was not imperative under
Telecommunications Law No. 36/1999.

"We are not against the idea of the establishment of the IRB,
however, our law states that the ministry is still the regulatory
body for telecommunications," the directorate general's spokesman
Gatot Dewa Broto said in the statement.

The government "is able to transfer its functions of
regulating, supervising and controlling telecommunications to a
regulatory body," said Gatot, quoting an explanatory clause of
the law.

The functions are currently carried out by the directorate
general.

However, Scott Wallsten of the World Bank's development
Research Group said in a press statement on Friday that the IRB
was urgent and imperative in view of the country's
telecommunications situation.

In December of last year, he said, the government made a
progressive move in ruling out a duopoly policy on the
telecommunications sector by selling about 40 percent ownership
of PT. Indosat, a state owned company, to Singtel, a Singaporean
telecommunications company.

Wallsten said that privatization as a part of market
liberalization was viewed as beneficial to the economy as it
would result in an increase in telecommunication companies'
sales, profit, investment and workforce.

However, liberalization, he continued, should be coupled with
the establishment of the IRB to ensure fair competition in the
telecommunications sector.

The IRB will monitor telecommunications policy and protect
consumers' interests with regards to charges and telephone inter-
connection and maintain healthy competition.

Wallsten said that according to the Ambrose research in 1990,
competition was a huge drive for improvement in
telecommunications.

Up until now, there are some 96 countries across the globe
that have established IRBs.

Meanwhile, Roy Suryo, a telecommunications analyst said that
state-owned telephone company PT Telkom had violated an agreement
made with the House of Representatives, when it hiked phone
charges early last month before the establishment of the IRB.

"The establishment of the IRB should have been finished before
2002 and is one of the seven preconditions that must be met
before Telkom could increase its rates. They simply violated
that," he said.

The government delayed the increase in phone charges late last
month due to the public protests rather than the arguments put
forth by experts such as Roy.

Last November, Director General of Post and Telecommunications
Jamhari Sirat said that the draft regulation on the establishment
of the IRB would be completed before the end of the year but a
staff member from his office said that the regulation was not
ready.

However, Suryo said that the government still had not
finalized the concept for such a regulatory body.

"The IRB should have been functioning before the phone charge
increase was imposed, because that body should have first
analyzed the rate of the increase," Suryo added.