Govt mulls lower phone tariffs for rural areas

By I. Christianto

PETALUMA, California (JP): The Indonesian government is exploring the possibility of introducing lower tariffs for rural telecommunications services in the country.

Minister of Tourism, Post and Telecommunications Joop Ave said here over the weekend that setting lower rates for the rural telephone system was essential in encouraging villagers to use the services.

"Politically, it is good to impose lower tariffs for rural telephones. It is impossible to force people to buy a Cadillac if they could not afford it," he said. "But we have to discuss first whether the plan is possible."

The Bakrie Group, which recently developed a rural telephone system called the Advanced Rural Telephone System (ARTS), made the proposal for lowering the rates. ARTS has been approved by the government and will be introduced in Indonesia.

Chairman of the Bakrie Group, Aburizal Bakrie, said it was essential for the government -- which sets the telephone tariffs -- to impose a free monthly billing charge and cheaper call rates for users of the rural telephone system.

"The purchasing power and also the utilizing power of the people living in rural areas are not as high as in the urban areas," said Aburizal, popularly known as Ical.

Minsiter Joop, Director General of Post and Telecommunications Djakaria Purawidjaja and Ical were here in Petaluma to inspect Bakrie's telecommunication facilities.

Meanwhile, Djakaria said the government determines the structure of telecommunications tariffs.

In some exceptions, telecommunications service providers are allowed to offer special rates.

"For instance, state-owned telecommunications provider PT Telkom is allowed to offer discount gimmicks to get more subscribers," he said.

He said Bakrie's proposal was appreciated and a meeting to discuss it would be held in the near future.

"We expect to complete the (rural telephone tariffs) issue later this year," he said.

ARTS was developed by BCC and Telkom beginning five years ago in the industrial park of Silicon Valley, Petaluma, California, with a total investment of some US$40 million, Ical said.

The copyright of ARTS is 74 percent owned by Bakrie and the remainder by Telkom.

ARTS is a radio system used for current telecommunication networks and systems usual in rural areas. The system's radius and coverage area reach 20 kilometers and 1,296 km, respectively.

The number of customers can start at 20 users per node with an estimated investment cost of US$2,250 per line, including switching, trunk network, terminal and radio distribution.

The system can be improved to reach an effective configuration of 256 users with an investment of $1,000 per line.

As a combination of switching/exchange and radio distribution network, ARTS is different from the popular Wireless Local Loop (WLL) which is a network substituting cables.

The Bakrie Group claimed that ARTS will offer low deployment cost, easy installation, low usage costs and low maintenance expenses.

Expansion

Ical said ARTS was initially developed in the U.S. by Nusantara Communications Inc., one of Bakrie's subsidiaries.

He said BCC's affiliated firm, PT Multi Kontrol Nusantara based in Bandung, West Java, was ready to manufacture ARTS. For the international market, ARTS would be handled by ARTS International Ltd.

"We plan to expand to some foreign countries by setting up joint venture companies to produce ARTS," he said. "We are now eying incorporating three joint venture manufacturing facilities in three different areas in China, one in South America, either Mexico or Brazil, and other nations."

He said that each facility may produce ARTS locally with the requirement to pay royalties to Telkom and BCC as the copyright holders of ARTS.

"Market portioning of the products had already included some 23 nations like Argentina, Thailand, Poland, Oman, Brazil, China, India, Nigeria," Ical said.

Uzbekistan had ordered a 65,000-line ARTS, he added.

Bakrie expect to sell 100,000 lines per year within the 1977- 1999 period.

"We expect to sell 10 million and 20 million lines all over the world within a year operation period," Ical said.

The company estimated that total available rural telecommunications market was around $15 billion over the next five years. In Indonesia alone, 70 percent of the population is considered as living in rural areas.

"The market is in the rural area which is never attractive to any single telecommunications equipment maker in the world," Ical said, adding that the pay back period of the project was estimated to reach five years.

Joop who witnessed the certificate awarding ceremony said that Indonesia needed to promote its own creations and brands like ARTS.

"However, you have to go internationally with Indonesian touch and identification. This is to avoid (the perception) that ARTS is a American product," he said.

Ical said he had selected Petaluma as Nusantara Communications' base as "there are a lot of brains here in the Silicon Valley". (icn)