House backs cell phone operators' policy on rates

JAKARTA (JP): The House of Representatives agreed on Thursday to a proposal from local cellular phone operators to change their current government-regulated charge scheme to a market-driven one.

"We agree that the government should relinquish its stiff control over the telecommunications sector, particularly the charges," Sudjarwo Sukardiman, the chairman of the House Commission IV for infrastructure and transportation affairs, said at the conclusion of a hearing with cellular phone operators.

He added, however, that the government's role was still needed in setting the maximum price for call charges.

Sujarwa said a market-driven charge scheme would have a positive impact on customers because it would push operators to compete with each other in providing the best service for the most reasonable price.

The hearing on Thursday was attended by representatives from the country's seven operators: PT Satelindo, PT Telkomsel and PT Excelcomindo, which use the global system for mobile communications (GSM); PT Telesera, PT Metrosel and PT Komselindo use the advanced mobile phone system (AMPS); and PT Mobisel which use the Nordic mobile telephone system (NMT). The seven operators currently serve around 2.4 million subscribers.

The operators acknowledged that it would take time for the government to change the tariff system. "But at least the existing charges should be increased," one of the telecommunications operators said at the hearing.

The operators want the government to increase the call charge for regular mobile phone calls from its current level of Rp 325 (about 4.5 U.S. cents) per minute to a more reasonable level.

The Ministry of Communications agreed in September last year to raise airtime rates for regular cellular phone services by 23 percent -- from Rp 325 per minute to Rp 400 -- an increase which was supposed to be implemented by October the same year. The decision, however, has never been put in effect.

The operators are free to set call charges for their pre-paid services.

President of Excelcomindo Gerald F. Rossi said the government should increase call charges because the current tariff was no longer sufficient to cover operators' expenses, which were mostly paid in U.S. dollars.

"It's just about time to increase the call charge. The last time the government raised the call charge for cellular services was in February 1998," he said.

Satelindo president Kadir Assegaf said operators were finding it very difficult to make major investments to upgrade facilities, let alone build new lines, because their income was not sufficient.

A report by the Association of Indonesian Cellular Telecommunications Operators (ATSI) shows that the amount of total investment by the seven operators has declined sharply from between $600 million and $800 million a year in 1995 and 1996 to only $100 million a year since 1997.

No major investments were made by any of the operators on new facilities in 1998 and 1999. This has resulted in poor services, including frequent bad transmission and reception "black spots".

ATSI executive Rudiantara said the ideal call rate for Indonesia's cellular phone industry was around 11 U.S. cents per minute.

"The current tariff for mobile phone call services of Rp 325, or only about 4.5 cents per minute, is much cheaper than the average international charge of 15 cents per minute," he said.

He said that if operators could set their own charges, they would be able to accumulate funds needed to invest in more infrastructure to accommodate growing demand.

ATSI predicts the number of mobile phone subscribers will reach over three million by the end of this year as against 2.05 million registered at the end of 1999.

Rudiantara said operators were very pleased to receive the commission's support and would immediately submit their proposal on the change in the overall tariff scheme and increase in the current airtime charge to the government.

The rate for regular cellular telephone services is currently set by the government based on proposals from telephone operators, but the change is subject to House approval. (cst)