Internet kiosks losing business

Fitri Wulandari, The Jakarta Post, Jakarta

When twenty-five year old Suharta, and his family decided to open a warnet (Internet kiosk) in 1999, they hoped it would become a profitable family business.

But after four years, instead of growing, their business is slowing down.

"We chose to open up an Internet kiosk because it seemed to be a good business at that time," Suharya told The Jakarta Post over the weekend, while attending his quiet Internet kiosk in Kebayoran Lama, West Jakarta.

With Rp 50 million (about US$5,400), Suharya bought nine computers and rented a house to set up his new business.

At first, Suharta managed to bring in at least Rp 400,000 a day even more on a busy day. But now, even on a busy day, he only gets Rp 200,000.

In order to survive, Suharta has even had to slash the Internet fee from Rp 8,000 to Rp 4,000 per hour. Sometimes, he throws in a 25 percent discount to lure customers.

While his earnings are low, the upkeep is high. Each month he has to pay Rp 2.5 million for the phone bill, and Rp 800,000 for the Internet subscription with the service provider.

"My business is still running, but the income is barely enough to buy new computers to replace old or broken ones," he complained.

Suharta is not alone. Many small Internet kiosk owners face a similar fate.

It is too early to say that the Internet kiosk business in the country is dying but its heyday is certainly over.

When the business was booming in the late 1990s, many saw it as a way to bridge the digital divide as well as a more effective way to disseminate information to the public.

But that was then, this is now. Data from the Indonesian Internet Kiosks Association (Awari) showed that as of 2001, there were only 2,500 Internet kiosks in the country, down from 6,000 in 1999.

The slump in the warnet business is one effect of the slow down in the number of Internet users in the country. Data from the Indonesian Internet Service Providers Association said that the number of Internet users would only grow slightly to 5 million from 4.2 million in 2001.

It is ironic because from 1998 to 2000, Internet users doubled every year. Experts said that the market that was limited to only the middle class and students had already been saturated.

On the other hand, there have been no efforts either by entrepreneurs or the government to develop the market.

For instance, the government's grand plan to establish 500,000 warnet as business information centers (SIMB) by 2004 seems to have evaporated.

Dipo Alam, a senior official at the Coordinating Ministry for the Economy, who was assigned to handle the project, claimed he did not know what had happened to the project.

He said that the project had been in limbo when Japan canceled its plan to provide funds for the project after the global recession hit following the Sept. 11 attack on the U.S.

Many experts said that SIMB could be used to introduce the Internet to a wider market, such as businesspeople operating small and medium businesses.

Donny B. U., the executive director of an information technology watchdog, ICT Watch, said the government and the industry players should have thought of ways to educate consumers in a bid to create a wider market.

"They are busy fighting for their piece of the pie, which is not big, but they forget to create the market," Donny told The Post.

Indonesian Internet users, so far, mostly use the Internet for chatting and emailing. Very few people use the Internet for research or studies.

In addition, educating the public to use the Internet will prevent crimes such as cyber fraud, he added.

Awar chairwoman Judith M. S., however, blamed the high cost of communication infrastructure as the main factor behind the slowdown in the Internet business.

The government increased telephone rates up to 21 percent this year as part of a 45.49 percent phone hike over three years.

"Many small warnet had to close down because they rely on direct telephone connection," she said.

Judith criticized the government and the Indonesian Internet Service Providers (APJII) for not providing assistance for warnet.

"Warnet are actually supported by their consumers. At least the government and ISPs could give a discount," she remarked.