ISPs cut operations amid tighter competition

Debbie A. Lubis, The Jakarta Post, Jakarta

Increased competition, most of it coming from TelkomNet Instan, owned by state telecommunications firm PT Telkom, has forced about half of the country's 90 internet service providers (ISP) to cut their operations, according to the Association of Indonesian Internet Service Providers (APJII).

APJII chairman Heru Nugroho told The Jakarta Post over the weekend that among the companies severely effected by the competition was Wasantara Net, a 51-percent-owned subsidiary of state-owned postal firm PT Pos Indonesia, which stopped service in 40 cities earlier this month due to a lack of subscribers.

The company had been one of the country's largest ISPs with services in 168 cities, including small towns, across the country.

Other big ISPs like Mega Net, Gapura Net and Web 88 have also reduced their operations, he said, without providing any details.

Heru said the ISPs could not compete with TelkomNet, which generally offered lower prices and more advanced technology.

TelkomNet is not a member of APJII.

According to Heru, APJII's members charge their customers Rp 3,500 (about 38 U.S. cents) per hour for Internet access, but customers also have to pay Telkom Rp 195 per minute for the phone access. While TelkomNet only charges Rp 165 per minute for both phone and Internet access.

"That is one factor that leaves APJII members unable to compete with TelkomNet Instan," Heru said.

He added that many APJII members, most of which are privately owned, still used analog technology, while TelkomNet employed digital technology, which provides faster access to the Internet.

"Most ISPs are now focusing on corporate subscribers because they are more sensitive about quality of service rather than price," Heru said.

He added that APJII would soon meet with government officials to discuss the problems confronting its members.

According to data from the association, Indonesia had four million Internet users last year, of which some 581,000 subscribed to APJII members.

Elsewhere, RM Roy Suryo, a telecommunications analyst, said the problems faced by internet service providers were due to internal and external factors.

Internally, he said, most of the companies did not make adequate preparations or draw up a strong business plan before entering the ISP business.

"They just rushed into the business during the Internet euphoria," he said.

Externally, the ISPs are the victims of changing customer preferences.

"They (Internet users) prefer to go to Internet kiosks or use the Internet services provided by their offices. Customers also prefer to use TelkomNet Instan because of its (faster) accessibility," he said.

Suryo warned, however, that the government must pay serious attention to the difficulties being experienced by the ISPs and work to resolve the problems.

He said many of the firms could go bankrupt, which would affect the country's efforts to bridge the digital divide between urban and rural peoples.

"The problems faced by Wasantara may not have much affect on the lives of Jakartans, but the cutting of services by the company only means many cities across Indonesia will no longer have Internet access. People in those cities will lag far behind in the fastest developments of the Internet," Roy said.