ISPs cut operations amid tighter competition

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.