JP/13/Telco

JP/13/Telco

Sari P. Setiogi
The Jakarta Post
Jakarta

The year 2003 has been a bright year for the telecommunications industry.

The number of cellular phone subscribers has increased
steadily, prompting cellular phone manufacturers to intensify
sales campaigns.

Cellular phone operators are also fighting fiercely with new
players introducing code division multiple access (CDMA)
technology to compete with the old system that uses the global
system for mobile communication (GSM) technology.

The government also announced the winner of a bid for the
development of the most advanced third generation (3G) cellular
technology in the country.

The number of cellular phone subscribers across the country is
estimated to reach 18 million by the end of 2003, an increase of
more than 50 percent from last year's 11.4 million, according to
the Indonesian Association of Cellular Telecommunications (ATSI).

It is the highest growth in seven years since cellular phones
using GSM technology were first introduced in the country. The
main cause of the rapid growth is the lower cellular phone
subscription rate and cheaper handsets.

Despite the rapid growth, the number of cellular phone
subscribers account for a mere 8 percent of the nation's
population of more than 215 million. This means the market's
potential is still vast.

Thus far, the industry is controlled by operators using GSM
technology, including Telkomsel, Satelindo and Excelcom.

But their domination is being challenged by new players using
CDMA technology.

The CDMA operators are TelkomFleXi, owned by the country's
largest telecommunications company PT Telekomunikasi Indonesia;
esia, owned by the Bakrie Group; and Mobile 8, controlled by the
Bimantara Group.

Bakrie is developing esia after acquiring PT Ratelindo, an
operator of advanced mobile phone services (AMPS) technology,
while Bimantara is developing its Mobile 8 after buying out three
AMPS operators: PT Komselindo, Metrosel and Telesera.

TelkomFlexi and esia are licensed to operate with limited
coverage, while Mobile 8, like the GSM operators, is allowed
national coverage.

Industry sources said another new player, Wireless Indonesia
(WIN), will join the CDMA market soon.

Mobile 8's president and CEO BT Lim boasted that Mobile 8
could become a serious contender for the existing GSM operators
as CDMA has several plus points compared to GSM, including high-
speed data delivery.

Lim said that the CDMA service provided by his company is
capable of delivering data at 120 and 150 kilobits per second
(kbps), while the data delivery speed provided by existing GSM
operators stands at about 30 kbps.

The delivery speed is crucial when cell phone users want to
download videos, songs and data from the Internet using cell
phones. The higher the delivery speed, the faster the downloading
process. Cell phone subscribers thus pay less to download.

Lim said that in the future the data delivery speed will be
one of the main concerns of customers.

Existing GSM operators have also improved their data delivery
speed using the so-called general packet radio services (GPRS).

But industry analysts say that CDMA technology is still better
than GPRS in terms of data delivery speed.

In order to improve its services, Telkomsel, the country's
largest cell phone operator, plans to launch "TelkomselEDGE" in
the first quarter of 2004 which the company claims delivers data
faster, Telkomsel's head of packet data network Ivan C. Permana,
told the Post.

According to him, this technology enables users to download
video music clips, have full multimedia messaging as well as high
speed color Internet access at 100 kbps. In order to use the new
service, people should use EDGE-ready cell phones, such as Nokia
6220.

Ivan, however, played down the significance of data delivery
speed for customers, saying that people mostly use cell phones
for voice communication rather than sending data.

"Out of Telkomsel's nine million subscribers, only 400,000
regularly use their cell phones for data communication," he said.

As existing cell phone operators are vying to introduce new
technology, the government launched a bid for a contract to build
the most advanced 3G technology.

This technology will not only support voice communications but
also real-time video and full-scale multimedia.

A 3G device functions as a phone, a computer, a television, a
pager, a videoconferencing center, a newspaper, a diary and even
a credit card.

A new player, PT Cyber Access Communications -- a subsidiary
of Thailand-based TelecomAsia -- won the auction to build the 3G
project here. TelecomAsia is a subsidiary of Thailand poultry
food giant Charoen Phokphand.

The technology will not be available here until 2005, almost
the same time that it will be available in Europe.

The rapid development in the telecommunications world here is
seen by mobile phone manufacturers as a big chance to market
their products aggressively.

Almost all mobile phone producers here are optimistic about
raising sales by 30 percent to 50 percent next year.

Market leader Nokia launched 15 new types in the country this
year, for the low-end and high-end markets. Among the 15 is the
7600 type, which is a CDMA/GSM phone. The gadget allows a user to
switch from CDMA to GSM, and vice versa.

The general manager of Nokia Indonesia, Hasan Aula, said he
believed with the development of the telecommunications
technology here, the market, which is currently dominated by the
low-end market, will soon shift to the mid-market.

"The use of mobile phones will no longer be only for voice
communication," he said.

In its report published in November this year, marketing
research firm Synovate said out of 19,222 cell phones users in
Jakarta surveyed by the firm, 29 percent were said to have cell
phones with Internet access.

Separately, global technology research company Gartner
predicts sales of smart phones -- phones that can do almost
anything from taking video pictures, still pictures, act as an
organizer, download Internet data, as well as play games -- will
jump by 140 percent next year.

There are smart phones already available on the local market.
Nokia launched one in its Communicator series last year and its
latest 6600 this year, while SonyEricsson launched its P800 last
year and the P900 this year. Another producer to join the smart
phone market is Britain-based O2 with its PDA-phone XDA and XDA
II.

New smart phones sell for an average of over Rp 5 million
(US$556) at the moment.

Samsung and Siemens manufacture smart phones, but they are not
yet available in Indonesia.

According to Robby Darmasetiawan, general manager of PT Dian
Graha Elektrika -- Siemens' distributor here -- they will soon
launch their premium series with video streaming feature, SX1 and
SX60.