JP/18/CAN1

Infrastructure is still not supportive

Unlike those in Europe, people in Asia, including -- if not, especially -- Indonesia like to have the most advanced cellular phone available, even if it is quite expensive.

A visit to several shops in Paris showed the latest-model handsets being offered were being sold in Jakarta several months ago. Many people in Paris still use handsets that are no longer popular in Jakarta.

Last year, there were 28 million cellular telephone subscribers in Indonesia, and the total is expected to increase to 40 million this year.

Meanwhile, only about 8.5 million of our total population of 220 million have fixed-line telephones; for operators, investment in this sector is less attractive compared to mobile telephony because the former requires much more funding and the return takes much longer to realize.

This all adds up to meaning a very strong cellphone market here. People often buy handsets with very advanced technology, which means they are more costly, even though in their daily lives they rarely make use of many of these functions, either because they are worried about high phone bills, or because the telecommunications infrastructure is still unable to match the latest technology. Furthermore, many Indonesian users perhaps don't know how to use many of these advanced features.

The geographical extent of Indonesia is another problem, comprising more than 17,000 islands. For the time being, telecommunications are not a priority for the government; only one of the 91 infrastructure projects -- the Palapa O2 Ring (Backbone Network Development) -- was offered to foreign investors in January.

Taking advantage of the large potential cellular market available, state-owned PT Telkom has provided new services like Code Division Multiple Access (CDMA) through Telkom Flexi, although it is still very limited. In April, the company is also scheduled to launch its new satellite service Telkom-2.

Last July, according to Alcatel's official website, PT Telkom and the French company held a partnership to launch Speedy Broadband Access. In November, Ericsson also won a contract to provide broadband technology in Surabaya, East Java. Telkom plans to have 2 million broadband users within the next three years.

Other foreign companies are also working to implement 3G technology. Much-criticized Law No.36 on Telecommunications, issued in 1999, has too many loopholes.

So far the government is only allowing PT Telkom and its partly-owned PT Indosat to provide fixed-line local phone services, long distance, and international services. Only a few companies are allowed to provide Voice over Internet Protocol (VoIP).

"We need legal certainly before we commit ourselves," said a foreign investor.

However, sooner or later, consumers will be able to enjoy a greater variety of services for their cell phone, despite all the current problems. -- Kornelius Purba