Lippo launches new ISP despite row on Lippo e-Net

JAKARTA (JP): Lippo Group launched on Friday an Internet service provider (ISP), www.link.net.id, despite some controversy over the group's insurance-turned-Internet company Lippo e-Net.

LinkNet claims to be the first ISP to offer high-speed broadband access. It also will provide free access for individual users and Internet rent providers (Warnet).

Lippo Group executive James Riady said LinkNet and Lippo e-Net were completely separate companies, although they are both under Lippo Group.

James, however, refused to say more about the group's expansion into the Internet businesses.

Commissioner chairman of LinkNet Handoko Tanuadji said Lippo e-Net had no involvement in LinkNet, although the company would utilize the infrastructure owned by the ISP.

Handoko said Lippo Group had allocated at least Rp 50 billion (US$6.3 million) for the development of LinkNet, in which the group owns the majority stake.

He said LinkNet planned to expand its business by acquiring another existing local ISP. "We will allocate another Rp 200 billion to back up the acquisition plan," he told journalists during the ISP's launch.

The Lippo Group's publicly listed life insurance firm Lippo e- Net is currently facing an investigation by the Capital Market Supervisory Agency (Bapepam) for allegedly presenting inconsistent information to the public.

The management of the Jakarta Stock Exchange reported Lippo e- Net to Bapepam for allegedly creating the misleading image that it had transformed itself into an Internet company. The announcement of a shift in the company's core business in January resulted in the company's share prices doubling within a week.

LinkNet managing director Sutrisno Wibowo said the company was optimistic it would be able to compete with existing ISPs, because its broadband access gave it a faster and free of charge connection.

"I don't think we have any potential competitors now. LinkNet has a much better quality connection, and it's free," he said, adding that the company expected to sign up no less than 300,000 registered users within its first year of operation.

Sutrisno, however, acknowledged that like other Internet start-up companies, LinkNet would not be able to turn a profit during its first and second years of operation.

"LinkNet is expected to start earning a profit within the third to fifth year of operation," he said, adding that LinkNet was projected to reach the break-even point in two to three years.

There are currently 35 ISPs operating in Indonesia, including LinkNet, according to the Indonesian Association of Internet Service Providers.

Sutrisno said his company would rely on advertisements as well as corporate subscribers for revenue. He said LinkNet would charge advertisers an average monthly fee of between $4,000 and $5,000. (cst)