Phone operators to allocate 0.75% of revenue for USO

Phone operators to allocate 0.75% of revenue for USO

Leony Aurora, The Jakarta Post, Jakarta

The government will put into effect within a month a regulation
requiring all telephone operators to allocate 0.75 percent of
their yearly revenues for the state's rural telephone program, a
government minister has said.

Minister of Communications and Information Sofyan Djalil told
The Jakarta Post over the weekend that the non-tax income
regulation would be applicable for sales throughout 2005, even
though it might only be signed into law in July.

"We'll impose the levy on revenues (the companies receive)
from January onwards," he said.

The regulation would be valid for a year and its application
next year would be subject to the evaluation of the government's
Universal Service Obligation (USO) program aimed at accelerating
development of telephone services in rural areas, Sofyan added.

"The draft is now with the state secretary, waiting for the
president's signature," said Sofyan. "I expect it to be signed
this month or the next."

In 2004, state telephone firm PT Telkom recorded gross sales
of Rp 33.95 trillion (US$3.53 billion), while the country's
second largest telecommunication company PT Indosat booked
revenues of Rp 10.55 trillion.

Based on last year's financial reports of these two companies
alone, the thriving telecommunications sector will contribute at
least Rp 334 billion -- and likely a lot more -- to the
development of telephone facilities in remote areas this year.

By comparison, the government provided Rp 45 billion -- a mere
13 percent of the expected contribution from the telecom
companies -- in 2003 to cover more than 3,000 villages.

Some 2,600 more villages got one telephone each last year.

The USO program uses satellite-based Very Small Aperture
Terminal (VSAT) technology, as many of the islands in the
archipelago cannot be reached by fixed cables

The Indonesian Association of Cellular Telephone Operators'
(ATSI) secretary general Rudiantara welcomed the new regulation,
saying that the industry had waited for over a year to see it
come into effect.

"The 0.75 percent rate was what we agreed upon with the
government," said Rudiantara.

However, the association had not been informed that the
regulation would be applied retroactively.

"It will affect our previous quarterly financial reports,"
said Rudiantara.

Indonesia has one of the lowest telephone densities in Asia.
Last year's figures showed that only about nine million of the
country's 220 million people have access to fixed-line phones,
which is one of the reasons for the rapid growth of cellular
phone companies here.

People in about 40,000 villages spread across the archipelago
have yet to enjoy the simple joy of calling their loved ones --
who may have moved elsewhere to study or work for a better life
-- over the phone.

To date, the implementation of the USO program has been widely
criticized for its inability to provide supporting services and
maintenance to the installed facilities.

Vouchers to buy phone credits and service centers remain
largely unavailable in remote areas.

The government has appointed four operators to implement the
rural telephone program, namely PT Pasifik Satelit Nusantara
(PSN), PT Citra Sari Makmur (CSM), PT Telkom and PT Mandara
Selular Indonesia.