Phone rate hike could create monopoly in Internet sector

Dewi Santoso, The Jakarta Post, Jakarta

The government's recent phone rate hike decision, which was aimed at ending the monopoly in the fixed line telecommunications sector, could create a monopoly in the internet sector, a monopoly watchdog has warned.

"The recent phone rate increase will leave Telkom in a position to monopolize the internet sector," Business Competition Supervisory Commission (KPPU) director Murman Budijanto said on Tuesday.

The government last week decided to allow fixed line operators to raise local telephone rates by up to 28.21 percent.

The new local call rates affect all internet service providers (ISPs) except TelkomNet Instan as it uses a port wholesale (PWS) dial-up service.

TelkomNet is a subsidiary of state-owned PT Telkom, the country's largest fixed-line operator.

PWS dial-up services use the numerical prefix 0809 and cost a total of Rp 9,900 (US$1.15) per hour, consisting of a PWS fee of Rp 6,600 per hour, plus a connection fee of Rp 3,300 per hour. Currently, 48 percent of internet services are provided by TelkomNet Instan.

Telkom has the authority to facilitate internet providers with the PWS dial-up service.

Murman said that the low rates of TelkomNet Instan would entice customers to select it as their provider.

He criticized the government's decision to allow Telkom to raise phone rates, saying that it was apparently made based only on the interests of Telkom, and without considering the interests of other businesses.

Telecommunications expert Roy Suryo agreed with Murman, saying that the recent phone rate hike would only benefit Telkom.

Data from Information & Communications Technology (ICT) Watch show that non-PWS ISPs have to charge their customers Rp 11,500 per hour (including 10 percent tax), which consists of a connection fee of Rp 3,300 per hour, plus local call rates per hour.

"Internet users will eventually turn to TelkomNet Instan, further strengthening its already dominant position," said Roy.

Data from the Indonesian Internet Providers Association (APJI) shows that 93 percent of internet users use dial-up services. Of these, 48 percent use TelkomNet Instan as their ISP provider and 45 percent use other providers such as CBN, Centrin, Radnet and Indonet. The remaining 7 percent use non-dial-up services, such as cable, lease-line and wireless.

APJI secretary general Heru Nugroho had earlier demanded that Telkom open up PWS services to all internet companies.