RI pay-TV business labors to survive

RI pay-TV business labors to survive

By Antariksawan Jusuf

JAKARTA (JP): At the end of 1998, the Indonesian pay-
television industry is struggling to survive the painful economic
crisis, but the future remains rosy in this vast market of more
than 200 million people.

The government has issued nine licenses, but only three
operators -- Indovision, TV Kabel and Indonusa -- have launched
their commercial operations.

Due to the economic crisis, Metra license holder has put off
indefinitely its plan to start operating in October. Metra, owned
by, among others, businessman Sudwikatmono, Henry Pribadi, state
TVRI and PT Telkom, earlier planned to roll out its service early
this year.

Good news came in mid December. In spite of the economic
crisis, market leader in free television RCTI announced the soft
launching of its cable service, Indonusa. The hard-wire cable
operator with a total investment of Rp 3 billion is owned by PT
Telkom, PT Telekomindo, media giant PT Datakom Asia and RCTI.

Indonusa's launch came at a time when direct-to-home (DTH)
operator Indovision was in the midst of a serious rift with media
mogul Rupert Murdoch's Hong Kong-base Satellite Television Asian
Region (Star) TV.

The dispute saw Star TV withdrawing eight channels under the
Star TV Group: Star Movies, Star World, Star Sports, (V)
International, (V) Asia, Fox News, Phoenix and Film Indonesia.

Star, which owns 45 percent equity in the DTH platform in
Indovision, is opposing the switching of its services from Palapa
C2 to Datakom's S-band Cakrawarta-1 satellite. The switch would
cost Star US$1 million a month to lease transponders.

Earlier, all Indovision's 31 channels were broadcast from Hong
Kong. By using Cakrawarta, broadcasting could be controlled from
Jakarta. In its latest announcement, Indovision said it would be
in full gear again next January with several additional premium
channels such as Kermit, AXN Action and Animal Planet.

Looking at the number of its subscribers, currently a total of
34,000 by DTH and 12,000 by cable, it is easy to say that the
Indonesian pay-TV industry is still some years away from taking
off. This number is expected to remain unchanged in the coming
months and before the economy gets back on track.

However, RCTI VP and operations director Alex Kumara says that
considering the current cable TV distribution in Indonesia, with
26.2 million TV households, there is so much room for growth.

Out of the more than 200 million population, "Currently there
are only 12,000 subscribers of cable TV among 60,000 already
connected houses in Jakarta," Kumara said. Connected homes are
situated in very limited enclaves such as Sunter, Kelapa Gading,
Kemang, Kebayoran Baru, Kuningan, Cipete and Menteng.

Other countries, such as China, India, the Philippines and
Taiwan, have hundreds of cable operators each.

With PT Telkom's fiber optic cable facilities, Indonusa
expects to sign up 60,000 homes out of Jakarta's hundreds of
thousands of middle and upper class residents who seek home
entertainment other than that available on regular television.

"Even TV Kabel finds it difficult to fulfill the demand for
cable service in Jakarta only because not all areas are reachable
by cable," Datakom spokesman Eddie Ellison said, adding that its
license covers all areas in Java.

There will be no head-on competition among the three
operators. Aside from ownership -- Datakom Asia has stakes in
each operator -- all operators have agreed to set the same price
for their services.

"Subscribers can decide which cable operator they want to
have," Kumara said.

However, Kumara sees a bigger opportunity for companies
offering services other than the DTH system in big cities. "The
sign-up fee is much lower," he said.

In terms of quality, satellite service is superior to cable.
But with its decoder and satellite dish, DTH has a higher sign-up
fee.

"Suppose a hotel subscribes to 60 channels using DTH, it would
have to purchase 60 decoders. Costing some Rp 6 million to Rp 7
million for the parabola antenna and decoder, the investment
would be very expensive," Kumara said.

To reduce the price of satellite dishes and subscription,
Indovision expects to utilize locally made satellite dishes. The
dishes are expected to be produced by the Bandung Institute of
Technology. "We expect this local dish will help reduce the sign-
up fee."