Telecommunications companies welcome new law

Telecommunications companies welcome new law

JAKARTA (JP): The new telecommunications law gives players in
the country's telecommunications industry the long-awaited chance
to compete more openly and fairly, operators in the industry
said.

The business development manager of multinational satellite
telecommunications firm PT Asia Cellular Satellite (ACeS), Gema
Suria, said the antimonopolistic characteristics of the law was a
good and solid basis for telecommunications players to create
open competition in the industry.

"Open competition is good for business. The law provides a
wider opportunity for open and fair competition in the market,"
he told The Jakarta Post on Friday.

The House of Representatives passed the new telecommunications
law on Aug. 25. The law, designed to eliminate the government's
monopoly of the telecommunications sector, will become effective
one year after it is ratified by President B.J. Habibie.

Under the law, local and foreign companies will be free to
enter the country's telecommunications industry without having to
collaborate with state-owned telecommunications firms PT Telkom
or PT Indosat.

In order to respect an earlier commitment given by the
government to foreign investors prior to the initial public
offering of the two state-owned companies, however, the law will
maintain the exclusive rights held by Telkom and Indosat for a
certain period of time.

Telkom will be allowed to maintain its control of local fixed
line nationwide until 2010 and domestic long-distance
telecommunications services until 2005. Indosat and its
subsidiary PT Satelindo will maintain their monopoly of
international call services until 2004.

Gema said ACeS was optimistic it could take advantage of the
opportunities afforded by the law to further expand its business.

"We are not thinking of entering the Telkom-dominated local
telecommunications sector. In terms of fixed-line telephones,
we're only aiming to provide an alternative telecommunications
system for users of domestic long-distance and international
calls.

"But we are sure about competing head-to-head with foreign
players in satellite-based telecommunications for cellular phones
by focusing on existing cellular phone users," he said.

ACeS' satellite telecommunications system is based on the
Global System for Mobile Communications (GSM), and will employ
the dual-mode handsets GSM900/1800 and AMPS.

Gema said ACeS would not compete with existing cellular
operators. ACeS' system will be an alternative for cellular phone
users while they are roaming outside the country's traditional
GSM900 network, he said.

The head of the industry policy division at the Indonesian
Association of Cellular Telecommunication, Rudiantara, also
welcomed the new law because it gave operators more freedom to
run their businesses.

"The most important benefit of the law is the improved and
fairer arrangement of interconnections. With the new arrangement,
cellular operators can work efficiently and will be able to
create a level playing field with other operators," he said.

The new law allows all operators to provide a network or
utilize other providers' networks by paying an interconnection
fee to network owners.

Rudi said that although the law gave new players a greater
opportunity to enter the business, the cellular industry would
continue to be dominated by the existing players, particularly
the GSM providers.

"We know some firms have been licensed to operate as cellular
operators, but they will not be able to begin operations soon due
to the economic crisis," he said.

He added that new cellular players would face tough
competition because they would be offering a system which was not
common in Indonesia.

There are currently seven cellular operators providing GSM,
Advanced Mobile Phone System and Nordic Mobile Telephone System
to 1.6 million users. (cst)