Telecommunications sector has bright outlook
Sari P. Setiogi, The Jakarta Post, Jakarta
The year 2003 has been a bright year for the telecommunications industry.
The number of cellular phone subscribers has increased steadily, prompting cellular phone manufacturers to intensify sales campaigns.
Cellular phone operators are also fighting fiercely with new players introducing code division multiple access (CDMA) technology to compete with the old system that uses the global system for mobile communication (GSM) technology.
The government also announced the winner of a bid for the development of the most advanced third generation (3G) cellular technology in the country.
The number of cellular phone subscribers across the country is estimated to reach 18 million by the end of 2003, an increase of more than 50 percent from last year's 11.4 million, according to the Indonesian Association of Cellular Telecommunications (ATSI).
It is the highest growth in seven years since cellular phones using GSM technology were first introduced in the country. The main cause of the rapid growth is the lower cellular phone subscription rate and cheaper handsets.
Despite the rapid growth, the number of cellular phone subscribers account for a mere 8 percent of the nation's population of more than 215 million. This means the market's potential is still vast.
Thus far, the industry is controlled by operators using GSM technology, including Telkomsel, Satelindo and Excelcom.
But their domination is being challenged by new players using CDMA technology.
The CDMA operators are TelkomFleXi, owned by the country's largest telecommunications company PT Telekomunikasi Indonesia; esia, owned by the Bakrie Group; and Mobile 8, controlled by the Bimantara Group.
Bakrie is developing esia after acquiring PT Ratelindo, an operator of advanced mobile phone services (AMPS) technology, while Bimantara is developing its Mobile 8 after buying out three AMPS operators: PT Komselindo, Metrosel and Telesera.
TelkomFlexi and esia are licensed to operate with limited coverage, while Mobile 8, like the GSM operators, is allowed national coverage.
Industry sources said another new player, Wireless Indonesia (WIN), will join the CDMA market soon.
Mobile 8's president and CEO BT Lim boasted that Mobile 8 could become a serious contender for the existing GSM operators as CDMA has several plus points compared to GSM, including high- speed data delivery.
Lim said that the CDMA service provided by his company is capable of delivering data at 120 and 150 kilobits per second (kbps), while the data delivery speed provided by existing GSM operators stands at about 30 kbps.
The delivery speed is crucial when cell phone users want to download videos, songs and data from the Internet using cell phones. The higher the delivery speed, the faster the downloading process. Cell phone subscribers thus pay less to download.
Lim said that in the future the data delivery speed will be one of the main concerns of customers.
Existing GSM operators have also improved their data delivery speed using the so-called general packet radio services (GPRS).
But industry analysts say that CDMA technology is still better than GPRS in terms of data delivery speed.
In order to improve its services, Telkomsel, the country's largest cell phone operator, plans to launch "TelkomselEDGE" in the first quarter of 2004 which the company claims delivers data faster, Telkomsel's head of packet data network Ivan C. Permana, told the Post.
According to him, this technology enables users to download video music clips, have full multimedia messaging as well as high speed color Internet access at 100 kbps. In order to use the new service, people should use EDGE-ready cell phones, such as Nokia 6220.
Ivan, however, played down the significance of data delivery speed for customers, saying that people mostly use cell phones for voice communication rather than sending data.
"Out of Telkomsel's nine million subscribers, only 400,000 regularly use their cell phones for data communication," he said.
As existing cell phone operators are vying to introduce new technology, the government launched a bid for a contract to build the most advanced 3G technology.
This technology will not only support voice communications but also real-time video and full-scale multimedia.
A 3G device functions as a phone, a computer, a television, a pager, a videoconferencing center, a newspaper, a diary and even a credit card.
A new player, PT Cyber Access Communications -- a subsidiary of Thailand-based TelecomAsia -- won the auction to build the 3G project here. TelecomAsia is a subsidiary of Thailand poultry food giant Charoen Phokphand.
The technology will not be available here until 2005, almost the same time that it will be available in Europe.
The rapid development in the telecommunications world here is seen by mobile phone manufacturers as a big chance to market their products aggressively.
Almost all mobile phone producers here are optimistic about raising sales by 30 percent to 50 percent next year.
Market leader Nokia launched 15 new types in the country this year, for the low-end and high-end markets. Among the 15 is the 7600 type, which is a CDMA/GSM phone. The gadget allows a user to switch from CDMA to GSM, and vice versa.
The general manager of Nokia Indonesia, Hasan Aula, said he believed with the development of the telecommunications technology here, the market, which is currently dominated by the low-end market, will soon shift to the mid-market.
"The use of mobile phones will no longer be only for voice communication," he said.
In its report published in November this year, marketing research firm Synovate said out of 19,222 cell phones users in Jakarta surveyed by the firm, 29 percent were said to have cell phones with Internet access.
Separately, global technology research company Gartner predicts sales of smart phones -- phones that can do almost anything from taking video pictures, still pictures, act as an organizer, download Internet data, as well as play games -- will jump by 140 percent next year.
There are smart phones already available on the local market. Nokia launched one in its Communicator series last year and its latest 6600 this year, while SonyEricsson launched its P800 last year and the P900 this year. Another producer to join the smart phone market is Britain-based O2 with its PDA-phone XDA and XDA II.
New smart phones sell for an average of over Rp 5 million (US$556) at the moment.
Samsung and Siemens manufacture smart phones, but they are not yet available in Indonesia.
According to Robby Darmasetiawan, general manager of PT Dian Graha Elektrika -- Siemens' distributor here -- they will soon launch their premium series with video streaming feature, SX1 and SX60.