Telecoms bill set to pass next month

Telecoms bill set to pass next month

JAKARTA (JP): The House of Representatives is upbeat about
passing the telecommunications bill by the end of August.

Chairman of House Commission IV for telecommunications,
tourism and transportation Burhanuddin Napitupulu said on Monday
that legislators and the government were in agreement on most of
the important aspects of the bill.

He said the commission would give its formal approval on
Thursday after the task force for the bill completed final
revisions of its wording on Wednesday.

"The House will hold a a plenary session on August 25 to give
final approval on the bill," he told The Jakarta Post.

He said commission members and the government finally reached
agreement on the most important issues in the bill, namely
exclusive rights in telecommunications currently held by state-
owned companies PT Telkom and PT Indosat, rate arrangements and a
regulating body.

He said the bill would allow local and foreign companies to
freely enter the telecommunications business without having to
cooperate with Telkom, which is currently required by
Telecommunications Law 3/1989.

"However, the bill will still allow Telkom and Indosat (and
Indosat's subsidiary Satelindo) to continue with their exclusive
rights until the end of their contracts," he said.

Under the present law, Telkom has exclusive rights to provide
local fixed and fixed wireless telecommunications services
nationwide until 2010, and domestic long distance
telecommunications services until 2005.

Indosat and its joint venture PT Satelit Palapa Indonesia
(Satelindo) hold exclusive rights for overseas long-distance
services until 2004.

The bill also allows for early termination of exclusive rights
subject to a mutual agreement between the government and Telkom,
Indosat or Satelindo, he said.

Burhan said the possibility of early termination was designed
to give other companies wide opportunities to enter the sectors
currently controlled by Telkom, Indosat and Satelindo by offering
compensation fees to each of the three companies.

"So we can start liberalizing the telecommunications sector
without having to breach the commitment given to investors before
the initial public offering of the three firms in early 1990s."

On the rate arrangements, the new bill will allow
telecommunications operators to set the amount of rates,
including the cellular airtime rate and new connection fee.
However, the rates should be based on the structures and formulas
made by the government.

Under the current law, operators can only propose rate
adjustments to the government based on formula and price cap
provided by the government

Burhan said the commission finally agreed to the government's
stance not to establish a completely independent regulatory body
to act as a watchdog in the telecommunications sector.

He said the new bill would arrange for the establishment of a
forum comprising all the concerned parties under the Ministry of
Communications to give the government input in the policy-making
process.

"The government said the current situation is not yet suitable
to accept an independent regulatory body. They're afraid a
completely independent body will only add to bureaucratic
barriers."

The House initially proposed the establishment of an
independent body consisting of telecoms operators, vendors,
relevant associations, analysts, consumers and associated
government institutions and government representatives to
supervise the country's telecommunications sector. (cst)