Telkom denies charges of unfairness towards ISPs

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned telecommunications company PT Telkom denied on Tuesday charges that it had created an unfair policy that hurt many Internet service providers in the country but helped boost its own ISP business, TelkomNet Instan.

Marketing general manager of Telkom's Multimedia Division Bambang Lusmiadi insisted that many ISP businesses were now struggling to survive, not because of the competition coming from TelkomNet but due to inappropriate business strategies.

He made the statement following complaints from the Association of Indonesian Service Providers (APJII) that about half of its 90 members had cut their operations for failing to compete with TelkomNet, which could offer both a lower price and better technology due to Telkom's support.

Bambang denied that TelkomNet offered lower prices.

"In fact, other ISPs offer a price lower than TelkomNet's," he told The Jakarta Post

He said other ISPs charged their customers Rp 3,500 per hour for Internet access in addition to Rp 195 per pulse, which customers had to pay Telkom for the phone connection. One pulse is equal to two minutes during peak hours and three minutes during off-peak hours. This means, their customers have to pay Rp 97.5 per minute to Telkom for the phone connection plus Rp 59 per minute to the ISPs for Internet connection -- or Rp 156.5 in total per minute for both phone and Internet connections.

In comparison, TelkomNet charges users Rp 165 per minute for both the Internet and phone connection, Bambang said.

"The prices payable by customers of other ISPs are even lower during off-peak hours," Bambang said.

He also denied charges that Telkom had prohibited other ISPs from using digital technology by withholding such permits, saying the right to award such permits lay with the directorate of posts and telecommunications at the Ministry of Transportation.

He noted that most of the country's privately-owned ISPs did not see TelkomNet as a competitor because they focused on corporate customers, while the latter focused on individual 'Net users.

He acknowledged, however, that TelkomNet directly competed against WasantaraNet, which is a 51 percent subsidiary of state- owned post firm PT Pos, because it focused on the same market segment -- individual Internet users.

However, he noted that WasantaraNet failed to compete, mostly due to an inappropriate business strategy. He said, rather than dedicating all its bandwidth to its Internet customers, WasantaraNet allocated 60 percent to its post business and the remainder to Internet users.

WasantaraNet, which was one of the country's largest ISPs, offering a service to 168 cities across the country, stopped its operations in 40 cities early this month.

WasantaraNet's business development director Dwi Suryanto claimed that the company's failure was indirectly caused by TelkomNet.

"Our business was about to collapse because 60 percent of the bandwidth was allocated for internal usage at the post office. We could have survived; however, TelkomNet has accelerated our downsizing," admitted Dwi.

TelkomNet currently has 300,000 unregistered users around Indonesia, including those living in villages of Aceh, Nusatenggara East or West Nusa Tenggara??, Kalimantan, and Sulawesi, which tends to be sidelined by other ISPs.

Bambang also dismissed the notion that Telkom, as the monopoly operator of the country's fixed telecommunications network, should not be involved in the ISP business, in order to ensure fair competition within the sector.

He said even developed countries had no such regulation that barred the owner of a telecommunications network from being engaged in the ISP business.

"For instance, Singtel of Singapore owns SingNet, which runs its ISP business," asserted Bambang.

Meanwhile, telecommunications analyst Onno W. Purbo insisted that there was enough evidence that Telkom had unfairly treated other ISPs.

"For instance, the ISPs in Kalimantan, Bali and Sulawesi have to pay to Telkom between Rp 300,000 and Rp 500,000 in monthly fixed fees, compared with the normal fee of only Rp 30,000. That's why ISPs have not grown well," Onno said.