Telkom to cut cost on new codes

Telkom to cut cost on new codes

Tony Hotland, Jakarta

PT Telekomunikasi Indonesia (Telkom) is meeting with government
officials to discuss how to minimize the costs of changing the
regional phone codes.

Telkom president Kristiono said the government funds earmarked
for the change were inadequate and the company would have to
renew its infrastructure to support the new coding system.

The government is to pay compensation fees to Telkom and PT
Indosat following its implementation of a duopoly policy on the
telecommunications sector, which ends Telkom's monopoly over
domestic telecommunications service and Indosat's international
call service.

Telkom will get Rp 478 billion (US$53.34 million) for the
termination of its local and long distance call rights, and
Indosat will get Rp 178 billion for its international calls.

The government is expected to pay the fees next year.

However, Kristiono said the real cost of the change was far
larger than the compensation fee.

Telkom has estimated the total cost of implementing the new
codes would reach about Rp 3.22 trillion.

Kristiono said Telkom would have to upgrade old computers and
revamp phone centers in many areas to make them compatible with
the new codes.

"Who will pay for the (funding) gap? The compensation fee
should cover all the expenses which will be incurred," Kristiono
said.

An alternative, which would keep costs down, would be to keep
the 0 proceeding the current area numbers, he said. He did not
say how much money could be saved.

Under the new system, the area code for Telkom's subscribers
will become 017 and Indosat's will be 011. These codes will
replace the 0 that proceeds the area numbers under the existing
system. For example, the 0 in 021 for the Jakarta area code will
be 017 or 011, and then followed by 21.

Instituted on April 1, the new policy is expected to be in
full operation by April 1 next year.

However, Indonesian Communication Regulatory Body (BRTI)
member Hery Nugroho said the compensation fee could not be
revised. It was calculated through a long process of appraisal
and due diligence and had been approved by the House of
Representatives, he said.

"It should have been Telkom's duty to regularly renew its
infrastructure. Much of it is out of date and should have been
upgraded after the old equipment reached its use-by date," he
told The Jakarta Post.

Hery said the BRTI was examining Telkom's Rp 3.22 trillion
cost estimate for the new codes.