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 Much of it is out of date and should have been upgraded after the old equipment reached its use-by date," he told The Jakarta Post.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.