Windfall for telecommunications operators in RI

JAKARTA (JP): The telecommunications industry in Indonesia has witnessed significant growth recently with the development of various facilities, including networks, equipment, value added services and other telecommunications related businesses.

In telephone facilities development the government has allowed the participation of private firms in the establishment and management of telephone lines in the country's five telecommunications areas.

During the current Five Year Development Plan (Repelita VI) period, the government has set itself the target of installing at least five million new telephone lines, of which some 2.25 million are being offered to private companies, while the remainder, located in the greater Jakarta area and East Java, will be installed by the state-owned domestic telecommunications company, PT Telekomunikasi Indonesia (Telkom).

A total of five consortia, comprising both foreign and domestic companies and cooperatives, have been selected to install the 2.25 million business lines in parts of the country other than Jakarta and East Java. After the signing of 15-year concessions, popularly called KSOs, Telkom handed over the projects to the five private firms earlier this year.

It's a long-awaited breakthrough for the country's telecommunications industry. Many other countries in Asia, including Singapore and Japan, still keep their basic telecommunications business closed to foreign participation. Before the KSO was introduced, Telkom had offered just profit- sharing cooperation arrangements to private firms.

Leading world-class telecommunications operators involved in the KSO projects include France Telecom, West Inc., Telstra of Australia, NTT of Japan, Cable and Wireless of Britain and Singapore Telecom.

"Welcome to the most open telecommunications industry in the world," Minister of Tourism, Post and Telecommunications Joop Ave said, referring to how Indonesia has been allowing foreign investment in the telecommunications industry.

In the cellular mobile telephone business, Indonesia currently has seven operators running three different systems. PT Telekomindo, PT Metrosel and PT Komselindo run the advanced mobile phone system (AMPS); PT Mobisel runs the Nordic mobile telephones (NMT) system; and PT Satelindo, PT Telkomsel and PT Excelcomindo run the Global System for Mobile Communications (GSM).

Some of the cellular mobile telecommunications operators are partly owned by foreign firms. Satelindo's partner is DeTeMobil of Germany, Telkomsel is partly owned by PTT Telecom Netherlands and Excelcomindo is linked to the American firm Nynex and Mitsui of Japan.

Subscribers to cellular mobile telephones have also increased rapidly, especially after the government eliminated the import duty on certain handheld models in 1995. However the government now imposes a Rp 400,000 duty for each handset when purchased.

In the meantime, both domestic and overseas firms are eying chances to enter the new digital cellular telecommunications projects. These include the Personal Communications Network (PCN), the DCS-1800 and the Personal Handy-phone Service (PHS). The new systems operate on 1,800 megahertz or 1,900 megahertz, a higher operating frequency than the digital network and able to support more subscribers per area. Its coverage includes expressways and tunnels.

A number of overseas telecommunications operators including Hutchison of Hong Kong, Singapore Telecom, and NTT of Japan have expressed an interest in dealing with the prospective businesses.

Domestic telecommunications firms, Telkom, PT Indosat and PT Inti, have also prepared themselves for the businesses as the government is expected to license more than one firm to operate the new digital cellular system.

The tender for the new digital cellular system is expected to be opened later this year.

On a smaller scale, fixed radio telecommunications, the second generation of cordless telecommunications system (CT2) and radio paging/beeper services as one of the other wireless telecommunications systems have also expanded widely.

Last year PT Ratelindo the country's only private operator of fixed cellular digital radio telephones, introduced its project. The system is offered particularly to areas in Jakarta which are far away from telephone networks installed by Telkom. Ratelindo is owned by Telkom and a joint venture company which is partly controlled by PTT Telecom Netherlands.

In the meantime, PT Telepoint Nusantara, a private firm which operates cordless telephones, is also running its CT2, a wireless telephone service which is only able to make outgoing calls. Several foreign firms intend to participate in the ownership of Telepoint.

Many overseas companies are also participating in Indonesia's radio-paging services. PT Dutasejahtera Komunikatama which runs Starpage beeper service, is partly owned by Motorola of the United States. Other radio paging providers which are partly owned by overseas parties include PT Telematrixindo with the EasyCall brand; PT SkyTelindo with Skytel; PT Indolink First Pacific with Indolink and PT Buana Bintangbayu whose Telepage is partly owned by a Japanese firm.

PT Raya Pertiwi Semesta with its Multipage beeper is indirectly owned by NTT International Corporation of Japan, while PT Hutchison Sewu, which runs Personal Beepers, is partly owned by Hutchison Whampoa Ltd of Hong Kong.

Currently, Indonesia has three radio trunking system providers. The firms operating radio phone services are PT Mobilkom Telekomindo (partly owned by Jasmine of Thailand, Goldman Sachs and International Wireless Communication of the United States), PT Jastrindo Dinamika (partly owned by Telstra) and PT Maesa Nusatama.

Two more firms, PT Indocall Rintis Buana and PT Prasarana Lokapratama will soon start similar businesses, while the government plans to license two more firms to provide telecommunications through the radio trunking system, bringing the total number of such operators to seven.

Besides the wireless telecommunications system, Indonesia will also be operating, within the next two years, a sophisticated digital mobile telecommunications project based on satellite technology. The $1 billion project is being developed by PT Asia Cellular Satellite System (ACeS) which is owned equally by Indonesian, Thai and Philippine firms.

Satellites are playing a major role in the development of the telecommunications industry, and will in turn accelerate the growth of the country's economy and improve the well-being of the population.

Currently the country has the third generation of communications satellites called the Palapa-C1 and the Palapa-C2 which are operated by Satelindo.

The two satellites, one of which was launched from Kourou in French Guiana yesterday, are invaluable both to broadcasters and telephony service providers.

As a satellite operator, Satelindo plans to establish partnerships in several global satellite telecommunications projects.

There are currently several global satellite projects with plans to launch satellite-based telecommunications systems. The multi-billion dollar projects, including Iridium, Odyssey, Globalstar, Teledesic and Inmarsat P, will begin operating within the next five or six years.

Iridium, led by American Motorola, will operate 66 satellites to be sent into orbit starting in 1998. The initial stage of the global network will have the capacity to serve 1.5 million mobile telephones and 500,000 international pagers. Another American project, the Globalstar system, plans to launch 48 low-orbit satellites to provide worldwide telephone and other digital communication services.

Odyssey, a consortium established by TRW from the U.S. and Canada's Teleglobe, also plans to operate 12 satellites in the medium-earth orbit. The project is expected to commence by the year 2000. The International Maritime Satellite (Inmarsat) organization is planning a similar project, called Inmarsat P or I-CO Global Communications, which will use 10 satellites.

Some of the projects have expressed their interest in entering Indonesia which is considered one of the biggest potential markets in Asia.

Inmarsat is the first of such companies to secure a place in Indonesia as Indosat has set up a new subsidiary called PT Indokomsat Lintas Dunia to provide services from I-CO Global in the country after the project starts within the next two years. Indosat spent $12.87 million to acquire a 1.41 percent stake in I-CO. The system will permit mobile voice and data communications through a hand-held telephone anywhere in the world.

Though the government has opened the telecommunications industry door to overseas firms, the government still holds its only key. Any basic telecommunications service must be operated by state-owned companies.

The involvement of private operators in the Indonesian telecommunications industry is permitted on the condition that such firms cooperate with the state-owned companies under a joint-operation, joint-venture or management agreement.

Therefore, based on the country's Telecommunications Law No. 3/1989, interested parties planning to enter the telecommunications industry are required to set up partnerships with either Telkom or Indosat or both.

-- I. Christianto