Syahrial Ali's Blog

After the regulator of Indonesia Telecommunication reducing the interconnection tariff on April 1st, 2008, the voice telecommunication tariff is getting lower and lower. Operators were competing in tariff war. Right now we will find that many operators will charge their customers not only time based or number of call based, but on daily basis. It means that the customers will be charged some amount of money (from Rp 1,000- 2,000 (around US$ 10 cents – 20 cents), unrelated with the number of calls or the duration of the calls you have made during that day. Very cheap indeed.

As the result of this campaign, the operators’ income from voice will decrease. So, there should be an alternate source of income to fill the gap. Some of them are: SMS, MMS, value added services and internet services. (more…)

Indonesian Telecommunication Authority has released a tentative schedule for the selection of Broadband Wireless Access Provider. According to New BWA White Paper, all the processes shall be finished by the last week of 2008. On the 3rd week of November 2008, there will be an announcement for the selection and then followed by the auction process which will end at the 4th week of December.

The spectrum frequency band for this auction are 2.3GHz and 3.3GHz.

On 2.3GHz, only 15 MHz will be auctioned, i.e. 2375 – 2390 MHz. Meanwhile, in 3.3GHz, there are 100MHz which are divided into 8 blocks of 12.5 MHz. Unfortunately, for 3.3GHz the most interested area (Jakarta metropolitan area) is already occupied. The participant shall be from network or service provider, incumbent or new entries. Both licenses are just for nomadic BWA.

The license will be regional based, where Indonesia is divided into 14 regions.

The spirit of this license is to use local resources, that is minimum 30% CAPEX and 50% OPEX.

So, hurry up. Prepare your document soon!

For detail information, please read the new BWA white paper.

A special task force in Indonesian Communication and Information Ministry has made a press release concerning the Public consultation on BWA. The public are invited to give comment for the new BWA white paper (language: Indonesian) that just released. The response shall be received by October 25th.

This consultancy is meant to complete the previous white paper released on November 2006. Apart from public’s consultations, this document compilation was based on inputs from the existing broadband organizers and stakeholder in telecommunications, and references from several international forums like results of the session WRC-2007,

This document focus on the government intention to spread out the service of wide band acces. Nevertheless, the meaning of this event not only relate to a new telecommunication services,  but  far more significant than that. By being spread out the broad band wirleless access,  Indonesia enter a new telecommunications environment. Old environment that was characterized by the narrow band for the voice moved to the wideband for multimedia, and the network of the PSTN will  begin to converge with  the global network of the Internet in which its architectures and capabilities are completely different.

If you read the document carefully then you will know that the Indonesian Telecommunication regulator will release a regulation concerning BWA in 2.3GHz and 3.3GHz. Hopefully, Indonesia will have broadband services in the near future.

According to Indonesian Stock Exchange, on September 19th and September 22th 2008, PT Global Mediacom Tbk owned by Hary Tanoesoedibjo has released 22,79% of his share in PT Mobile-8 Telecom Tbk. Currently, the share of the company remained at 28.21% (previously 66,8%). Mobile-8 is one of CDMA operator in Indonesia.

Meanwhile, a couple of days ago, Bisnis Indonesia daily reported that three investors from Middle East indicating interest in the shares of Bakrie Telecom including QTel, which recently acquired 40.8 per cent stake in the country’s second largest telecommunication company PT Indosat.

Moreover, both Telkom Flexi and Startone Indosat have slowdown their expansion.

So, what’s really happened?

There are three possible causes, namely internal financial situation, tariff war effects or other technical flexibility.

In Bakrie case, earlier, the Bakrie Group said it will sell shares of a number of its subsidiaries including Bakrie Telecom to raise fund to repay a debt of US$1.2 billion maturing in April next year. So, internal financial condition which lead them to this action.

How about other cases?

Does the tariff war has result in casualties or does the economic crisis has affected this business?

Mobile-8 has announced to quit from tariff war by replacing it with value added services. How about other operators? We still have to wait.

All people in Indonesia know that mobile telecommunication tariff now is already cheap. So, the network qualities will play an important role. If the quality of your network was ugly, the customer will run and move to other operator.

It seems that only CDMA operators were hurt. GSM based technology operator such Telkomsel, Indosat or XL and also new operators such Axis and Three are still making expansion. They keep growing.

One main point should be keep in mind that the low tariff has eroded the income of the operator.

Or does limited spectrum has affected their flexibility. As writen in CDMA-GSM-Competition-in-Indonesia, all CDMA operators just have a small spectrum frequency (5MHz bandwidth), so they have small flexibility in making network design which result ini a higher budget for network expansion. The same problem does not exist in GSM based operator as they have at least 10MHz bandwidth.

So, what is the reason behind of this situation? We don’t know so far. The solution? I believe that transfer of ownership will not resolve the problem. I think, operator merger shall be considered.

Indonesia’s government has made a fairly large change to its policy on foreign ownership of telecoms operators – and is to permit Qatar Telecom (Qtel) to increase its holding in Indosat to 65 percent. Qtel recently paid US$1.8 billion for a 40.8% in the firm, and was seemingly restricted to a 49% stake by Indonesian law.

Qtel paid US$1.8 billion to buy Asia Mobile Holding, which was a holding company for a stake in Indosat. Previously, Qtel held one-quarter of Asia Mobile’s stake, while three-quarters was owned by Singapore Technologies Telemedia. (more…)

According to the data from DG Postel (released on Oct 9th, 2008), the total number of Indonesian telecommunication subscribers were more than 134 millions subscribers which consist of 8.7 millions fixed, 12.7 millions FWA and 113 millions of cellular subscribers. Like other developing countries, the prepaid and postpaid compositions of FWA and cellular subscribers are 96% (more than 121m) are prepaid subscribers with only less than 4 % are post paid. This was different very much with developed countries where this composition was overturn, namely the number of customers postpaid far exceeded the number of customers prepaid. Their classic reason is they do not want to pay everything that was not yet utilised.

By the way, have you ever compared the tariff scheme for both types of payment (prepaid and postpaid) in Indonesian cellular telecommunication?  Let’s take Telkomsel as an example. If we look at the basic price then the postpaid tariff is lower than other prepaid tariff (Halo Rp 600/min, Simpati Rp 1500/min & Kartu As Rp 900/min) for on-net local, off-net (Halo Rp750/min, Simpati Rp 1600/min; Kartu As Rp 900/min). Only SMS is higher than prepaid (Halo Rp 150, Simpati Rp 125, Kartu As Rp 88). However, if we investigate the promo tariff, then the prepaid tariff is far lower than the postpaid tariff. The tariff for prepaid is only Rp 0.5/second or Rp 30/min, far below the tariff for postpaid Rp 600/min).

The similar thing will be found with other cellular operator such as Indosat and XL. XL for instance just ask prepaid subscribers to pay Rp 1,000 for 60 minutes, while postpaid subscriber has to pay Rp 9/second.  Indosat place a Rp 15/second to all operators for postpaid subscribers and Rp 1,000/day for prepaid subscriber .

I think, this tariff scheme is an anomaly if we calculate the cost of prepaid system.

Prepaid call need more resources. For instance, before connected, the system shall perform a balance checking, whether it still has credit to make a call. This check perform continuously during the conversation. After the call release, the system shall report the charge of the call to subtract the credit. So, it need a realtime system. This requirement is different with post paid system. All checkings can be postpone to the end of the month when you need to send the billing.

In the security view, the postpaid users have a clear identities because of initial checking on registration. Meanwhile the prepaid user who register online can input invalid data.

So, why the operators do not offer good incentives for postpaid subscribers? Shall we jump to conclusion that operators are more beneficial by getting money earlier before their network is used? And the amount is bigger than the cost of prepaid systems?