The Struggle of New Entries in Cellular Business in Indonesia (2)
On previous posting, it has been written the first reason why incumbents operator have several advantages in cellular businesses in Indonesia. The second reason is the entry time of the new comers. All new comers were started their business when the incumbents have a established network. So, they were too late.
The impact of the late entry time are:
1. New users will be protested about coverage limitation. This leads to unhappy users and back to incumbent operators.
2. Most new users who join the new comers are in low economic level who just have very low budget for their communication need. Middle or high economic level who spend high communication cost already have their mobile number. They already received good communication services from incumbent operators so they will keep their mobile number.
We know that the number of low economic subscriber is far higher than the high and middle class subscribers. However, according to Pareto principal, ” 80% of your income come from 20% of your clients”. It means that the incumbents already kept the 20% subscribers, the high and middle class subscribers.
When the new comers have better coverage, the situation was not getting better for them as the price was happened. Currently, there was no subscription fee, the on-net tariff reaching zero and the interconnection tariff was getting down. All of the facts above have worsen the business situation for new comers in cellular business in Indonesia.
Another reason why the new comers have difficulties in develop their business is the number portability implementation. Number portability is the ability for the user to keep their mobile number eventhough they change their network (operator). With this, people can choose the best operator which suit them without worrying their mobile number. In previous posting, Mobile Number a New Important Identity, it has also been written the importance of the mobile number for modern life style. Number portability is one of competition tools which lead to competition of quality. At this time I think number portability will make situation better for new comers.
In CDMA and GSM competition in Indonesia, I have written several issues related with the competition. It’s still valid to include it in this subject.
As conclusion, the cellular business in Indonesia is still in unbalance competition. The new comers will still have difficulties to make their business healthy.
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