Syahrial Ali's Blog

On January 16th this year, President Republic of Indonesia has signed a Presidential decree no 7 about Tariff and Type of Non-Tax State Income in the Department of Communication and Information. Similar with other rule or decree, this decree valid from the date of signing. With the enactment of this decree, the previous regulation, namely Regulation No. 28 Year 2005 on the same issue is revoked and declared invalid.

However, exceptions apply to administrative sanctions from the telecommunications operation, because Article 14 mentions in full, that the imposition of tariffs on the types of non-tax state revenue derived from the Organization of Post and Telecommunications such as: a. administrative sanctions in the form of fines for violations of the permit obligation telecommunications network administration and / or basic telephony services; and b. administrative sanctions in the form of fines for breach of obligation of the organization permit value-added telephony services and multimedia services, entered into force 1 (one) year after this Government Regulation set. Hence the imposition of sanctions fines began an effective force on the date of January 16, 2010.

Although previously announced as in press releases dated February 3, 2009, and yet through this press release, the regulator wants to remind the Regulation No. 7 year 2009 to the telecommunications providers so they can prepare themselves better before the enactment of the provisions of the fine sanctions. The consequences of the implementation of such regulation can significantly impact for the telecommunications rules violator.

Below are several important things on Regulation no 7 of year 2009.
1. Administrative sanctions for non-achievable development:
- less than 40% from commitment: IDR 600m
- between 41% to 70% from commitment: IDR 400m
- between 91% to 90% from commitment: IDR 200m
2. Sanction in the form of fine for not meeting service quality standards are set according to prevailing regulation, IDR 200m / item.
3. Sanctions in the form of fines for violations due to the absence of compliance with the provision of interconnection schedule (schedule process of the answer, schedule negotiation process, the process of providing access to schedules, etc.) as stipulated in the regulations, IDR 600m / item.
4. Sanctions in the form of fines for violation of price discrimination and interconnection access, IDR 10b.
5. Sanctions in the form of fines for violations of use of domestic products due to capital expenditures that do not meet the applicable provisions, 15% x (Cons Obligations)% x Capital Expenditures / year.
6. Sanctions in the form of fines for violations of the use of domestic production due to operational expenditures that do not meet the applicable provisions, 15% x (Cons Obligations)% x Operational Expenditures / year.
7. Does not meet the minimum services which must be provided, IDR 10m / service.

(translated from www.postel.go.id)

When you travel abroad, you will receive a welcoming message in the destination port from another operator. This message will tell you that you can use your mobile phone in this country as if you are in your own country. You are currently in other country and the operator you use has a cooperation agreement with the local operator in the destination country. You are in international roaming condition.

The same principal can also be applied within the same country. Some operators have better coverage than some others, or some operators have coverage in one or more areas, while some others have coverage in that region but they don’t have in another region. To cover all regions, an operator shall need to make a domestic roaming agreement with other operators.

Up until October 2009, almost 15 years since GSM technology was launched in Indonesia, no cellular operator was interested in domestic roaming. Big operators seem reluctant to provide domestic roaming to its competitor. This is one reason why new entry in cellular industry get difficulties to attract more customer in Indonesia. New entry operators must built their own network to serve customers.

However on Nov 16th 2009, there is a breakthrough in cellular communication in Indonesia when XL agreed to provide national roaming for Axis. Hence Axis’s customer can make a communication in all over Indonesia even though Axis doe have network in that area.

Domestic roaming is beneficial for both parties. The main benefit goes to tenant (Axis), however XL also receives additional revenue from this service. Domestic roaming is enable new entry to attract many customers as it can serve wider coverage.

Special respect shall be given to XL management who opens up an healthy competition with their competitors. Congratulation.

Deregulation in telecommunication sector tends to encourage competition in multi-operator environment. The same phenomenon also happen in Indonesia. Currently there are 10 cellular operator with 12 types of services, namely 6 cellular services and 6 fixed wireless access services.

Indonesian big market has attracted many investors in telecommunication industry. According to the data from Directorate General of Post and Telecommunication, till the end of 2008, Indonesian mobile subscribers has reached 150 million. This is one of the magnet why the investors come to Indonesia.

The competition among mobile telecommunication operators have increased sharply which are supported by two main things namely the need for communication itself and the affordable tariff. In terms of communication need, mobile phone has become life style not only for high and medium class society but also for low class society. With regards to tariff, the tariff war among cellular operators has brought the tariff down to the lowest level. Moreover, currently there are many low cost handsets available in the market. With these things, the number of subscribers has sky rocketed.

Responding to the high competition, a control mechanism is released by telecommunication authority. To ensure that the competition is healthy and to protect the customers’ right, every telecommunication providers are obliged to provide a service within the standard quality of service. This rules is based on Minister Information and Communication decree no 12 in the year of 2008.

There are 4 main items in the Cellular Quality of Service Rule namely: Service Performance, Network Performance, Reporting, and Assessment, Reward & Punishment.

The service performance consists of billing complaint, other complaint, activation and customer care response. The billing complaint shall be less than 5% of the total complaint, and all complaint shall be resolved in 15 days. 98% of activation both for post and prepaid shall be finished in 24 hours. 85% of Customer complaints shall be finished in a year (this is to anticipate if most complaint happen at the end of the year). With regards to customer care, 75% of all calls to service center shall be picked up by operator in 30 seconds. The time is calculated after the caller presses a special digit which mean he/she wants to speak to operator.

In the network performance, the dropped call and blocked call rate shall be less than 10% from total calls. The test shall be done by drive test and static test with a minimum sample 260 and 200 calls respectively for each city/region. The call shall be 60 seconds holding time and 10 seconds pause time. In terms of short message service, 75% of the number of short message shall be sent at maximum 3 minutes. The total sample of SMS test is 100 messages with 160 characters long and the interval time to send the sms is 10 minutes.

The rule is also requested operators to report their quality of service performance, once a year. The report shall be submitted not late the second week of February. Besides that operator shall update and publish its quality of standard on quarterly bases in its own website.

To assess operators’ report, Indonesian Telecommunication Regulator performs quality of service measurement once a year. When the measurement result is not meet the rule criteria, a punishment such fine will be applied to the operator. The moral is the regulator wants to protect customers from bad service quality.

Welcome to Mr. Tifatul Sembiring, as a new Indonesian Minister of Information and Communication. Since October 21st 2009, Mr. Tifatul replaces Mr. Muhammad Nuh, who now appointed as Education Minister in the 2nd term of Mr. Yudhoyono as Indonesian President.

Tifatul, previously was a president of Partai Keadailan Sejahtera, a party which has supported Yudhoyono since his firm term in 2004. Below are bio data of the new Minister.

Name: Tifatul Sembiring, Ir.
Born: Bukittinggi, Sumbar, 28 September 1961
Education: Sekolah Tinggi Ilmu Manajemen Informatika dan Komputer, Jakarta, & International Politic Center for Asian Studies Strategic Islamabad, Pakistan.
Work experiences: PLN, 1982-1989 & Director of Asadudin Pres, Jakarta.

Tifatul Sembiring programed in 100 first days his work as Inforcom Minister, to implement 100 computer villages, a village with computer literacy. This program is part of grand design to implement 10.000 computer village in 2014.

Tifatul also determines the computerization system can enter all through the foundation of the community from the educational agency, the business, to the government officer in the lowest level. Computerize government will reduce the corrupted activities as officer will not receive any cash. They just receive the docket or payment receipt.

Congratulation Mr. Tifatul and we are waiting for your positive contributions for this department and for the country.

According to the data released by DG Postel, Telkomsel is the highest payer of spectrum frequency fee. Up until end of June 2009, Telkomsel has paid just above IDR 1.6 trillion, which consist of Rp. 929b (900 MHz) and Rp. 724b (1800 MHz). Indosat comes second with IDR 940b, followed by XL with IDR 700b. Bakrie is the highest payer for CDMA operator with IDR 230b. The total spectrum fee until end of June is IDR 4.2 trillion.

Currently DG Postel released a consultation for spectrum fee based license. The white paper has been released. It can be downloaded here.

The pressure to spectrum fee stuck up since a few years ago. This was triggered with the cost that must be paid using current system, apparatus license. In this scheme, as written in the previous posting Indonesian Spectrum Levy, operator will pay as they build new equipments which use spectrum frequency. From time to time, the figures will increase and nowadays it has become so high. Just take Telkomsel for example. It has 2x30Mhz spectrum in 900MHz and 1800MHz. Until June 09, they have already paid, IDR 1.6 trillion or more than IDR 26b per MHz. This figure is far higher than 3G spectrum fee, with just IDR 16b per MHz.

The purpose this consultation is to make an equal treatment for all industry which uses the spectrum frequency. However, for the time being the focus is the cellular industry in which spectrum frequency is the vital element of the business. In this consultation, people are encourage to submit their comment to the DG Postel, from Oct 16th to the end of the month.

According to InMobi Network Research data, Indosat the second largest cellular operator in Indonesia leads the mobile internet service with the market share almost 75%. Indosat mobile data service serves almost 3 million subscribers. This figures is far higher than Telkomsel and XL.

From this 3 million subscribers, Indosat gets IDR 1.4trillion or equivalent to 15.6% of its total revenue in first semester 2009. This figures is slightly higher than the 2008 figures with just IDR 1.28 trillion.

InMobi also noted that the young people (18-27 years) are the highest (53%) customers of mobile internet and 82% of the users are men.

For your information, Indosat has served mobile data services since a few years ago ahead of its competitors.