Dian Kuswandini, The Jakarta Post, Jakarta | Tue, 06/24/2008 10:02 AM | Business
Indonesia's telecommunication giants have demanded the government limit the number of new entrants to the industry, citing limited resources and growing investment risk.
The Indonesian Cellular Telephones Association (ATSI) chairman Merza Fachys said limited frequency allocations and phone numbers meant there was no room to accommodate new players.
"The government must regulate the number of players so as to ensure the sustainability of the industry," Merza said in his speech at the annual national coordination meeting on telecommunication, information and media held by the Indonesian Chamber of Commerce and Industry.
Unlimited entry to the industry, he said, would crowd the market, increase competition and generate greater investment risk for existing players.
President director of the country's largest telecommunication company PT Telekomunikasi Indonesia Rinaldi Firmansyah said "There are far too many players. The regulation must limit the number of players."
Telkom owns a more-than 65 percent stake in PT Telekomunikasi Selular, which has a more-than 50 percent market share of the mobile telecommunication industry.
The crowded environment has resulted in an unhealthy tariff war between operators, which has recently seen aggressive rate cuts, Merza said.
"Cheaper tariffs generate more customers, but at the price of lowering the quality of the services," he said.
PT Indosat corporate services director Wahyu Wijayadi said text message services (SMS) in particular had suffered.
"Due to the increased traffic, we had to upgrade our capacity, which later affected SMS deliveries," he said.
Operators have to constantly review their business models in order to keep up with the changing market, which is greatly affected by each new entrant, he said.
The majority of the speakers at the meeting said regulations were slowly adapting to the industry's changing nature.
The industry is moving into a technology convergence era, Merza said.
"The current regulations can no longer accommodate the telecommunications industry, which has moved so fast toward a convergence. Mobile operators, television stations, content and application providers have intersected one another, while the current policies regulate them separately," Merza said.
Discrepancy between broadcasting laws and telecommunications laws respective to foreign ownership have resulted in confusion when mobile operators apply to broadcast a show.
"When a mobile operator wants to provide a new content service like cellular TV, the operator will face a dilemma as it won't know whether the service requires a broadcast permit that belongs to a TV station."
Under the broadcasting laws, foreign ownership is limited to 25 percent, while it is limited to 65 percent in the mobile telecommunications laws.
The director general of Telecommunication and Information Technology Applications at the Communications and Information Ministry, Cahyana Ahmadjayadi, said poor regulations had hampered industry.
"We understand that the current regulations on telecommunications and media overlap, and have not yet accommodated all sectors in the industries," Cahyana said.
The government, according to Cahyana, still requires input from all stakeholders to formulate improved regulations.
Indonesia's telecommunication giants have demanded the government limit the number of new entrants to the industry, citing limited resources and growing investment risk.
The Indonesian Cellular Telephones Association (ATSI) chairman Merza Fachys said limited frequency allocations and phone numbers meant there was no room to accommodate new players.
"The government must regulate the number of players so as to ensure the sustainability of the industry," Merza said in his speech at the annual national coordination meeting on telecommunication, information and media held by the Indonesian Chamber of Commerce and Industry.
Unlimited entry to the industry, he said, would crowd the market, increase competition and generate greater investment risk for existing players.
President director of the country's largest telecommunication company PT Telekomunikasi Indonesia Rinaldi Firmansyah said "There are far too many players. The regulation must limit the number of players."
Telkom owns a more-than 65 percent stake in PT Telekomunikasi Selular, which has a more-than 50 percent market share of the mobile telecommunication industry.
The crowded environment has resulted in an unhealthy tariff war between operators, which has recently seen aggressive rate cuts, Merza said.
"Cheaper tariffs generate more customers, but at the price of lowering the quality of the services," he said.
PT Indosat corporate services director Wahyu Wijayadi said text message services (SMS) in particular had suffered.
"Due to the increased traffic, we had to upgrade our capacity, which later affected SMS deliveries," he said.
Operators have to constantly review their business models in order to keep up with the changing market, which is greatly affected by each new entrant, he said.
The majority of the speakers at the meeting said regulations were slowly adapting to the industry's changing nature.
The industry is moving into a technology convergence era, Merza said.
"The current regulations can no longer accommodate the telecommunications industry, which has moved so fast toward a convergence. Mobile operators, television stations, content and application providers have intersected one another, while the current policies regulate them separately," Merza said.
Discrepancy between broadcasting laws and telecommunications laws respective to foreign ownership have resulted in confusion when mobile operators apply to broadcast a show.
"When a mobile operator wants to provide a new content service like cellular TV, the operator will face a dilemma as it won't know whether the service requires a broadcast permit that belongs to a TV station."
Under the broadcasting laws, foreign ownership is limited to 25 percent, while it is limited to 65 percent in the mobile telecommunications laws.
The director general of Telecommunication and Information Technology Applications at the Communications and Information Ministry, Cahyana Ahmadjayadi, said poor regulations had hampered industry.
"We understand that the current regulations on telecommunications and media overlap, and have not yet accommodated all sectors in the industries," Cahyana said.
The government, according to Cahyana, still requires input from all stakeholders to formulate improved regulations.
