Telkom Where Are You?

Onno W. Purbo

With eight (8) million fixed lines available for the 210+ million populations cut the Indonesia?s teledensity to four (4) percent. Unfortunately, it means half of the 4000+ municipalities or more than 43.000 villages left with no right to communicate. Of the 55 million Indonesian families, only 12.6% has telephone, 57% television and 5% has personal computer (PC). Among other Asian countries, Indonesia is the lowest in penetration on the Internet, Telephone and PC; even lower than India and China.

International Telecommunication Union indicates that one percent increases in teledensity may result in three percent increases in economic growth. Thus, any government should provide incentive to telecommunication infrastructure deployment. Telkom, a century old company initiated during colonial time, seems to asleep and inefficient while hiding behind the law that results in very minim telecommunication infrastructure deployment in Indonesia.

In contrast, within a much lesser time, the Indonesian cellular operators seem fulfill people?s right to communicate and challenge Telkom at the same time. In the beginning 2002, the total number of cellular subscriber surpass the 7,7 million fixed line subscriber. Today in mid 2005, it is safe to say that cellular subscribers are close to 30 million far beyond fixed line subscribers.

A significant shift from fixed line subscribers into cellular subscriber is understandable as high initial activation fee Rp. 300-500.000 of fixed line plus additional telephone pole cost for those in remote villages. There is neither prepaid service nor added value service, e.g., SMS, caller-ID in some areas. In contrast, cellular subscribers enjoy low activation cost at Rp. 15-20.000,-; easy to get voucher for prepaid card; and numerous added value services, e.g., SMS, MMS, caller-ID, GPRS with many SMS based content and increasing coverage in many areas. Locally made external GSM antenna at Rp. 150-300.000 solve remote village difficulties to access to the base station.

In the past three (3) years, Telkom brave enough to talk on their fulfillment of their duty to deploy infrastructure in remote villages. Within the Universal Service Obligation (USO) regulatory framework, Telkom must set 0.75% of gross income to deploy the infrastructure in remote villages. Unfortunately, no clear policy and action plan on USO in the government creates the main stumbling block.

 ?Limited mobility? CDMA based fixed wireless access solution known as TelkomFlexi has been provided as an alternative solution to the expensive wired infrastructure and can be used as USO in remote villages. It is a though call to maintain a level playing field between ?mobile? and ?limited mobility? players specially in the unfair airtime tariff. It is an uneasy task for the regulator.

USO in the Internet world would focus on provoking a cultural shift, from listen-talk society towards read-write society that in the end will create the demand for Internet. Such demand creation may be achieved by early introduction of computer in schools, i.e., connecting 38+ million students in 220.000+ schools to Internet and self-finance at Rp. 2000-5000/student/month.

Fortunately, since mid 2004, Telkom has been running Internet Goes to School (IG2S) which is a real challenge to ISP Association?s Sekolah 2000 initiative. Furthermore, some Telkom's regional & local offices take risk to give loan for schools to buy computers and LAN. Unfortunately, such positive movement never receives government?s acknowledgment. Regulator should rethink on USO and include education and empowering people as USO. Without knowledgeable generation, it would be difficult for Indonesia to compete globally.

In the last three (3) years, Telkom makes a significant profit. Shift in corporate mind set from fairly colonial nature into customer oriented corporate results in a more competitive company. The Telkom's annual share holder meeting will be held this June 2005 of which Telkom will report on its profit, award dividend and board of director replacement. It seems Telkom lean towards 40% dividend for all stakeholders; including the 51% Indonesian government share.

Telkom as well as all telecommunication operators should not solely work for profit for its share holders. Telkom should answer the questions, e.g., would Telkom like to redirect its dividend into price reduction else market will shift to Telkom's competitor? Put more investment in infrastructure especially in rural areas, and human resource investment to excel and compete, and investment to increase the quality of service? Would Telkom like to remove any of its unfair monopoly, such as, service bundling with particular infrastructure and do fair interconnection? Unfair practice will ruin Telkom's credibility in a competitive environment.

The future is uneasy for any operators especially with the ?disruptive technology?, e.g., Internet Telephony (VoIP), WiFi, and WiMAX that are based on low cost, user friendly Internet technology. In reality, it is highly depends on the operator's strategy to collaborate with such community infrastructures to benefit both sides.

Triggered by 2.4GHz WiFi band unlicensing on 5th January 2005, many corporate and neighborhood networks grow to capture the unlimited Internet access. In many cities, unlimited WiFi-based Internet access sells at Rp. 150-300.000 monthly per house. Such price is a direct challenge to the Rp. 4 million unlimited Telkom's ADSL and to any GPRS cellular services.

The newly Session Initiation Protocol (SIP) based VoIP running on top of the unlimited Internet access will attack any telecommunication operator. Open source SIP-based soft switch, e.g., Asterisk http://www.asterisk.org, is the core international VoIP infrastructure, which is more advanced than the maverick Indonesian VoIP Merdeka.

SIP-based Internet Telephony is very disruptive and enables an office to have its very own British or US Washington DC free phone number that recognizable from the old Telecommunication infrastructure. Thus, it is possible for an office in Indonesia to get free British number and be called from Telkom and, surprisingly, our computer will ?ring? and be able to receive the call. The free British VoIP number can be obtained from, e.g., http://www.voiptalk.org; while the Washington DC number is from http://www.kallfree.com/. VoIP-Info http://www.voip-info.org carries a complete guide on how to build the VoIP infrastructure.

Not surprising to see Henry Sinnreich, MCI's engineering expert, said that by 2008 VoIP will likely take 40% cash flow of the world telecommunication industry (or about US$ 180 billion). While John Melick, director Primus Telecommunications, reported that, in 2004, 40% of 770 million monthly minute traffics pass through VoIP.

Creativity and imagination is crucial to meet global competition. In the last three years, Telkom has been trying to shift its corporate culture towards more customer oriented. Telkom needs management and board of director that can make Telkom more efficient, pro-fair competition, professional, and exploit the maximum of the latest technology. Hope we can see a much better future in Indonesian Telecommunication industry.