New formula to bring mobile phone bills down

The Jakarta Post, Jakarta

The government is set to introduce a new tariff formula for the mobile phone industry that will reduce tariffs between operators by 10 to 30 percent, an official said.

"The interconnection tariff is expected to be announced on Monday, and implemented on April 1," Indonesian Telecommunications Regulatory Body spokesperson Heru Sutadi told The Jakarta Post on Sunday.

He also stated that the new formula may not satisfy all telecommunication operators as the formula was designed to serve the public interest.

Nevertheless, he said, there was plenty of room for the industry to expand as mobile phone penetration was still low.

"The decrease is around 10 to 30 percent for the interconnection tariff between different operators."

"We hope that this decrease will also be reflected in the operators' retail prices," he said, adding that the new formula was expected to produce healthier competition among operators.

The director general for post and telecommunications, Basuki Yusuf Iskandar, said that the government has prepared two scenarios for the interconnection tariff, as quoted by Antara news agency.

The first one is a pure cost-based interconnection tariff, while the second is a cost-based interconnection tariff with a subsidy for the local tariff.

In November, the Business Competition Supervisory Commission convicted Telkomsel, the biggest player in the industry, of abusing its dominant place in the market through "price leadership" and told it to lower retail prices at least 15 percent this year. The case is being appealed.

Vice president for public and marketing communications at PT. Telekomunikasi Indonesia (Telkom), Eddy Kurnia, said that the decrease would influence Telkom as Telkomsel's parent company.

"The Telkom Group has yet to calculate the estimated loss caused by the new tariff, since the exact formula is not yet known," he said.

He said that the plans included accelerating the development of infrastructure for Telkom Group.

"We will add at least 5,000 more BTS (Base Transreceiver Station) for Telkomsel and at least 3,000 more BTS for Telkom Flexi," he said.

Eddy said that Telkomsel will also develop its business broadband access, aiming to recruit 1.2 million more customers, resulting in at least 1.5 million broadband users by the end of 2008.

Johnny Suwandi Sjam, the president director of PT. Indosat Tbk. said that the influence of the new tariff on the company's business would depend on its final formula.

"Of course we have prepared new strategies, but I can't disclose them until the formula is formally introduced," he said.

Telkomsel and Indosat control more than 80 percent of the about 80 million mobile phone users in Indonesia. (lva)