There are three major national players, Telkomsel, Indosat and XL, all competing vigorously against each other – and with as many as ten smaller outfits in regional markets keeping them all honest.
Charges to consumers are generally affordable in a very price sensitive market and low by international standards and with waiting time for a connection close to zero.
In many ways the market is a model for developing a vigorous free market in other sectors; dismantle monopolies, deregulate, remove the dead hand of government, let it rip and pick up the taxes. Don’t hold your breath though.
Downsides are generally low grade voice connection quality and laughably slow speeds for Internet connections, though all operators are well aware of the issue and are making significant investments to improve, not least by employing expatriates on very competitive terms – as testified by a number of our own readers.
Existing operations are elderly GSM or CDMA based stuff and real improvement in voice and data will only come with new generation technology. Unfortunately the Government is “in the process” on appropriate bandwidth auctions and technology selection and nobody your Telecoms Correspondent knows can even guess when that process might complete. As can be imagined, there are huge vested interests involved and equally huge brown envelopes to be distributed before the starting gun can sound on 4G/LTE. And you can add 2 years to that before there is general availability of CNN in HD on your iPhone.
There is at least one thriving mast infrastructure operator and all the players are looking to farm out this activity to third parties with Telkomsel itself having recently sold thousands and leased back capacity on them. Third parties have far less desire to have one mast for each operator and the move should result in significant cost savings, a better service and lower barriers to entry for new operators.
Current problem children in the arena include the purveyors of music, ring-tones, gossip magazines, horoscopes and dancing dwarves who are being banned and/or subject to far tighter rules by the major operators – a long time after their fraudulent charging practices had been exposed amid a million consumer complaints. The time delay was doubtless, in part at least, due to the fact that operators were taking up to 50% of the purveyors’ gross take – hard to let that go. To give you an idea of how big the market is, there are currently in the region of 100 million Internet page impressions a day from Indonesian phones – monetising that traffic is the challenge.
Indonesia is Blackberry’s largest and sole remaining growth area following the rise elsewhere of first iPhone and then Android based smart phones, with its strength here coming from its attractive hand phone pricing and the cheapness of its BBM service which led to the self reinforcing network effect seen today. The Government is less than best pleased with Blackberry, however, mainly because of the company’s recent decisions to base its manufacturing operation in Malaysia and its Indonesia server operation in Singapore. Expect more fire and fury from the Government and an eventual at least partial climb-down by Blackberry.
With a population of only (!?) around 260 million orangs, it is somewhat surprising to learn that in excess of 350 million SIMS have been issued. This is due to three main factors, firstly the huge and burgeoning enthusiasm for the service itself, secondly the cheapness of the least sophisticated devices (right down to $25 including a bunch of usage credits meaning that all but the most humble can spend their days sending SMSs to their friends) and, lastly, the endless obsession here with “cheap” meaning that the various networks offer of free or near free calls and SMS to other members of the same network has led to many having a SIM for two or more networks. Cards available for as little as Rp 2,500 have served to exacerbate this trend.
Just like in the rest of the world, voice is on the way down and data (SMS/Internet) is on the way up and is another issue to be faced by the incumbents as most of their revenue is still voice and endangered by Skype and the likes and are struggling to get data pricing plans together which don’t cut their own throats. It’s not all beer and skittles for your mobile operator.
So, enjoy the low prices in country now (roaming is another issue and one to which we will return) and stop grumbling when you lose your connection – in five years it will be much better, though all that 4G/LTE kit and those expat houses in Pondok Indah will need paying for, so pricing is likely to change too – and not in your favour.