Telecom rules need to be updated, say experts

Andi Haswidi, The Jakarta Post, Jakarta

Thanks to the performance of its mobile telecoms subsidiary Telkomsel, state-owned PT Telekomunikasi Indonesia was recently named as one of Forbes' Asia Fabulous 50 companies for the first time this year.

Telkom, however, is not alone. Most of the players in the industry enjoy hefty profits.

Taking this into account, and the fact that the local industry boasts the second highest average service tariffs in Asia Pacific, many analysts and academics are urging the government to act faster so as to put the right policies and rules in place to prevent abuse of dominant market positions.

"Telecommunications is a strategic sector due to its contribution to the economy and its ability to increase a country's productivity.

"However, the available policies and regulations have failed to keep pace with the development of services and equipment," said analyst Arif Arryman during a discussion organized by the Centre for Strategic and International Studies (CSIS) last week.

Arif is also an independent commissioner of Telkom.

He said that there was nothing wrong with Telkom having a dominant position as long as the government exercised tight control so as to avoid abuses. However, he admitted that such control was currently lacking.

"The ideal example is how the United Kingdom maintained the vertical growth of its British Telecom while exercising tight control so as to prevent abuses," he said, urging a similar approach in the interests of safeguarding the strategic goals of telecommunications-sector development intact.

Referring back to the government's duopoly arrangement that started in 2002 with the separation of Telkom and Indosat, Arif said the initial aim was to modernize the incumbent operator and to facilitate new entrants so that the general public could benefit from a competitive climate.

However, due to a series of political changes since the outset of reform after the 1997 financial crisis, which had also affected the internal dynamics of state-company management, the government had failed to put the necessary regulations and policies in place to properly foster the duopoly scheme.

Later, the government introduced new rules that led to the entrance of more players into the mobile telecommunications industry, with a total of 11 players already being present.

Also speaking during the discussion, Chatib Basri, the chairman of the University of Indonesia's Institute for Economic and Social Research (LPEM-UI), said the country must quickly design an appropriate competition policy as more players entered the market.

"The Business Competition Supervisory Commission (KPPU) has an important role to play in maintaining healthy competition," he said.

"Unfortunately, we are still at the infancy stage regarding this. Our knowledge of competition policy, especially in the telecommunications sector, is far from being comprehensive," he said.

At the regulatory level, Directorate General of Post and Telecommunication spokesperson Gatot S. Dewa Broto told The Jakarta Post on Tuesday that the government was currently preparing a road map for the industry and that this would be published in November.
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