The Beauty and The Beast

My country of Indonesia is one of the biggest countries in the world. According to the latest statistics this country is having some 234 millions of population with 1,919,400 square kilometers area and 17,504 islands. What a great potential market for telecommunication business in-order to connect our people with multifaceted social backgrounds, cultures, races, and religions. This great potential market has been believed as one of the key-driven forces on the world telecommunication product innovation and corporate change strategy of big telecommunication equipment makers such as Alcatel-Lucent, Ericsson, Motorola, NEC, Nokia-Siemens, Nortel, etc.

However the telecommunication density is still low compared to other ASEAN countries. In 2007 the total wireless subscribers may reach up to 80 millions subscribers compared to fixed line subscribers only able to reach up to 8.7 millions subscribers. Hit by regional economic crisis in 1998, the development of fixed line especially for rural area become stagnant caused by limited investment whereby the tariff is expensive so as the poor village and rural people subsidizing the rich people in big cities.

New CDMA technology of fixed-wireless has been developed by Telkom to anticipate the lagging development in fixed lines and marketed under the brand name of Telkom Flexi. This technology is followed by Mobile-8 marketed under the brand name of Fren, Bakrie Telecom marketed under the brand name of Esia and Indosat marketed under the brand name of StarOne. In 2006 Telkom Flexi was leading the market of 52% market shares, followed by Fren of 25% market shares, Esia of 19% market shares and StarOne of 4% market shares. Bakrie Telecom as new player is targeted to penetrate middle-lower market segment by offering low-cost tariff and higher market segment with innovative solution of wireless internet connectivity, marketed under the brand name of Wimode.

As the Indonesian cellular market characteristic is so demanding in-terms of price sensitive, the introduction of low tariff communication triggered the price war since the last two years which cause the incumbent players including GSM providers seem cannot maintain its ARPU (Average Revenue Per User) level. New technology application development of 3G in Indonesia is expected to reach higher market segment but it seems not yet successfully attracts the market. It is expected that video streaming application that can be provided by 3G technology to be a “killer application” but the market apparently is more likely utilize this technology as internet broadband wireless connectivity.

The intense chaotic price war race amongst GSM full mobility, CDMA fixed-wireless and 3G players force all incumbent and new providers to change its cost structures strategy, starting from the haircut on its telecommunication infrastructure costs (telecommunication tower and its facilities), find other alternative low-cost telecommunication makers and outsourced telecommunication infrastructure providers. So the problem is begun. Nobody cares about the meaning of Quality Product or Service to win the market shares.

Attractive low-price theme advertisements try to persuade market and confuse their loyalty to move to another provider. No wonder that a people can own two or three mobile phones/subscribers. What a beautiful market for mobile phone handset makers and providers! This great potential market looks like an attractive beautiful girl, but the fierce competition drives the tame players become wilder like the beast..