Tuesday, October 30, 2007

3G euphoria, where to from here?


How is 3G faring in Indonesia? While it is still being promoted, this third-generation cellular telephone service seems to be losing its sheen. The presence of this latest technology in the mobile phone industry, advertisements of which feature a number of celebrities ranging from Gigi and Krisdayanti to Muslim religious teacher Jefry, it appears to be a wilting flower.

It is true that when 3G technology was first introduced in Indonesia, users lacked proficiency in this technology. It calls for a change in the habit of making a telephone call, namely from merely speaking and listening to speaking, listening and viewing.

However, it is not the lack of proficiency in this latest technology that is responsible for the very slow development of 3G in Indonesia. According to several observers, 3G operators seem to pay more attention to video calling services while in fact subscribers need speedy data access.

Obviously, GSM operators in Indonesia have invested hundreds of millions of U.S. dollars to develop 3G service. A year after its introduction here, however, the number of 3G subscribers stands at fewer than 3.5 million people. Telkomsel, who had 3.2 million subscribers up to July 2007, claims to be among the 10 biggest operators in the world. Meanwhile, XL claims to have 100,000 subscribers making video calls every day (HandPhone magazine, October 2007).

These figures, however, are far from the estimate by International Data Corporation, a leading data institution, which has predicted that Indonesia will have 300,000 3G subscribers using video call-up by late 2008. The 3G euphoria in Indonesia, which operators have plugged since September last year, has failed to gain a proper response. GSM operators initially set a minimum target of 15 to 20 percent of their subscribers being users of 3G mobile phone technology. This means by 2008, there would be a potential for 10 to 12 million 3G subscribers.

The question is, how willing are these subscribers to spend money using 3G technology, which is certainly more expensive than using the ordinary mobile telephone? The number of subscribers may be real but they are not active users as they have simply registered. "My cell phone is 3G equipped, but I very rarely use it for video calls. I use this technology only when it is really necessary," said A. Baihaqi, director of Tactic Communications.

Baihaqi is just one example. In fact, over the past year, the average revenue per user rate has continued to drop. It therefore comes as no surprise that some people question the future of 3G in Indonesia. Will it fizzle?

In 2003, the director of Pyramid Research, Ross O'Brian, predicted that 3G in the Asia-Pacific region would sell well only in Japan, South Korea and Australia. As for countries like Hong Kong, Singapore and Taiwan, he said it was not time to implement 3G serviced because the markets in these countries were not ready for 3G technology, plus the income level of Asians was still relatively low.

Perhaps the promotion period needs to be longer so that 3G investments in Asia will increase. In addition, in most Asian countries teledensity is still below 50 percent, while there is more concern about augmenting the capacity of the network for voice rather than building a new service based on 3G technology. Operators may claim that they are on the right track in developing 3G services, but facts illustrate the opposite, if not indicate that they have used the wrong tactic.

At the initial stage, operators prioritize the video calling service to lure the public. In fact, what subscribers need is not a video calling or video streaming service but high-speed data access, or an Internet service using HSDPA technology.

In countries where 3G has been successful, such as Japan and South Korea, video calling service is not overly popular. Most subscribers use this service for music downloading and Internet access. In addition, what's more important is that the Japanese government, for example, fully supports 3G technology and imposes an upfront fee on the use of the 3G spectrum, while South Korea, which also imposes an upfront fee, offers incentives and assistance in the development of the broadband wireless network.

It is true that to operators providing 3G services in Indonesia, video calling -- the rate of which is the same as that of ordinary phone conversations during this one-year popularization period -- is merely a gimmick to lure subscribers to use other services. They are now beginning to sell a data package of high-speed Internet modem.

In addition, a number of operators have also begun to seriously set up communities of mobile Internet users. They have begun to popularize what is called Web 2.0 or Mobile 2.0, which enables subscribers to do mobile blogging, video sharing and avail of other content-sharing applications. Unfortunately, those most intensively involved in this campaign are mostly cell phone vendors, not operators.

Nokia, for example, has forged a strategic cooperation deal with three broadband wireless Internet providers, namely PT Telkom, PT Indosat Mega Media (IM2) and PT Cyberindo Aditama (CBN), while one content aggregator, PT Mobile Lifestyle Indonesia (MLI), is offering free Wi-Fi services.

This cooperation will allow all users of Nokia N series handsets, which have a Wi-Fi feature, to access high-speed Internet free of charge at 1,000 hot spots owned by these three operators in more than 20 cities in Indonesia. However, to access free Internet services, N series users must first register through www.cooldesak.com, built by MLI. According to the general manager of Nokia Indonesia, Hasan Aula, cell phones have become an inseparable part of modern life. A cell phone is not simply a device for making a phone call as it now has many other functions. Once the cell phone started enjoying its heyday as a device for talking and sending SMSes, more functions started to be included in the cell phone following increased capability to use various technologies, including making cell phones compatible with 3G technology, or even with 3.5 G, 4G or WiMAX technology.

What's obvious is that GSM operators are hedging their bets with 3G service. This is not only because they have invested a lot of money in establishing this service but also because this service is a stepping stone for the operators to eventually enter the data service arena. (Burhanuddin Abe)

The Jakarta Post, October 30, 2007

No comments:

Post a Comment