DESPITE A HIGH MARKET POTENTIAL, THE INDUSTRY OF PAGER SERVICES IS IN A CRISIS.
From the first time it began its operations in Indonesia in 1976 until 1992, the industry of pager services only had 3 operators with a total of 24,000 customers. In 1993, due to the high market potential, national operators commenced their operations. In the same year, the number of operators rose to 38 and that of customers to 79,900.In the following years, the population of pager services customers grew rapidly and so did the number of operators. In 1996, as many as 75 operators were in operations. The continued growth in the population of paging operators eventually led to unsound competition for customers. This was marked by a large-scale price war among them. In such a war, a paging operator would not mind subsidizing the price of its pager handsets by up to 70%.
Such unhealthy competition prevented paging operators from improving their performance. As a result, only a few of them have started to profit from their operations. The rest, especially national ones, still have to invest more money in the expansion of their networks and in the development of new paging features in order to be able to make profit.
With the prolonged monetary crisis which Indonesia is currently facing, it is interesting to observe how the industry of paging services will cope with it. Late in 1997, some local and national operators discontinued the sales of their handsets. This means that they stopped recruiting new customers. The high increase in the prices of imported pagers as a result of the monetary turmoil has made it impossible for operators to continue their price war. In such a condition, some of the established operators have opted to concentrate on providing better services for their customers and, at the same time, to provide room for survival for the newcomers in the paging services industry.
Product description
A pager is a one-way communication device which is used to pass on a message from a certain party to its owner, who is a customer of the operator of paging services in question.
A paging customer has his own call number, which is installed in his pager. If another person knows this call number, he can contact the owner of the pager by leaving a message to the relevant operator. The operator will enter the message into the computer, and this message will subsequently be transmitted by a transmission tower to the right pager.
In the case of a local operator, a message can be transmitted to the right pager if it is located within a distance of 40 kilometers from the transmission tower. In the case of a national operator, the message is first transmitted to a satellite, from which it is subsequently transmitted to the operator's transmission towers, which are located in different areas. The message is then transmitted to the right pager by the nearest transmission tower.
Basically, there are three types of pagers as follows: voice, numeric, and alpha-numeric. With the first type, the message is sent by phone to the operator, which subsequently turns on the signal on the right pager. The weakness with this type is that it cannot store messages. So, if the recipient of a message wants to know what the message is, he should call the operator for information.
The second type is the numeric one. With this type, a message is presented only in the form of numeric codes. Only the person who has the key to deciphering such codes can understand what the message is. This system is highly popular in western countries due to its ability to keep messages confidential. In the United States, for example, nearly 90% of the total population of paging customers use this system.
The third type is the alpha-numeric one. With this type, a message is presented in the form of both letters and numerals and, as such, it is readily
understandable both to the recipient and to the sender. Another advantage of the alpha-numeric system is that it can store messages for review purposes.
Pioneered by Motorollain Group
The industry of paging services commenced its operations in Indonesia in 1976 following the establishment of PT Motorollain Corporation, which introduced pagers and paging services under brand name Starko. Founded with an authorized capital of Rp 10 million in 1975, Motorollain Corporation is jointly owned by Robby Sumampow (25%), who is one of the co-owners of the Batara Indra Group, Agus Didagdo (30%), Endang Lestari Pudjiastuti (25%), and the heir to Agus Hartono (20%).
A pioneer of Indonesia's paging services industry, Motorollain Corporation initially had a license to operate on a local basis. Subsequently, it obtained a license to operate on a national basis. With this license, Motorollain Corporation provided paging services in 18 Indonesian cities. Before it obtained the license to operate on a national basis, the company established cooperation with local operators in a number of cities in order to enable its customers to enjoy long-distance (intercity) services like those provided by a national operator.
This system, which was first ,developed by Motorollain, is now widely applied by other paging operators. Motorollain's success in recruiting customers in its areas of operations has inspired many investors -- both those with local licenses and those with national licenses -- to use these areas as theft areas of operations.
Motorollain's profit comes largely from its position as the sole agent for Motorolla pagers, which are produced by NEC Corp. of Japan. Nearly all paging operators in Indonesia use Motorolla pagers. So, Motorollain Corporation profits not only from providing paging services under brand name Starko but also from supplying Motorolla pagers to other paging operators.
Another large-scale paging operator with a national license is PT Duta Pertiwi Sentosa, which provides paging services under brand name Starpage. This company was established with an authorized capital of Rp 150 million in 1985. In 1991, it became an importer of Motorolla pagers. Affiliated to PT Duta Darma Bhakti, PT Duta Pertiwi Sentosa is jointly owned by Karna Brata Lesmana (40%), David Salim (50%), and Liem Sin Tung (10%).
Initially, Duta Pertiwi Sentosa offered two types of paging services: voice and digital. However, many of its voice services customers subsequently saw such services as inefficient and switched to digital services, which are also provided by many other paging operators. As for the pagers (handsets), the company offers Motorolla, which is the most widely used in Indonesia, as well as Philips (PRG 1032).
Duta Pertiwi Sentosa has been growing rapidly, netting an average 150 new customers every month. In 1992, the company expanded to a number of major Indonesian cities by opening branches there with an investment of Rp 2 billion. In order to improve the quality of its services, Duta Pertiwi Sentosa has made a plan on selling some 30% of its stock to Motorolla IND of the United States, which has been serving as a supplier of equipment to the former. However, it is not clear as to when this plan will be implemented.
A newcomer in the industry of paging services in Indonesia is PT Indolink First Pacific, which offers such services under brand name Indolink. Jointly owned by Primkoparpostel (the Primary Cooperative of the Department of Tourism, Post, and Telecommunications) and First Pacific Communications Holding of Hongkong, PT Indolink commenced its operations in August 1994. Late in 1996, despite its good performance, PT Indolink was acquired by PT Duta Pertiwi Sentosa, the operator of Starpage paging services.
In the face of the already existing paging operators, PT Indolink entered the market by offering the latest Motorolla technology called Flex-TM, which the company purchased for US$ 1 million. With such a technology, Indolink can send messages at a greater speed than the other paging operators.
Since March 1997, Indolink has been able to send messages to nearly 85% of the territory of Java, which covers all important cities and major transportation routes on the island. This is in line with the results of a survey conducted by Indolink, which show that the area of coverage is seen as the most important point of consideration by users of paging services. In view of the results of this survey, Indolink has been expanding its network to cover all of Java by taking into consideration the following aspects: topography, population, technically feasible locations, and economic condition.
With an investment of US$ 8.1 million, PT Indokom Primanusa of the Kedaung Group has become the owner of 51% of the shares in PT Skytelindo Services, a company offering paging services under brand name Skytel. The rest of the shares in PT Skytelindo are owned by Singapore Telecom International Pte. Ltd (30%) and Mobile Telecommunication International of the USA (19%). PT Skytelindo Services' licensed area of coverage comprises Java, Sumatra, Sulawesi, and Bali. Its licensed capacity is 50,000 lines (or customers).
Another national operator is PT Telematrixindo, a joint venture established with an investment of US$ 6 million in 1993. By establishing cooperation with Koppostel, PT Telematrixindo has managed to become the first national paging operator to be able to send messages to all areas in Indonesia. The paging services offered by PT Telematrixindo, which are popularly known by brand name Easy-Call, were first introduced to the Philippines in 1988 and subsequently to Malaysia, Thailand, and Poland. The software technology used by the company was developed together by Telstra and Matrix Telecommunications Ltd., both of which are Australian companies. On the other hand, the hardware technology used by PT Telematrixindo is from AT&T of the United States.
It seems that paging operators share the same idea about which areas are ideal for their operations and where they should start and expand. This is so because all of them have one thing in mind: to net as many customers as possible. Therefore, major cities with the highest potential and most intensive economic activity always serve as the bases of operations for paging operators.
In all cases, Jakarta, Bandung, and Surabaya are chosen as the bases of operations by paging operators. From these cities, they expand to such favourite cities as Medan, Semarang, Denpasar, and Batam Island because they have high population and intensive economic activity. From these cities, paging operators expand further to areas outside of Java by selecting the following cities on a random basis: Yogyakarta (in Java), Lhokseumawe, Padang, Jambi, Palembang, Pontianak, Balikpapan, Samarinda, Ujungpandang, and Manado.
Motorollain Corp., for example, currently serve 18 major cities in Java (Jakarta, Bandung, and Surbaya), Sumatra (Medan, Palembang, and Lampung), Kalimantan, and Sulawesi (Manado and Ujungpandang). Duta Pertiwi Sentosa serves 11 major cities in Java, Sumatra, Kalimantan, and Sulawesi. Indolink serves major cities in Java, Sumatra, and Kalimantan.
Local paging services provided by 62 companies
Currently, as many as 63 private companies are licensed to provide local paging services, of which 23 have a cooperation agreement with PT Telkom and the other 40 operate independently. Local paging services are also provided in Sorong, Irian Jaya, with PT Bumi Pertiwi Royalpage as the operator. As per the end of 1996, Sorong had 250 paging customers.
Since paging services are required mostly by people with a high level of mobility living in areas with intensive economic activity, paging operators have been serving only major cities in the western parts of Indonesia. In Sumatra, only such cities as Medan, Deli Serdang, Lhokseumawe, Padang, Pakanbaru, Lampung, Batam Island, and Jambi have such services. Easy-Call, however, intends to market its paging services in South Sumatra's district towns early this year.
Jakarta, which is the base of operations for national paging operators, is also home to most local ones. Five local paging operators currently operate in Jakarta, and they are PT Santika Wirayudha (for the area of Jabotabek), Primkopparpostel, PT Duta Pertiwi Sentosa, PT Persada Komindo, and PT Motorollain Corporation. The last three are not only local operators but also national ones. Tangerang has four local operators, Bandung has three, Medan has three, and Surabaya also has three.
Central Java and Bali are dominated by local operators which operate under a cooperation agreement with national ones. In addition, they also have local operators which operate independently. Some of these have more customers that those which cooperate with national operators. PT Cipta Jasa Dwipa Sakti in Semarang, for example, operates independently and has 20,000 customers (as per 1996), as compared to only 5,000 with Skytel's Semarang Branch or 2,500 with Starko's branch in the same city.
Frequency tariff for Botabek only Rp 800 thousand
Due to the market potentials they have, major cities in Java and outside of Java have been widely chosen by both local and national paging operators as their areas of operations. In view of this, the radio frequency tariff which they have to pay to PT Telkom varies according to the size of the city. The frequency tariff, is Rp 50 million/year for a city of category I (Jakarta), Rp 30 million/year for a city of category II (Surabaya), Rp 20 million/year for a city of category IIIA (Medan), and Rp 15 million/year for a city of category IIIB (Bandung).
A number of local operators which are based in Bogor, Tangerang, and Bekasi have to pay a frequency tariff of only Rp 800,000/year. This is very low compared to Rp 50 million in the case of Jakarta, despite the fact that paging operators based in Botabek (Bogor-Tangerang-Bekasi) also rely on Jakarta as their market.
Due to the increasingly tough competition in larger cities, a number of investors have started to consider operating in smaller cities, i.e. cities of category II, in both the western and eastern parts of Indonesia where such competition is still low. One local operator have started to serve Sorong (Irian Jaya) and it has 500 customers. Easy-Call will provide paging services in a number of district towns in South Sumatera. A businessman in Kupang (East Nusa Tenggara) is also thinking of establishing a paging operator in the city. The frequency tariffs in these non-commercial areas are still low.
Investor interest declines
A few years ago, the investor interest in the industry of paging services was very high. Nowadays, however, with the competition among local and national operators increasingly tough, the investor interest in this industry has started to decline. In 1996, for example, two new projects and one expansion project in this industry were approved by the BKPM. In 1997, however, no projects -- neither new nor expansion ones -- were approved by the BKPM.
One of the new projects approved by the BKPM in 1996 belongs to PT Selarasindo Mulia, which will provide paging services in such lucrative areas as Jakarta, Bandung, and Surabaya. Approved under the domestic investment (PMDN) scheme, PT Selarasindo Mulia invested some Rp 5 billion in the business and has an installed capacity of 30,000 lines (or customers). Although the company originally planned to commence its operations in 1999, it began to do so in 1996. The company markets its services under brand name Metrotel.
The other new project was approved under the foreign investment (PMA) scheme, and it belongs to PT Duta Dejahtera Komunikatama, a joint venture between PT Duta Pertiwi Sentosa -- an leading paging company of Indonesia -- and Chivalri Holdings Ltd. of British Virgin Islands. This project requires an investment commitment of US$ 2.5 million and will have an installed capacity of 100,000 lines. It will serve customers in Jakarta, Surabaya, and Lampung. This project is scheduled to. commence its commercial operations in March 1998.
The expansion project which was approved by the BKPM in 1996 belongs to PT Skytelindo Services (Skytel). Through this project, which requires an investment commitment of US$ 33 million, Skytell will increase its capacity by 182,000 lines in order to be able to provide services for more customers in Bandung, Surabaya, Semarang, and Padang. Approved under the PMA scheme, this project is scheduled to be completed in March 1998.
Paging industry once showed rapid growth
For the first fifteen years after it was started by Motorollain Corp in 1976, the business of paging services grew very slowly. This was so because the economic activity of the people was then not very high and because the Government issued only local licenses to .paging operators. In 1993, however, with the mobility of paging customers increasing, paging operators were allowed to provide long-distance (intercity) services. Some of them even obtained national licenses, which allowed them to operate in more than five cities.
In 1994, as many as four paging operators operated nationwide, and they were PT Indolink First Pacific (Indolink), PT Telematrixindo (Easy-Call), PT Skytelindo Services (Skytel), and PT Duta Pertiwi Sentosa (Starpage). In 1997, the number of paging operators with national licenses rose to 10, one of which was PT Sumber Kreasi Prima. However, PT Sumber Kreasi Prima has not commenced its commercial operations as yet. As per the end of 1997, Jakarta had 16 paging operators, of which nine had national licenses and six had licenses to operated in the area of Jabotabek (Jakarta-Bogor-Tangerang-Bekasi).
For the past five years (1993-1997), the demand for pagers (handsets) showed rapid growth. In 1994, it rose fivefold from the previous year. One factor leading to this extraordinary growth in 1994 was that operators were then involved in a price war among one another in their competition for customers. As part of this price war, they subsidized their pagers, making these handsets very cheap and more readily affordable to people. As a result, the population of paging customers soared in 1994.
Local paging customers outnumber national ones. In 1994, the former accounted for 75% of the total population of paging customers in Indonesia, and the latter 25%. Nowadays, however, the share of the latter in the total population of paging customers is estimated to be higher than 25% in view of the growing number of national paging operators.
Of the total 700,000 paging customers in 1997, PT Motorollain Corp (Starko) -- the pioneer of Indonesia's paging industry -- had the most share (15.9% or 111,000 lines), followed by PT Skytelindo Services (Skytel) with 86,000 lines and PT Duta Pertiwi Sentosa (Starpage) with 65,000 lines.
The first paging operator to operate in Indonesia, Motorollain Corp. currently manages to operate in a number of cities spread over four different areas (Java, Sumatra, Kalimantan, and Sulawesi), partly thanks to. its cooperation with local operators in these areas. Similarly, Duta Pertiwi Sentosa has also managed to expand its areas of operations and to increase the number of its customers to, 65,000. In addition, it has also acquired Indolink, which has 35,000 customers.
As for the six local operators which provide services in the area of Jabotabek (Jakarta-Bogor-Tangerang-Bekasi), the largest one is PT Santika Wira Yudha (40,000 customers). In Central Java (Semarang), the largest local operator is PT Cipta Jasa Dwipa Sakti, which markets its services under brand name Starpu. It has 20,000 customers.
In the face of the increasingly tough competition in the business of paging services, pager manufacturers have found it necessary to come up with new innovations or new features for their handsets. In line with this and in order to avoid a prolonged price war, certain paging operators have started to work on market segments which have not been served by their seniors. To net customers from such market segement, they have started to develop new features. PT Skytelindo Services (Skytel), for example, has started to provide international roaming services coveting 20 countries without charging additional fees on its customers. Thus, Skytel is the first national paging operator to be technically capable of providing international roaming services.
To be able to provide international roaming services, Skytelindo has established cooperation with the US-based Mtel Incorporate, one of the former's shareholders. Mtel Incorporate has bilateral agreements with similar paging operators in a number of countries. It is these agreements which enable Skytelindo to provide international roaming services.
With this international roaming system, a message is first transmitted via a satellite to the United States, from which it is subsequently transmitted to the country of destination. Skytelindo itself does not have any bilateral agreements with paging operators in the countries covered by the former's international roaming services.
For the time being, Skytelindo does not intend to charge extra fees on its customers which use its international roaming services. On the other hand, the company wants to show to its already existing and potential customers what technical capabilities it has to offer to them. With its international roaming services, Skytelindo can send messages to Singapore, Hongkong, the Philippines, Malaysia, the United States, Canada, Peru, Columbia, and a number of European countries.
In addition to international roaming services, Skytelindo also provides Skyzone services, with which customers can send messages to six major Indonesia cities (Medan, Jakarta, Bandung, Semarang, Surabaya, and Denpasar) without having to pay long-distance phone charges. This year, the company will expand further to Ujungpandang and Pakanbaru.
Another feature which Skytel has developed is an international network using the VSAT (Very Small Aperture Terminal) system. With this network, a message can be sent to the recipient wherever he is, even when he is making an overseas trip. Earlier, Skytel introduced a pager for two-way, communication purposes as a subsitute for cellular phones, which frequently experience disturbances.
Unlike Skytel, Multipage -- whose operator is PT Raya Pertiwi Semesta -- offers an additional facility m the form of a credit card to its customer this is intended to make Multipage customers feel they are exclusive persons whose identity is different from that of the customers of other paging operators. As may have been known, Multipage established cooperation with PT MBf Multi Finance and PT Investindo Nusa Permata in mid-1997 for me provision of credit cards to its customers. For the first year of the provision of its credit cards, Multipage has targetted to net 8,000 customers.
Multipage's cooperation agreement with these two companies is on cobranding. On the basis of this agreement, Multipage has launched two types of credit cards called Multipage Master Card and Multipage Countdown Card. This cooperation agreement has made Multipage the first paging operator in Indonesia to equip its customers with credit cards. The holders of Multipage credit cards enjoy all the facilities provided by a MBF Master Card and Countdown Discount Card throughout the world. For the first year, a Multipage credit hard holder does not have to pay the annual fee.
Another national paging operator, called Metrotel, which was established in 1996, has recently established cooperation with PT Bitnet Komunikasindo (an internet provider) in launching a new service called Metronet. With Metronet, a message can be sent via the internet to the fight pager. This means that internet users all over the world can send messages to Metrotel pagers without having to, call the operator. This facility enables Metrotel customers to save on phone bills and to keep messages confidential because messages do not have to be edited by the operator.
With Metronet, a message can also be sent via the internet to PT Metrotel's hotline. This Metronet facility can also send messages to paging customers when their mail boxes receive messages. In addition, Metrotel also provide a service called E-Mail Notification to customers having accounts with Bitnet. With this service, any incoming e-mails will be notified to the right customer through the pager. Thus, Metrotel customers do not have to check their computers for e-mails.
Metrotel has also developed another feature called Cellular Link. This feature is intended especially for those, who have handphones. With Cellular Link, a handphone owner can receive a message through the pager when the handphone is off, when it is outside of the service area, or when it is being used. When a message is coming while the owner of the handphone is in any of the situations as described above, the message will be received by the Metrotel operator, which acts as a personal secretary to the former, and passed on to the pager.
Starko -- whose operator is PT Motorollain Corporation and has the most customers in Indonesia -- has introduced an integrated service product in 18 business centers in Indonesia. This product is called Starnet Access. With this feature, a customer can send or receive a message to and from another city without having to make a long-distance call and without having to pay additional charges. Besides Starnet Access, Starko has also introduced such services as TPL Plus (direct paging) and Autocall. With TPL Plus and Autocall, a Starko customer can be contacted without going through the operator.
PT Persada Komindo (Nusapage) and PT Buana Bintang Bayu (Telepage) also provide additional services to their customers, Nusapage, for example, uses only one phone number to serve three cities (Jakarta, Bandung, and Surabaya. Telepage even uses one phone number to serve seven cities, allowing people to send messages to its customers in any of these seven cities without paying a long-distance phone charge.
Pager prices soar
Unlike cellular phones, pagers (paging hansets) have never seen any significant declines in prices. This is so because the import duty on cellular phones have been slashed to 0%. So, the prices of cellular phones have declined from a range of Rp 8-15 million/unit to only Rp 1-2 million. On the other hand, the prices of pagers still stood at a range of Rp 200-$00 thousand/unit as per October 1997. These prices are high because the import duty on pagers is 35%. To overcome this problem., paging operators subsidize their pagers by up to 70% so that they can be affordable to new customers.
Since November 1997, when the monetary turbulance was reaching its peak, a growing number of paging operators have discontinued the sale of their pagers due to the fact that prices of imported pagers soared with the heavy depreciation of the rupiah against the US dollar. However, new operators like Metrotel and Personal are still actively marketing their pagers in order to net customers although they have had to increase the prices of their pagers by 100%.
Observations conducted in October 1997 show that a number of paging operators offer considerable discounts. Garco and some other operators are courageous enough to offer a 50% discount for the purchase of a pager. Meanwhile, Globalpage has lowered the price of its four-line, glass-screen pager frown Rp 450,000 to Rp 375,000. Starko through its Starko Partnership offers its pagers at only Rp 390,000/unit with an annual fee of Rp 0 for the first year.
Over the last few months, the competition among paging operators has been unusually tough due to the declines in the prices of cellular phones and to the shrinking market. As a result, many operators offer cheap subscription packages. In 1994/1995, a customer had to pay Rp 400,000 to obtain a pager and a six-month service period with the price of the pager itself ranging from Rp 150.,000 to Rp 225,000 depending on the type. In 1997, however, a customer had to pay only Rp 225-250,000 to obtain a pager and a six-month service period.
This is possible because operators subsidize the prices of their pagers by up to 70% in order to be able to net customers. Due to the subsidy, they have to delay profits for dozens of months.
In reality, however, the subsidy frequently does not serve the purpose for which it is provided: operators often suffer financial losses due to the provision of the subsidy. This is so because in many cases, customers -- which have purchased their pagers at subsidized prices -- leave their operators and switch to another. Indolink, however, has reduced the subsidy to only 25%. This step has been taken in view of the results of a survey which the company conducted some time ago, which show that to customers, the area of coverage is more important than the price of the pager itself.
Service fee to be adjusted
Up to now, the service fee which a paging customer has to pay has been based on the maximum tariff: Rp 25,000/month for local services and Rp 40,000 for national services covering 3 cities. For every addition of a city, an addition service fee of Rp 5,000/month has to be paid. This maximum tariff has been applicable for 12 years, and many paging operators now see it as inadequate and as necessary to review.
Paging operators depend very much on service fees for their survival. No paging operators rely on the sale of the hardware (pagers) for that purpose. Due to the price war among themselves, most paging operators have not been able to obtain profit from their operations. Only local and national operators which have been in operations for a long time -- e.g. Starko, Starpage, and some others -- have managed to book profits.
To net customers, a paging operator is required not only to subsidize the price of its pagers but also to invest in the expansion of its transmission network. This is quite a heavy burden and, as a result, certain operators have found themselves compelled to get out of the business. Indolink, for example, has sold its business to PT Duta Pertiwi Sentosa. Nusalink has been taken over by Nusapage, its. own affiliate. It is said that Easy-Call is now being offered for sale by its owner. Apart from this, it is not unlikely that certain operators -- especially local ones -- may find it necessary to resort to merger.
In the current situation of a mounting monetary crisis, the paging industry is increasingly threatened with a collapse. The Government, therefore, is required to help by adjusting the monthly service fee. In this regard, Aprindo has proposed that the maximum limit on the monthly service fee be removed and only the minimum limit be retained. This proposal is based on the fact that to develop new features -- e.g. information of commodity prices and foreign currencies or secretarial services -- an operator needs to invest more than can be covered by the minimum (standard) service fee.
Market opportunities for locally produced pagers
In the current monetary crisis, the price of an imported pager would remain high even if the import duty were eliminated. With the current rate of exchange of the rupiah to the US dollar, the net price of an imported pager would remain as high as Rp 480-800,000/unit (US$ 60-125). This provides a good opportunity for locally produced pagers to serve as substitutes for imported products.
In Indonesia, pagers are currently produced by only one company, namely PT Metro Media Raya (MMR), which has an. annual production capacity of 13,000 units. For now, with its plant located in Parung (Bogor), the company can supply its output only to its affiliate, namely PT Motorollain Corp. MMR has invested some Rp 10 billion in developing an R&D center in Singapore, in cooperation with Starko Technology Pte. Ltd. MMR is affected by the current monetary crisis because some 60% of its component requirements has to be procured from import sources.
Another national company can be expected to produce substitutes for imported pagers, and it is PT Industri Telekomunikasi Indonesia (INTI). Early in 1997, PT INTI launched its mini pagers on a trial basis. These products are expected to be able to compete with imported mini pagers, which are currently quite popular among customers.
Prospects and conclusions
Although the population of paging customers has shown rapid growth, the paging industry has not become a necessity for the Indonesian people, including those doing business activities. In Indonesia, the ratio of pager users to the total population is very low, 0.25 per 100 persons (as per 1996), as compared to 1.11 in Thailand, 1.28 in Singapore, and 30 in Singapore. Singapore has 1 million paging customers. Hongkong, whose population is only 6 million, has 4 million paging customers. This means that the market opportunities for paging services in Indonesia are very great.
Seen from the vast market opportunities, the industry of paging services in Indonesia has good prospects for growth. However, these opportunities are difficult to take for as long as pager prices and the service tariff have not been adjusted to the purchasing power of the main market segment, namely medium- and small-scale businesspeople.
As a communication device, a pager with its shortcoming -- it being a one-wa communication device -- can still be acceptable to prospective users if the price is low and the area of coverage is large. This means that the price of the hardware and the service fee should be lower than in the case of cellular phones.
In 1995, when the demand for pagers was very high, their prices stood at a range of Rp 150,000-250,000 while the service fee was Rp 25,000/month for local services and Rp 40,000/month for national services. Meanwhile, the price of a cellular handphone ranged from Rp 2 million to Rp 3 million rupiahs and the service fee was Rp 200,000-300,000 per month. Thus, the price of a pager was then only 10% of that of a cellular phone. In 1997, however, with the import duly on cellular phones eliminated, the price of the handset declined to only Rp 1 million/unit. On the other hand, the price of a pager remained unchanged at Rp 250,000/unit or 25% of that of the cellular phone. With the import duty on pagers still high, it is difficult to push down their prices to a level affordable to the main market segment. Meanwhile, people of high-income levels still prefer cellular phones to pagers.
Now, amidst a prolonged monetary crisis which reached its peak level early in January, the business of paging service, s is expected to show slower growth or even to stagnate. A number of paging operators have even stopped recruiting new customers in view of the fact that price of an imported pager can reach up to Rp 800,000/unit. To cope with this monetary crisis, large-scale paging operators with economically feasible numbers of customers may want to concentrate on improving the quality of their services for the already existing customers. In one way or another, the high prices of pagers will force the already existing customers to remain loyal to their operators.
For paging operators whose customers have not reached an economically feasible number, the current monetary crisis is a very heavy blow. This is so because they still have to concentrate on netting more customers. Inevitably, therefore, they have to subsidize the prices of their handsets. Anyhow, it is difficult for them to expect the number of their customers to increase at significant rates unless the Government promptly reduces the import duty on pagers to 0% or unless efforts are made to boost the domestic production of pagers so that they can be sold at affordable prices.
Table - 1
National paging operators, 1997
Name of company Brand Commencement of operation PT Motorollain Corp. Starko 1976 PT Dura Pertiwi Starpage 1985 Sentosa PT Skytelindo Service Skytel 1993 PT Telematrixindo EasyCall 1993 PT Indolink First Indolink 1994 Pacific PT Persada Komindo Nusapage 1994 PT Buana Bintang Bayu Telepage 1994 PT Selarasindo Mulia Metrotel 1996 PT Hutchson Sewu Personal 1996 Name of company Areas of operation PT Motorollain Corp. Jakarta, Medan, Batam, Palembang, Lampung, Bandung, Semarang, Yogya- karta, Surakarta, Malang, Surabaya, Denpasar, Banjarmasin, Samarinda, Balikpapan, Manado, Ujung Pandang Jakarta, Bandung, Surabaya. PT Dura Pertiwi Jakarta, Bandung, Surabaya, Sema- Sentosa rang, Medan, Denpasar, Batam, Lam- pung, Cirebon, Ujung Pandang, Bogor PT Skytelindo Service Jakarta, Bandung, Surabaya, Medan, Semarang, Batam, Palembang, Yogya- karta, Surakarta. PT Telematrixindo Jakarta, Bandung, Surabaya, Medan, Semarang, Batam, Palembang, Yogya- karta, Surakarta. PT Indolink First Jakarta, Bandung, Surabaya, Yogya, Pacific Tegal, Surakarta, Malang, Samarinda. PT Persada Komindo Jabotabek, Bandung, Surabaya. PT Buana Bintang Bayu Jabotabek & Bandung, Semarang, Yog- yakarta, Malang, Surabaya, Medan. PT Selarasindo Mulia Jabotabek, Bandung, Surabaya, Yog- yakarta, Semarang, Solo, Dumai, Pekanbaru. PT Hutchson Sewu Jabotabek, Bandung, Surabaya, Jember.
Source: Data Consult
Table - 2
Local paging operators, 1996
Name of company Location Status PT Arta Surya Patria Serang Non PKS PT Mitra Jakarta Sejati Cilacap Non PKS PT Multi Larasati Surabaya Non PKS PT Deli Mitra Kencana Deli Serdang Non PKS PT Delima Prasta Utama Manado Non PKS PT Eka Buana Nusantara Semarang Non PKS PT Pagindo Dinamika Manado Non PKS PT Persada Komindo Jakarta Non PKS PT Raya Pertiwi Semesta Bekasi Non PKS PT Sumokomlek Dinamika Semarang Non PKS PT Telstra Indocom Tanggerang Non PKS PT Lusistronic Medan PKS PT Wahana Putra Yudha Medan PKS PT Yasa Mitra Nusantara Lhokseumawe PKS PT Mandiri Aksara Karya Padang PKS PT Inrico Perkasa Batam PKS PT Payung Sekaki Pekanbaru PKS PT Metroklina Agung Ujung Pandang PKS PT Intan Sriwijaya Palembang PKS PT Motorolain & Co. Jakarta PKS PT Santika Wira Yudha Jakarta PKS PT Abdi Komunika Bandung PKS PT Senopati Duta Caraka Bandung PKS PT Bahana Prambanan Bandung PKS PT Duta Mutiara Perkasa - PKS PT Cipta Dwipa Sakti Bandar Lampung PKS PT Paging Mataram Yogyakarta PKS PT Komisurya Solo PKS PT Bumi Menara Jaya Surabaya PKS PT Bumi Nusantara Komunika - - PT Trisula Manunggal Jaya Surabaya PKS PT Bali Rapco Ceria Denpasar PKS PT Indo Putra Pontianak PKS PT Putra Mahardika Balikpapan PKS PT Balisani Starbanindo Denpasar - PT Banda Permai Banda Aceh - PT Aksara Deli Caraka Pematang Siantar Kopparpostel Medan - PT Bella Barsan Batam - PT Laser Setia Budhi Pekanbaru - PT Tetap Megah Tanjung Pinang - PT Citrajaya Mitrabuana Bandar Lampung - PT Duta Pertiwi Santosa Bandar Lampung - PT Primkopparpostel Jakarta - PT Sugih Perdana Bogor - PT Tunggal S Jaya Mandiri Bogor - PT Prisma Sentra Agung Tanggerang - PT Kanwil V Parpostel Tanggerang - PT Dika Mutiara Pagingindo Cirebon - PT Star Citra Agung Pekalongan - PT Aksara Indo Komunika Tegal - PT Aksara Guna Media Yogyakarta - PT Media L. Komunikatama Kediri - PT Telecall Indonesia Mataram - PT Sandicita Nusatimur Samarinda - PT Balisani Starbanindo Banjarmasin - PT Metroklina Agung Ujung Pandang - PT Metroklina Agung Palu - PT Metroklina Agung Pare-pare - PT Pagindo Dinamika Manado - PT Putra Media T. Palu - PT Bumi Pertiwi Royalpage Sorong - PT Indokharisma Wirasatria Tanggerang - Name of company Brand PT Arta Surya Patria - PT Mitra Jakarta Sejati Multipage PT Multi Larasati Multipage PT Deli Mitra Kencana Delipage PT Delima Prasta Utama - PT Eka Buana Nusantara Starpage PT Pagindo Dinamika Starko PT Persada Komindo Nusapage PT Raya Pertiwi Semesta Multipage PT Sumokomlek Dinamika Starko PT Telstra Indocom Garco PT Lusistronic Lusis Paging PT Wahana Putra Yudha Medan Paging PT Yasa Mitra Nusantara Cunda Paging PT Mandiri Aksara Karya Starko PT Inrico Perkasa Starpage PT Payung Sekaki - PT Metroklina Agung Starko PT Intan Sriwijaya Starko PT Motorolain & Co. Starko PT Santika Wira Yudha Santika Paging PT Abdi Komunika Starpage PT Senopati Dura Caraka Starko PT Bahana Prambanan - PT Duta Mutiara Perkasa - PT Cipta Dwipa Sakti Starpu PT Paging Mataram Paging Mataram PT Komisurya Starko PT Bumi Menara Jaya Garco PT Bumi Nusantara Komunika Global Page PT Trisula Manunggal Jaya Wiraco PT Bali Rapco Ceria Starko PT Indo Putra Starko PT Putra Mahardika Starko PT Balisani Starbanindo - PT Banda Permai Banda Paging PT Aksara Deli Caraka Siantar Paging Kopparpostel Prompt Paging PT Bella Barsan Starko PT Laser Setia Budhi - PT Tetap Megah - PT Citrajaya Mitrabuana Starko PT Duta Pertiwi Santosa Starpage PT Primkopparpostel Globalpage PT Sugih Perdana Metropage PT Tunggal S Jaya Mandiri - PT Prisma Sentra Agung SentraCall PT Kanwil V Parpostel Indopage PT Dika Mutiara Pagingindo Starpage PT Star Citra Agung Starpage PT Aksara Indo Komunika - PT Aksara Guna Media Starko PT Media L. Komunikatama - PT Telecall Indonesia Telepage PT Sandicita Nusatimur - PT Balisani Starbanindo Starko PT Metroklina Agung Starko PT Metroklina Agung Starko PT Metroklina Agung Starko PT Pagindo Dinamika Starko PT Putra Media T. Media pager PT Bumi Pertiwi Royalpage Royalpage PT Indokharisma Wirasatria -
Note:
PKS = Under a cooperation agreement with PT Telkom
Non PKS = Without a cooperation agreement with PT Telkom
Source: Data Consult
Table - 3
Frequency tariff for paging operators
Category City Frequency tariff (per year) I Jakarta Rp 50,000,000 II Surabaya Rp 30,000,000 III.A Medan Rp 20,000,000 III.B Bandung Rp 15,000,000 Denpasar IV Palembang Rp 5,000,000 Solo Semarang Ujungpandang Batam Bandar Lampung V Jogyakarta Rp 3,000,000 Malang Pontianak VI Bogor Rp 2,000,000 Balikpapan Banjarmasin VII Pekanbaru Rp 1,000,000
Source: Directorate General of Post & Telecommunications
Table - 4
Investor interest in the industry of paging services, 1996 - 1997
Name of company Location Status Capacity (lines) New projects: PT Selarasindo - Jakarta PMDN 30,000 Mulia - Bandung - Surabaya PT Duta - Jakarta PMA 100,000 Sejahtera - Surabaya Komunikatama - Lampung Expansion project: PT Skytelindo - Jakarta PMA 182,000 Services - Bandung - Semarang - Padang Name of company Investment Commencement commitment of operation New projects: PT Selarasindo Rp 5 billion Jan'1999(*)) Mulia PT Duta US$ 2.5 million Aug.' 1999 Sejahtera Komunikatama Expansion project: PT Skytelindo US$ 33 million Mar. 1998 Services
(*) Actual commencement of operations late in 1996, brand name "Metrotel"
Source: Investment Coordinating Board/Data Consult
Table - 5
Growth in population of paging operators and customers, 1993 - 1997
Year Population Population Growth in of operators of customers population of customers (%) 1993 38 79,900 - 1994 54 405,000 406.7 1995 58 510,000 25.9 1996 75 625,000 22.6 1997 76 700,000 12.0
Source: Arpindo/Data Consult
Table - 6
Several local and national paging operators and their total customers
Operator Brand Total Share customers (%) National : PT Motorollain Corp. Starko 111,000 15.9 PT Skytelindo Services Skytel 86,000 12.3 PT Duta Pertiwi Sentosa Starpage 65,000 9.3 PT Telematrixindo Easycall 55,000 7.6 PT Indolink First Pacific Indolink 35,000 5.0 PT Persada Komindo Nusapage 24,000 3.4 PT Buana Bintang Bayu Telepage 14,000 2.0 PT Hutchson Sewu Personal 12,000 1.7 PT Selarasindo Mulia Metrotel 10,800 1.5 Local : PT Raya Pertiwi Semesta Multipage 55,000 9.3 PT Santika Wira Yudha Santika 40,000 5.7 PT Bumi Nusantara Globalpage 10,000 1.4 Komunikas PT Tunggal Sakti Metropage 2,000 0.3 Jaya Mandiri PT Cipta Jasa Dwipa Starpu 20,000 2.9 Sakti Other local operators 160,200 22.9 Total 700,000 100.0
Source: Arpindo/Data Consult
Table - 7
Additional features offered by several operators
Operators Additional features PT Skytelindo Group call : Send the same message to a number Services of pagers at the same time (SkyTel) Page recall : Operator can read out a message within 99 hours Sky forward : Message received by a pager can be sent further to another pager Sky alert : Message sent according to the requested schedule (alarm) Sky code : Keep messages sent through page recall fasilitas Page recall, Sky forward and Sky alert confidential PT Dura Pertiwi Group call : Send the same message to a number of pagers at the same time Santosa Star memo : Serve as an agenda (alarm) (Starpage) Star code : Keep messages confidential Star file : Print out messages received in the last 15 days Star PC : Send message to the customer's computer through a modem Star forex : Send information of foreign currency prices once every 2 minutes Star english, Star city, Star plus, Star news, Follow me, Star executive services, Corporate screen, Star alert, Star dial and Home page PT Motorollain Alpha numer- : Present messages in the form of Corp. ic display voice, letters and numerals (Starko) massage Fax box : Receive faxes at Starko offices Starko forex : Display information of foreign currency rates on Asian, European & USA markets once in every 2 minutes Voice infor- : Operator can read out a message mation System after being contacted Starko N. Customers can send messages in the form of numerals directly without going through operator Special Starko pagers available for school children PT Gema Teleko- Secretary services, Security system, data minindo communications (Personal) PT Buana Bintang Adhoc call, schedule call, check call, alert Bayu call, voice call, DG Manager, Added value PT Indolink First Instructions in the Indonesian language Pacific Swiss knives available for Swissphone customers (Indolink) for free PT Persada The same operator number for 3 cities (no Komindo long-distance phone charges) group call, (Nusapage) Corporate managing system PT Raya Pertiwi Multinet, Megamulti, Multi info, Semesta Multinews, Multifinance, (Multipage) Multitraffic & Multipage Mastercard PT Selarasindo Information of standby doctors and cellular links Mulia (Metrotel)
Source: Data Consult
Table - 8
Prices of locally produced pagers, October 1997 - January 1998
Name of company Brand of Brand/type services of pager Price as per October 1997 : PT Persada Komindo Nusapage Panasonic-4 Motorolla-4 PT Telematrixindo EasyCall EasyCall Traveller PT Raya Pertiwi Multipage Bravo express Semesta Advisor Motorola PT Motorollain Corp. Starco Alfa slim R3A410A Alfawide R3A411A Alfa AX PT Duta Pertiwi Starpage Bravo Santosa Advisor PT Bumi Nusantara Globalpage Motorola advisor Komunika Bravo express PT Skytelindo Sky-Tel Bravo Services Skyzone Motorola advisor PT Santika Wira Santika Philips 1032 Yudha PT Telstra Indocom Garco Motorola scriptor Motorola advisor Price as per January 1998 : PT Hutchon Sewu Personal Personal spider Personal scriptor Personal excellence PT Selarasindo Mulia Metrotel Metro classic Scriptor plex Advisor elite Name of company Price Service fee/ (Rp) month Price as per October 1997 : PT Persada Komindo 22,320 27,500 22,320 PT Telematrixindo 28,392 137,500 - 220,000(*)) PT Raya Pertiwi 53,392 27,500 Semesta 36,248 47,320 PT Motorollain Corp. 262,500 27,500 312,500 212,500 PT Duta Pertiwi 275,000 27,500 Santosa 412,500 44,000 PT Bumi Nusantara 225,000 27,500 Komunika 330,000 PT Skytelindo 200,000 33,000 300,000 44,000 400,000 PT Santika Wira 400,000 27,500 PT Telstra Indocom 179,000 27,500 189,000 Price as per January 1998 : PT Hutchon Sewu 363,000(*)) 27,500 440,000(*)) 550,000(*)) PT Selarasindo Mulia 478,000(*)) 27,500 643,000(*)) 698,000(*))
Note: Price of Metrotel page exclusive of 10% discount
(*) Inclusive of a six-month service fee
Source: Data Consult3
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| Comment: | DESPITE A HIGH MARKET POTENTIAL, THE INDUSTRY OF PAGER SERVICES IS IN A CRISIS. |
|---|---|
| Publication: | Indonesian Commercial Newsletter |
| Geographic Code: | 9INDO |
| Date: | Jan 26, 1998 |
| Words: | 7645 |
| Previous Article: | THE BACKGROUND TO AND IMPLEMENTATION OF ECONOMIC REFORM. |
| Next Article: | 1. EXPORT MARKETING OF UREA HANDLED BY PT PUPUK KALTIM AND PT PIM. |
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