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Who Said Talk is Cheap?

Jakarta Seminar Says Indonesia's Telephone Rates Among the World's Most Expensive.

(5/31/2004) Indonesian international telephone tariff for a three minute call average US$ 2.5 dollars, a rate second only to Chile which charges US$ 3 dollars.

As reported in the Indonesian-language daily Kompas, a seminar was held in Jakarta on Monday, May 17, 2004, where experts from the University of Indonesia discussed the topic "Indonesia's Readiness for Competition in Telecommunications."

Sponsored by the Commission to Supervise Business Competition (KPPU), the featured speakers were Faisal Basri, an economist from the University of Indonesia, and Muhammad Iqbal, a member of the KPPU.

According to Faisal, the cost of making an international telephone call is lower in neighboring countries. Singapore and Malaysia, for example, charge less than US$ 1 for a three-minute call, while Korea charges US$ 2. The economist went on to outline the many benefits to national productivity and exports that accrue from a low-cost telecommunications regime.

The Reasons for the High Indonesian Phone Tarrif

Faisal complained that the argument always offered in support of higher telephone tariffs by telecommunication authorities in Indonesia was the need to raise funds for the installation of more fixed lines for the public and the need to meet payments for universal service obligations - the fees due to overseas operators. The reality, he argued, is that additional fixed lines are not being installed, supplanted instead by the cheaper flexi phone system - a mobile telephone system not requiring fixed line technology.

Adding insult to injury, according to the economist, is the question of what use was put to the 30% increase in telephone tariff introduced in 2001 and 2002, followed by yet another 25-28.21% increase introduced on April 1, 2004.

To resolve the problem and ensure Indonesia remains competitive in services and technology in the telecommunication sectors, Faisal recommends that those operating the telephone systems must be separated from those who manage the telecommunications infrastructure's backbone.

Muhammad Iqbal, the KPPU official speaking at the seminar said the lack of an effective referee has alienated the public interest in favor of the telephone operating company. As a result, of the 12 cases of unfair and unhealthy competition handled by the KPPU, 11 of these were cases involving the telecommunications sector.