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Indonesia reverses decision on interconnect cuts

08 SEP 2016

Indonesia’s Information and Communication Ministry backtracked on its push to reduce interconnection charges after yielding to pressure from state-supported Telkomsel, which is the country’s largest mobile operator.

Minister Rudiantara suspended the order the ministry issued on 2 August to the country’s mobile operators to reduce interconnection fees by an average of 26 per cent, the Jakarta Globe reported. The instruction would have cut the average interconnection fee to IDR204 ($0.023) per minute from IDR250 per minute.

Telkomsel expressed outrage at the government’s effort to reduce overall telecoms costs for customers by lowering the interconnection charges that operators pay each other.

The operator has pushed for a “cost-based” system that recognises operators’ significant infrastructure investments, especially in remote areas. In addition, Telkomsel’s president director Ririek Adriansyah said that lower retail prices are not everything, noting that an operator has to “offer good quality service and coverage to every region”, the Globe said.

Telkomsel, the mobile unit of state-controlled Telkom, had 157 million mobile connections in Q2 2016, equivalent to a 44 per cent share of the market, according to GSMA Intelligence. The country has 10 mobile operators.

A House of Representatives commission asked the government to review further the positive and negative impacts of the interconnection reduction plan, the newspaper said.

Author

Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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