The abundance of new wireless licenses in Indonesia could have as much to do with politics as market opportunity, said a Pennsylvania State University college professor who specializes in international telecommunications.
“Many of the ruling elite have recognized the value of wireless communications and want to find entry,” said Rob Frieden, formerly deputy director of international relations for Motorola Satellite Communications Inc.
“On the other hand, Indonesia is a growing economy. Instead of laying terrestrial cable, they go wireless as the first option, so there is a willingness to have a proliferation of operators.”
The Indonesian government had only to announce its intention to issue a tender for new personal communications services licenses, and a deluge of applications flooded the telecommunications office.
The Indonesian press has reported that more than 90 applications were received, and that numerous applicants are connected to the family of President Suharto and other high-ranking government officials.
There now are seven cellular operators in Indonesia, covering a variety of areas. Indonesia hopes to offer new licenses for about nine service areas, which could result in some licenses offering a more lucrative and viable opportunity than others. Indonesia’s National Telecommunications Operators Association fears this could become a sensitive issue.
PCS operators will be required to use Global System for Mobile communications technology.
Although the name of Motorola Inc. has been linked to two or more ventures, the Illinois-based manufacturer denies being a license applicant.
The country has a total of 466,000 cellular subscribers. As the nation’s economy continues to grow, wireless use is expected to expand as well.
Indonesia is one of the most densely populated nations in the world. There are 200 million people on an archipelago of 17,000 islands that stretches east to west about the same distance as the United States.
Most of the ventures forming for Indonesia are comprised of other Asian wireless operators, such as Shinawatra of Thailand and Hutchison of Hong Kong.
Japanese manufacturers have shown an interest in Indonesia with the aim of establishing Personal Handyphone System technology there. European manufacturer L.M. Ericsson and Canada-based Northern Telecom Ltd. have been mentioned as possible players as well. Conspicuously absent from the speculative lists are some U.S. operators often active overseas, such as U S West International or BellSouth International.
“It’s a complex country,” said Frieden. “The Indonesians are very adept at securing aggressive terms with equipment manufacturers. A U S West is less able to blend cash, in-kind services and equipment.”
California-based AirTouch Communications Inc., which pursues numerous international ventures, said it wasn’t applying for the Indonesian license. AirTouch will be the exclusive service provider for the Globalstar satellite telephone system in Indonesia and nine other countries.
