JAKARTA, Indonesia-For years, countries in Southeast Asia have achieved tremendous growth in cellular phone services. However, when economic turmoil hit the region in 1997, network buildout was deferred and even stopped in some countries due to plummeting local currencies.
Although many operators in the region have encountered such economic difficulties, they still find cellular services lucrative due to competitive practices that have forced them to provide reliable networks and reasonable pricing.
Lim Swee Say, Singapore’s minister of state for communications and information technology and trade and industry, envisions that competition between service providers will lead to more competitive pricing, but more importantly to a higher quality of service and increased innovation and investment in infrastructure and emerging technologies. Although the market is already competitive, the Infocomm Development Authority (IDA), the country’s telecom regulator, still protects customers’ interests by ensuring they are not victims of unfair practices.
Similar conditions exist in Malaysia. The country’s Telecommunication Bill 1998 required that licenses of telcos no longer be technology specific but service specific. This action promoted more intense competition as operators now offer enhanced customer service and billing systems along with attractive service packages to entice new subscribers and retain existing ones.
Commenting on the situation, Tan Sri Nuraizah Abdul Hamid, Malaysia’s secretary-general of the Energy, Communications and Multimedia Ministry, said that mobile service is already competitive so there is no need for government intervention. “Growth rates have continued to be strong, if the prices for cellular mobile services are left to market forces,” she added. In addition, Angie Yen, senior trade manager at British High Commission, a service organization that maintains a close bilateral relationship with the United Kingdom and Malaysia, said that so far there have been no reports of any unfair practices.
Meanwhile, Malaysia’s counterpart, Indonesia, which was strongly affected by the economic crisis, committed to the agreement with the International Monetary Fund (IMF) to adjust the public sector tariff. Since cellular customers in the country have undergone pricing adjustments several times, they are demanding better services from their operators to compensate for the adjustment.
In fact, operators could only fulfill some of the subscribers’ demands, and in their words, defer the others, due to the fact that the adjustment was mostly intended to recoup operating losses. In the circumstances, Djamhari Sirat, the country’s director general of Post and Telecommunications anticipates that someday the pricing structure for cellular service will be completely market driven.
Value-added services
Amid the situation, operators are determined to be creative in their quest to deliver high-quality services at an affordable price. Coupled with the many similarities between the countries, the way in which each operator offers their services varies slightly.
Indonesian cellular customers, for instance, subscribe to a prepaid and postpaid system with predetermined value-added services regardless of whether they need the services or not. Unlike their counterparts, there are no monthly charges and usage fees for such services with the exception of SMS, where a user is charged for every message sent, and Wireless Application Protocol (WAP), which requires customers to register in advance.
Moreover, the number of value-added services offered by an operator is not considered the primary issue for customers. They are more interested in coverage area and roaming fees. This relates to the nature of the country’s landscape and the customers’ inclination to use their phones outside a local coverage area, while at the same time worrying about how much their bill will increase due to roaming fees.
Telkomsel, an Indonesian operator, provides the widest coverage and consequently the largest customer base and charges the least for local access but the most for roaming fees. In contrast, Satelindo offers free roaming fees and charges relatively higher rates for local access.
Meanwhile, fierce competition between five cellular operators in Malaysia has brought down average revenue per unit (postpaid and prepaid) from RM90 to RM60 (US$23.70 to US$15.80). Consequently, to maintain revenue growth, operators are offering a range of services to attract more customers.
Celcom, the operator with the largest customer base in Malaysia (1.7 million as of March 2001), offers different pricing structures for individuals, companies and government subscribers, each with additional registration and monthly fees for their chosen value-added services. While Maxis, a service provider with 1.64 million customers as of March 2001, offers price plans according to customer lifestyle-whether or not they make mostly local calls or long-distance calls. Customers who are more apt to call locally should opt for the “Pro-Talk Plan” rather than the “Standard Plan” which is intended for frequent travelers.
In another part of the region, Singapore has long offered customized services. SingTel Mobile, a subsidiary of Singapore Telecom and the country’s largest cellular operator with more than 1.6 million subscribers, has at least seven mobile price plans targeted to a broad range of customers. Jesmine Ong, communication manager at SingTel Corp., said that SingTel’s strategy is to ensure that they continuously meet, if not exceed, customers’ expectations.
“Besides offering excellent quality services, in terms of reliability and unsurpassed indoor and outdoor coverage, at very competitive prices, SingTel Mobile also differentiates themselves from other operators by offering innovative and useful services that will meet our customers’ needs,” Ong added. Last year the company introduced *Send, a short message service that allows customers to receive location-specific information, such as finding the closest gas station.
Although each operator employs unique pricing strategies to remain competitive, the customer’s primary concern is not always price but the desire for better services.
