JAKARTA, Indonesia—Southeast Asian operators are predicted to face unprecedented growth in data traffic during the coming years. Operators in the region have witnessed a surge in data traffic through short message service (SMS) traffic, followed by General Packet Radio Service (GPRS) offerings in recent months, with third-generation (3G) services promising more future revenues.
Indonesia, which counted more than 6 million cellular subscribers last year, experienced an explosion of text-messaging traffic, especially when inter-operator SMS opened in the country last May. Text-messaging traffic, such as SMS and information-on-demand services, contributed nearly 3 percent, or US$8 million, in revenues, in 2000, jumping to US$84 million in 2001 or 8 percent of the mobile operator’s total revenue.
Rudiantara, head of the country’s cellular association ATSI, predicted there will be a significant increase in data traffic this year, considering new entrants in the market and the growing GPRS services that are provided by only Indosat Multimedia Mobile (IM3) so far. Market leader Telkomsel and other operators, such as Excelcomindo and Satelindo, plan to roll out GPRS in the near future.
Rudiantara, also chief technology officer (CTO) of Excelcomindo, said data traffic will contribute about 12 percent of total operator revenue during 2002 in Indonesia, and is predicted to gain US$1.5 billion in total operator revenue compared with 2001 revenue. Some 11 percent will be SMS traffic, while the other 1 percent will be GPRS traffic, Rudiantara said.
Substantial growth in data traffic also occurred in the Philippines, which is home to the highest SMS traffic sent per user in the world. The Philippines currently has a mobile penetration rate of more than 11 percent. Two major players, Globe Telecom and Smart Communication, have strengthened their positions by continually improving their networks, including significantly increasing their data traffic capacity.
In mid-January, Smart announced that it doubled its GSM switching capacity to 8 million subscribers from 4 million in 2000. The carrier’s text-messaging capacity has increased three-fold to 240 million text messages daily from 92 million during 2000. Globe’s expansion program includes deploying GPRS networks in key cities all over the country, as well as upgrading its backbone network.
Smart, which counted 4.3 million subscribers as of September 2001, continues to accelerate its network rollout to cope with the increase in voice and text traffic volume, as well as the introduction of various wireless value-added services, such as mobile banking, information-on-demand offerings and text-based entertainment services. As a result, wireless data accounted for 25.8 percent of Smart’s revenues of US$390 million in the first nine months of 2001 compared with 15 percent during the same period in 2000. Smart’s counterparts, the combined Globe Telecom and Islacom, which was acquired by Globe Telecom in June 2001, have increased their data contribution from 15 percent to 21 percent, or US$392 million, in revenue during the same period.
While Indonesia and the Philippines are concentrating on text-messaging services, Malaysia might be considered the pioneer in the region for implementing next-generation mobile data. In compliance with guidelines from the country’s telecommunications regulator Malaysia Communications and Multimedia Commission (CMC), leading operators like Maxis are gearing up their 3G plans with a recent collaboration with Technology Resources Industries (TRI) to adopt a so-called mobile virtual network operator (MVNO) to offer 3G services. MVNOs, unlike existing mobile network operators, do not have licenses to use radio spectrum, but have access to one or more of an operator’s radio elements, allowing it to offer somewhat similar services to end users.
Maxis is expected to seek a virtual route into 3G services to eliminate the cost of network expansion, which is expected to cost each operator an estimated US$1 billion. This fact helped another player in the sector, TimeCel, decide to focus on developing its current text messaging and GPRS services instead of spending heavily on 3G infrastructure.
Although the country’s regulator has not agreed on implementing MVNOs and will likely announce further details on the 3G license awards expected later this year, Maxis’ leadership in data communications is unquestionable. In August 2000, Maxis was the first operator to offer GPRS services. Moreover, industry forecasts indicate that Maxis’ data transmission will contribute 40 percent to 50 percent of its total revenue during the next couple of years, although Maxis’ officials have a more modest single-digit growth projection in the sector.
Southeast Asian operators are trying to increase customers’ use of data communications whether through advanced text-messaging services like those offered by Indonesia’s operators, the delivery of new services like expansive GPRS offerings in the Philippines or through the trial of virtual 3G networks in Malaysia.
As operators face huge investments and uncertainty surrounding the return on delivering new services, customers have the benefit of trying services that operators offer whether they need them in the long term. ‘Smart has invested heavily to expand its network facilities,” said Napoleon L. Nazareno, Smart president and chief executive officer (CEO). “As we continue to offer new wireless services, the increase in voice and text traffic requires that we also make our network more resilient.” GW
