telkomselindonesiatelkomselindonesia 1 h agency interconnect the most difficult issue for a new...
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T E L K O M S E L I N D O N E S I A 11
H a
gen
cy
interconnectinterconnectthe most difficult issue for a new operator ?
(Indonesia’s Experience)
1997
Cannes, France
Koesmarihati SugondoPresident Director -Telkomsel
February 1997
the most difficult issue for a new operator ?
(Indonesia’s Experience)
1997
Cannes, France
Koesmarihati SugondoPresident Director -Telkomsel
February 1997
++66
22
8811
11
WW OO RR LL DDWW OO RR LL DD
CONGRESSCONGRESSCONGRESSCONGRESS
T E L K O M S E L I N D O N E S I A 22
H a
gen
cy
TELKOMSELCOMPREHENSIVE INTEGRATED SUPPORT
GSM OPERATOR IN INDONESIA POSITIONING AS “GSM SPECIALIST” AND “MARKET LEADER IN QUALITY & SERVICE”
SETCO : INDONESIAN QUALIFIED PRIVATE COMPANY
SETCO5.00%
KPN : DUTCH TELECOMMUNICATION CARRIER
KPN17.28%
TELKOM : NATIONAL TELECOMMUNICATION CARRIER
TELKOM42.72%
INDOSAT : INDONESIAN INTERNATIONAL TELECOMMUNICATION CARRIER
INDOSAT35.00%
TOTAL COMPANY VALUE : US$. 2 BILLION
T E L K O M S E L I N D O N E S I A 33
H a
gen
cy
COVERAGE & CUSTOMERS
INDONESIAINDONESIAINDONESIAINDONESIA
TELKOMSEL’S COVERAGE5200 kms
2000kms
ALL 27 PROVINCIAL CAPITAL CITIES200 DISTRICT CAPITALS306 TOTAL CITIES
current : 215.000 customers in less than 2 years of operationaggressive growth : > 1.100.000 customers in the year 2000
TELKOMSEL'S CUSTOMERS&
MARKET SHARE (CELLULAR MARKET)
4%
11%
30% 30%29%
27% 26%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1994 1995 1996 1997 1998 1999 2000
0%
5%
10%
15%
20%
25%
30%
CUSTOMERS
MARKET SHARE
T E L K O M S E L I N D O N E S I A 44
H a
gen
cy
TELECOMMUNICATION SECTOR OF INDONESIA
FIXED-TEL MOBILE/CELLULAR FUTURE
* 2 INT’L GATEWAYs * NATION WIDE * PHSs* REGIONAL OPR. ~ RBOC’s - 3 GSMs * DCS 1800s
- 2 TELKOM’s - 1 NMT-450 * GMSSs- 5 KSOs * REGIONAL- 1 Fixed Cellular - 3 Analog AMPSs
* LONG DISTANCE- 1 Div. NET
GOVERNMENT :-FUNDAMENTAL TECH. PLAN
-INTERCONNECT
-REVENUE SHARING
-TECHNOLOGY
-TARIFF-
LICENSES & FREQ. ALLOC.
-SUPERVISION
METROSELMETROSELTELESERATELESERA KOMSELINDOKOMSELINDO regionalcellular
TELKOMSELGSM
TELKOMSELGSM
MOBISELNMT-450MOBISELNMT-450
SATELINDOGSM
SATELINDOGSM
EXCELCOMINDOGSM
EXCELCOMINDOGSM
nation-widecellular
DIVRE IIDIVRE II DIVRE VDIVRE V KSOMGTIKSOMGTI
KSOARIAWEST
KSOARIAWEST
KSOASTRATEL
KSOASTRATEL
KSODATA MALINDO
KSODATA MALINDO
KSOBUKAKA SINGTEL
KSOBUKAKA SINGTEL RATELINDORATELINDO
regionalfixed-tel
DIVNETLONG-DISTANCE
DIVNETLONG-DISTANCE
long-distanceoperator
T E L K O M S E L I N D O N E S I A 55
H a
gen
cy
MAIN ISSUESINTERCONNECT
INTERCONNECT SYSTEMINTERCONNECT SYSTEM
PHYSICALPHYSICAL PRICEPRICE
T E L K O M S E L I N D O N E S I A 66
H a
gen
cy
WHY INTERCONNECT IS DIFFICULT ?
“BIG BROTHER”(PSTN OPERATOR)
“BIG BROTHER”(PSTN OPERATOR)
“LOOSING SHARE” “COMPETITION”
“LOOSING TRAFFIC” “IMAGE CHALLENGED”
NEW ENTRANCES ARE SEEN AS “THREAT”INSTEAD OF “PARTNERS” WHICH CONTRIBUTE
(BRING & CREATE) MORE REVENUE TO PSTN OPERATOR
NEW ENTRANCES ARE SEEN AS “THREAT”INSTEAD OF “PARTNERS” WHICH CONTRIBUTE
(BRING & CREATE) MORE REVENUE TO PSTN OPERATOR
T E L K O M S E L I N D O N E S I A 77
H a
gen
cyMARKET DEVELOPED
NEW
OPER
ATO
RN
EW
OPER
ATO
R
NEW
OPER
ATO
RN
EW
OPER
ATO
R
NEW
OPER
ATO
RN
EW
OPER
ATO
R
PSTN
OPE
RA
TOR
ORIGINAL TELECOMMUNICATION MARKET
LEA
SED
LIN
ES
TRA
FFIC
THE MONEY GO BACK TO FIXED-OPR
PSTN OPERATOR SHOULD NOT SEE NEW ENTRANCES AS “THREAT”BUT AS “BIG CUSTOMERS” AND “PARTNERS” WHO CONTRIBUTE
(BRING & CREATE) MORE REVENUE TO PSTN OPERATOR
T E L K O M S E L I N D O N E S I A 88
H a
gen
cy
EVOLUTION OF INTERCONNECT ARRANGEMENT
1. INTERCONNECT WITHIN MONOPOLISTIC MARKET
PSTN
RSACELLULAR MOBILE C.
RS ACELLULAR MOBILE B.
TELKOMSELCELLULAR MOBILE A.
INTRA PRICING
TELKOM
2. INTERCONNECT BETWEEN LIBERALIZED& MONOPOLISTIC MARKET
PSTN
CELLULAR MOBILE C.
CELLULAR MOBILE B.
CELLULAR MOBILE A.
PT. TELKOM
3. INTERCONNECT BETWEEN TWO LIBERALIZED MARKETS
CELLULAR MOBILE C.
CELLULAR MOBILE B.
CELLULAR MOBILE A.
PSTN B
PSTN A
PSTN C
A
B
C
T E L K O M S E L I N D O N E S I A 99
H a
gen
cy
MOBILE OPERATOR’S TRAFFIC PROFILE(MINUTES)
TRAFFIC INDONESIA GERMANY
- MOBILE-MOBILE 10 % 5 %- MOBILE-FIXED 90 % 95 %
MOBILE OPR CONTRIBUTION TO PSTN-OPR
LEASED LINES17%
INTERCONNECT60%
NET. REV.-USAGE23%
BIG PORTION OF CELLULAR TRAFFIC REVENUE STILLGOES TO PSTN OPERATOR
BIG PORTION OF CELLULAR TRAFFIC REVENUE STILLGOES TO PSTN OPERATOR
TOTAL TRAFFIC/USAGE REVENUEMARKET IS SUPPORTED BYATTRACTIVE CUSTOMER GROWTH
CELLULAR MOBILE TELEPHONEDEMAND FORECAST (‘2000)- JICA (‘92) : 230,000 CUSTs.- BOOZ ALLEN (‘94) : 600,000 CUSTs- GOVERNMENT
- ORIGINAL (‘94) : 400,000 CUSTs- REVISED (‘97) : 1.200.000 CUSTs
- TELKOMSEL : 4.000.000 CUSTs
T E L K O M S E L I N D O N E S I A 1010
H a
gen
cy
HOW SHOULD THE GAME BE PLAYED ?
INTERCONNECT SHOULD BE TREATED AS “SERVICE”
SERVICE
SUPPLIER(BIG STOCKS)
BUYER(BULK PURCHASE)
THE PLAYERS
PSTN OPERATORNEW ENTRANCES
“WHOLESALE TREATMENT”
T E L K O M S E L I N D O N E S I A 1111
H a
gen
cy
BUYER(NEW ENTRANCE)
SUPPLIER(PSTN OPERATOR)
SERVICEDELIVERY
* QUALITY/RELIABILITY
* CAPACITY* PRICE* AVAILABILITY
RESPONSIBILITY,RIGHT
&OBLIGATION
INTERCONNECT SHOULD BE TREATED AS “SERVICE”
“SERVICE” SHOULD APPLY “RIGHT & RESPONSIBILITY” DEAL
COMMON BUSINESS PRACTICE
T E L K O M S E L I N D O N E S I A 1212
H a
gen
cy
4 MAIN REASONS TO BUILD OWN OVERLAY NETWORKCOMMON BUSINESS PRACTICE
OWN OVERLAY NETWORK IS JUST LIKE A COMMON INVESTMENT WHICH REQUIRES “HUGE FINANCE” &
COSTS “OPERATION & MAINTENANCE HEADACHE”
OTHER NETWORKOWN OVERLAY
NETWORK
1. QUALITY/RELIABILITY
2. CAPACITY3. PRICE4. AVAILABILITY
1. QUALITY/RELIABILITY
2. CAPACITY3. PRICE4. AVAILABILITY
IF THE SERVICE IS NOT SATISFACTORILY DELIVERED ,IT WILL ENCOURAGE THE DEVELOPMENT OF
EXCLUSIVE OVERLAY NETWORKWHICH BECOMES IN FACT,
A LONG DISTANCE OPERATOR
T E L K O M S E L I N D O N E S I A 1313
H a
gen
cy
INTERCONNECTION NEED A PRICEINDONESIA'S SITUATION : INTERIM SOLUTION
REVENUE SHARING IS APPLIED AS EACH PARTIESARE NOT ABLE TO DETERMINE THE PRICE OF
EACH “INTERCONNECT BUILDING BLOCK”
PSTN
CELLULAR
X
X X
X
T E L K O M S E L I N D O N E S I A 1414
H a
gen
cy
X
X X
Customer baseCustomer acquisition
Cost of revenue-collection (RISK)
800 900
XMobile operator is eligible for 15 % of long distance tariff
ALL KIND OF VALUE ADDED SERVICES AND PREMIUM MAKE REVENUE SHARING EVEN MORE DIFFICULT
REVENUE SHARING IS APPLIED ON “USAGE CHARGES”NOT ON DELIVERED ADDED VALUE
REVENUE SHARING DOES NOT INCORPORATE ALL SERVICE ASPECTS
T E L K O M S E L I N D O N E S I A 1515
H a
gen
cy
INTERCONNECT ARRANGEMENT ?MOBILE-PSTN
PHYSICALPOINT OF INTERCONNECT
PHYSICALPOINT OF INTERCONNECT
VIRTUALPOINT OF INTERCONNECT
VIRTUALPOINT OF INTERCONNECT
USER TARIFFBASIS
USER TARIFFBASIS
COST BASISCOST BASIS
INTERCONNECTSYSTEM
INTERCONNECTSYSTEM
INDONESIA
RECOMMENDED
T E L K O M S E L I N D O N E S I A 1616
H a
gen
cy
HOW TO MEET THE GOALINTERCONNECT PRICE
BASIS :COST BASIS (ADDED VALUE)
COMPONENT OF BUILDING BLOCK “WHOLESALE”
BASIS :COST BASIS (ADDED VALUE)
COMPONENT OF BUILDING BLOCK “WHOLESALE”
BASIS :USER TARIFF
RETAIL
T E L K O M S E L I N D O N E S I A 1717
H a
gen
cy
Australia Finland Japan New Zealand UK US
Negotiated/Determined N/D N D N N/D D
Tariff/Cost based C T C/T T C/T C
Historic/Current cost H - H - H H
Marginal/Fully allocated costs M - F - F F
Actual/Model costs A - A - A A
Return on capital allowed (%) 16.80 - 5 - 15 11.25
Australia Finland Japan New Zealand UK US
Negotiated/Determined N/D N D N N/D D
Tariff/Cost based C T C/T T C/T C
Historic/Current cost H - H - H H
Marginal/Fully allocated costs M - F - F F
Actual/Model costs A - A - A A
Return on capital allowed (%) 16.80 - 5 - 15 11.25
INTERCONNECTION ENVIRONMENT
Source : “Interconnect”, Ovum, London, 1994
T E L K O M S E L I N D O N E S I A 1818
H a
gen
cy
CONCLUSIONHOW TO COME TO “WIN - WIN” SITUATION
STEP 1. The connecting parties should see each other as customer and supplier
> PROVIDING BEST SERVICE
STEP 2. The network development plan of each parties should be well coordinated
> TO ENSURE DELIVERY
STEP 3. The regulator must set “clear rule of the game” and play as “referee”
> TO SUPPORT EQUAL TREATMENT
STEP 4. The ”interconnect building block” of the service must be priced
> COST ALLOCATION
T E L K O M S E L I N D O N E S I A 1919
H a
gen
cy
THANK YOU ...THANK YOU ...for your attentionfor your attention
TELKOMSELTELKOMSELLandmark Center Bld. Tower A, 19th Fl.
Jl. Jend. Sudirman No. 1Jakarta 12910 - Indonesia
Tel. +62-21 5200811, 5272930Fax. +62-21 5712672, 5711324
kartuHALO +62-811100908
THANK YOU ...THANK YOU ...for your attentionfor your attention
TELKOMSELTELKOMSELLandmark Center Bld. Tower A, 19th Fl.
Jl. Jend. Sudirman No. 1Jakarta 12910 - Indonesia
Tel. +62-21 5200811, 5272930Fax. +62-21 5712672, 5711324
kartuHALO +62-811100908
T E L K O M S E L I N D O N E S I A