June 22, 2016
– Even though Telkomsel dominates the market, Syarkawi does not believe the company violated business competition law. The company would be in considered in breach if it abused its dominant position.
The Business Competition Supervisory Commission (KPPU) is looking into suspected unhealthy competition practices in the telecommunications industry, from the alleged monopoly of telecommunications giant Telkomsel to the discounted pricing practices of Indosat Ooredoo.
KPPU Head Syarkawi Rauf said Telekomunikasi Indonesia subsidiary Telkomsel dominates the telecommunications market outside Java, controlling over 50 percent of the market. “Under business competition law, a company is considered a monopoly if it (controls) more than 50 percent (of the market),” he told Katadata on June 21, 2016. The monopoly covers calls, text message (SMS) and data services.
Even though Telkomsel dominates the market, Syarkawi does not believe the company has violated business competition law. The company would be in considered in breach if it abused its dominant position in the market.
An example would be if the company obstructed consumers from accessing the products of its competitors. “For example, Telkomsel’s alleged bulk buying of Indosat SIM cards outside Java,” said Syarkawi. In response to complaints from the public about this, the KPPU plans to summon Telkomsel’s management on June 24, 2016.
Syarkawi said the KPPU had coordinated with the Minister of Communications and Information Rudiantara on June 20, 2016 night, who advised the KPPU and the Telecommunications Regulation Body (BRTI) to summon Telkomsel.
The KPPU also intends to summon Indosat over its advertisement promoting a call tariffs of just IDR 1 per second. Syarkawi questioned whether this price is reasonable and plans to determine whether Indosat’s aim is to steal a market share by charging low tariffs.
Telkomsel Vice President of Corporate Communications Adita Irawati said that Telkomsel’s domination of the market outside Java is not a monopoly. “Telkomsel’s domination of the market outside Java was achieved through a long process of extraordinary ups and downs since it was established in 1995,” she said in a press release on June 20, 2016.
Adita explained that during that time, other telecommunication operators were more focused on building the telecommunication network infrastructure on the island of Java and in major cities, which were considered more profitable than the smaller markets outside Java. Building a network outside Java also required a huge capital expenditure, and operating costs were higher than on Java.
Adita said that despite these challenges, Telkomsel continued development as part of the company’s commitment to modern licensing, pursuant to Telecommunications Law No. 36/ 1999. She claimed that Telkomsel is still the only operator to build cellular telecommunication infrastructure in remote, border and outermost regions across Indonesia.
She added that Telkomsel has 116,000 base transceiver stations in Indonesia, and the company expands its network by an average of 25 percent each year.
Indosat previously accused Telkomsel of monopolizing the telecommunications business outside Java. “Outside Java, Telkomsel has (an) 86 percent (market share), and this continues to grow, making Indosat, XL, and others stop and wonder whether there would be any value doing business there?” Indosat Ooredoo President Director Alexander Rusli said to Katadata.
(By Maria Yuniar Ardhiati)