Telcos Oppose SIM Subscription Price Plan
Telecommunication companies have resisted a government plan to impose a minimum price for new prepaid mobile-phone starter packs, fearing that the regulation would reduce revenue.
The government proposed a plan last month to impose a subscriber identity module (SIM) price at a minimum of Rp 100,000 ($10) per card and a tighter cellular number registration.
The proposal came as an attempt to control spam messages offering loans, goods, services and the occasional scam.
One of the most commons scams is known as “mom asks for phone credit” — a message from a perpetrator posing as a family member in distress and in need of urgent financial help.
The government argued that the scammers take advantage of cheap starter packs, which can be sold for Rp 5,000 for new SIMs with lavish phone credit bonuses, by buying them in bulk and discarding them after a short period of use.
However, companies have argued that the proposal could restrict expansion as 98 percent of their cellular services sold are prepaid.
“The number of postpaid customers is only around 2 percent. If the regulation is enforced strictly, I would guess that a lot of customers would disappear, it could affect half of the current total mobile subscribers,” said Telkomsel president director Alex Janangkih Sinaga, who is also chairman of the Indonesian Cellular Telecommunications Association (ATSI).
That would be very detrimental to the telecommunications industry and, in turn, would have a negative impact on the national economy, Alex said.
From Telkomsel’s experience so far, Alex said that the company usually makes and sells eight starter packs to get a new customer, as customers tend to experiment with many competing operator packages before settling on one.
Last year Telkomsel took in 15 million subscribers, suggesting that the number of starter packs that were produced and distributed was 120 million.
Hasnul Suhaimi, president director of XL Axiata, said that fierce competition among 10 cellular operators in Indonesia has caused a 20 percent churn rate per month among mobile customers.
Alexander Rusli, president director and chief operating officer of Indosat, said that lower-income customers would be directly affected by the government’s plan.
“Poor people would not be able to afford the starter pack priced at Rp 100,000,” Rusli said.
On the other hand, Nonot Harsono, a member of the Indonesian Telecommunications Regulatory Body (BRTI), said that the government plan does actually benefit teleco companies and their customers.
“Why is the proposed minimum price Rp 100,000? It is so the SIM card is not easily wasted. People will buy a SIM card and use it for a long time,” Nonot said.
Nonot estimated 50 million SIM cards are discarded each month, and that costs the companies around Rp 250 billion per month, or about Rp 3 trillion per year.
However, according to Telkomsel’s president director, the company’s cost to produce one SIM card is at an average Rp 2,000 per unit.
“Does the company issue the SIM card to make a profit? Not really, because the SIM card is sold very cheaply,” Nonot said.
In addition to the higher price, the regulator intends to tighten the SIM card registration process to eliminate fraudulent actions. With the price of an expensive SIM card, fraud perpetrators are expected to reconsider, Nonot said.
According to Nonot the government is targeting to implement the new rules sometime next year before the election in order to block black political campaigns through SMS.
“Tighter registration is expected to minimize or even eliminate it,” he said.