Rinaldi Firmansyah, President Director, Telkom: Interview

Interview: Rinaldi Firmansyah

In what ways is the industry undergoing a transformation from providing basic services towards more sophisticated offerings?

RINALDI FIRMANSYAH: Over the past decade the telecommunications industry grew faster than any other industry, largely because it was propelled by the provision of basic services. As a result, many players entered the market looking to capitalise. However, the high growth rate we previously experienced is beginning to flatten as the basic services market becomes saturated. Consequently, the sector is now overrun and highly competitive, with margins on the decline.

We have entered a new era for telecommunications. While it will be extremely challenging, it will also mark a period of great opportunity as operators adjust and attempt to secure a long-term presence. Operators, more so than ever, will have to act quickly as they try to anticipate the market’s future needs and decide how to leverage resources. Their ability to provide customers with the increasingly sophisticated products and services demanded will be vital to their success or failure.

This is no longer simply a commodity-driven market. It is now instead an industry of value-added products accelerated by technology convergence. For instance, at Telkom we have labelled our strategy TIME (Telecom, IT services, Media and Entertainment). The telecommunications industry is being pressured by rapid changes in both consumer lifestyle and technology. A mobile operator’s survival will depend largely on its ability to adjust its model at a similar pace.

We must remember that, while some may argue that convergence has been slow, Indonesia is a vast country with an enormous population. It would be unfair to compare it to another nation due to its size and complexity. However, the reality is that demand for more sophisticated services in highly saturated areas like Jakarta motivates convergence at levels we have never experienced before. If you just look at the number of Facebook or Twitter accounts registered to Indonesians, it is easy to see where this country is headed.

Over the next few years packaged services will become more readily available as broadband will be bundled with wire, wireless and cable services. Additionally, content delivery through various platforms will become increasingly important to the end-user. Internet television’s development will have a lasting and meaningful impact as well. The industry is undergoing tremendous change, but this change should be embraced as we progress to the next stage of telecommunications development.

How will the Palapa Ring project affect economic development, and what role will the industry play?

FIRMANSYAH: The Palapa Ring project is critical if the government intends to realise its objective of “meaningful” broadband penetration reaching 30% by 2014.

Additionally, acceleration and development of the six national economic corridors identified under the government’s Master Plan 2011-25 (MP3EI) also requires the Palapa Ring project’s successful implementation.

The MP3EI programme must be supported by a highly capable telecommunications infrastructure providing subscriber access to content providers with speeds from 20 Mbps up to 100 Mbps.

Upon completion, the Palapa Ring project will strengthen overall national connectivity and improve broadband penetration so even remote regions will have access. The project to connect the Eastern Indonesia regions of Sulawesi Island, Maluku, North Maluku and Papua with the rest of the provinces opens the door for increased trade and tourism, as well as to improve the competitiveness of regions less developed because of limited telecommunications infrastructure.

Many international studies show broadband technology has the potential to bring about positive social change and economic prosperity. For our part, we will keep gradually building high-speed broadband infrastructure, with the aim of reaching 13m homes across 33 provinces and 497 cities and districts by 2015; a project in which we will invest Rp21.2bn ($2.5m).