Indonesia is certainly one of the most competitive mobile markets in the Asia-Pacific region, if not the world, with 11 mobile and fixed-wireless operators all striving for a piece of the world's fourth-most populous nation. This extreme competition has driven voice tariffs to extremely low levels as incumbent Telkomsel's prepaid "Kartu AS" per minute charges are now less than 8 rupiah, or about $0.0008 per minute, and promotions have gone below 1 Rupiah per minute.
This intense competition has hit all of the operators hard, and while the worst of the price war seems to be over, newer entrants like Hutchison have only managed to garner an ARPU of 10,316 rupiah (about $1.09) and a staggering churn rate of 24.9% as of the second quarter of 2009. Aggressive in-network calling plans and the mandated price difference between GSM and CDMA fixed wireless service have also led to Indonesia having the highest SIM card-to-user ratio in the region, which is expected to stand at 1.7 SIMs per user by the end of the year.
Indonesia's operators have more recently decided to pursue higher-end users in the prepaid space by marketing network quality and expunging inactive users from their subscriber bases of inactive users. It should come as no surprise that operators have made a major push into the mobile data space as a way to stay competitive in the market and differentiate their product offerings.
Indonesians have always had a proclivity to use mobile data, and Indonesia is expected to have the second-highest contribution to ARPU from mobile data services than any other emerging Asia-Pacific market with the exception of the Philippines.
Most of this revenue is derived from text messaging, and despite the massive growth in non-messaging data traffic, Indonesia's market is only 3% postpaid, and as a postpaid usage has historically been a gating factor in advanced mobile data uptake, local mobile operators understood the need to expand mobile data services to the remaining 97% of the market.
While prepaid data usage has long been a quandary for mobile operators around the world, Indonesian mobile operators got a major boost from two sources: smartphones and social networking sites. Research In Motion's Blackberry Curve has proven a smash hit in the Indonesian market, largely driven by the large QWERTY keyboard and Blackberry Messenger service, which can be used for free RIM-to-RIM device chatting. The device has been such a success that the Indonesian government forced RIM to open a servicing center to cater to the 500,000 users as the vast majority of the devices sold come from the black market.
The second factor that has aided the rise in prepaid mobile data is the rise of social networking sites such as Facebook and Friendster. Indonesia had a miniscule household broadband penetration rate of 1.3% at the end of 2008, but an internet user penetration rate of about 15%, demonstrating that there are many people in the market who rely on access at school, work and/or cybercafè.