Anticipating floor price in data communication service.


Indonesian telecommunications industry is known as competitive. Indonesia is now known as one of the countries with competitive telecommunication rates. Competition occurs in all telecommunication services provided by operators, such as voice telecommunication services, SMS, data communications, and other telecommunication services.

In the latest developments, there are parties who argue that the recent competition, considered unhealthy and harm telecommunications industry. Especially in data communications services, where tariffs offered by operators are considered low to the detriment of operators. They encourage the Government to issue a tariff restriction policy on data communications services through the establishment of lower tariff limits (floor price).

In response, Chairperson of KPPU, Syarkawi Rauf explained that tariff war is a common phenomenon in the market mechanism. Operators compete to offer various tariff schemes that are considered able to boost their sales and market domination. Cheap tariff is one of the operator’s strategies to capture consumers who are sensitive to tariffs.

The more efficient the company, the greater its ability to offer competitive tariffs, and because the efficiency capability of the company varies, it causes the emergence of various tariffs in the market, which is the consumer’s choice,” explained Syarkawi.

With regard to the discourse on the emergence of a floor tariff policy for data communication services, Syarkawi believes that this is not necessary given the adverse effects of floor tariff policy on the industry in the long term, and the national economy as a whole.

There are at least 5 (five) considerations why the lower limit tariff policy for data communication services is not enforced” explained Syarkawi.

Firstly, every telecommunication operator has a different tariff. Included in terms of generating tariffs that are increasingly affordable by the consumer. Currently, in the market, a consumer can find very varied prices with diverse schemes from Rp 25.000 / GB to Rp 57,500 / GB.

Second, the biggest problem of floor tariff policy lies in the determination of the amount. The floor tariff is generally set to protect all business actors without exception, including inefficient business actors and a burden to industry and national economies.

Third, the floor tariff is an obstacle for efficient telecommunication operators capable of generating tariff rates below the floor tariffs. The business actor, unable to use his efficiency to win the competition. In the long term, it will create a disincentive for the telecom industry to be efficient and lower their tariffs. Innovations that lead to the presence of cheap tariffs be hampered, whereas, in the telecommunications industry, the technological change cycle is growing very fast with the ability to reduce the extraordinary cost.

Fourth, due to the low tariff hindrance under the floor tariff, people will lose the affordable tariff. It would be a loss to as users of data communication services since they have to pay expensive tariffs than they should.

Fifth, in the national economy, floor tariff policy tends to be the driving force behind inflation. This is because there are potential business actors asking for a periodical increase in floor tariff. On the other hand, in the event of deflation, efforts to lower the floor tariffs are not easy to do.

Meanwhile, responding to the allegation that there are operators suspected of predatory pricing through low tariff strategy, which aims to eliminate competitors, KPPU encourages the operator or any party who has evidence related to it to report to KPPU.

For people who are aware of any alleged unfair business competition practice, please submit their report, KPPU is ready to process according to the prevailing regulations” closed Syarkawi.