19 June 2008

SMS -- Price Fixing

The Indonesian Commission for the Supervision of Business Competition (KPPU) has issued a decision that finds six mobile operators have engaged in a scheme that has resulted in price fixing for the provision of SMS services. The collusion between the operators has seen some IDR 2.8 trillion or the equivalent of USD 302 million being skewered from unsuspecting mobile and SMS users.

The six operators are Excelcomindo Pratama (XL), PT Telekomunikasi Seluler (Telkomsel), PT Telekomunikasi Indonesia (Telkom), Bakrie Telecom, Mobile-8 Telecom and Smart Telecom. I am an XL customer so perhaps I should be more annoyed than I am about this. I knew I was being speared in terms of how much I was paying but paid it anyway.

The KPPU ordered Telkomsel and XL to pay fines of IDR 25 billion each. The KPPU also ordered Telkom, Mobile-8 and Bakrie have to pay IDR 18 billion, IDR 5 billion, and IDR 4 billion, respectively. I guess the lower fines are representative of the size of the role they played in the price fixing scheme.

The fun part here is that the KPPU does not only issue decisions but considers itself to be the arbiter of what the proper costing of an SMS should be. By the KPPU's reckoning the cost of an a 160 character SMS should not be higher than IDR 114. I am not sure that the KPPU has the internal expertise to make these kinds of calculations nor am I sure that its role should be to stipulate the fees that can be charged in a free market.

I have no problem with the KPPU adjudicating whether or not there has been a breach of the law. The market will take care of what prices it can and cannot sustain for SMS messages.

I am looking forward to cheaper SMS messages though!


Rishardana said...

Yup, I am an XL user also since 1999. Always suspect there's some sort of cartel going on in telecommunication as the price is so much higher than other countries.

Out of curiosity, where would the 25 billion fines go? :D

I'm also sure there is cartel behind the price of internet in here. KPPU should check them out sooner.

Thanks for the info Pak Rob.

Rob Baiton said...

XL SMS rates have already been cheaper for a while...cheaper than the IDR 114 recommendation of the KPPU :D