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DECISION
Case Number: 26/KPPU-L/2007
The Commission for the Supervision of Business Competition of the Republic of
Indonesia (hereinafter referred to as “the Commission”) has examined the alleged
violation of Article 5 of Law Number 5 Year 1999 on Prohibition of Monopolistic
Practices and Unfair Business Competition (hereinafter referred to as Law Number 5
Year 1999), which was committed by:
1.
------------------------------------------------------------
PT Excelcomindo Pratama, Tbk., having its office at Graha XL, Jalan Mega
Kuningan Lot. E4-7 Nomor 1, Jakarta 12710, hereinafter referred to as “the
Reported Party I”; ---------------------------------------------------------------------------------
2.
PT Telekomunikasi Selular, having its office on Jalan Jenderal Gatot Subroto
Nomor 42, Jakarta 12710, hereinafter referred to as “the Reported Party II”; ------
3.
PT Indosat, Tbk., having its office on Jalan Medan Merdeka Barat Nomor 21,
Jakarta 10110, hereinafter referred to as “the Reported Party III”; -------------------
4.
PT Telekomunikasi Indonesia, Tbk., having its office on Jalan Japati Nomor 1,
Bandung 40133, hereinafter referred to as “the Reported Party IV”; -----------------
5.
PT Hutchison CP Telecommunication, having its office at Menara Mulia Lantai
10, Jalan Jenderal Gatot Subroto Kavling 9-11, Jakarta 12930, hereinafter
referred to as “the Reported Party V”; -------------------------------------------------------
6.
PT Bakrie Telecom, Tbk., having its office at Wisma Bakrie Lantai 2, Jalan H.R.
Rasuna Said Kavling B-1, Jakarta 10350, hereinafter referred to as “the
Reported Party VI”; -------------------------------------------------------------------------------
7.
PT Mobile-8 Telecom, Tbk., having its office at Menara Kebon Sirih Lantai 1819, Jalan Kebon Sirih Nomor 17-19, Jakarta 10340, hereinafter referred to as
“the Reported Party VII”; ------------------------------------------------------------------------
8.
PT Smart Telecom, having its office on Jalan Haji Agus Salim Nomor 45 Jakarta
Pusat, hereinafter referred to as “the Reported Party VIII”; -----------------------------
9.
PT Natrindo Telepon Seluler, having its office at Gedung Citra Graha Lantai 3,
Jalan Jenderal Gatot Subroto Kavling 35-36, Jakarta 12950, hereinafter referred
to as “the Reported Party IX”; ------------------------------------------------------------------
has made a Decision as follows: ---------------------------------------------------------------------The Commission’s Assembly: ----------------------------------------------------------------------Having read the letters and documents in this case; --------------------------------------------Having heard the Reported Parties’ testimony; ----------------------------------------------------
Having heard the Witnesses’ testimony; ------------------------------------------------------------Having heard the Experts’ testimony; ---------------------------------------------------------------Having read the Investigation Report (Berita Acara Pemeriksaan) (hereinafter referred
to as IR); -----------------------------------------------------------------------------------------------------
REGARDING THE CASE
1.
Considering, the Commission has received a report on the alleged violation of
Article 5 of Law Number 5 Year 1999 committed by PT Excelcomindo Pratama,
Tbk., PT Telekomunikasi Selular, PT Indosat, Tbk., PT Telekomunikasi
Indonesia, Tbk., PT Hutchison CP Telecommunications, PT Bakrie Telecom,
Tbk., PT Mobile-8 Telecom, Tbk., and PT Smart Telecom;------------------------------
2.
Considering, the Commission has conducted the investigation and clarification,
as a result, the report is declared compete and clear; ------------------------------------
3.
Considering, as the report is declared complete and clear, the Commission’s
Meeting held on November 1st, 2007 decided that the report can be follow-up with
the Preliminary Examination Phase;-----------------------------------------------------------
4.
Considering,
the
Commission
has
issued
a
stipulation
Number
68/PEN/KPPU/XI/2007, dated November 1st, 2007 concerning Preliminary
Examination of the Case Number 26/KPPU-L/2007, effective from November 2nd,
2007 up to December 13th, 2007 (see : evidence A1); -----------------------------------5.
Considering, in order to conduct the Preliminary Examination, the Commission
issued a Decree Numebr 184/KEP/KPPU/XI/2007, dated November 1st, 2007
concerning Appointment of the Commission’s Members as the Examination
Team in the Preliminary Examination of the Case Number 26/KPPU-L/2007 (see
: evidence A2); --------------------------------------------------------------------------------------
6.
Considering, further the Executive Director of the Commission’s Secretariat
issued a Task Letter (Surat Tugas), Number 607/SET/DE/ST/XI/2007, dated
November 1st, 2007 which requires the Commission’s Secretariat to assist the
Examination Team in conducting the Preliminary Examination (see : evidence
A3); ----------------------------------------------------------------------------------------------------
7.
Considering, in the Preliminary Examination, the Examination Team has heard
the testimonies of the Reported Party I, the Reported Party II, the Reported Party
IV, the Reported Party VII and the Reported Party VII (see: evidences B1, B2,
B3, B4, B5) ; ----------------------------------------------------------------------------------------
8.
Considering, having conducted the Preliminary Examination, the Examination
Team found sufficient beginning evidence on the alleged violation of Article 5 of
Law Number 5 Year 1999 committed by the Reported Parties (see: evidence
A22); --------------------------------------------------------------------------------------------------
2
9.
Considering, on the basis of the results of the Preliminary Examination, the
Examination Team recommended to the Commission that the examination was
continued to the Advanced Examination phase and decided PT Natrindo Telepon
Seluler as the Reported Party (see : evidence A22); --------------------------------------
10.
Considering, on the basis of the recommendation given by the Preliminary
Examination Team, the Commission has agreed it through the Commission’s
Meeting held on December 13th, 2007 and issued the Commission’s Decision
Number 86/PEN/KPPU/XII/2007, dated December 13th, 2007 on Advanced
Examination of the Case Number 26/KPPU-L/2007, effective from December
14th, 2007 up to March 26th, 2008 (see : evidence A24); --------------------------------
11.
Considering, in order to carry out the Advanced Examination, the Commission
issued the Decree Number 217/KEP/KPPU/XII/2007, dated December 13th, 2007
on Appointment of the Commission’s Members as the Advanced Examination
Team in the Advanced Examination of the Case Number 26/KPPU-L/2007 (see :
evidence A25); --------------------------------------------------------------------------------------
12.
Considering, the Executive Director of the Commission’s Secretariat further
issued a Task Letter Number 727/SET/DE/ST/XII/2007, dated December 13th,
2007 requiring the Commission’s Secretariat to assist the Advanced Examination
Team in carrying out the Advanced Examination ((see : evidence A26); -------------
13.
Considering, in conjunction with the stipulation on the collective holidays of Idul
Fitri Day 1428 H, it was issued the Commission’s Decision Number
21/KPPU/PEN/II/2008 on Adjustment of Period of Examination and Handling of
Cases at the Commission; therefore, the period of Handling of the Case Number
26/KPPU-L/2007 which was originally from December 14, 2007 up to March 26th,
2008 changed to be from December 14th, 2007 up to March 25th, 2008; -----------
14.
Considering, having conducted the Advanced Examination, the Advanced
Examination Team deemed it necessary to extend the Advanced Examination; ---
15.
Considering,
the
Commission
further
issued
the
Decision
Number
120/KPPU/KEP/III/2008, dated March 25th, 2008 on Extension of the Period of
Advanced Examination of the Case Number 26/KPPU-L/2007, from March 26th,
2008 up to May 7th, 2008 (see : evidence A72); -------------------------------------------16.
Considering, in order to extend the Period of the Advanced Examination, the
Commission issued the Decision Number 121/KPPU/KEP/III/2008, dated March
25th, 2008
on Appointment of Commission’s Members as the Advanced
Examination Team in the Extension of the Period of the Advanced Examination
of the Case Number 26/KPPU-L/2007 (see : evidence A73); --------------------------17.
Considering, the Executive Director of the Commission’s Secretariat assigned the
Commission’s Secretariat to assist the Advanced Examination Team in the
Extension of the Period of the Advanced Examination by issuing a Task Letter
3
Number 173/SET/DE/ST/III/2008, dated March 25th, 2008 as amended by the
Task Letter Number 303/SET/DE/ST/IV/2008, dated April 22nd,
2008 (see:
evidence A74, A89); ------------------------------------------------------------------------------18.
Considering, in the period of the Advanced Examination
and the extension
thereof, the Examination Team has heard the testimonies of the Reported
Parties, Witnesses, Experts and Government;---------------------------------------------19.
Considering, the identities and testimonies of the Reported Parties, Witnesses,
Experts and Government have been recorded in the Investigation Report which
have been acknowledged to be correct and true and signed by the concerned
parties; ------------------------------------------------------------------------------------------------
20.
Considering, in the Preliminary and Advanced Examinations, the Examination
Team has found, examined and assessed a number of letters and/or documents,
the Investigation Report and other evidences which have been found during the
examination and investigation;------------------------------------------------------------------
21.
Considering, having conducted the Advanced Examination, the Examination
Team made the Advanced Examination Report as follows: ----------------------------21.1. Identities of the Reported Parties; --------------------------------------------------21.1.1.
The Reported Party I, PT Excelkomindo Pratama, Tbk;
hereinafter referred to as XL, having its office at Graha XL, Jl.
Mega Kuningan Lot. E4-7 No. 1, Jakarta 12710, is a legal
business entity, incorporated under the laws of the Republic of
Indonesia, in the form of a Limited Liability Company, whose the
whole part of articles of association have been promulgated in the
State Gazette of the Republic of Indonesia, dated September 1st,
2005, Number 70, Supplementary Number 9425 and the
amendments thereof as already promulgated in the State Gazette
of the Republic of Indonesia, dated December 27th, 2005, Number.
103, Supplementary Number 1218 and the latest composition of
its management is contained the deed Number 121, dated
November 23rd, 2007 drawn up before Sutjipto, SH, engaged in
the telecommunication services; --------------------------------------------
21.1.2.
The Reported Party II, PT Telekomunikasi Selular (Telkomsel);
hereinafter referred to as Telkomsel, having its office on Jl.
Gatot Subroto No. 42, Jakarta 12710, is a legal business entity,
incorporated under the laws of the Republic of Indonesia, in the
form of a Limited Liability Company on the basis of the deed
drawn up before the Notary, Poerbaningsih Adi Warsito, SH,
Number 181, dated May 26th,
1995 as lastly amended by the
Deed Number 21, dated April 21st, 2005, drawn up before Mrs.
4
Djumini Setyoadi, SH, MKN, engaged in the telecommunication
services; -------------------------------------------------------------------------21.1.3.
The Reported Party III, PT Indosat, Tbk; hereinafter referred to
as Indosat, having its office on Jl. Medan Merdeka Barat No. 21,
Jakarta 10110, is a legal business entity, incorporated under the
laws of the Republic of Indonesia, in the form of a Limited Liability
Company on the basis of the deed drawn up before the Notary MS
Tadjoeddin Number 55, dated November 10th, 1967, as lastly
amended by the Deed drawn up before the Notary Sutjipto, SH,
Number
31,
dated
May
5th,
2006,
engaged
in
the
telecommunication services; ------------------------------------------------21.1.4.
The Reported Party IV, PT Telekomunikasi Indonesia;
hereinafter referred to as Telkom, having its office on Jl. Japati
No. 1, Bandung - 40133, is a legal business entity, incorporated
under the laws of the Republic of Indonesia, in the form of a
Limited Liability Company whose Articles of Association have
been promulgated in the State Gazette of the Republic of
Indonesia Number 5, dated January 17th, 1992, Supplementary
Number 210, as already amended and lastly have been
promulgated in the State Gazette of the Republic of Indonesia
Number 45, dated May 4th, 2002, Supplementary Number 5495,
engaged in the telecommunication services;-----------------------------
21.1.5.
The Reported Party V, PT Hutchison CP Telecommunication;
hereinafter referred to as Hutchison, having its office at Menara
Mulia, 10th Floor, Jl. Gatot Subroto Kav. 9-11, Jakarta 12930, is a
legal business entity, incorporated under the laws of the Republic
of Indonesia, in the form of a Limited Liability Company on the
basis of the deed drawn up before the Notary is a legal business
entity, incorporated under the laws of the Republic of Indonesia, in
the form of a Limited Liability Company on the basis of the deed
drawn up before the Notary Rachmad Umar, SH, Number 18,
dated March 18th, 2000, as lastly amended by the Deed of
Resolutions of Meeting of Shareholders of PT Hutchison CP
Telecommunications, drawn up before the Notary Muhammad
Ridha, SH, engaged in the telecommunication services; -------------
21.1.6.
The Reported Party VI, PT Bakrie Telecom; hereinafter
referred to as Bakrie, having its office at Wisma Bakrie, 2nd
Floor, Jl. HR Rasuna Said Kav. B-1, Jakarta 10350, is a legal
5
Indonesia, in the form of a Limited Liability Company on the basis
of the deed drawn up before the Notary Muhani Salim, SH,
Number 94, dated August 13th, 1993, as already amended by the
Deed drawn up by the Notary Sovyedi Adasasmita, SH, Number
5, dated September 24th, 1998 which has been promulgated in
the State Gazette of the Republic of Indonesia Number 26, dated
March 30th, 1999, the Supplementary of the Republic of Indonesia
Number 1934 Year 1999, whose articles of association have been
amended several times and lastly amended by the Deed drawn up
by the Notary Agus Madjid, SH, Number 6, dated February 3rd,
2006, engaged in the telecommunication services; -------------------21.1.7.
The Reported Party VII, PT Mobile-8 Telecom, Tbk; hereinafter
referred to as Mobile-8, having its office at Menara Kebon Sirih,
18th-18th Floor, Jl. Kebon Sirih No. 17-19 Jakarta 10340, is a legal
Indonesia, in the form of a Limited Liability Company on the basis
of the Articles of Association as contained in the Deed Number
202, dated July 27th, 2005, drawn up before the Notary, Sutjipto,
SH, engaged in the telecommunication services; -----------------------
21.1.8.
The Reported Party VIII, PT Smart Telecom; hereinafter
referred to as Smart, having its office on Jl. H. Agus Salim No. 45
Jakarta Pusat, is a legal business entity, incorporated under the
laws of the Republic of Indonesia, in the form of a Limited Liability
Company by virtue of the Deed drawn up by the Sutjipto, SH,
Number 60, dated August 16th, 1996, as already amended several
times and lastly amended by the deed drawn up before the Notary
Sri Hidianingsih Adi Sugijanto, SH, Number 32, dated September
29th, 2006, engaged in the telecommunication services; --------------
21.1.9.
The Reported Party IX, PT Natrindo Telepon Seluler;
hereinafter referred to as NTS, having its office at Gedung Citra
Graha, 3rd Floor3, Jl. Jend. Gatot Subroto kav. 35-36 Jakarta
12950, is a legal business entity, incorporated under the laws of
the Republic of Indonesia, in the form of a Limited Liability
Company whose Articles of Association have been promulgated in
the State Gazette of the Republic of Indonesia Number 5820,
dated June 10th, 2005, drawn up before Aulia Taufani, SH, as a
substitute for
the
Notary,
Sutjipto,
SH,
engaged
in the
telecommunication services; ------------------------------------------------21.2. Facts and Findings; ----------------------------------------------------------------------
6
21.2.1. Brief History and Telecommunication Development; ------------21.2.1.1.
Telecommunication
activities
in
Indonesia
were
originally controlled by the state through the state-run
enterprise, namely PT Telkom, Tbk., whose 51.19
percent of its shares as of the year 2006 were owned
by the government and which monopolized the
domestic telecommunication services and PT Indosat,
Tbk. (“Indosat“) whose the whole part of its shares
were acquired by the government in the year 1980
and
which
monopolized
the
international
telecommunication services; --------------------------------21.2.1.2.
The advancement of telecommunication technology
has then enabled the investment in telecommunication
services with lower costs, allowing the participation of
private sector in the telecommunication industry. In
order to facilitate the analysis in the subsequent part,
the facts and findings are divided into three (3) periods
due to the characteristic difference in each period; -----
21.2.2. Brief History and Telecommunication Development in the
Period of 1994 – 2004; ------------------------------------------------------21.2.2.1.
The revolution of telecommunication technology in
Indonesia was initiated by the establishment of PT
Satelit Palapa Indonesia (“Satelindo”) in 1993 which
obtained a license for International Direct Dial, cellular
phone and exclusive rights on some communication
satellites. Satelindo introduced cellular telephone
service in November 1994; -----------------------------------
21.2.2.2.
On May 26th, 1995, PT Telekomunikasi Selular
(“Telkomsel”) was established as celular telephone
operator and the first operator in Asia which offered
the pre-paid services; ------------------------------------------
21.2.2.3.
On October 1996, PT Excelcomindo Pratama (“XL”)
started its operation in the cellular market in and
became a new player in the telecommunication
service competition in Indonesia; ---------------------------
21.2.2.4.
Until the year 1999, there was still a cross-ownership
in the ownership structure of some cellular operators,
namely: Satelindo, Telkomsel and Excelcomindo, as
contained in the Decree of Minister of Communication
7
Number 72 Year 1999 on Blueprint of Government
Policies on Telecommunication. It was a consequence
from the mandate given by the Law Number 3 Year
1989 on Telecommunication which obligated the
cooperation
or
joint
venture
Telecommunication
Operators (Telkom and/or Indosat) with other Entities,
Telkom and Indosat therefore had shares in Satelindo
and
Telkomsel,
PT
Telekomindo
while
PT
Primabhakti
Telkom
had
through
shares
in
Excelcomindo; --------------------------------------------------21.2.2.5.
As a follow up to the Decree of Minister Number 72
Year 1999, on April 3rd, 2001, PT Indosat and PT
Telkom had therefore agreed to eliminate the cross
ownership of both in Telkomsel and Satelindo1; ---------
21.2.2.6.
PT Indosat Multi Media Mobile (”IM3”) was established
by Indosat in May, 2001 and commenced its operation
in August 2001, became a new player in the cellular
telecommunication service competition in Indonesia.
In 2003, IM3 conducted a vertical merger with Indosat;
21.2.2.7.
As a consequence of the control of ownership of
Telkomsel by Singtel which is a subsidiary of Temasek
at the end of the year 2001 and Indosat by STT which
is a subsidiary of Temasek at the end of the year
2002, the cross-ownership between cellular operators
was
again
established
until
now
(see
:
The
Commission’s Decision on Case Number 07/KPPUL/2007); ----------------------------------------------------------21.2.2.8.
In this period, there were still cellular operators having
their operations in Indonesia and controlled over the
cellular telecommunication service, namely Telkomsel,
XL and Indosat, while there was still a crossownership between Telkomsel and Indosat; -------------
21.2.3. Brief History and Telecommunication Development in the
Period of 2004 – 2007; ------------------------------------------------------21.2.3.1.
This period was signaled by the entry of a new player
in the market, namely PT Mobile-8 Telecom with its
1
“The Blueprint [Decree of Minister of Communication Number. 72 Year 1999] call for progressive elimination of
these shareholdings to promote competition and avoid any actual or potential conflict of interest in more competitive
telecommunication environment and the Proposed Transaction are consistent with this Blueprint…. Mobile phone service:
Pursuant to the conditional SPA, the current joint-shareholdings by Telkom dan the Company [Indosat] will be dissolved and the
mobile market will be fully competitive as provided in the Blueprint, Indosat, 2000 Annual Report, Form 20-F, page 41;
8
“Fren product” in December 2003 which operates
under the CDMA technology, but it also possesses the
cellular license (see : evidence B3, B19); ----------------21.2.3.2.
Following the change of PT Radio Telepon Indonesia
(Ratelindo) to be PT Bakrie Telecom which had
obtained a license for Fixed Wireless Access (FWA) in
the year 2003, had also introduced a new player in
this period with its “Esia” product (see: evidence B7,
B25); ---------------------------------------------------------------
21.2.3.3.
In order to expand its coverage, Telkom had obtained
the FWA license and launched the “Flexi” product in
the year 2003 (see: evidence B2, B21); -------------------
21.2.3.4.
More players in the FWA services following the entry
of StarOne into the market in the year 2004, which is a
product of Indosat (see : evidence B8, B22);-------------
21.2.3.5.
At the end of the year 2005, PT Sampoerna
Telekomunikasi Indonesia started its commercial
launching for the FWA services under the brand Ceria
and added another new player in the period (see:
evidence B15);---------------------------------------------------
21.2.3.6.
The market structure in the period had drastically
changed, where there were previously three operators
in the market. In this period, the number of operators
had changed following the commencement of the
FWA services. Therefore, in this period, there was a
significant raise of the number of operators which
reached eight operators; --------------------------------------
21.2.3.7.
The performance of each operator in this period could
be seen from the number of their respective
subscribers as illustrated in the following table: ---------
9
Table 1
Subscribers Number and Share
Fixed Lines
Number of Subscribers
2004
Fixed Lines
2005
Share of Subscribers
2006
2004
2005
2006
8,703,218 8,824,467 8,806,702
PT Telkom
8,559,350 8,686,131 8,709,211 98.35% 98.43% 98.89%
PT Bakrie Telecom
(Ratelindo)
PT Indosat (I-Phone)
120,990
114,082
68,359
1.39%
1.29%
0.78%
20,000
21,724
26,632
0.23%
0.25%
0.30%
2,878
2,530
2,500
0.03%
0.03%
0.03%
PT Batam Bintan
Telekomunikasi (BBT)
Source: Directorate of Telecommunication, Directorate General of Postal
Services and Telecommunication, 2007
Table 2
Fixed Wireless Access
2004
Fixed Wireless Access (FWA)
2005
2006
2004
2005
2006
1,673,081 4,683,363 6,014,031
Subscribers of PT Telkom
(Flexi)
1,429,368 4,061,800 4,175,853 85.43% 86.73% 69.44%
Prepaid Subscribers
3,240,500 3,381,426
Postpaid Subscribers
Subscribers of PT Indosat
Prepaid Subscribers
821,300
52,752
249,434
69.19% 56.23%
794,427
358,980
17.54% 13.21%
3.15%
5.33%
5.97%
40,854
229,726
338,435
2.44%
4.91%
5.63%
11,898
19,708
20,545
0.71%
0.42%
0.34%
10
Subscribers of PT Bakrie
Telecom (ESIA)
190,961
Prepaid Subscribers
372,129
176,453
14,508
1,479,198 11.41%
7.95% 24.60%
351,826 1,414,920 10.55%
7.51% 23.53%
20,303
64,278
0.87%
0.43%
1.07%
Table 3
Cellular Telephone
2004
Cellular Telephone
Telkomsel
Prepaid Subscribers
Indosat
Excelkomindo
Prepaid Subscribers
2006
2004
2005
2006
30,336,607 46,992,118 63,803,015
16,291,000 24,269,000 35,597,000 53.70% 51.64% 55.79%
14,963,000 22,798,000 33,935,000 49.32% 48.51% 53.19%
1,328,000
9,754,607
Prepaid Subscribers
2005
1,471,000
1,662,000
4.38%
3.13%
2.60%
14,512,453 16,704,729 32.15% 30.88% 26.18%
9,214,663 13,836,046 15,878,870 30.37% 29.44% 24.89%
539,944
676,407
825,859
3,791,000
6,978,519
9,527,970
3,743,000
6,802,325
48,000
176,194
1.78%
1.44%
1.29%
12.50% 14.85% 14.93%
9,141,331 12.34% 14.48% 14.33%
386,639
0.16%
0.37%
11
0.61%
Mobile-8 (Fren)
500,000
1,200,000
Prepaid Subscribers
1,825,888
1.65%
2.55%
2.86%
1,150,000
1,778,200
0.00%
2.45%
2.79%
50,000
47,688
0.00%
0.11%
0.07%
0.00%
0.02%
0.21%
133,746
0.00%
0.00%
0.21%
967
0.00%
0.00%
0.00%
12,715
0.00%
0.05%
0.02%
Prepaid Subscribers
10,155
0.00%
0.00%
0.02%
2,560
0.00%
0.00%
0.00%
Sampoerna
Telekomunikasi Indonesia
10,609 134,713
Prepaid Subscribers
Natrindo Telepon Seluler
21,537
21.2.3.8.
In total, comparison of number of subscribers for each
type of services is illustrated in the following table: ----Table 4
Number of Telecommunication Subscribers by Type of Telephone
2004
2005
2006
8,703,218
8,824,467
8,806,702
1,673,081
4,683,363
6,014,031
Telephone
30,336,607
46,992,118
63,803,015
Total
40,712,906
60,499,948
78,623,748
Fixed Lines
2004
2005
2006
21.38% 14.59% 11.20%
Fixed
Wireless
Access
(FWA)
4.11%
7.74%
7.65%
Cellular
74.51% 77.67% 81.15%
100%
100%
100%
21.2.4. Brief History and Development of Telecommunication in the
period of 2007 to present;
12
21.2.4.1.
During this period, several new operators have
entered
the
competition.
market,
On
resulting
March
30th,
in
a
2007,
tightened
Hutchison
conducted commercial launching under the brand of 3
(see evidences B6, B23); -------------------------------------
21.2.4.2.
After the presence of 3 in the market, PT Smart
Telecom also launched a cellular product under the
brand of Smart with the CDMA technology on
September 3rd, 2007 (see evidences B4, B20);----------
21.2.4.3.
The last in this period, NTS which had obtained the
license since 2001, but provided regional telephone
service in Surabaya only, has conducted gradual
national launching under the product brand of Axis on
February 28th, 2008. (see evidences B9, B 28; ----------
21.2.4.4.
In this period, the structure of telecommunication
market has shown a significant change following the
increasing number of operators. Yet no customers
data was obtained so that the influence of the
operators to the market share as a whole was not
known. -------------------------------------------------------------
21.2.5. Development of SMS Service Rates; ----------------------------------21.2.5.1.
SMS is an added value service of cellular and FWA
telecommunication services which is now inseparable
from voice services. For this service, operators
charges the rate to paid by customers sending the
SMS, also known as the term, Sender Keeps All
(SKA) (see evidences A8, B1, B2, B3, B4, B5, B6, B7,
B8, B9, B11, B14, B16, B24, B26, B27); ------------------
21.2.6. Development of SMS Rates in the period of 1994 – 2004; ------21.2.6.1.
At the beginning of this period, the SMS could only
be sent from and to the same operator. Based on the
information provided by XL, SMS among operators
was started around the years 2000 - 2001 (see
evidences B1, B5); --------------------------------------------
21.2.6.2.
The rate of SMS in the period of 1994 -2004 was the
same for all operators (Telkomsel, Indosat, XL) either
off-net or on-net, i.e. Rp 350,00 for prepaid
subscribers; -----------------------------------------------------
13
21.2.6.3.
In this period, no operators offered promotional SMS
rate to their subscribers; -------------------------------------
21.2.7. Development of SMS Rates in the period of 2004 – 2007; ------21.2.7.1.
This period was signed by the entry of some new
operators such as PT Mobile-8 Telecom (Fren),
PT Bakrie Telecom (Esia), and PT Sampoerna
Telekomunikasi
Indonesia
(Ceria).
In
addition,
Indosat and Telkom also launched their CDMA
products, StarOne and Flexi consecutively; ------------21.2.7.2.
In this period, some operators started to apply
different rate for the on-net and off-net SMS; -----------
21.2.7.3.
The increasing number of the operators in this period
has also led some operators to offer promotional rate
of SMS which was lower than applicable base rate; --
21.2.7.4.
In the year 2004, XL introduced Jempol product
which offered lower rate for the on-net SMS (see
evidences B5, B17); -------------------------------------------
21.2.7.5.
In the same year, Telkomsel also introduced a new
product, i.e. Kartu As, which offered lower rate for the
on-net SMS (see evidence B1); ----------------------------
21.2.7.6.
The SMS base rate of each operator in this period
are illustrated in the following table: -----------------------
14
Table 5
SMS Base Rate of Each Operator
Years 2004 – 2007
Indosat
Telkomsel
Operators
XL
Products
Destination
2004
2005
2006
2007
Halo Card (Postpaid) Off-net
250
250
250 250/3501
Halo Card (Postpaid) On-net
250
250
250 250/3501
Simpati (Prepaid)
Off-net
350
350
350
350
Simpati (Prepaid)
On-net
350
350
299
299
As Card (Prepaid)
Off-net
300
300
300
299
As Card (Prepaid)
On-net
300
150
150
99/1492
Matrix (Postpaid)
Off-net
300
300
300
300
Matrix ( Postpaid )
On-net
300
300
300
300
250/3503 250/3503
-
-
-
-
225
225
IM3 Brigth
(Postpaid)
Off-net
IM3 Brigth
(Postpaid)
On-net
StarOne (Postpaid)
Off-net
225
225
StarOne (Postpaid)
On-net
100
100
100
100
Mentari (Prepaid)
Off-net
350
350
350
350
Mentari ( Prepaid)
On-net
350
350
350
350
IM3 Smart (Prepaid)
Off-net
350
350
350
88/3504
88/100/
40/88
5
/100/1506
IM3 Smart (Prepaid)
On-net
150
150
StarOne (Prepaid)
Off-net
350
350
350
350
StarOne (Prepaid)
On-net
150
100
100
100
Xplor (Postpaid)
Off-net
250
250
250
250
Xplor (Postpaid)
On-net
250
250
250
250
Bebas (Prepaid)
Off-net
350
350
350
350
Bebas (Prepaid)
On-net
350
350
350
350
Jempol (Prepaid)
Off-net
299
299
299
299
Jempol (Prepaid)
On-net
99
99
99
45/997
15
Flexi Classy
(Postpaid)
Off-net
Telkom
Flexi Classy
(Postpaid)
On-net
Flexi Trendy
(Prepaid)
Off-net
Bakrie
Mobile-8
Flexi Trendy
NTS
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
250
75
350
(Prepaid)
On-net
Fren (Postpaid)
Off-net
NA
NA
NA
250
Fren (Postpaid)
On-net
NA
NA
NA
100
Fren (Prepaid)
Off-net
NA
NA
NA
300
Fren (Prepaid)
On-net
NA
NA
NA
100
Esia (Prepaid)r
Off-net
NA
NA
NA
250
Esia (Prepaid)r
On-net
NA
NA
NA
50
Esia (Postpaid)
Off-net
NA
NA
NA
250
Esia (Postpaid)
On-net
NA
NA
NA
50
NTS (Prepaid)
Off-net
NTS (Prepaid)
On-net
350
NA
350
NA
100
350
350
NA
50
Notes:
1
:
350 was SMS rate for the free-monthly fee Halo Card
2
:
99 was the SMS rate among As card, 149 was the SMS rate from As Card
to Telkomsel’s subscribers.
3
:
350 was the rate to XL. In the year 2006, IM3 Brigth merged with Matrix
4
:
88 was the rate applicable to subscribers outside Java island Q4
5
:
88 was rate offered to subscribers in Bali, Nusa Tenggara, Sulawesi,
Ambon, Papua; 100 was rate applicable for SMS January voucher
6
:
40 was the rate for the super voucher 200 SMS May, 88 for subscribers
outside Jawa Q4
7
:
99 was the rate at peak time, 45 was the rate at off peak time
21.2.8. Development of SMS Rate in the period of 2007 to present; ---21.2.8.1.
This period was signed by the entry of some new
operators, i.e., Hutchison (3), PT Smart Telecom
(Smart), and the commercial launching of PT Natrindo
Telepon Seluler (Axis);------------------------------------------
21.2.8.2.
At the launching, Hutchison offered the off-net
promotional
SMS
rate
of
Rp
100
and
on-net
promotional rate of Rp 0 (see evidence B6); --------------
16
21.2.8.3.
Meanwhile, NTS offered a flat promotional SMS rate of
Rp 60 per SMS either for on-net or off-net, but the base
rate was Rp 150 per SMS (see evidence B28); ----------
21.2.8.4.
The SMS base rate for each operator as of April 25th,
2008 is illustrated in the following table: --------------------
Table 6
SMS Base Rate of Each Operator
Per April 25th, 2008
Operator
Products
s
Telkomsel
2007
2008
on
Off-net
250/3501
150
Kartu Halo (Postpaid)
On-net
1
125
Simpati (Prepaid)
Off-net
350
150
Simpati (Prepaid)
On-net
299
100
Kartu As (Prepaid)
Off-net
299
149
Kartu As (Prepaid)
On-net
99/1492
88
Matrix (Postpaid)
Off-net
300
150
Matrix (Postpaid)
On-net
300
100
StarOne (Postpaid)
Off-net
225
150
StarOne (Postpaid)
On-net
100
100
Mentari (Prepaid)
Off-net
350
149
Mentari (Prepaid)
On-net
350
99
IM3 (Prepaid)
Off-net
88/3503
100
Kartu Halo (Postpaid)
Indosat
Destinati
250/350
40/88
XL
Telkom
IM3 (Prepaid)
On-net
/100/1504
100
StarOne (Prepaid)
Off-net
350
150
StarOne (Prepaid)
On-net
100
100
Xplor (Postpaid)
Off-net
250
250
Xplor (Postpaid)
On-net
250
250
Bebas (Prepaid)
Off-net
350
350
Bebas (Prepaid)
On-net
350
350
Jempol (Prepaid)
Off-net
299
299
Jempol (Prepaid)
On-net
5
99
Flexi Classy (Postpaid)
Off-net
250
250
Flexi Classy (Postpaid)
On-net
75
75
Flexi Trendy (Prepaid)
Off-net
350
350
45/99
17
Operator
Products
s
Bakrie
Mobile-8
Smart
Hutchison
NTS
STI
Destinati
2007
2008
on
Flexi Trendy (Prepaid)
On-net
100
85
Fren (Postpaid)
Off-net
250
250
Fren (Postpaid)
On-net
100
100
Fren (Prepaid)
Off-net
300
250
Fren (Prepaid)
On-net
100
100
Esia (Prepaid)
Off-net
250
275
Esia (Prepaid)
On-net
50
55
Esia (Postpaid)
Off-net
250
250
Esia (Postpaid)
On-net
50
50
3 (Prepaid)
Off-net
100
100
3 (Prepaid)
On-net
0
50
Smart (Prepaid)
Off-net
275
275
Smart (Prepaid)
On-net
25
25
Smart (Postpaid)
Off-net
-
250
Smart (Postpaid)
On-net
-
22
NTS (Prepaid)
Off-net
350
150
NTS (Prepaid)
On-net
50
150
Ceria (Prepaid)
Off-net
200
200
Ceria (Prepaid)
On-net
200
200
Notes :
1
:
350 was SMS rate for the free-monthly fee Halo Card
2
:
99 was the SMS rate among As card, 149 was the SMS rate from As Card
to Telkomsel’s subscribers.
3
4
88 was the rate applicable to subscribers outside Java island Q4
:
40 was the rate for the super voucher 200 SMS May, 88 for subscribers
outside Jawa Q4
5
:
99 was the rate at peak time, 45 was the rate at off peak time
21.2.9. Regulation of SMS Rate; ---------------------------------------------------21.2.9.1.
The statutes generally related to the rates of the
cellular telecommunication are as follows: ----------------a.
Law No. 36/1999 on Telecommunication, Articles
27 and 28
b.
Government Regulation No. 52/2000 on
Telecommunication Operations
18
c.
Ministerial
Decree
No.
21/2001
on
Telecommunication Service
d.
Ministerial
Regulation
No.
PM
8/2006
on
Interconnection Rate
e.
Ministerial Regulation No. PM 12/2006 on Cellular
Telephone Station Rate
21.2.9.2.
The above stated statutes provide for that the
imposition of cellular telecommunication rate shall be
fully at the discretion of the operations with due
observance of the rate formula and structure as
stipulated by the government as contemplated in Article
28 of Law No 36 Year 1992; -----------------------------------
21.2.9.3.
On April 1st, 2008, Ministry of Communication and
Information
issued
a
Ministerial
Regulation
No.
9/Per/M.Kominfo/IV/2008 on Procedure of Charging of
the Rate of Telecommunication Services Provided
through
Cellular
Mobile
Network.
Following
the
enactment of the Ministerial Regulation, all operators
shall adjust their rates no later than April 25th, 2008; ---21.2.9.4.
However, the SMS rate shall be determined under the
scheme of Sender Keeps All (SKA), without calculating
the
interconnection
rate.
The
change
from
interconnection revenue sharing regime to be the costbased interconnection one will only affect the voice rate
and does not change the SKA scheme for the SMS
rate of each operator; ------------------------------------------21.2.10. Agreements on SMS Rates among Operators; ---------------------21.2.10.1. In order to assure a sustainable interconnection among
the
operators,
the
operators
enter
into
an
Interconnection Cooperation Agreement one another
(see evidences A8, B1, B2, B3, B4, B5, B6, B7, B8, B9,
B11, B14, B16, B24, B26, B27); -----------------------------21.2.10.2. Such agreement is entered into by the Access
Providing Operators who have usually prepared the
template for each agreement and the operators
searching for the access; ---------------------------------------
2
The rate of telecommunication network and/or telecommunication service is specified by the telecommunication
network and/or telecommunication service provider on the basis of the formula set out by the government.
19
21.2.10.3. The Examining Team finds some Interconnection
Cooperation Agreements which contain clause on SMS
rate fixing, as illustrated in the following table: ----------Matrix of SMS Rate Fixing in the Interconnection Cooperation
Agreement
Operator
XL
Telkomsel Indosat
Telkom
Hutchison
Bakrie
Mobile-
Smart
NTS
STI
√
√
-
8
XL
Telkomsel
-
-
√
√
√
(2005)
(2004)
(2003)
-
√
-
-
-
√
(2002)
Indosat
-
-
Telkom
-
√
-
(2004)
(2006) (2001)
√
√
-
(2007) (2001)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2002)
Hutchison
√
-
-
-
√
√
-
-
-
(2004)
(2004)
√
-
-
-
-
-
√
√
-
-
-
-
-
(2006)
(2007)
√
√
-
-
-
-
-
-
(2001)
(2001)
-
-
-
-
-
-
-
-
(2005)
Bakrie
Mobile-8
(2003)
Smart
NTS
STI
-
-
21.2.10.4. There are two types of clauses regarding the imposition
of SMS rate as contained in the Interconnection
Cooperation Agreement, i.e. the SMS rate of the
operators searching for the access (a) shall not be
lower than Rp 250; (b) and than retail rate imposed by
the access provider (see evidences B1, B2, B3, B4, B6,
B7, B9); ------------------------------------------------------------21.2.10.5. Based on the information provided by Telkomsel and
Bakrie, the clause (a) as referred to above is
contemplated
in
the
Interconnection
Cooperation
Agreement entered into between Telkomsel and
Bakrie; --------------------------------------------------------------
20
21.2.10.6. The clause (a) is contained in Article 18 paragraph 2 of
the Interconnection Cooperation Agreement entered
into between XL and Hutchison (formerly known as
Cyber Access Communication/CAC), which is read as:
“Especially for the SMS rate to be charged to the
subscribers of each party, the parties agree that the
charging to the CAC’s subscribers shall not be lower
than that to XL’s subscribers, i.e. Rp 250/SMS.” (see
evidences C1.13, C5.16, C5.17);----------------------------21.2.10.7. The clause (a) as referred to above is also stipulated in
Article
18
paragraph
2
of
the
Interconnection
Cooperation Agreement entered into between XL and
Bakrie, which is read as: “Especially for the SMS rate
to be charged to the subscribers of each party, the
parties agree that the charging to the Bakrie Telecom’s
subscribers shall not be lower than that against
Exelkom’s
subscribers,
i.e.
Rp
250/SMS.”
(see
evidence C1.12); ------------------------------------------------21.2.10.8. The clause (a) as referred to above is also stipulated in
Article 6 of the Interconnection Cooperation Agreement
entered
into
between
XL
and
Mobile
Seluler
Indonesia/Mobisel, which is read as: “Especially for the
SMS rate to be charged to the subscribers of each
party, the parties agree that the charging to the
Mobisel’s subscribers shall not be lower than that
against XL’s subscribers, i.e. Rp 250/SMS.” (see
evidence C1.18); ------------------------------------------------21.2.10.9. The clause (a) as referred to above is also stipulated in
Article
18
paragraph
2
of
the
Interconnection
Smart
(formerly
known
as
PT
Indoprima
Mikroselindo/Primasel), which is read as: “Especially
for the SMS rate to be charged to the subscribers of
each party, the parties agree that the charging to the
Primasel’s subscribers shall not be lower than that
against XL’s subscribers, i.e. Rp 250/SMS.” (see
evidence C1.2); --------------------------------------------------21.2.10.10. The clause (b) as referred to above is also stipulated in
Article
28
paragraph
2
of
the
Interconnection
21
Cooperation
Agreement
entered
into
between
Telkomsel and Smart (formerly known as PT Indoprima
Mikroselindo/Primasel), which is read as: “… the rate to
be charged by Primasel to its subscribers shall not be
lower than that charged by Telkomsel to its subscribers
…”(see evidences C8.3, C8.4); ------------------------------21.2.10.11. Based on the information provided by Telkomsel, the
clause (b) as referred to above is contemplated in the
Interconnection Cooperation Agreement entered into
between Telkomsel and Telkom; ----------------------------21.2.10.12. The clause (b) as referred to above is also stipulated in
Article 5 of the First Addendum to Interconnection
Cooperation
Agreement
entered
into
between
Telkomsel and NTS which is read as: “The SMS rate
charged to the subscribers shall be at the discretion of
each party, the parties shall therefore have the rights to
specify their respective rates, provided that the SMS
rate to be charged to the Natrindo’s subscribers shall
not be lower than that charged by Telkomsel to its
subscribers…”(see evidence C9.7);
21.2.10.13. The clause (b) as referred to above is also stipulated in
Article 6 of the First Addendum to Interconnection
NTS which is read : “Despite each party realizes that
the rate charged to its subscribers shall be at the
discretion of each party, each party shall therefore
have the rights to specify itself the rate to its respective
subscribers. However, Natrindo agrees that the rate
charged by Natrindo to its subscribers shall not be
lower than that charged by Excelkom to its subscribers
from time to time” (see evidence C9.14); ------------------21.2.10.14. Based on the statement given by the Expert Witness,
Mas Wigrantoro RS, the Interconnection Cooperation
Agreement which agrees on the final rate to be
charged to the subscribers is not justified and therefore
needs to be corrected (see evidence B11); ---------------21.2.10.15. Based on the statement obtained from the Expert
Witness, KRMT Roy Suryo, the operators imposes the
22
rate is to prevent any spamming which may be
received (see evidence B24); --------------------------------21.2.10.16. On May 30th, 2007, Indonesian Telecommunications
Regulatory Body (BRTI) held a meeting with the
Indonesian Cellular Telephone Association (ATSI). In
the meeting, BRTI stated that the imposition of the
SMS rate violates the Law Number 5 Year 1999 and
hinder fair business competition. As a follow up to the
meeting,
ATSI
issued
002/ATSI/JSS/VI/2007,
a
Circular
dated
Letter
4th,
June
No.
2007
requesting all of its members to comply with the Law
Number
5
Year
1999
consistently
and
annul
agreements, notice, gentlemen agreement and other
matters which are binding in relation to the imposition
of the SMS rate (see evidences L20, L21, A8); ----------21.2.10.17. By virtue of such Circular Letter, the cellular operator
which stipulates the clause on the imposition of the
SMS rate in its the Interconnection Cooperation
Agreement
shall
make
an
amendment
to
the
agreement by deleting the stated clause. The last
amendment
made
by
Telkomsel
and
NTS
on
December 10th, 2007, and by XL and NTS on
December 3rd, 2007; --------------------------------------------21.2.11. SMS Rate; ----------------------------------------------------------------------21.2.11.1. In 2006, BRTI, with an approval from cellular operators,
uses the services of OVUM in calculating the sum of
interconnection charge among the operators to be used
as a reference in calculating the interconnection charge
in the year 2007 (see evidences A8, B26); ---------------21.2.11.2. In
performing
the
work,
OVUM
established
a
cooperation with a local partner, i.e. PT Tritech Consult
(hereinafter referred to as “Tritech”) (vide evidences
A8, B26); ----------------------------------------------------------21.2.11.3. The charge calculation conducted by OVUM together
with Tritech, applied the Long Run Incremental Cost
(LRIC) method in accordance with the agreement
between the Director General of Postal Service and
Telecommunication and the cellular operators (see
evidences A8, B26); ---------------------------------------------
23
21.2.11.4. The results of calculation conducted by OVUM are
illustrated in the following table: ------------------------------
Table 8
Results of OVUM Calculation
R eco m m en d ed
2006
157
268
564
185
550
659
564
551
549
157
268
564
185
550
659
564
551
549
92
336
355
F ix e d I n te rc o n n e c t e d C h a rg e s - I n R u p ia h p e r m i n u t e o r p e r m e s s a g e
O r i g i n a t i n g i n t e r c o n n e c t e d - L o c a l ( F i x e d t o F ix e d )
O r ig in a tin g in te rc o n n e c te d - L o c a l ( F ix e d to M o b ile )
O r i g i n a t i n g i n t e r c o n n e c t e d - L o c a l ( F i x e d t o S a te l l i te )
O r i g i n a t i n g i n t e r c o n n e c t e d - L o c a l ( F i x e d t o I S P ( V o IP ) )
O r ig in a tin g in te rc o n n e c te d - L o n g d is ta n c e ( F ix e d t o F ix e d )
O r ig in a tin g in te rc o n n e c te d - L o n g D is ta n c e (F ix e d t o M o b ile )
O r i g i n a t i n g i n t e r c o n n e c t e d - L o n g d i s t a n c e ( F i x e d t o S a t e ll i t e )
O r ig in a tin g in te rc o n n e c te d - L o n g d is ta n c e ( F ix e d t o I S P ( V o I P ))
O r ig in a tin g in te rc o n n e c te d - I n t e r n a tio n a l ( F ix e d to In t e r n a tio n a l)
T e r m in a t in g in te rc o n n e c t e d - L o c a l (F ix e d to F ix e d )
T e r m in a t in g in te rc o n n e c t e d - L o c a l (M o b ile t o F ix e d )
T e r m i n a t i n g i n t e r c o n n e c t e d - L o c a l ( S a te l l it e t o F i x e d )
T e r m in a t in g in te rc o n n e c t e d - L o c a l (I S P ( V o I P ) to F ix e d )
T e r m in a t in g in te rc o n n e c t e d - L o n g d is ta n c e ( F ix e d to F ix e d )
T e r m in a t in g in te rc o n n e c t e d - L o n g d is ta n c e ( M o b ile t o F ix e d )
T e r m i n a t i n g i n t e r c o n n e c t e d - L o n g d i s t a n c e ( S a t e l l i t e t o F ix e d )
T e r m i n a t i n g i n t e r c o n n e c t e d - L o n g d i s t a n c e ( O L O V o IP t o T e lk o m - W L )
T e r m i n a t i n g i n t e r c o n n e c t e d - I n t e r n a ti o n a l ( In t e r n a ti o n a l t o F i x e d )
T r a n s i t 1 - t r u n k s w i tc h ( O L O t o F i x e d t o O L O )
T r a n s i t 2 - t r u n k s w i tc h e s ( O L O to F i x e d t o O L O )
T r a n s it to I G W (O L O t o F ix e d to O L O )
N ear
T e rm
T e rm
T e rm
T e rm
E n d a n d F a r E n d A lte rn a tiv e s
in a t in g in te rc o n n e c t e d - L o n g d is ta n c e
( F ix e d to F ix e d ) ( F ix e d to F ix e d ) (M o b ile to F ix e d )
(M o b ile to F ix e d )
569
174
819
268
N ear E nd
F ar End
- Near E nd
- F ar E nd
R eco m m end ed
2006
361
449
574
471
622
851
510
38
361
449
574
471
622
851
510
38
M o b i le In te rc o n n e c te d C h a rg e s - In R u p ia h p e r m in u t e o r p e r m e s s a g e
O r ig in a tin g in te rc o n n e c te d v o ic e - L o c a l ( to fix e d )
O r ig in a tin g in te rc o n n e c te d v o ic e - L o c a l ( to m o b ile )
O r i g i n a t i n g i n t e r c o n n e c t e d v o i c e - L o c a l ( t o s a te l l i te )
O r i g i n a t i n g i n t e r c o n n e c t e d v o i c e - L o n g d i s ta n c e ( to f i x e d )
O r i g i n a t i n g i n t e r c o n n e c t e d v o i c e - L o n g d i s ta n c e ( to m o b i l e )
O r i g i n a t i n g i n t e r c o n n e c t e d v o i c e - L o n g d i s ta n c e ( to s a t e l l i t e )
O r ig in a tin g in te rc o n n e c te d v o ic e - In te r n a tio n a l ( to in t e rn a t io n a l)
O r ig in a tin g in te rc o n n e c te d S M S (t o m o b ile )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o c a l ( f r o m f ix e d )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o c a l ( f r o m m o b ile )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o c a l ( fr o m s a t e llite )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o n g d is t a n c e (f ro m fix e d )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o n g d is t a n c e (f ro m m o b ile )
T e r m in a t in g in te rc o n n e c t e d v o ic e - L o n g d is t a n c e (f ro m s a te llit e )
T e r m in a t in g in te rc o n n e c t e d v o ic e - In te r n a tio n a l ( fr o m in t e r n a tio n a l)
T e r m in a t in g in te rc o n n e c t e d S M S ( f ro m m o b ile )
N ear
T e rm
T e rm
T e rm
T e rm
E n d a n d F a r E n d A lte rn a tiv e s
(fro m
(fro m
(fro m
(fro m
F ix e d ) F ix e d ) M o b ile )
M o b ile )
502
361
671
449
N ear E nd
Far E nd
- Near End
- F ar E nd
21.2.11.5. The results of calculation state that the interconnected
charges of SMS is Rp 38 for the originating
interconnected SMS (to mobile) and Rp 38 for the
terminating
interconnected
SMS
(to
mobile).
It
constitutes the charge for providing an efficient network
for interconnection only and cannot be used as a basis
for calculation of the retail charge; --------------------------21.2.11.6. In the year 2007, by using the same formula, BRTI
calculated the interconnected charge for SMS which
will be used as a reference in calculating the SMS
charge in the year 2008, i.e. in the sum of Rp 26 for
originating and Rp 26 for terminating (see evidence
A8); ------------------------------------------------------------------
24
21.2.11.7. Based on the information obtained from the BRTI, that
the SMS rate of Rp. 250 – Rp 350 is considered too
high. The elements for calculation of SMS comprise of
Network Element Cost (NEC) + Retail Service Activity
Cost (RSAC) + Profit Margin, where the amount of
NEC is Rp 76, RSAC : 40% of total elements of SMS
rate, and profit margin of 10% of the total elements in
SMS rate (see evidence A8); ---------------------------------21.2.11.8. Based on the information obtained from the Tritech that
the service cost expended by telecommunication
greatly depends on the fixed cost and service traffic,
where the service itself closely relates to the number of
subscribers and their behaviors. Consequently, two (2)
operators may not have the same cost, despite of the
same infrastructure is used. New operator is impossible
to offer SMS products with the price higher than that
offered by the existing operator (see evidence B26); ---21.2.11.9. Based on the information obtained from Expert
Witness, Faisal Hasan Basri, the same SMS rate
imposed by operators constitutes a cartel. In general,
the price cartel applies a range (see evidence B12); ---21.2.11.10. Based on the information obtained from Expert
Witness, KRMT Roy Suryo, new operators will offer
lower price as their investment cost is smaller than the
existing operators, for example, they do not have to
establish the BTS (see evidence B24); --------------------21.3. Alleged Violation; ------------------------------------------------------------------------21.3.1. The Reported Party I up to Reported Party IX have imposed the
SMS rate with the interval of Rp 250 – Rp 350 which has allegedly
violated Article 5 of Law Number 5 Year 1999: ” Business actors
shall be prohibited from entering into agreements with their
business competitors to fix the price of certain goods and or
services payable by consumers or customers on the same relevant
market”; ---------------------------------------------------------------------------21.4.
Analysis;----------------------------------------------------------------------------------21.4.1. In analyzing the occurrence of violation to Article 5 of Law Number
5 Year 1999, the Examining Team is in the opinion that there shall
be at least two elements to be met, i.e.: 1) Element of Business
25
Actor 2) Element of Agreement with Business Competitors.
Meanwhile, the element of same relevant market is additional and
not absolute to be proven, but to explain the second element.
21.4.2. The analysis on the fulfillment of the two elements of Article 5 of
Law Number 5 Year 1999 is as follows: ----------------------------------21.4.2.1. Business Actors; -----------------------------------------------21.4.2.1.1. What is meant by the business actors in
Article 1 point 5 of Law Number 5 Year
1999 shall be any individual or business
entity,
either
incorporated
or
not
incorporated as legal entity, established
and domiciled or conducting activities
within the jurisdiction of the Republic of
Indonesia, either independently or jointly
based on agreement, conducting various
business activities in the economic field.
21.4.2.1.2. Whereas, the Reported Party I, Reported
Party II, Reported Party III, Reported Party
IV, Reported Party V, Reported Party VI,
Reported Party VII, Reported Party VIII,
and Reported Party IX are business actors
who conduct business in the field of
telecommunication
service
within
the
jurisdiction of the Republic of Indonesia as
contemplated in the Reported Parties’
Identities, point 1 to 9 above, thereby
fulfilling the element of business actors as
referred to in Article 1 point 5; -----------------
21.4.2.2. Rate Agreement with Competitors; -----------------------21.4.2.2.1. Some competition literatures define cartel
as the establishment of rate agreement
entered into by a business actor with its
competing business actors; -------------------21.4.2.2.2. Agreement by virtue of the provisions of
Article 1 point 7 of Law Number 5 Year
1999 shall mean the action of one or more
business actors for binding themselves to
26
one or more other business actors under
whatever name, either in writing or not in
writing. In the competition law, unwritten
agreement regarding the price can be
analyzed in the event of the existence of
two conditions: 1) the same or parallel
price 2) communication among business
actors on the price;------------------------------21.4.2.2.3. The Examining Team finds some written
agreements on the price fixing by operators
which
form
an
integral
part
of
the
Interconnection Cooperation Agreement as
illustrated in the Matrix of SMS Rate Fixing
in
the
Interconnection
Cooperation
Agreement in the part of Facts and Finding.
Formally, it has included in the category of
cartel
which
Telkomsel,
is
Telkom,
conducted
Hutchison,
by
XL,
Bakrie,
Mobile 8, Smart, and NTS; --------------------21.4.2.2.4. However, the Examining Team also finds
the same SMS rate among operators in
each period, although no clause on price
fixing in the Interconnection Cooperation
Agreement; ---------------------------------------21.4.3. Analysis for the Period of 1994 – 2004; -------------------------------21.4.3.1. In the period of 1994-2004, the base and effective SMS
rates of all operators (Telkomsel, Indosat, and XL) was
Rp 350, despite of the fact that there was no clause on
price
fixing
in
the
Interconnection
Cooperation
Agreement entered into by these three operators; -------21.4.3.2. These same rate was effective in spite of the fact that
the government did not regulate the SMS rate either in
with regard to its nominal or formula. No regulatory
factors which led the operators to fix the same rate for
SMS services; -----------------------------------------------------21.4.3.3. Yet, in the competition law literature, the same rate
among competitors does not indicate the existence of a
cartel. It will be considered as a cartel if the same rate is
27
applied and a communication among the competitors is
established to fix such price, either directly or indirectly;
21.4.3.4. Cross-ownership
among
three
cellular
operators
(Telkomsel, Indosat, and XL) during the regime of Law
Number 3 Year 1989 on Telecommunication can
become an instrument which enabled a communication
among these operators to fix the rate which should have
been competitive. However, the Examining Team does
not find sufficient evidence that such potency had been
used directly to fix the SMS rate among the operators; -21.4.3.5. As no agreement on SMS rate entered into by these
three operators nor evidence on communication among
the operators in fixing the SMS rate were found, the
Examining Team is in the opinion that the existence of
the same rate cannot become a sufficient ground in
proving the existence of a cartel; -----------------------------21.4.3.6. At the beginning, the SMS service was provided by
Satelindo with the rate based on the trial and error, i.e.
Rp 350/SMS which was then accepted by consumers of
telecommunication at that time; -------------------------------21.4.3.7. Following such acceptance, other operators consciously
imposed the same rate as Satelindo’s as a benchmark
at the time. It was normal in an open market where a
business actor had an access to know the rate imposed
by its competitors; ------------------------------------------------21.4.3.8. Although the SMS service had been offered since the
year 1994, the KPPU has the authority only to analyze
the legal events which occurs after the enactment of
Law Number 5 Year 1999 which becomes effective
since March 2000;
21.4.4. Analysis for the Period of 2004 – 2007; -------------------------------21.4.4.1. In this period, although the number of operators
increased and the services were diversified (off-net and
on-net), there was the same rates imposed by the
operators as illustrated in the following paragraph; ------21.4.4.2. The SMS basic rate of Rp 350 was imposed to the
following subscribers: -------------------------------------------a. Simpati (Prepaid) Off-net; ---------------------------------b. Simpati (Prepaid r) On-net, up to the year 2005; -----
28
c. IM3 Smart (Prepaid) Off-net;------------------------------d. Mentari (Prepaid) On-net and Off-net; ------------------e. Star One (Prepaid) Off-net; -------------------------------f.
XL Bebas (Prepaid) Off-net and On-net; ----------------
g. Flexi
Trendy
(Prepaid)
Off-net
(price
fixing
agreement with Telkomsel);-------------------------------h. NTS (Prepaid) Off-net (price fixing agreement with
XL and Telkomsel); -----------------------------------------21.4.4.3.- In the period of 2004-2007, the SMS basic rate of Rp
300 was imposed to the following subscribers: -----------a. Kartu As (Prepaid) Off-net up to the year 2006;------b. Kartu As (Prepaid) On-net in the year 2004; ----------c. Matrix (Prepaid) Off-net and On-net;--------------------d. Mentari (Prepaid) Off-net and On-net up to the year
2006; -----------------------------------------------------------e. Fren (Prepaid) Off-net in the year 2007 (price fixing
agreement with XL); ----------------------------------------21.4.4.4. SMS basic rate of Rp 250 was imposed to the following
subscribers: --------------------------------------------------------a. Kartu Halo (Postpaid) Off-net and On-net, except
free monthly charge package, of Rp 350 in the year
2007; -----------------------------------------------------------b. IM3 Bright (Postpaid) Off-net up to the year 2005,
except the SMS to XL, of Rp 350. In the year 2006,
IM3 Bright merged to Matrix.
c. XL Xplor (Postpaid) Off-net and On-net; ---------------d. Flexi Classy (Postpaid) Off-net (rate agreement with
Telkomsel);----------------------------------------------------e. Fren (Postpaid) Off-net (rate agreement with XL); --f.
Esia (Prepaid dan Postpaid) Off-net (rate agreement
with with XL and Telkomsel); ------------------------------
21.4.4.5. The base SMS rate below Rp 250 is charged to the
subscribers for the following services:-----------------------a. StarOne (Postpaid) Off-net dan On-net; ---------------b. IM3 Smart (Prepaid) On-net;------------------------------c. StarOne (Prepaid) On-net; --------------------------------d. Jempol (Prepaid) On-net; ----------------------------------e. Flexi Classy (Postpaid) On-net; --------------------------f.
Flexi Trendy (Prepaid) On-net; ----------------------------
29
g. Fren (Postpaid) On-net; ------------------------------------h. Fren (Prepaid) On-net; -------------------------------------i.
Esia (Prepaid) On-net; --------------------------------------
j.
Esia (Postpaid) On-net; -------------------------------------
k. NTS (Prepaid) On-net; -------------------------------------21.4.4.6. Besides, based on the information obtained from
Mobile-8, since the year 2004 there has been a
difference between effective SMS rate and basic SMS
rates as some operators imposed promotional rates in
various ways. The forms of promotions done by
operators caused the effective rates paid by consumers
when sending a SMS is not the same as the SMS basic
rate charged by operators. The Examining Team also
found that in the year 2004, XL introduced the XL
Jempol with lower SMS rates and Telkomsel introduced
Kartu As with lower SMS rates; -------------------------------21.4.4.7. However, the Examining Team assessed that the
promotional SMS rate was just applicable to the on-net
SMS rate, instead of the off-net SMS rate. As illustrated
in point 89 to 92 above, out of the off-net SMS rate, only
the SMS rate of StarOne Postpaid that imposed the
SMS rates under Rp 250. Meanwhile, other operators
imposed the off-net SMS rate above Rp 250. StarOne is
a product of Indosat, which was not found on this
examination to have entered into any agreement of
SMS rates with other operators; ------------------------------21.4.4.8. Therefore, the Examination Team considered that SMS
rate agreement executed by operators only effectively
applicable to the off-net SMS rate. In the meantime, the
Examination Team assessed that since the year 2004,
the agreement that provided for the on-net SMS
minimum rate was not effectively applicable, despite of
the fact that SMS rate agreement was just formally
amended in the year 2007 after the issuance of ATSI’s
Circular Letter, No. 002/ATSI/JSS/VI/2007,dated June
4th, 2007; -----------------------------------------------------------21.4.4.9. Based on the numbers of subscribers of each operator
as can be seen in the facts and findings, the new
30
entrant operators were in a weak position in competing
with the then operators in the period of 1994-2004; -----21.4.4.10. Based on information provided by new entrant operators
to
the
Examining
Team,
in
carrying
out
the
interconnection negotiation, new entrant operators did
not have sufficient bargaining powers in facilitating their
interests in the interconnection agreement. At the same
time, if the incumbent operators inserted the clause on
the minimum SMS rates, the new entrant operators
were not in the position to reject the clause; ---------------21.4.4.11. Based on the information obtained from the incumbent
operators, the clause on fixing minimum rate was set
out to avoid drastic increase of SMS traffic from the new
entrant operators to the incumbent ones; ------------------21.4.4.12. The reason was justified by the Expert Witness, KRMT
Roy Suryo who stated that the SMS users in Indonesia
are very sensitive to prices so that it may cause a
spamming;
21.4.4.13. Based on this analysis, it is logical that the SMS
minimum rate as required by the incumbent operators
was to maintain their market share, and the minimum
SMS rate could be implemented forceably by the
incumbent operators against the new entrant operator
by using the former’s stronger bargaining power as they
have a larger subscribers. New entrant operators were
forced to accept the clause as they needed the
interconnection with the incumbent operators; ------------21.4.4.14. However, the Examining Team is in the opinion that the
concern of the incumbent operators should have not
been anticipated by using the rate instrument as it would
result in a loss to the new entrant operators and
prospective subscribers who would use the SMS
service. This idea is justified by the Expert Witness, Mas
Wigrantoro who declared that the Interconnection
Cooperation Agreement which fixed the final rate was
incorrect;------------------------------------------------------------21.4.4.15. New entrant operators were lost out by the clause on
price fixing as they were unable to attract new
subscribers by offering the off-net SMS rate which was
31
cheaper than the off-net SMS rate offered by the
incumbent operator; ---------------------------------------------21.4.4.16. While, the consumers were also lost out as they should
had been able to enjoy cheaper SMS rate. With lower
SMS rate, consumers may send more SMS, but more
segments of the community can use the SMS services; 21.4.4.17. Therefore, the Examining Team is in the opinion that
there was a cartel on the off-net SMS rate in the period
of 2004-2007; -----------------------------------------------------21.4.5. Analysis for the Period of the year 2007 to present; ---------------21.4.5.1.
The entry of Hutchison which offered the off-net SMS
rate of only Rp 100 per SMS, despite of the fact that
Hutchison is bound with the SMS rate agreement with
XL, it has obviously stricken the rate to be maintained
by the incumbent operators; ------------------------------------
21.4.5.2.
As acknowledged by XL and Hutchison and supported
by written documents obtained by the Examining Team,
Hutchison received a
warning from XL and was
instructed to revise its off-net SMS rate. However,
Hutchison keeps violating the agreement by not
changing its off-net SMS rate; ---------------------------------21.4.5.3.
As illustrated in the facts and findings section, this event
has led ATSI to issue a circular letter from the ATSI and
ended with the annulment of the clause on the price
fixing by each operator; ------------------------------------------
21.4.5.4.
Therefore, the cartel of SMS rate has not been formally
applicable since the year 2007. However, material
evidencing is more crucial in the business competition
law than formal one. Therefore, the Examining Team is
still conducting an observation on the SMS rate imposed
in the market after the amendment to the agreement on
SMS rate;------------------------------------------------------------
21.4.5.5.
The Examining Team finds no direct changes done by
each operator after the amendment to the SMS rate
agreement. The applicable SMS rate was the same as
the period prior to such amendment. The Examining
Team is in the opinion that there were two possibilities
on which such occurrence was based: 1) the cartel of
SMS rate was still effective 2) the SMS rate as promised
32
was the rate in the market equilibrium; therefore, the
SMS rate would be the same, despite of the agreement
is executed or not ; -----------------------------------------------21.4.5.6.
On April 1st, 2008, the Government through the
Directorate
General
of
Postal
Service
and
Telecommunication announced the interconnection rate
and that the Government hopes that the reduction of the
rate could be effective no later than April 25th, 2008; ----21.4.5.7.
Following this announcement, the operators introduced
new basic rate which is lower than before, including the
SMS rate either for on-net or off-net; -------------------------
21.4.5.8.
It seems to indicate that the previous SMS rate was the
rate in the market equilibrium and the reduction of the
rate occurred solely as result of the decreasing
interconnection rate set out by the government; ----------
21.4.5.9.
As illustrated in the former SMS rate regulation, the
changes to such regulations did not change the SKA
method for the SMS delivery. Therefore, there was no
relevance between the lowering the SMS rate and the
reduction
of
interconnection
rate,
as
no
SMS
interconnection charge imposed to consumers for the
SMS service; ------------------------------------------------------21.4.5.10. In other words, after April 1st, 2008, the operators
lowered the SMS rate without changing the internal and
external cost of the SMS service. The Examining Team
is therefore in the opinion that the operator may impose
cheaper SMS rate to the subscribers long before the
reduction of interconnection rate by the government.
The cancellation of lowering the SMS rate was solely
due to the fact that the cartel agreement among the
operators was still effective and enforceable, despite of
the fact that it had been formally amended in the year
2007; ----------------------------------------------------------------21.4.5.11. Therefore, in this period, out of three new cellular
operators (Hutchison, Smart, and NTS-Axis), only Smart
complied with the cartel agreement. Hutchison, despite
it formally signed the agreement, it never materially
performed the provisions thereof. Although NTS-Axis
had formally signed the cartel agreement since the year
33
2001, as the Axis was just launched in 2008, after the
revocation of the clause on the rate cartel, it has never
formally performed the provisions of the agreement; ----21.5.
Conclusions; ----------------------------------------------------------------------------21.5.1.
Based on the analysis on the facts and evidences in the form of
information given by the Reported Parties, Witnesses, Experts
and documents collected during the examination, the Examining
Team comes to the following conclusions; ----------------------------21.5.1.1. Whereas, there was no cartel of SMS rate in the
period of 2000-2004 which was conducted by
Telkomsel, Indosat, and XL;---------------------------------21.5.1.2. Whereas, there was a cartel of SMS rate in the period
of 2004-2007 which was created by Telkomsel and XL
and Telkom, Mobile 8 and Bakrie were forced to
follow; -------------------------------------------------------------21.5.1.3. Whereas, there was a cartel of SMS rate in the period
of 2007 up to April 2008 which was a continuity of the
previous period and Smart was forced to follow; -------21.5.1.4. Whereas Indosat, Hutchison, and NTS are not proven
to conduct the cartel of SMS rate; --------------------------
21.5.2.
Therefore,
PT
Excelcomindo
Pratama,
Tbk,
PT
Telekomunikasi Selular, PT Telekomunikasi Indonesia, Tbk,
PT Bakrie Telecom, PT Mobile-8 Telecom, Tbk, PT Smart
Telecom are proven to violate Article 5 of Law Number 5 Year
1999;
21.5.3.
Whereas,
PT
Indosat
Tbk,
PT
Hutchison
CP
Telecommunication, and PT Natrindo Telepon Seluler are
not proven to violate Article 5 of Law Number 5 Year 1999; ------22.
In consideration that the Advanced Examining Team has delivered the Advanced
Examination Report to the Commission, calling for the Commission’s Assembly
Session (see evidence A90); ---------------------------------------------------------------------
23.
In consideration that further, the Commission issued a Decision of the
Commission
for
the
Supervision
of
Business
Competition,
Number
80/KPPU/PEN/V/2008, dated May 7th,2008, calling for the Commission’s
Assembly Session from May 8th, 2008 to June 19th, 2008 (see evidence A91); ----24.
In consideration that in order to conduct the Commission’s Assembly Session,
the Commission issued a Decision, Number 165/KPPU/KEP/V/2008, dated May
7th, 2008 on Assigning the Members of the Commission as the Commission’s
34
Assembly in the Assembly Session for the Case Number 26/KPPU-L/2007 (see
evidence A92); --------------------------------------------------------------------------------------25.
In consideration that the Executive Director of the Commission Secretariat further
issued the Task Letter, Number 357.1/SET/DE/ST/V/2008, dated May 7th, 2008
assigning the Commission Secretariat to assist the Commission’s Assembly in
the Commission’s Assembly Session (see evidence A93); -------------------------------
26.
In consideration that the Commission’s Assembly has delivered the Excerpt of
the Decision of the Assembly Session and Advanced Examination Report to the
Reported Parties (see evidences A94 to A102);---------------------------------------------
27.
In consideration that the Commission’s Assembly has given opportunities to the
Reported Parties to inspect the case documents (enzage) scheduled on May
21st, 22nd, 23rd, and 26th, 2008; -------------------------------------------------------------------
28.
In consideration that the Reported Party I and Reported Party have been present
to inspect the case documents (enzage) on May 21st, 2008 (see evidences B29,
B30);; --------------------------------------------------------------------------------------------------
29.
In consideration that the Reported Party IV and Reported Party VI have been
present to inspect the case documents (enzage) on May 22nd, 2008 (see
evidences B31, B32); ------------------------------------------------------------------------------
30.
In consideration that the Reported Party VII, Reported Party VIII and Reported
Party IX have been present to inspect the case documents (enzage) on May 23rd,
2008 (see evidences B33, B34, B35 );---------------------------------------------------------
31.
In consideration that the Reported Party III has been present to inspect the case
documents (enzage) on May 26th, 2008 (see evidence B36); ----------------------------
32.
In consideration that the Reported Party V has not been present to inspect the
case documents (enzage) on Mei 26th, 2008 (see evidence B37); ---------------------
33.
In consideration that on May 26th, 2008, the Commission’s Assembly has
summoned the Reported Parties accordingly to attend the Commission’s
Assembly Meeting on June 2nd, 2008 to deliver a written Replies/Defense to the
Commission’s Assembly (see evidences A103 to A111); ---------------------------------
34.
In consideration that in the Commission’s Assembly Meeting held on June 2nd,
2008, all Reported Parties were present and the Commission’s Assembly had
received the written Replies/Defense from the Reported Party I, Reported Party
II, Reported Party III, Reported Party IV, Reported Party VI, Reported Party VII,
Reported Party VIII and Reported Party IX (see evidence B38); ------------------------
35.
In consideration that in the Commission’s Assembly Meeting, Commission’s
Assembly has received the written Replies/Defense from the Reported Party I
(Excelcomindo) as follows (see evidence A114): ------------------------------------------35.1.
In the PL report, Point108, page 24, it is read that “The Examining Team
finds no immediate changes after the amendment to the SMS rate
35
agreement by each operators, the SMS rate after the amendment is still
the same as that prior to the amendment is made. The Examining Team
is in the opinion that there are two possibilities which cause this: 1) that
the cartel of SMS rate is still effective; 2) the SMS rate as contracted is
the rate at the market equilibrium; therefore, regardless of the agreement,
the SMS rate will be the same”; -------------------------------------------------------35.2.
Further, in the PL Report, Point 114, page 25, it is read, “ In other words,
after April 1st, 2008, the operators lowered the SMS rate without any
change to either internal or external cost for the SMS services. Therefore,
The Examining Team considers that the operators could have imposed
lower SMS rate to their subscribers long before the decreasing of the
Interconnection rate by the government. The cancellation of the lowering
the SMS rate is solely due to the price fixing agreement entered into by
the operators is still effective, despite of the fact that it had been formally
amended in the year 2007”;-------------------------------------------------------------
35.3.
Therefore, the Examining Team comes to a conclusion that XL together
with
PT.Telekomunikasi
Indonesia,Tbk
(“Telkom”),
Seluler
(“Telkomsel”),
PT.Bakrie
Telecom
PT.Telekomunikasi
(“Bakrie
Telecom”),
PT.Mobile-8 Telecom,Tbk (“Mobile 8”), PT.Smart Telecom (“Smart”) are
proven to have violated Article 5 of Law Number 5 Year 1999 on
Prohibition of Monopolistic Practices and Unfair Business Competition; ---35.4.
Bearing in mind the main considerations taken by the Examining Team in
making a conclusion that XL and other operators have violated Article 5 of
Law Number 5 Year 1999 is the opinion of the Examining Team that the
SMS rate cartel materially exists, the legal defense given by XL will be
focused on the delivery of data and evidences to assure the
Commission’s Assembly that the SMS rate cartel agreement among the
operators DOES NOT EXIST either formally or materially; ---------------------
35.5.
IN SPITE OF THE FACT THAT XL HAS FORMALLY SIGNED A
COOPERATION AGREEMENT CONTAINING CLAUSE ON PRICE
FIXING, THE EXPERT WITNESS HAS SUPPORTED THE XL’S
REASON THAT ITS MOTIVATION IS NOT TO ESTABLISH A CARTEL,
BUT TO MAINTAIN THE NETWORK STABILITY;------------------------------35.5.1. Before XL proposes its argument to prove that there is no
material cartel nor tacit collusion in the SMS price fixing, XL
would like to confirm its previous clarification that despite of the
fact that XL has signed a Cooperation Agreement containing a
clause on price fixing, it is done without INTENTION to establish
a cartel. Such clause is intended to prevent the spamming which
36
is in turn aimed at maintaining the network stability. Such
reasons or motivation is justified and supported by the
testimonies
of
Notodiprodjo
the
expert
witness,
KRMT.
Roy
Suryo
as also stated in the Advanced Investigation
Report, point 99, page 23. Dr. Ir Bambang P. Adhiwiyoto (BRTI),
also affirmed the same idea in the Minutes of Meeting with KPPU
who among others states “...... It is reasonable in a
telecommunication industry, in which rate is not only as a
competition media, but also to control the network in order that it
is not collapsed”. It can be therefore concluded that the actions
taken by XL in signing the Cooperation Agreement which
contains the clause on price fixing is an innocent mistake, it
cannot be said as an action to establish a price cartel; --------------35.6. ALTHOUGH THE BASE RATES OFFERED BY THE OPERATORS
SEEM TO BE THE SAME, THE EFFECTIVE RATE ENJOYED BY
CONSUMERS
IS
MUCH
LOWER
THAN
THE
BASE
RATE
PUBLISHED. IT IS SOLELY A STRATEGY APPLIED BY EACH
OPERATOR IN SELLING THEIR PRODUCTS, AND DOES NOT
CONSTITUTE A CARTEL OR PRICE FIXING IN ANY KINDS
WHATSOEVER; -------------------------------------------------------------------------35.6.1. The Examining Team’s conclusion that “The cancellation of the
decreasing of the SMS Rate is solely due to the fact that the
cartel agreement entered into by the operators is still effective
and enforceable” is incorrect as it is the fact that the SMS rate
has been lowered and it can be enjoyed by the subscribers of
each operator since April 1st, 2008. The reducing of the SMS rate
is done by each operator through different marketing strategies
and techniques, but the consumers have in fact enjoyed lower
effective SMS rate, and far below the base rate between
Rp.250,-/SMS for the on-net and Rp.350,-/SMS for the off-net.
Upon the amendment to the Cooperation Agreement, there is
NO AGREEMENTS on establishing the cartel either formally or
materially. In fact, operators compete one another in offering
promotional programs which offer BENEFITS TO THEIR
RESPECT CUSTOMERS;-------------------------------------------------35.6.2.
In its testimonies before the Examining Team as recorded in the
Investigation Report, each operator basically stated that the
consumers have in fact enjoyed lower SMS rate through
promotional programs, so the effective rate imposed to
37
consumers is far below the base rate. Below are some excerpts
of the testimonies of those operators: -----------------------------------35.6.2.1.
Testimonies of Telkomsel; In the Investigation
Report (“BAP”), dated November 23rd, 2007, Mister
Syarif Syarial Ahmad, the Telkomsel’s Director of
Planning and Development states as follows: ----------Question (“Q”): The rate of Rp 250 had been
imposed since the year 1998 up to present. It means
that now the SMS rate should have risen. Why it
remains to be Rp 250?; -------------------------------------Answer(“A”): It may be due to the value of the money
itself. From the discount offered, the effective SMS
rate is below Rp 250. For subscribers of As Card the
on-net SMS rate is Rp 9, while the off-net rate
remains to be Rp 250; ---------------------------------------Q: In a competition, the rate does not stay at the
range of Rp 250, as the rate has been no change
since the year 1998; -----------------------------------------A: The competition at Telkomsel is actualized by
offering bonuses to its subscribers, so the rate
imposed to subscribers tends to lower from year to
year; -------------------------------------------------------------Q: How about the rate of Telkomsel’s SMS product?
A: For the As is Rp 299, Simpati remains Rp 350,
Kartu Halo remains Rp 250; --------------------------------
35.6.2.2.
Testimonies of Telkom; In the Investigation Report
(“BAP”), dated December 3rd, 2007, Mister, Mister
Rinaldi
Firmansyah,
the
Telkom’s
President
Director states as follows: ----------------------------------Q: According to the information, since the year 2003,
no variation in the rate structure, it remains within the
range of Rp 250 to Rp 350. We see the rate is in the
contrary to the economic principle as the demand
increases. Please explain; ---------------------------------J: The rate is only a general benchmark, but it is the
fact that the operators offer numerous bonuses, so
there is no longer the SMS rate of Rp 250 and
Rp 350. For example, 100 SMS bonus for 100 SMS
38
used, so the rate is no longer Rp 250 lagi. In general,
I see that the operators have not imposed the SMS
rate of Rp, 250 through their gimmick-gimmick
marketing strategies. Concretely, the SMS rate can
be seen in the newspaper advertisement. --------------35.6.2.3.
Testimonies of PT Mobile 8 Telecom Tbk; In the
Investigation Report (“BAP”), dated December 5th,
2007,
Mister
Merza
Fachys,
the
Director
of
PT Mobile 8 Telecom Tbk states as follows : ----------Q: Has PT Mobile 8 Telecom Tbk imposed the SMS
rate with the range of Rp 250 to Rp 350? --------------A: There some rates applied. We ever sold at the
rate of Rp 100, Rp 150. We has never specified the
rate to be Rp 250 or Rp 350, but it depends on the
class of service. -----------------------------------------------Q: Is such SMS rate agreed among the operators? A: The rate is imposed on the basis more on the
cost of production. In addition, we also see the
market rate. At the time, on the basis of the cost
structure and market rate, the SMS rate imposed
was ranging from Rp 250 to Rp 350; --------------------Q: How does PT Mobile 8 calculate the off-net SMS
Rate? ------------------------------------------------------------A:
We impose the rate on the
basis cost of
investment. We make calculation on the basis of the
guidelines provided by the government which has
calculated the long run incremental cost. Internally,
we use the same formula until we achieve a figure. In
the year 2005, we imposed the one-way rate of
approximately Rp 104 and the two-way rate of
approximately Rp 208. The rate of Rp 76 was the
same package rate for the long run incremental cost
with a bottom-up approach. For the long run
incremental cost, there are two approaches, i.e. top
down and bottom up. In the top down approach, the
cost is calculated on the basis of real expenditure at
the field. While in the bottom up approach, the real
39
network cost cannot be calculated, smaller figure is
therefore achieved, i.e. Rp 76; ----------------------------Q: For the new operator, is there a separate SMS
rate calculation, so it is not Rp 76? ----------------------J: Yes, there is, it is because the calculation done by
the government which follows the best practice of the
incumbent company may not be appropriate to be
applied by the new operator due to different cost
structure and traffic. Our traffic is only about 1 million
per day, while as an illustration, a big operator may
reach the traffic of 100 millions per day; ----------------35.6.2.4.
Testimonies of PT Smart Telecom ; In the
Investigation Report (“BAP”), dated December 6th
2007, Mister Sutikno Widjaja, the President Director
of PT Smart Telecom states as follows: ---------------Q:
How is the SMS rate imposed by Smart
Telecom? -------------------------------------------------------A: The SMS rate among the Smart’s subscribers is
Rp 25 and among the operators is Rp 275; ------------Q: What are the cost components to be covered so
the SMS rate reaches Rp 275? ---------------------------A: It’s only our business strategy and pricing policy;
Q: Is there any price fixing agreement among the
cellular operators, so the SMS rate ranges from
Rp 250 to Rp 350? -------------------------------------------a: As a matter, there is no such agreement. We just
follow the market. If new operator sells with lower
rate, there will be a party disliking it, despite of the
fact that the subscribers like it. Our market segments
are middle and low level subscribers. As we still need
the networks of other operators, we are still not in our
position to provide the SMS with lower rate. If later
we have more subscribers, then we will reduce the
SMS rate; -------------------------------------------------------35.6.2.5.
Testimonies
of
Bakrie
Telecom;
In
the
Investigation Report (“BAP”), dated January 7th,
2008, Mister Rahmat Junaidi, the Corporate
40
Services Director of PT Bakrie Telecom, Tbk states
as follows: ------------------------------------------------------Q:
How is the cost covered by PT Bakrie Telecom
for the SMS?---------------------------------------------------A: The cost is almost Rp 200, based on the
projection calculation in the years 2003 and 2004.
Nowadays, the cost has been decreasing and we
use the cost reduction by offering the off-net SMS
promotional rate of Rp 99 which has been applicable
since the end of last year until the beginning of the
year 2008. ------------------------------------------------------Q: Why does the on-net rate remain to be Rp 50, as
a matter of fact, it is said that the on-net is free-ofcharge? ---------------------------------------------------------A: I think that it is impossible to be free of charge
since there must be however an investment to be
made.
In
addition,
we
have
to
see
that
telecommunication deals with a heavy investment
which keeps growing, so it is impossible for us to
keep growing if the on-net SMS is free of charge.
Also, if it is free-of-charge, it may be that the traffic
will be high, the network will be therefore down,
resulting in the lower quality of service to consumers.
Q:
Is the off-net rate of Rp 99 the regular or
promotional rate?
A: Yes, it is still a promotional rate. ---------------------P: Does PT Bakrie Telecom plan to reduce its SMS
rate? -------------------------------------------------------------A: Yes, our marketing team is however studying
whether our network is sufficiently reliable to
accommodate high traffic. It is to avoid unsatisfactory
services to subscribers if our network is unable to
serve the existing traffic;. -----------------------------------Q: How long does the cost of Rp 200 last? -----------A: The cost was made in the year 2004. However, I
don’t remember how long it lasted and it is projected;
35.6.3.
On the basis of the testimonies given by the operators as stated
in their respective Investigation Report (“BAP”), it can be seen
that operator which is declared by the Examining Team to have
41
violated the provisions stipulated in Article 5 of Law Number 5 of
1999 has different arguments and reasons in imposing their
basic SMS rates. Therefore, it is not true after the period of
amendment to the Cooperation Agreement (PKS), there is
materially no a cartel on the SMS rates due to the fact that there
is no AGREEMENT, materially and/or formally entered into by
and among the operators to fix the SMS Rates. On the other
hand, through promotional strategies taken by each operator,
they even launch a “price war” to attract the consumers as many
as possible through promotional programs which will finally
provide the most affordable EFFECTIVE RATE for either voice
and SMS products; ----------------------------------------------------------35.6.4.
Moreover, on the basis of the SMS rate variations as determined
by each operator as stated in their Investigation Reports, it is
clear that the SMS cartel allegedly committed after the
amendment to the Cooperation Agreement as declared by the
Advanced Examining Team ARE NOT PROVEN, as it can be
seen from the data that each operator has different rate
structures and promotional strategies in imposing the SMS rates.
It proves
that at present there is a competition among the
operators in the telecommunication industry in accordance with
the MARKET MECHANISM which is free and not distorted by
the external factors. Therefore, KPPU needs not to render an
intervention in demanding certain operators to reduce their SMS
rates, since if a certain operator is “forced” by KPPU to reduce its
rate, the MARKET will be even distorted and no longer works
naturally. The existence of operators which impose different
basic rates, ranging from very cheap, cheap, quite expensive
and expensive, will indicate a fair market mechanism, as
consumers are given OPTIONS to decide which product to be
purchased as per their requirements. Consumers have different
characteristics, and not all of them are sensitive to the price.
There are even consumers who are willing pay “higher” for a
product which are offered with lower price by other operators, to
the
extent
that
such
product
can
meet
their
specific
requirements. Therefore, as long as there is no duress against
the consumers “forcing” them to purchase a certain product, it is
better that all telecommunication operators are given a
discretion to determine their own SMS rate structure and
42
implement their own marketing strategy, as far as it is still
within
the
Indonesian
regulatory
corridor
Telecommunication
as
specified
Industry
by
the
Regulator
(moreover, there is no regulations on the limitation of the
upper SMS rate at present); --------------------------------------------35.7.
THE RESULTS OF THE RESEARCH CONDUCTED BY OVUM ON THE
INTERCONNECTION RATE CANNOT BE IMMEDIATELY APPLIED IN
DETERMINING
THE
SMS
RATE
AS
THE
OVUM
HAS
YET
CONSIDERED THE OTHER COST PARAMETERS. MOREOVER, ON
THE BASIS OF THE DOCUMENTS FOUND IN THE INZAGE
PROCESS, TRITECH AS THE OVUM LOCAL PARTNER OPPOSES
THAT RP.76,- FOR THE REASONABLE SMS RATE IS THE OVUM
OPINION; ---------------------------------------------------------------------------------35.7.1. The Preliminary and Advanced Examination Teams refer to the
Report prepared by the Ovum and Information provided by the
BRTI that the cost of each unit of SMS will be the network
element cost plus retail service activity cost of 40%, the figure of
Rp.106,4/SMS was therefore obtained for the year 2006. The
research conducted by Ovum deals with the interconnection
cost, and applies the parameters only directly related to the
interconnection. Therefore, the results of such research cannot
be made as a reference in determining the SMS rate which is
considered “reasonable” for each operator due to the following
reasons: ------------------------------------------------------------------------(i)
the determination and calculation of the cost by each
operator are not same, depending of the duration of the
operation of the concerned operator, amount of its
investment, credit facilities obtained from bank, interest
costs to be covered, and other operating costs; ---------------
(ii)
the marketing costs and other cost elements cannot be
same for each operator since each operator has its own
strategy; -----------------------------------------------------------------
35.7.2. Therefore, calculating the SMS rate in a simple way by adding
the network element cost in the Ovum’s version of Rp.76,- with
retail service activity cost of BRTI’s version which is calculated
as 40% of Rp.76,- can be an action to simplify the issue due to
the following: (i). it is not sure that the calculation made by Ovum
that the network element cost of Rp.76.- is an accurate
calculation as it has not yet tested scientifically on the
43
parameters of the research applied; and (ii) if it is assumed that
the research conducted by Ovum is accurate, quod non, the
figure of 40% as used by the BRTI to calculate the retail service
activity cost is still questionable, as what parameters are applied
by the BRTI to achieve such figure of 40%? It may occur that
due to the specific condition of an operator, its retail service
activity cost is bigger than its network element cost; despite of
the fact, that there may be other operators which have the retail
service activity cost which ranges between 40% to 70% of the
network element cost. To the extent that it does not violate
the regulation as stipulated by the Regulator, let the market
determine the “reasonability” of the SMS rate. The consumer
will obviously prefer to cheaper SMS rate, the operators will
therefore compete to be more efficient in relation to the SMS
production cost in order that they can offer more competitive
rates; ----------------------------------------------------------------------------35.7.3. In addition, on the basis of the documents found and read by XL
in the inzage process, it is found that Tritech as a local partner of
Ovum OPPOSES the statement that the figure of Rp.76,- as the
SMS rate considered reasonable from Ovum. In the document,
there is the following dialogue: ” is it correct the figure of Rp 76,is the results of the meeting with OVUM? It’s not correct that
we calculate the figure of Rp 38,-. The figure 76 is an
interpretation. For the retail, there are two calculation
components, i.e., own cost and competitor cost. The
competitor cost is the interconnection cost. The own cost
shall be calculated for each operator”. [emphasized];-----------35.7.4. So, according to Tritech, the reasonable SMS rate
for each
operator is DIFFERENT, depending on some objective factors of
the operator. Therefore, the action to ”force” all operators to
follow the rate standard calculated on the basis of the subjective
data at Telkomsel is a groundless action; -----------------------------35.8.
ACADEMIC TEAM FROM BANDUNG INSTITUTE OF TECHNOLOGY
(ITB) HAS CONDUCTED A RESEARCH ON THE BASIS OF THE
DYNAMIC METHOD ON THE XL SMS RATE, AND IT IS PROVEN
THAN THE XL SMS RATE IS SUFFICIENTLY REASONABLE AND
NOT EXCESSIVE (FAIR AND REASONABLE PRICE);----------------------35.8.1. As the research conducted by Ovum is a general research to
obtain the reasonable interconnection cost ranges in a bid to
44
determine the off-net SMS rate; therefore, in order that KPPU
gets other information which is relevant to the specific
condition of XL in a bid to complete the results of the research
conducted by Ovum, XL has asked the assistance of LAPI-ITB
Team from the Bandung Institute of Technology to conduct a
scientific research in order to determine the “reasonable” rate
ranges for the specific condition and situation of XL. Based on
the research conducted by the ITB Team by applying a dynamic
model, it is obtained the SMS rate ranges between Rp.225,- to
Rp.325,- for the ARPU value between Rp.40,000,- to
Rp.50,000,- and the recommended SMS Rate range between
Rp.250,- to Rp.320,- for the IRR value between 15% to 30%
(See, Voice and SMS Service Rate Analysis Report of
PT.Excelcomindo Pratama,Tbk, dated January 7th, 2008, LAPIITB); -----------------------------------------------------------------------------35.8.2. Based on the results of the research conducted by the ITB Team
as stated above, the XL rate structure prior to April 1st, 2008 as
illustrated below, plus the promotional packages which is offered
by each product, the rate can be categorized as reasonable,
and cannot therefore be categorized as expensive, let alone
excessive; ----------------------------------------------------------------------
45
XL SMS RATE BEFORE APRIL 1, 2008
BASE RATE
Product/
Rate
EFFECTIVE RATE
PACKAGE I
PACKAGE II
PACKAGE III
PACKAGE IV
Destination
Base rate + Free Package Rp.25 / Package Rp.100 / Package Rp.40 /
SMS Bonus (XL
SMS
Bebas)
(XL Jempol)
XPLOR
SMS
(XL Xplor, Bebas (XL Xplor, Bebas &
& Jempol)
Among XL
SMS
Jempol)
250
(On-net)
Top-up
Operator (Off-
Rp.10.000.- free Rp.3.000.- for
Rp.5.000.- for 50 for 125 SMS
net)
10 SMS/day, for 5 120 SMS
SMS
International
500
days.
Top-up
Top-up
Top-up Rp.5.000.-
Other
Rate Rp.25/SMS Rate
Rate Rp.40/SMS
Rp.100/SMS
Top-up
BEBAS
Among Xl
350
Valid for :5 days. Valid for:5 days.
Valid for 5 days.
Rp.50.000.- free > 120 SMS is
> 50 SMS is
> 125 SMS subject
50 SMS/day, fro subject to base
subject to base
to base rate.
15 days
rate.
rate
Top-up 100.000.- < 120 SMS void. < 50 SMS void.
< 125 SMS void.
(On-net)
free 100
Other
SMS/day, for 30 Subject to
Subscribers shall Subscribers shall
operators (Off-
days.
register with
register with
automatic
automatic renewal.
registration.
net)
International
500
JEMPOL
Among XL
99
(On-net)
Other
299
Valid for the
Valid among XL
purchase of the
subscribers.
renewal.
Voucher of Extra
Valid for
XL Bebas.
subscribers of all subscribers of all
Valid for
operators.
operators
Valid among XL
For all XL
For postpaid and
subscribers.
postpaid and
prepaid subscribers
prepaid
of XL in East Java ,
subscribers
Bali & Lombok.
(except in East
operators (Off-
Java, Bali &
net)
Lombok).
46
International
500
35.8.3.
Based on the facts identified and experienced by consumers, the
XL SMS rate, despite of the fact it seems expensive”, there is
however promotional package offered by XL, where the
consumers, in fact, enjoy the cheaper effective rate. So, it shall
be differentiated between the published rate from the effective
rate (the rate which can be actually enjoyed by consumers).
Although the published rate used by XL ranges from Rp.250,- to
Rp.349,- per SMS, thanking to the promotional strategy used, ,
the effective SMS rate which can be enjoyed by consumers
ranges from Rp.45,- to Rp.199,- per SMS. Therefore, XL has
actually fulfilled the request of the KPPU to charge a “cheaper”
rate, i.e. the one within the range of Rp.100,-/SMS. Effective
from April 1st, 2008 as reported in the website of the Directorate
General of Postal Service and Telecommunication, the rate of XL
New Services is Rp.150,- /SMS. If it is related to the promotional
packages which are being and will be offered by XL, the effective
rate to be enjoyed by the consumer will be even much lower er
than Rp. Rp.150/SMS; ------------------------------------------------------
35.8.4.
In the Advanced Examination Report, the Examining Team
questioned the fact that “…after April 1st, 2008, the operators
decreased the SMS rate without any changing to the internal and
external costs of the SMS rate. Therefore, the Examining Team
considers that the operators can offer more lower SMS rate to
the subscribers long before the decrease of the interconnection
rate applied by the Government. The suspension of the decrease
of the SMS rate solely occur due to the cartel agreement among
the operators is still effectively in force, although it has been
formally amended in
2007”.
Logically, the question of the
Commission here can be explained as follows : even before
April 1st,
2008, the consumers had actually enjoyed the
effective rate
of about
Rp.150,-, though this figure was
obtained through cross-subsidy subsidy between the on-net and
off-net SMS rate. Therefore, if now the off-net and on-net SMS
rate is Rp.150,- then it will not be a problem to operators as their
income so far has been effectively approaching the amount of
Rp.150,-/SMS. Before April 1st, 2008 XL remained to apply its
47
SMS rate, as the characteristics of the XL consumers ARE
BADLY REQUIRING the product with
various cross-subsidy
product between lower on-net rate and higher off-net rate. The
promotional strategy to meet the requirements of such
subscribers should have not been forbidden by the Commission,
to the extent that there are no actions which are categorized as
unfair business competition and/or violating the applicable laws
and regulations; --------------------------------------------------------------35.9.
IT IS KINDLY REQUESTED THAT THE COMMISSION ASSEMBLY BE
NOT TRAPPED IN THE
FRAME OF MIND, CALLED HASTY
GENERALIZATION. IF A CONCLUSION IS MADE BASED ON ONE
DATA IN THE FORM OF BASE RATE ONLY THAT XL APPLIES
HIGHER SMS RATE, THEN THE COMMISSION ASSEMBLY WILL BE
TRAPPED IN THE HASTY GENERALIZATION. AS A MATTER OF
FACT,
IF
ALL
DATA
ARE
ANALYZED
AND
CONSIDERED
CAREFULLY, THEN THE XL SMS RATE IS REASONABLE AS ITS
SUBSCRIBERS ARE GIVEN OPTIONS TO SELECT THE PRODUCT
RELEVANT TO THEIR NEEDS; ----------------------------------------------------35.9.1. XL respectfully requests the Commission Assembly to kindly
consider all available factors and data before making a
conclusion that XL is involved in the material cartel and “higher”
SMS price fixing. As illustrated above, XL’s subscribers enjoy
many promotional programs which make the EFFECTIVE RATE
much lower than the specified base rate. The Commission
Assembly should consider the
end-result in the form of the
REAL RATE which is actually paid by consumers in considering
how high and low a rate will be; ------------------------------------------35.9.2. XL respectfully requests that the Commission Assembly kindly
consider the facts that although there are now many operators
offer the base rate which is relatively lower than that offered by
XL; however, the consumers still select to use the XL products. It
proves that the Indonesian consumers DO NOT CARE to the
base rate as specified by the operator, to the extent that the
EFFECTIVE RATE which they enjoy will BENEFIT them and as
per their respective requirements. If the consumers feel
benefited and even offered various options by the operators,
then it constitutes primary fact (prima facie) where the market is
working perfectly and leads to a more ideal equilibrium.
Excessive intervention committed by the KPPU will DISTORT the
48
market
and
even
triggers
“latent”
business
competition.
Therefore, XL respectfully hopes that the KPPU Assembly is
willing to correct the mistake of the Advanced Examining Team
that forgot to consider the factors of consumer behavior and
consumer acceptance against tariff structure and promotion
program offered by XL. Consumer acceptance is a strong
evidence (prima facie) that the SMS rate applied by XL is
considered FAIR and DOES NOT INFLICT FINANCIAL LOSS to
the customers; ----------------------------------------------------------------35.9.3. XL respectfully hopes that the Commission Assembly will be
willing to consider the fact that pursuant to the data obtained
from ITU (International Telecommunication Union) in 2005
indicating that the SMS rates in Indonesia nearly equal to those
in India, Malaysia and Philippine, i.e. within the range of Rp 200,up to Rp 470/SMS. This kind of SMS rate shall be categorized
into 34 countries with lowest SMS rate among 187 countries
across the world. The variation of basic rates applied by the
operators within the range of Rp 250.- up to Rp 350.- per SMS
constitutes fair rate, moreover with regard to the fact that the
promotion strategy incorporating off-net and on-net rates
produces much lower effective rate. Therefore, it can be
concluded that the basic rates which are within the range of Rp
250.- up to Rp 350.- per SMS constitute fair price equilibrium,
considering that with the promotion strategy of the respective
operators, the effective rate enjoyed by the customers will be
much lower compared to the determined basic rate; ----------------35.10. PURSUANT TO XL FINANCIAL REPORT AUDITED BY PUBLIC
ACCOUNTANT, IT IS PROVED THAT XL DID NOT GAIN UNFAIR
PROFIT AND EVEN PROVED TO EXPERIENCE LOSS --------------------35.10.1. In their letter addressed to the Advanced Examining Team, the
President Director of XL has reported and enclosed the copy of
the Consolidated Profit and Loss Report of XL for the period of
2003 – 2007. Factually, it is proved that in 2003, the profit
margin obtained by XL is approximately 14.6%, while in 2004
XL experienced loss of 1.36%, in 2005 XL experienced loss of
5.21%, while in 2006 XL gained profit of 10.8%. Up to
September 2007, XL gained profit of 2.7%. (Refer to the
Attachment of Letter from XL to the Advanced Examining Team
No.003/PD/1/08 dated 17 January 2008); ----------------------------
49
35.10.2. Pursuant to this fact, it is proved that XL did not gain excessive
profit with such SMS rate or voice rate structure determined for
their customers. Therefore, it shall be deemed that the
customers did not experience loss as well due to the XL rate
structure. The rates applied by XL constitutes fair rates and are
in line with the objective conditions applicable to XL; -------------35.11. THE DUTY OF THE KPPU IS TO PREVENT MONOPOLY AND UNFAIR
BUSINESS COMPETITION, INSTEAD OF GIVING UNNECESSARY
ADDITIONAL BURDEN TO TELECOMMUNICATION INDUSTRY IN
THE FORM OF VEXATIOUS LITIGATION DUE TO THEIR JUDGMENT;
35.11.1. XL understands and fully respects the duty and authority of the
KPPU to prevent monopoly and unfair business competition.
Therefore, XL hereby accepts if the issuance of Cooperation
Agreement containing price fixing clause signed by their party is
deemed as a violation by the KPPU. However, as explained by
the President Director of XL as well as supported by the
testimony of KRMT. Roy Suryo and Dr. Ir Bambang P.
Adhiwiyoto (BRTI) as Expert Witnesses, such action was
merely committed for the purpose of preventing spamming
practice or network failure resulting in loss experienced by the
customers. Considering that the motive and intention of this
price fixing are to prevent network failure which indirectly
PROTECTS THE CUSTOMERS, therefore it is clear that the
action was conducted WITHOUT any improper intention to
violate the applicable law. This is proved by the fact that after
knowing that the price fixing cause potentially violated the
Article 5 of Law Number 5 year 1999, XL directly amended all
agreements signed with other operators, and revoked the
clause which potentially violated the provision of Law Number 5
of Year 1999; ----------------------------------------------------------------35.11.2. Therefore, in the event the KPPU considers that the signing of
Cooperation
Agreement
containing
price
fixing
clause
constitutes a violation against the provision of Article 5 of Law
Number 5 Year 1999 which is illegal per se, XL respectfully
hopes that the KPPU Assembly will consider the ABSENCE of
improper intention and law violation aspects in determine their
sanction to XL.
In several jurisdictions of other countries,
business necessity defense, which is, in this case, in the form
of intention to protect cellular network, it can be accepted as an
50
EXCUSE for the court or business competition supervisory
institution such as KPPU to excuse the violations which are
illegal per se. In the event the KPPU Assembly considers the
needs to “punish” XL, then it is respectfully expected that the
punishment or fine
is as low as possible for innocent
mistake;----------------------------------------------------------------------35.11.3. XL respectfully hopes that the KPPU Assembly will avoid the
emerge of new complication or problem which will interrupt the
operational activities of the operators in the form of vexatious
litigation, by NOT relating to the violation of Article 5 of Law No.
5 Year 1999 which is UNINTENTIONAL with the consumer
loss. The reason of XL to propose this is based on the following
facts: (i) the SMS rates applied by XL constitute fair and not
excessive rates, and this has been supported by a scientific
research conducted by ITB Team; (ii) the XL customers enjoy
effective rates pursuant to their respective needs through
promotion program implemented by XL; and (iii) currently there
is no objective parameter to measure the fairness or
unfairness of SMS rates, considering that there is no law and
regulation which regulates the SMS rates. Without objective
parameters (in the form of regulation), it is risky for the KPPU
Assembly to conclude the occurrence of consumer loss in this
case, considering that the KPPU Judgment will certainly
“triggers” vexatious litigation in the form of class action which
will interfere the business activities of the operators, which in
turn will interfere their services to the operators; -----------------35.11.4. Pursuant to the aforementioned, XL respectfully hopes that the
KPPU Assembly will be willing to declare that XL is not proven
violating the provision of Article 5 of Law Number 5 Year 1999l
or in the event the KPPU Assembly has otherwise opinion, XL
expects a fair judgment (ex aequo et bono). In the event the
KPPU Assembly is of the opinion that the signing of the
Cooperation
Agreement
containing
price
fixing
clause
committed by XL as a form of violation, therefore considering
that the President Director of XL has apologized and promised
to take corrective measures, XL respectfully hopes that the
KPPU Assembly will impose punishment or fine as low as
possible; ---------------------------------------------------------------------
51
36.
Considering that in the Commission Assembly Session, the Commission
Assembly has received written Response/Pleading and additional evidences from
the 2nd reported party (Telkomsel) as set forth hereunder (see the evidence
A115); ------------------------------------------------------------------------------------------------36.1.
Telkomsel/The 2nd Reported Party hereby submit their Pledge and
Response against the Report of Advanced Examination Result on Case
Number 26/KPPU-L/2007 dated 7 May 2008 (hereinafter referred to as
“LHPL Number 26/KPPU-L/2007”). We will submit this Pledge and
Response pursuant to the provision of Article 53 par. (1) in conjunction
with Article 65 par (2) letter f of the Regulation of Business Competition
Supervisory Commission Number 1 of 2006 as follows; -----------------------Article 53 par. (1); -----------------------------------------------------------------------“In the first session, the Commission Assembly granted a chance to the
Reported Party to convey their opinion or pledge relating to the alleged
violation as accused;” ------------------------------------------------------------------Article 65 par. (2) letter f; --------------------------------------------------------------“In every phase of examination and commission assembly session, the
Reported Party shall have the right to: convey their response or pledge
against the accusation of alleged violation;” ---------------------------------------
36.2.
Points 116-118 on page 25-26 of the LHPL Number 26/KPPU-L/2007 set
forth the followings ----------------------------------------------------------------------“ 116.
Based on analysis against the facts and evidences in the form of
information provided by the Reported Party, Expert Witness and
documentation obtained during the examination, the Advanced
Examining Team concludes as follows: ---------------------------------a.
Whereas there was no such short message (SMS) rate
cartel during the period of 2000-2004 committed by
Telkomsel, Indosat and XL; -------------------------------------------
b.
Whereas there was short message (SMS) rate cartel during
the period of 2004-2007 established by Telkomsel and XL
and had to be followed by Telkom, Mobile 8 and Bakrie; ------
c.
Whereas there was short message (SMS) rate cartel during
the period of 2007 up to April 2008 which constituted the
continuation of the previous period and had to be followed by
Smart; ----------------------------------------------------------------------
d.
Whereas Indosat, Hutchinson and NTS were not proved to
commit short message (SMS) rate cartel; -------------------------
117.
Whereas therefore, PT Exelcomindo Pratama, Tbk, PT
Telekomunikasi Selular, PT Telekomunikasi Indonesia, Tbk,
52
PT Bakrie Telecom, PT Mobile-8 Telecom, Tbk, PT Smart
Telecom are proved to violate Article 5 of Law Number 5 Year
1999; ----------------------------------------------------------------------------118.
Whereas
PT
Indosat
Tbk,
PT
Hutchison
CP
Telecommunication, and PT Natrindo Telepon Seluler are not
proved to violate Article 5 of Law Number 5 Year 1999”; -----------36.3.
Telkomsel/The 2nd Reported Party firmly expressed that the conclusion of
the aforementioned LHPL Number 26/KPPU-L/2007 was mistaken
considering that Telkomsel/The 2nd Reported Party did not violate Article
5 of Law Number 5 Year 1999 pursuant to the reasons as set forth
hereunder: ---------------------------------------------------------------------------------
36.4.
THE INDONESIAN TELECOMMUNICATION REGULATORY AGENCY IS AN
AUTHORITY HAVING SPECIAL AUTHORITIES TO IMPLEMENT MONITORING
AGAINST
BUSINESS COMPETITION IN THE FIELD OF TELECOMMUNICATION,
NOT THE KPPU; ---------------------------------------------------------------------------
36.4.1.
The
Indonesian
Telecommunication
Regulatory
Agency
(“BRTI”) is a body having been granted special authorities in
the monitoring and control of price fixing as well as the authority
in the monitoring of business competition in the field of
telecommunication based on legal provisions applicable in the
field of telecommunication service; ------------------------------------36.4.2.
Article 4 par. (1) of Law Number 36 year 1999 concerning
Telecommunication declares that: “Telecommunication shall be
dominated by the State and its development shall be conducted
by the Government.” (Evidence TII-1);---------------------------------
36.4.3.
Furthermore, pursuant to Article 4 par. (2) of Law Number 36
Year 1999, it is expressly stated that the Development
constitutes the stipulation of policy, regulation, supervision and
control against telecommunication activities in Indonesia. In the
official explanation of the said article, it is stated that:
“...Pursuant to the development of situation, the function of
regulation, supervision and control of the telecommunication
operation may be transferred to a regulating body.”(Evidence
TII- 1); -------------------------------------------------------------------------
36.4.4.
In its development, pursuant to the Ministerial Decree of
Communication Number KM. 31 year 2003 concerning the
Formation of The Indonesian Telecommunication Regulatory
Agency (“KM 31/2003”), BRTI is established and granted
special authorities in the monitoring and control of price fixing
53
as well as the authority in the monitoring of business
competition in the field of telecommunication service;
Therefore, the BRTI shall be the only authority having been
granted
authorities
in
the
supervision
of
business
competition in the field of telecommunication; ----------------36.4.5.
The examination conducted by the KPPU in the case Number
26/KPPU-L/2007 is not in line with the law and regulation
specifically applicable concerning the absolute authority of the
BRTI considering that the supervisory function against business
competition in the field of telecommunication shall be
authorized to the BRTI; ----------------------------------------------------
36.4.6.
The role of the BRTI in the supervision of business competition
is firmly determined in the provision of Article 6 letter b KM
31/2003 stating: “In order to perform its function as referred to
in Article 5, the BRTI shall have the following roles: b. -------- To
supervise the operation of telecommunication network and
telecommunication service, namely: 1) operating performance;
2) business competition; 3) the use of telecommunication
device.” (Evidence TII- 2); ------------------------------------------------
36.4.7.
The authority of the BRTI as stipulated in the KM 31/2003 shall
be in accordance and in line with the provision of Article 10 of
Law Number 36 Year 2009 concerning Telecommunication
stating that: ------------------------------------------------------------------”(1)
In the telecommunication operation, it shall not be
allowed to perform any activity causing monopolistic
practice and unfair business competition to occur
among telecommunication operators; ------------------------
(2)
The prohibition as referred to in par. (1) shall be in
accordance with the applicable law and regulation.”
Official Explanation of Article 10 par. (1) :
“This Article is intended to allow fair business competition to
occur among telecommunication operators in performing their
activities. ---------------------------------------------------------------------The applicable law and regulation constitutes Law Number 5
Year 1999 concerning the Prohibition of Monopolistic
Practice
and
Unfair
Business
Competition
and
its
implementing regulation.” (Evidence TII- 1); ---------------------36.4.8.
Pursuant to the aforementioned provisions, it is hereby
concluded that the “business competition” in the KM 31/2003
54
shall mean the prohibition of monopolistic practice and unfair
business competition as set forth in the Law Number 5 Year
1999. The supervision authority shall be absolutely owned
by the BRTI, instead of the KPPU; ----------------------------------36.4.9.
In legal enforcement, the principle of Lex Specialis Derogat
Legi Generalis (more specific legal provisions shall set aside
more general legal provisions.) Pursuant to this legal principle,
the authority having authorities in the supervision of business
competition in the field of telecommunication shall be the BRTI,
instead of the KPPU. This statement shall be based on the fact
that: ----------------------------------------------------------------------------
The authority of the KPPU shall be based on the Article
36 of Law Number 5 Year 1999; --------------------------------
-
The authority of the BRTI shall be specifically based on
Article 4 of Law Number 36 Year 1999 jo. Article 6 letter
b number 2 of KM 31/2000; --------------------------------------
36.4.10.
The provision concerning the supervision authority owned by
the BRTI as governed in the aforementioned provision
constitutes more specific legal provision in the field of
Telecommunication compared to Law Number 5 Year 1999
which is generally applicable.
Therefore, Article 4 of Law
Number 36 Year 1999 jo Article 6 letter b number 2 of KM
31/2000 (which is more specific in the telecommunication
business sector) shall set aside Article 36 of Law Number 5
Year 1999 (which is more general); ----------------------------------36.4.11.
In addition, pursuant to the precedent of examination practice in
business competition case, the KPPU shall also be obliged to
terminate the examination against this case, considering that
there is different authority regulation in the supervision of
business competition un the field of telecommunication
pursuant to Law Number 36 Year 1999 jo KM 31/2000 and
Law Number 5 Year 1999; ------------------------------------------------
36.4.12.
This policy has been implemented by the KPPU in the case of
alleged violation of Article 27 of Law Number 5 Year 1999
(concerning
Cross-ownership)
committed
by
PT.
Media
Nusantara Citra, Tbk. (“MNC”). In this case, the KPPU
terminated the examination process due to different perception
of the definition of cross-ownership between Antitrust Law and
Broadcasting Law. The aforementioned was expressed in the
55
opinion of the Commissioner of the KPPU Tresna P. Soemardi
quoted by hukumonline: “This case, he continued, can be
processed by the KPPU providing that there is perception
equality on the definition of cross-ownership, between
Broadcasting
Law
and
Antitrust
Law.
Therefore,
the
commission assembly recommended the government to
improve the policy of cross-ownership...”(Evidence TII- 3);------36.4.13.
For the purpose of consistency and legal certainty, the KPPU
shall
implement
the
same
policy
and
terminate
examination process in this case, considering that there are
2 (two) different regulating regimes in the supervision of
business competition in the field of telecommunication, namely
Law Number 5 Year 1999 and Law Number 36 Year 1999; -----36.4.14.
The examination of this case may be continued by the
authorized body once the legal certainty concerning single legal
regime is issued that regulates the authorities of the
supervising authority of business competition in the field of
Telecommunication; --------------------------------------------------------
36.5.
TELKOMSEL/THE 2ND REPORTED PARTY SHALL COMPLY WITH THE VALID
POLICY OF THE BRTI AND ALL APPLICABLE LAW AND REGULATION;----------36.5.1.
Pursuant to Article 2 of KM 31/2003, the BRTI possesses the
functions of regulation, supervision and control over the
operation
of
telecommunication
network
and
telecommunication service. The article expressly states as
follows: The purpose of establishing the BRTI is to better
guarantee transparency, independency and justice principle in
the
operation
of
telecommunication
network
and
telecommunication service in the functions of regulation,
supervision
and
control
over
the
operation
of
telecommunication network and telecommunication service.” --36.5.2.
One of the roles of the BRTI is to supervise business
competition in the field of telecommunication. This is in line with
Article 6 letter b of KM 31/2000 reading as follows:
“In
order to perform its function as referred to in Article 5, the BRTI
shall have the following roles: b.To supervise the operation of
telecommunication network and telecommunication service,
namely: 1) operating performance; 2) business competition; 3)
the use of telecommunication device.”---------------------------------
56
36.5.3.
In the context of implementing business competition
supervision in the field of telecommunication business, on 15
June
2007,
the
BRTI
172/BRTI/ATSI/VI/2007
Telecommunication
issued
intended
a
to
Network/Service.
Letter
all
Number
Operators
Telkomsel/The
of
2nd
Reported Party received the said letter on 18 June 2007.; ------36.5.4.
In the said letter, the BRTI stated as follows: “With regard to the
aforementioned, we express that you are not allowed to be
bound into any agreement, invitation or gentlemen agreement
or cooperation agreement among operators relating to price
fixing of Short Message Service (SMS)...” (Evidence TII-4); -----
36.5.5.
It shall be noted that the BRTI have never issued any policy,
invitation or notification whatsoever concerning interconnection
SMS clause. Therefore, pursuant to the applicable legal
principle, the BRTI policy in the aforementioned letter shall
come into effect since the receipt of the letter by Telkomsel /
The 2nd Reported Party instead of prior to the issuance of the
letter; ---------------------------------------------------------------------------
36.5.6.
In order to follow up the BRTI policy, Telkomsel/The 2nd
Reported Party with compliance and good willing has
implemented change or amendment to 4 (four) Interconnection
Cooperation Agreements (“Interconnection Agreement”),
namely as follows: ---------------------------------------------------------36.5.6.1.
Interconnection
Agreement
between
Telkomsel/The 2nd Reported Party and PT.
Bakrie Telecom, Tbk (“BakrieTel”); -----------------The
first
Amendment
to
the
Interconnection
Cooperation Agreement of Telkomsel Network and
BakrieTel Network between PT. Telekomunikasi
Selular and PT Bakrie Telecom, Tbk. Telkomsel
Number:
AMD.1227/LG.05/PD-00/VI/2007
BakrieTel
Number:
–
600/EST-
Amd/Telkomsel/VI/2007 Dated 25 June 2007.
(Evidence TII-5); --------------------------------------------36.5.6.2.
Interconnection
Agreement
between
Indoprima
Mikroselindo
(now
PT.
Smart
Telecom) (“SMART”); -------------------------------------
57
The
first
Amendment
to
the
Interconnection
Cooperation Agreement of Telkomsel Network and
Primasel Network between PT. Telekomunikasi
Selular and PT Indoprima Mikroselindo, Telkomsel
Number:
ADD.1246/LG.05/PD-00/VI/2007
Primasel
Number:
BOD/IPM/RAI/VI/2007
–
AMD.123/LO-
Dated
25
June
2007.
(Evidence TII-6); --------------------------------------------36.5.6.3.
Interconnection
Agreement
between
Natrindo Telepon Seluler (“NTS”); ------------------The
first
Amendment
to
the
Interconnection
Cooperation Agreement of Telkomsel STSB GSM
Network and Natrindo STBS DCS-1800 Network
between PT. Telekomunikasi Selular and PT
Natrindo Telepon Seluler, Telkomsel Number:
ADD.2231/LG.05/PD-00/XII/2007 – NTS Number:
275/JKT-NTS/XII/2007 dated 10 December 2007.
(Evidence TII-7); --------------------------------------------36.5.6.4.
Interconnection
Agreement
between
Telekomunikasi Indonesia (“Telkom”); ------------36.5.6.5.
The
first
Cooperation
Amendment
to
Agreement
the
of
Interconnection
Telkom
PSTN
Telecommunication Network and Telkomsel STBS
Network
with
Agreement
Number:
27/HK.810/OPSAR-00/97 – Number : PKS.168/OPDRT/V/97 Dated 5 May 1997 Between PT.
Telekomunikasi Selular And PT. Telekomunikasi
Indonesia, Tbk, Telkom Number: 137/HK.820/DCIA1000000/2007
–
Telkomsel
AMD.2266/LG.05/PD-00/XII/2007
Number:
dated
11
December 2007. (Evidence TII-8)
36.5.7.
In the change or amendment, the interconnection short
message (SMS) clause shall be revoked or eliminated; --------
36.5.8.
The BRTI policy complied by Telkomsel/the 2nd Reported Party
shall also be consistent with the decision of the KPPU within
three issues as set forth hereunder: -----------------------------------
58
(i)
Case Number 02/KPPU-I/2003 concerning Jakarta Pontianak Cargos (Evidence TII-9); ----------------------------
(ii)
Case Number 03/KPPU-I/2003 concerning Surabaya Makassar Cargos (Evidence TII-10); ---------------------------
(iii)
Case
Number
05/KPPU-I/2003
concerning
Air-
Conditioned Express City Bus in DKI Jakarta (Evidence
TII-11); ----------------------------------------------------------------36.5.9.
In these cases, the KPPU cancelled any clause or agreement
considered as price fixing; ------------------------------------------------
36.5.10. The revocation of the aforementioned interconnection short
message (SMS) clause shall not reflect the admission of
violation against Article 5 of Law Number 5 Year 1999,
considering that the said clause does not constitute price fixing
agreement. Telkomsel/The 2nd Reported Party shall revoke or
eliminate the clause in order to comply with the invitation of the
BRTI as the supervisor of business competition in the field of
telecommunication. In addition, the revocation of the said
clause is intended to avoid misinterpretation to understand the
interconnection SMS clause; --------------------------------------------36.5.11.
In addition, Telkomsel/The 2nd Reported Party always comply
with every applicable law and regulation, including but not
limited
to
Law
Number
36
Year
1999
concerning
Telecommunication (see the Evidence TII-1) jo. Government
Regulation Number 52/2000 (Evidence TII-12) concerning
Telecommunication Operation and all relevant regulation
thereof; -----------------------------------------------------------------------36.5.12.
The change or amendment implemented by Telkomsel/The 2nd
Reported Party indicates that Telkomsel/The 2nd Reported
Party constitutes telecommunication operator that obeys
and complies with the policy of the BRTI serving as the
authorized party in the field of telecommunication as well
as to all applicable law and regulation. Telkomsel/The 2nd
Reported Party shall never have any intention to violate the
applicable regulation including the provision of Article 5 of Law
Number 5 Year 1999.
36.6.
INTERCONNECTION SHORT MESSAGE (SMS) CLAUSE (OFF-NET) IS NOT THE
REALIZATION OF PRICE FIXING INTENTION, INSTEAD IT IS THE PREFERRED
SOLUTION DUE TO THE ABSENCE OF LEGAL PROVISION CONCERNING
INTERCONNECTION SMS; ----------------------------------------------------------------
59
36.6.1.
Initially, the activities to provide domestic telecommunication
service in Indonesia is fully dominated by the government
through one telecommunication operator, namely Perusahaan
Umum Telekomunikasi (“Perumtel”) which later becomes and is
known as PT. Telekomunikasi Indonesia, Tbk. (“Telkom”). In
this case, the interconnection activities shall not be needed for
the operation of domestic telecommunication activities; ----------
36.6.2.
Nevertheless,
the
development
of
technology
and
the
amendment over Government policy/regulation allows private
parties
to
participate
in
telecommunication
industry
in
Indonesia. The revolution of telecommunication technology was
initiated by the establishment of PT Satelit Palapa Indonesia
(“Satelindo”) in 1993 that first introduced cellular telephone
service by using Global System for Mobile Communication
Technology (“GSM”) in November 1994. Thereafter, in 1995,
PT. Telekomunikasi Indonesia was established as the provider
of
GSM
cellular
establishment
of
telecommunication
Telkomsel/The
service.
2nd
After
Reported
the
Party,
telecommunication industry in Indonesia was also flourishing
with the establishment of PT. Excelcomindo Pratama (“XL”) and
followed by other telecommunication providers;--------------------36.6.3.
The number of telecommunication operator participating in
telecommunication activities in Indonesia became larger and
thus encouraged the establishment of telecommunication
interconnection
activities
and/or
cooperation
among
telecommunication operators which became more complex.
This telecommunication interconnection activity was intended to
allow the users of telecommunication service of various
operators
to
be
interconnected
and
enjoy
unlimited
telecommunication service. Therefore, it is necessary to
establish cooperation among telecommunication operators in
the
form
of
Interconnection
Agreement.
Interconnection
agreement constitutes a common issue and has become the
necessity of telecommunication operators in performing their
telecommunication activities;--------------------------------------------36.6.4.
In addition, the presence of several telecommunication
operators which conduct their telecommunication activities and
considering the importance of interconnection cooperation
among
the telecommunication
operators,
it
is
deemed
60
necessary to apply regulations for this purpose in order to
establish orderliness and fair business activity in conducting
their telecommunication activities that is getting more complex,
particularly regulation from the regulator or the Government.
These necessary regulations consist of regulations concerning
basic telephony service (voice) and additional service facilities,
such as Short Message Service (SMS);------------------------------36.6.5.
Nowadays, interconnection regulation in Indonesia shall be
governed pursuant to the Regulation of the Minister of
Communication
and
Informatics
Number
08/Per/M.KOMINF/02/2006 concerning Interconnection (“PM
08/2006”) (Evidence TII-13). PM 08/2006 basically regulate the
general implementation of interconnection, interconnection
cost, the charging and billing of interconnection cost, the
reporting of interconnection cost calculation, and so forth,
particularly
for
interconnection
of
voice
telephony.
Nevertheless, the PM 08/2006 does not regulate the
procedure and standard implementation of interoperator
SMS interconnection needed by those telecommunication
operators. Related regulations prior to the issuance of PM
08/2006 shall only regulate interconnection cost; ------------------36.6.6.
The absence of regulation concerning the procedure and
standard
implementation
of
SMS
interconnection
(inter-
operator) has caused problems particularly between the
sending and the receiving operators. The problem aroused
shall be the imbalanced flow of or the traffic of SMS between
the sending and the receiving operators, in the other word the
presence of flow imbalance or traffic between the sending and
receiving of SMS. The flow imbalance or traffic of SMS shall
occur due to: ----------------------------------------------------------------36.6.6.1.
the sending of SMS by the sending operator to the
receiving operator through machine or message
center. The SMS to be sent constitutes SMS that
promotes
certain
products
or
those
contain
information concerning event promotion or other
commercial information (Broadcasting SMS). Loss
due to the sending of these Broadcasting SMS shall
be flow imbalance and traffic experienced by the
receiving operators. The subscribers receiving the
61
Broadcasting SMS will not reply the incoming
Broadcasting SMS considering that such SMS shall
only serve as information media for those receiving
such SMS. Therefore, the huge flow or traffic of
incoming SMS (receive) is not balanced with the
flow or traffic of outgoing SMS (send). This situation
causes loss experienced by the operator receiving
such Broadcasting SMS;----------------------------------36.6.6.2.
the sending of junk SMS to other operators either
voluntarily or involuntarily (“Spamming SMS”); ------
36.6.6.3.
telemarketing activities which trigger unilateral
increase of flow or traffic. Telemarketing activities
referred to herein shall be activities conducted by
the
relatively
new
operators
in
Indonesian
telecommunication industry with the purpose of
attracting customers or extending their market
share quickly by determining extremely low SMS
rate compared to those apply in Indonesian
telecommunication industry. This situation will invite
the customers to use SMS service provided by such
operator which is addressed to the customers of
other operators. However, due to price difference
between the sending operators and the receiving
operators, this situation will cause flow imbalance or
traffic of SMS. The receiving flow or traffic (receive)
will be larger compared to the sending flow or traffic
(send) for the SMS receiving operators. Thus, this
situation certainly causes loss for the receiving
operators;-----------------------------------------------------36.6.7.
Broadcasting SMS, Spamming SMS and telemarketing
activities
may
cause
overloaded
or
hang
network
experienced by the receiving operator and furthermore
they shall decrease the network quality of the receiving
operators. The subscribers of the receiving operator will
experience loss due to the absence of excellent service
provided by the receiving operators; --------------------------------36.6.8.
Problems due to Broadcasting SMS, Spamming SMS and
telemarketing activities have aroused and cause loss to occur.
Telkomsel/The 2nd Reported Party significantly experience
62
losses due to Broadcasting SMS launched by NTS. Through
their letter Number 11/NTS/NS/IV/04 dated 29 April 2004,
NTS admitted that their party had launched Broadcasting
SMS toward Telkomsel/The 2nd Reported Party (Evidence TII14); --------------------------------------------------------------------------36.6.9.
In
addition,
experienced
2nd
Telkomsel/The
significant
loss
Reported
due
to
Party
also
Spamming
SMS
conducted by BakrieTel. Through their letter Number:
7367/EST.02/Direksi/IX/2006
dated
5
September
2006,
BakrieTel admitted that their party had launched Spamming
SMS toward Telkomsel/The 2nd Reported Party causing
Telkomsel/The
2nd
Reported
Party
to
experience
loss.(Evidence TII-15); This was also admitted by BakrieTel in
point 25 of page 5 of the Minutes of Advanced Examination
dated 7 January 2008 reading as follows (Evidence TII16/B7); ----------------------------------------------------------------------”25.
Question
What is the fact that spamming will occur if PT Bakrie
Telecom fixes SMS rate below Rp 250,-?
Answer
Yes, there are customers of Bakrie Telecom who commit
spamming.”
36.6.10.
The issue of Spamming SMS shall not only attract the
attention and become the concern of Telkomsel/The 2nd
Reported Party, but it also attracts the attention and become
the concern of other telecommunication operators. It was
proved by the holding of a meeting on 29 August 2006 at
Grha XL between Telkomsel/The 2nd Reported Party, XL,
Mobile-8, BakrieTel and Sampoerna Telecom Indonesia
(“STI”) (“Meeting”). The agenda of this meeting was to discuss
the SMS interconnection conducted by BakrieTel to other
telecommunication
operators.
The
activity
of
sending
Spamming SMS conducted by BakrieTel has caused loss to
the telecommunication operators receiving such SMS. In point
4 of page 1 of the Minutes of Meeting, it is stated as follows: -”4. The second concern of XL-Mobile 8-Telkomsel is that, to
date, the traffic of interoperator SMS in its commercial form is
SKA (Sender Keep All). Meanwhile, the impact of free SMS
advertising launched by BakrieTel has caused the large
63
portion of capacity of the existing SMSC Gateway owned by
those operators is dominated by the SMS Traffic of
BakrieTel and this situation causes the traffic of outgoing
SMS from operators relatively failed, and the link condition
approaches congestion. In order to avoid such congestion,
there should be links addition or upgrade which directly
influences cost.” (Evidence TII-17); Therefore, it is proved that
the issue concerning Broadcasting SMS and Spamming SMS
constitutes important issue and needs to be immediately
resolved
as
it
causes
huge
loss
particularly
for
telecommunication operators receiving such SMS; --------------36.6.11.
It is important to be noted that the voice and SMS services as
well as other services such as mobile banking shall be
operated by using one single channel. Therefore, in the event
the said network becomes congested and overloaded, it will
cause large and fatal impact namely the disruption of all voice
and SMS services as well as other services, in the same time.
Furthermore, in the event this situation keeps occurring, the
network may become collapse and does not functioning at all.
This
situation
shall
cause
extremely
high
loss
for
telecommunication operators receiving such SMS. This loss
does not only in the form of material loss but also in the
form of intangible damage such as reputation damage of
telecommunication operators and the loss of community
trust in the telecommunication operators. In addition, it will
also cause losses experienced by the community as the
community is not able to enjoy wide-scope and unlimited
telecommunication service. -----------------------------------------36.6.12.
In the other hand, telecommunication operators shall also be
responsible to maintain telecommunication network to avoid
overload conditions; -----------------------------------------------------36.6.12.1.
The same is also declared by the BRTI in point
8 of page 3 of the Minutes of Meeting between
the BRTI and the KPPU dated 22 November
2007: “When the network of an operator is
overload and the said operator does no
increase their network capacity, then the
operator shall be declared as guilty.” (Evidence
TII -18/A8); -----------------------------------------------
64
36.6.12.2.
In this context, it is deemed unfair and
constitutes
unfair
business
behavior
if
Telkomsel/The 2nd Reported Party, as the SMS
receiving operator, must assume large amount
of charge and additional cost; ---------------------(i)
to increase network capacity due to
“overload”
conditions
caused
by
Broadcasting SMS and Spamming SMS
sent
by
other
telecommunication
operators; -----------------------------------------(ii) to procure anti-spamming devices; and----(iii) to release large amount of “capex” or
investment cost in order to repair damaged
network; -------------------------------------------36.6.12.3.
In addition, the SMS sending operators shall
gain
maximum
revenue
due
to
the
implementation of Sender Keeps All (SKA)
concept. SKA shall mean a concept where the
SMS sending operators will gain revenue from
the rate applied to all sent SMS while the SMS
receiving operators will not gain any revenue
whatsoever. The Senders Keep All (SKA)
concept applied for SMS as on of commonly
used
interconnection
regimes
in
telecommunication service industry, which does
not allow payment mechanism both for outgoing
and incoming SMS. SKA may be implemented
properly in the event all telecommunication
operators apply the same code of conduct,
meaning the SMS sending operators shall not
commit spamming and broadcasting practices
as well as price dumping. Furthermore, due to
the absence of payment obligation, this SKA
concept brings a kind of “moral hazard” of
certain operators wanting to gain unfair revenue
by sending a lot of SMS to their interconnection
partners,
particularly
machine.
Other
by
impact
using
caused
spamming
by
the
implementation of SKA concept is completely
65
interrupted network due to the use of the same
channel for both SMS and voice telephony in
terms of signaling; -------------------------------------36.6.12.4.
In addition, SMS rate dumping is also intended
to acquire customers and this action certainly
causes
the
SMS
receiving
operators
to
experience further losses.
36.6.13.
In the aforementioned situation, it is expected that the
Government and or the BRTI provides solution to govern the
interconnection and interconnection SMS rate in order to
realize
fair
structure
of
telecommunication
industry.
Nevertheless, the Government and or the BRTI serving as the
body authorized to implement regulation, supervision and
control of the operation of telecommunication service in
Indonesia pursuant to KM 31/2003 (Evidence TII-2) does not
issue any regulation whatsoever concerning the procedure
and standard of implementation (operational) of SMS
interconnection
in
order
to
resolve
or
prevent
the
aforementioned issues. The absence of regulation concerning
the procedure and standard of implementation (operational) of
SMS
interconnection
telecommunication
has
service,
forced
including
the
operators
of
Telkomsel/The
2nd
Reported Party to self-regulate themselves in order to resolve
the existing issues; ------------------------------------------------------36.6.14.
In order to resolve or prevent the aforementioned issues,
Telkomsel/The 2nd Reported Party added interconnection
SMS clause in their Interconnection Agreement with several
telecommunication operators. This choice shall actually
constitute the good-will of Telkomsel/The 2nd Reported Party
in order to realize telecommunication interconnection activities
which are proper, fair, balanced and do not harm any
telecommunication operator. The choice was not taken for the
purpose of price fixing in order to gain large amount of profit.
Telkomsel/The 2nd Reported Party neither have any intention
nor motivation to violate the applicable law; ------------------------
36.6.15.
Other telecommunication operators (Smart/The 8th Reported
Party) also admitted that the intention to add interconnection
SMS clause was in order to resolve or prevent the issues of
flow imbalance and traffic of short message (SMS). This same
66
was also declared in point 3 of page 2 of the Minutes of
Advanced Examination dated 7 April 2008 reading as follows:
“...Our intention to draw up the Agreement is to balance the
imbalanced SMS flow...” ----------------------------------------------36.6.16.
The addition of interconnection SMS clause also constituted
as the realization of the good will of Telkomsel/The 2nd
Reported Party in order to maintain the capacity and
capability of the telecommunication network among the
existing telecommunication operators in order to provide
reliable, wide coverage and high quality telecommunication
service for the community; ----------------------------------------------
36.6.17.
This solution was chosen by considering it as a method which
was expected to be effective and could be applied by the
telecommunication operators at that time (several years ago).
It was due to the fact that at that time there was not any
technology which could be used by the telecommunication
operators to effectively and efficiently prevent the arise of
imbalanced flow or traffic of SMS. The conditions of
telecommunication network technology in 2001, 2002 and
2004 were not equal and not as advanced as today. The
condition of telecommunication network technology nowadays
shall not be used as a reference to provide solution for the
issues of Spamming and Broadcasting SMS as well as
telemarketing action in the past; ---------------------------------------
36.6.18.
The above consideration is also in line with the opinion of the
BRTI stated in point 6 of page 2 of the Minutes of Meeting
between the BRTI and the KPPU dated 22 November 2007
reading: “Such practice is considered as proper in the field of
telecommunication industry where rates, beside serving as
competition tool, also control the network to avoid
collapse.” (Evidence TII-18/A8); --------------------------------------
36.6.19.
In addition, the KPPU also acknowledge or accept this by
quoting the opinion or information provided by expert witness
KRMT Roy Suryo in point 65 of page 16 of the LHPL Number
26/KPPU-L/2007,
stating
as
follows:
“Based
on
the
information obtained from the Expert Witness KRMT Roy
Suryo, the reason behind the price fixing of the operator is to
prevent incoming spam. (see the evidence B24)” (Evidence
TII-20); -----------------------------------------------------------------------
67
This is in line with the statement of the expert witness KRMT
Roy Suryo in point 19 of page 7 of the Minutes of Advanced
Examination Over Expert Witness dated 11 April 2008 reading
as follows: “I can accept such reason considering that in
Indonesia, if we provide everything without charge, then
people will not be responsible over the facilities provided. I
experience such situation by myself when I have 3 cards
and I received a lot of spamming SMS...” (Evidence TII21/B24); --------------------------------------------------------------------36.6.20.
Telkomsel/The 2nd Reported Party shall never have any
intention to violate the provision of Article 5 of Law Number 5
Year 1999. In this case, Telkomsel/The 2nd Reported Party
asks the followings to the KPPU: -------------------------------------(i)
to comprehensively consider the all factors as stated
above; -----------------------------------------------------------------
(ii) the KPPU may be able to provide solution; or ------------(iii) to make decision wisely; -----------------------------------------based on the understanding over the whole situation or
condition
or
other
real
issues
experienced
by
telecommunication operators as set forth above; ----------------36.6.21.
Pursuant to the aforementioned evidences and facts, it is
proved that the interconnection SMS clause as set forth in the
Interconnection
Agreement
between
Telkomsel/The
2nd
Reported Party and other 4 (four) telecommunication
operators shall not constitute price fixing agreement, and thus
the element of Article 5 of Law Number 5 Year 1999 is not
fulfilled. Therefore, Telkomsel/The 2nd Reported Party did not
commit any violation against Article 5 of Law Number 5 Year
1999; ------------------------------------------------------------------------36.7. TELKOMSEL/THE 2ND REPORTED PARTY DID NOT VIOLATE ARTICLE 5 OF LAW
NUMBER 5 YEAR 1999 CONSIDERING THAT THE ELEMENT OF PRICE FIXING
AGREEMENT IS NOT FULFILLED; --------------------------------------------------------36.7.1.
In the point 78 of page 18 of the LHPL Number 26/KPPUL/2007, the KPPU states as follows: “The 1st to 9th Reported
Parties have committed price fixing for SMS rates within the
price range of Rp 250 - Rp 350 which allegedly violated
Article 5 of Law Number 5 Year 1999.” (Evidence TII-20); ------
36.7.2.
In fact, Telkomsel/The 2nd Reported Party has never put
interconnection SMS clause regulating the price fixing of the
68
interconnection SMS rate within the range of Rp 250 - Rp
350. The LHPL Number 26/KPPU-L/2007 is based on the
wrong
assumption
of
the
KPPU.
Therefore,
all
examinations conducted by the KPPU in this case are
considered as improper and must be cancelled; --------------36.7.3.
The interconnection SMS clause as set forth in the
Interconnection Agreement between Telkomsel/The 2nd
operators shall not constitute price fixing agreement. The
clause is merely intended to establish a telecommunication
interconnection system which is better, fair and ordered,
particularly in terms of interconnection SMS service needed
by wide-range community; ----------------------------------------------
36.7.4.
The Interconnection Agreement shall constitute an agreement
drawn up by and between telecommunication operators in
order to increase the effectiveness and the efficiency of
telecommunication network of both parties for the purpose of
providing telecommunication service which is reliable, wide
coverage and high quality. The Interconnection agreement
shall govern the procedures of interconnection activities as
well as the rights and obligations of each telecommunication
operators
conducting
their
interconnection
activities.
Therefore, all clauses set forth in the Interconnection
Agreement shall be intended merely to regulate things related
to
the
procedures
underlying
of
interconnection
assumption
of
this
activities.
The
Interconnection
Agreement shall not be related to price fixing; ---------------36.7.5.
Basic assumption explaining the purpose and objective of
an agreement is always set forth in the “recital” section
(consideration section) of the said agreement. The Recital
part
of
the
Interconnection
nd
Telkomsel/The 2
Agreement
between
Reported Party and other 4 (four)
telecommunication operators basically states as follows: ------36.7.5.1.
The Interconnection Agreement shall be intended
to increase the efficiency and effectiveness of
telecommunication
network
system
of
telecommunication operators; -------------------------36.7.5.2.
The Interconnection Agreement was drawn up in
order
to
increase
the
efficiency
and
the
69
effectiveness of telecommunication network of the
telecommunication operators for the purpose of
providing telecommunication service which is
reliable, wide coverage and high quality; -----------36.7.5.3.
The
Interconnection
Agreement
drawn
up
between Telkomsel/The 2nd Reported Party and
other 4 (four) telecommunication operators is in
line with the provision of applicable law (Evidence
TII-22, Evidence TII-23, Evidence TII-24 and
Evidence TII-25); -----------------------------------------Therefore, it is proved that the underlying assumption
(purpose and objective) of this Interconnection Agreement
shall not be related to price fixing; Therefore, all clauses
in the Interconnection Agreement shall not be considered
as price fixing agreement;-------------------------------------------36.7.6.
The aforementioned arguments are also supported by the fact
that the interconnection SMS clause set forth in the
Interconnection
Agreement
between
Telkomsel/The
2nd
operators only refer to the valid market price or benchmark at
that time and may even possibly lower compared to the
benchmark (Evidence TII-22). In fact, this Interconnection
SMS clause neither completely alter the valid interconnection
SMS rate nor creating new rates; ---------------------------------36.7.7.
The applicable Benchmark was initiated when Satelindo
applied SMS rate at Rp 350 per SMS, where such rate was
acceptable by the telecommunication costumers at that time.
The
acceptance
of
the
benchmark
was
also
firmly
acknowledged by the Examining Team of the KPPU in point
86 of page 21 of the LHPL Number 26/KPPU-L/2007 as
follows: “By such acceptance, other operators voluntarily
applied the same SMS rates as applied by Satelindo which
served as a benchmark at that time. This is considered as
common to occur in open market so that a business actor
may obtain access to understand the tariff applied by other
competitors.” (Evidence TII-20); --------------------------------------36.7.8.
Furthermore, points 80 and 81 in page 20 of the LHPL
Number 26/KPPU-L/2007 also firmly state that: ------------------
70
“80. During the Period of 1994-2004, the basic rate and
effective rate of SMS from all operators (Telkomsel,
Indosat and XL) was Rp 350...
81.
The same SMS rate occurred effectively although the
government had never regulated the SMS rate either in
nominal or in formula. Therefore, there is no regulating
factor causing operators to determine the same rate
for SMS service.” (Evidence TII-20); ------------------------
36.7.9.
Instead, the benchmark applicable in the market may be
higher compared to the interconnection SMS clause as set
forth
in
the
Interconnection
nd
Agreement
between
Telkomsel/The 2
Reported Party and other 4 (four)
telecommunication
operators.
Therefore,
in
the
event
Telkomsel/The 2nd Reported Party is going to commit price
fixing (which is in fact not correct), Telkomsel/The 2nd
Reported
Party
compared
to
shall
the
logically
applicable
determine
higher
benchmark.
In
tariff
fact,
Telkomsel/The 2nd Reported Party only referred to the same
tariff and even lower than the benchmark as stated in their
interconnection SMS clause. This proved that Telkomsel/The
2nd Reported Party did not commit any price fixing
whatsoever;----------------------------------------------------------------36.7.10.
Moreover, every telecommunication operator, in determining
their effective rate of interconnection SMS, also followed the
market price or the benchmark commonly accepted by the
customers and did not refer to the interconnection SMS
clause in the Interconnection Agreement. This is firmly
acknowledged by Telkom (as one of telecommunication
operators entering into Interconnection Agreement with
Telkomsel/The 2nd Reported Party) in points 23, 25 and 32 of
page 4-5 of the Minutes of Preliminary Examination Against
the 4th Reported Party dated 3 December 2007, stating as
follows (Evidence TII-26/B2): -------------------------------------------
71
”23.
Question
On the launching in 2003, what was the SMS rate?
Answer
Around Rp 250 up to Rp 350 for inter-operator SMS, there was
not intra-operator SMS at that time considering that Flexi did
not have customer. The price referred to the market price
(benchmark).
25.
32.
Question
So, what was the basis of determining SMS rate at Rp 250,-?
Answer
We determined only based on the benchmark.
Question
Please submit documentation indicating that the price is not
always within the range of Rp. 250,-.
Answer
Alright, we will submit such documentation, however it is
important for me to emphasize that the SMS rate of Rp 250
was merely the benchmark considering that what occurred
was market mechanism.”
In addition Smart/The 8th Reported Party also admitted that
their effective rate of interconnection SMS also followed the
market price or benchmark. This same was also declared in
point 14 of page 3 of the Minutes of Preliminary Examination
against The 8th Reported Party dated 6 December 2007 as
follows: ”... The market shall determine this. Basically,
there was no legal price fixing.” (Bukti TII-27/B4);-------------
36.7.11.
The aforementioned argument is also strengthen by the fact
that other telecommunication operators which did not add
interconnection
SMS
clause
in
their
Interconnection
Agreement also applied interconnection SMS rate which was
equal to the applicable benchmark. It proved that the
interconnection SMS clause questioned by the KPPU in the
Interconnection
Agreement
between
Telkomsel/The
2nd
operators as aforementioned shall not mean price fixing
agreement;----------------------------------------------------------------36.7.12.
Pursuant to the aforementioned, it is proved that the SMS
clause questioned by the KPPU neither influenced nor altered
the interconnection SMS rate applicable in the market. In fact,
the interconnection SMS rates applicable in the market
before, during and after the presence of SMS clause,
which is questioned by the KPPU, are the same; -------------
72
36.7.13.
In addition, the interconnection SMS clause was only related
to interconnection SMS rate (off-net), excluding on-net
SMS rate. This same was also emphasized by Telkom as set
forth in point 3 of page 3 of the Minutes of Advanced
Examination dated 8 April 2008 reading as follows: ”...The
existing agreement is only applicable for inter-operator
SMS. We entered into such agreement in order to enforce
the Law of interconnection, instead of committing price
fixing for the users...” (Evidence TII-28/B21); ------------------It shall be noted that the revenue from off-net SMS is
averagely 16% of the total SMS revenue acquired by
Telkomsel/The 2nd Reported Party, meanwhile 84% of the
revenue derives from on-net SMS rate. Therefore, it is
obvious that Telkomsel/The 2nd Reported party did not have
any intention to commit price fixing that violated the applicable
law. If the price fixing did occur, then the price fixing should be
more reasonable and profitable by including on-net SMS, not
just off-net SMS with lower revenue contribution compared to
the revenue from on-net SMS; -----------------------------------------
36.7.14.
We also intend to ask the attention of the KPPU that the
interconnection SMS clause being questioned is not present
in all Interconnection Agreements between Telkomsel/The
2nd Reported Party and all telecommunication operators,
considering that the clause is present only in 4 (four)
Interconnection Agreements. (Evidence TII-29), (Evidence TII30), (Evidence TII-31), (Evidence TII-32), (Evidence TII-33)
and (Evidence TII-34). It shall also mean that Telkomsel/The
2nd Reported Party did not have any intention to commit price
fixing which violated the applicable law, considering that if the
price fixing did occur then it would be reasonable and
profitable if the interconnection SMS clause is added into
Interconnection Agreement with major telecommunication
operators dominating the market share of Indonesian
telecommunication industry, namely Indosat and XL. In fact,
this situation did not occur; ---------------------------------------------
36.7.15.
Pursuant to the aforementioned evidences and facts, it is
proved that the interconnection SMS clauses as set forth in
the Interconnection Agreement between Telkomsel/The 2nd
73
operators shall not constitute price fixing agreement. This
Interconnection Agreement shall constitute an agreement that
governs interconnection. The Element of Price Fixing
Agreement in Article 5 of Law Number 5 Year 1999 is not
fulfilled. Telkomsel/The 2nd Reported Party did not commit
any violation against Article 5 of Law Number 5/1999;----------36.8.
TELKOMSEL/THE 2ND REPORTED PARTY DID NOT VIOLATE ARTICLE 5 OF
LAW NUMBER 5 YEAR 1999 CONSIDERING THAT THE ELEMENTS OF RELATED
MARKET AND COMPETITOR ARE NOT FULFILLED; ----------------------------------36.8.1.
According to the decision of the KPPU in the previous cases,
the KPPU always explained the definition of “related market
“as one of basis in issuing decision. It is obvious in the
following cases:
36.8.1.1.
KPPU
Decision
concerning
Price
Number
Fixing
05/KPPU-I/2003
of
Air-Conditioned
Express City Bus in DKI Jakarta, in page 27
reading as follows:----------------------------------------“21.4.
The same Related Market-----------
21.4.2.
Considering that pursuant to the facts
revealed in the Preliminary Examination
and Advanced Examination what is
referred to as the same related market
in this case is passenger’s transportation
service of Air-Conditioned Express City
Bus where the route permit is issued by
the
Provincial
Government
of
DKI
Jakarta; ------------------------------------------21.4.3.
Considering
that
pursuant
to
the
aforementioned point, the element of the
same related market as set forth in Article
5 par. (1) of Law Number 5 Year 1999
has been fulfilled; (Evidence TII-11); ----36.8.1.2.
Decision of the KPPU Number 02/KPPU-I/2003
concerning Minimum Price Fixing of Container
Freight, page 10 stating as follows: ------------------“1.8. In this case, related market may be fulfilled
by two factors of related market definition
namely
product
geographic
types
definition.
definition
Product
and
types
74
definition
shall
constitute
the
services
provided for goods owners who are going to
ship their goods by means of container
through
sea
transportation,
while
the
geographic definition shall mean that those
services are limited to Jakarta-PontianakJakarta route;- -------------------------------------1.9. The 1st Reported Party, the 2nd Reported
Party, the 3rd Reported Party and the 4th
Reported Party shall hereinafter categorized
as
business
business
actors
activities
conducting
within
the
their
same
related market, namely shipping service
market by means of container from JakartaPontianak-Jakarta;;-------------------”
(Evidence TII-9); --------------------------------------36.8.1.3.
The decision of the KPPU Number 03/KPPUI/2003 concerning the Price Fixing and Service
Route Quota of Surabaya-Makassar Route, page
41 stating as follows:
“6.7.
The same Related Market-----------
6.7.3.
Considering that the related market in
the Minutes of Business Meeting held at
Elmi Hotel Surabaya is Surabaya Makassar - Surabaya and Makassar Jakarta - Makassar;
6.7.4.
Considering
that
pursuant
to
the
aforementioned points, the element of
the same related market as set forth in
Article 5 par. (1) of Law Number 5 Year
1999 has been fulfilled; (Evidence TII10);
36.8.1.4.
The Decision of the KPPU Number 07/KPPUL/2007 dated 19 November 2007 in the case of
Temasek Cs, page 591-593 reading as follows:
“ 3.1
Prior to examining the presence of
violation, the Commission Assembly
firstly specify the definition of related
75
market
in
this
case
as
stated
hereunder:
3.1.1 That in the LHPL, the Examining Team
basically states that the Related Market
in
this
case
constitutes
cellular
telecommunication services across the
territory of Indonesia. The determination
is based upon analysis over products,
function and price as well as the scope
of geographic area; (see Article 7 to
Article 9 of Law Number 36 Year 1999
concerning Telecommunication, Article
9 par. (2) of Government Regulation
Number 52 Year 2000 concerning
Telecommunication
Operation
of
Wireless Local Fixed Network with
Limited Mobility, Evidence B55)---------3.1.4
That
therefore,
the
Commission
Assembly did not find any mistake of
the Examining Team in defining product
market in this case, namely cellular
service excluding FWA and PSTN;”
(Evidence TII-35); ---------------------------36.8.2.
“Related Market” constitutes one of important element that
must be proved by the Examining Team by the KPPU during
the examination pursuant to Article 5 of Law Number 5 Year
1999. It is based on the phrase “...in the same related
market” in the Article 5 of Law Number 5 Year 1999;------------
36.8.3.
Nevertheless, the KPPU did not prove the “Related Market”
element in this case. The Examining Team of the KPPU, in
the LHPL Number 26/KPPU-L/2007 in point 71 of page 19
stated that the related market element constituted additional
element which is not necessary to be proved. This constitutes
a fundamentally wrong statement. This statement is not in
line with the content of Article 5 of Law Number 5 Year 199
and is not consistent with the decision of the KPPU in the
previous cases; ------------------------------------------------------------
36.8.4.
The Examining Team should firstly prove the “Related Market”
element in this case considering that the “Related Market”
76
constitutes one of the absolute elements that needs to be
fulfilled in the allegation pursuant to Article 5 of Law Number 5
Year 1999.
The “Related Market” shall also need to be
proved in order to emphasize the limit of the “market”
considering that there are a lot of business actors or players,
competitors and products in telecommunication service
market. At least, the types of market in telecommunication
service can be analyzed from two categories namely (i) from
the perspective of license and business permit or (ii) from the
perspective of technology or product; -------------------------------36.8.5.
According to its license or business permit, there are 3 types
of telecommunication service market namely Full Mobility
Cellular,
Limited
Mobility
or
Satellite
Mobile
Phone.
Meanwhile, according to their types of technology or products
there are Nordic Mobile Telecommunication (NMT), Advance
Mobile Phone System (AMPS), GSM, Code Division Multiple
Access (CDMA), Wide CDMA (WCDMA), Satellite or Public
Switching Telecommunication Network (PSTN); -----------------36.8.6.
Each type of markets of telecommunication service as
aforementioned is managed by different business actor or
player, different business competitors and different products.
In the event every market is combined each other, there will
be a lot of or even tens of alternatives in the type of related
market that must be explained and proved by the Examining
Team. One fundamental question is: which “related market”
becomes examined object in this case. The clear definition of
“related market” also needs to be emphasized for the purpose
of legal certainty and business comfort for business players.
In this case, the KPPU must be consistent with their previous
decisions. Nevertheless, the Examining Team of the KPPU
did not provide clear definition of related market and they
even wrongfully and inconsistently stated that it did need to be
defined. ----------------------------------------------------------------------
36.8.7.
There is no clear definition of “related market” in this case
proving that the “Related Market” element is not fulfilled; ------
36.8.8.
Furthermore, considering that the LHPL did not prove the
“Related Market” element, other elements in Article 5 of Law
Number 5 Year 1999, namely “Competitor” element
became unfulfilled. It is due to the fact that the fulfillment of
77
“Competitor” element shall need clear or certain definition of
“Related Market”. The said “competitor” shall be present in the
same related market, instead of business players in different
related market. Meanwhile, the Examining Team of the KPPU
did not provide clarity whether the Reported Parties in this
case were in the same or different related market; --------------36.8.9.
Pursuant to the aforementioned explanation, it is proved that
the elements of “Related Market” and “Competitor” are not
fulfilled. Therefore, the Commission Assembly should declare
that, in this case, Telkomsel/The 2nd Reported Party does not
violate Article 5 of Law Number 5 Year 1999. ----------------------
36.9.
TELKOMSEL/THE 2ND REPORTED PARTIES REQUIRES
ATTENTION
OF
AUTHORIZED PARTIES CONCERNING PREDATORY PRICING TECHNIQUE WHICH
IS POTENTIAL TO VIOLATE
36.9.1.
ARTICLE 20 OF LAW NUMBER 5 YEAR 1999; -------
Telkomsel/The 2nd Reported Party requires the attention of the
authorized parties including the Commission Assembly to
comprehensively review or examine this case by recognizing
and considering various factors in a balanced manner,
including possible factor of Predatory Pricing. It is potential to
violate the provision of Article 20 of Law Number 5 Year 1999
which may be committed by certain new telecommunication
operators. This practice is conducted by fixing very low price
with the purpose of eliminating and defeating their competitors
in telecommunication industry. In addition, such very low SMS
rate is potential to Spamming SMS; ----------------------------------
36.9.2.
According to some operators, as new telecommunication
operator, they have to assume higher SMS cost, therefore
their SMS rate should be higher compared to the current SMS
rate. Point 14 of page 3 of the Minutes of Advanced
Examination against The 8th Reported Party dated 7 April
2008 states as follow (Evidence TII-19):-----------------------------
“14.
Question
Has PT Smart calculated the effective SMS rate?
Answer
Due to low number of subscribers, the effective rate is
still high. According to our calculation, applying the SMS
rate of Rp 250 is still not profitable for us.”
36.9.3.
The same is also stated by the STI in point 4 page 3 of the
Minutes of Advanced Examination dated 14 March 2008:
78
“...for PT Sampoerna Telecommunication Indonesia, the SMS
rate of Rp 250 is still considered as low for us as new entrant
considering that the number of our subscribers is still
low. In 2006, the number of subscribers of PT Sampoerna
Telecommunication Indonesia was only 10,000. Therefore,
the SMS cost assumed by PT Sampoerna Telekomunikasi
Indonesia had exceeded Rp 250,- so that the rate charged
to the customers should be higher that Rp 250.” (Evidence
TII-36); ----------------------------------------------------------------------36.9.4.
This potential threat of predatory pricing is quite reasonable
due to the fact that some new telecommunication operators
are currently applying very low SMS rate. This is extremely
contradictory
to
the
aforementioned
statement.
The
application of low rate can be committed by those new
telecommunication operators supported by the shareholders
having strong capital or some of them constitute global
players in the field of telecommunication which are stronger
compared to Telkomsel/The 2nd Reported Party; -----------------36.9.5.
In this case, the consideration of the KPPU stating that certain
cellular operators constitute weak new players is not in line
with the fact.
The aforementioned fact
allows
those
telecommunication operators to maintain their SMS rate as
low as possible during certain period of time due to their
strong capital support. They will raise their SMS rate once
they are able to acquire the market and defeat other existing
telecommunication operators; -----------------------------------------36.9.6.
In addition certain telecommunication operators may take
advantage from Interconnection Agreement with existing
telecommunication operators and use the network of other
existing telecommunication operators to determine very low
SMS rate. This situation occurs due to the fact that those
telecommunication operators have not put large investment
for
establishing
new
BTS
compared
to
the
existing
telecommunication operators which have invested their capital
for this purpose. In the other side, Telkomsel/The 2nd
Reported Party shall consider the investment cost aspect
assumed by them in fixing the price; --------------------------------36.9.7.
We hope the Commission Assembly will consider and
examine this case in a more comprehensive and fair manner
79
including considering the potential issue of Spamming or
Broadcasting SMS directly or indirectly caused by predatory
pricing action committed by certain parties; -----------------------36.10. CONCLUSION; -----------------------------------------------------------------------------36.10.1.
According
to
specific
telecommunication,
monitoring
over
the
legal
regime
body
authorized
business
in
activities
in
the
to
the
field
of
implement
field
of
telecommunication is the BRTI, instead of the KPPU. This is
pursuant
to
Law
Number
36
Year
199
concerning
Telecommunication jo. Ministerial Decree of Communication
Number 31 Year 2003 concerning the Formation of The
Indonesian Telecommunication Regulatory Agency; ------------36.10.2.
With regard to the aforementioned, there is an inconsistency
between the regulation in the field of telecommunication and
Law Number 5 Year 1999. Considering this context, the KPPU
shall terminate the investigation process against this case or
provide recommendation to the government to first clarify the
inconsistency. This inconsistency has caused uncertainty in
performing business activities in telecommunication sector; ---
36.10.3.
In performing their business activities, Telkomsel/The 2nd
Reported Party always comply with the provisions of
applicable law and regulation including the BRTI policy as the
authorized body to perform monitoring against business
activities in the field of telecommunication service. It is proved
by the good will of Telkomsel/The 2nd Reported Party that will
immediately
revoke
the
SMS
clause
within
their
Interconnection Agreement by referring to the Letter of BRTI
number 172/BRTI/ATSI/VI/2007 dated 15 June 2007; ----------36.10.4.
Telkomsel/The 2nd Reported Party did not have any intention
to commit price fixing as referred to in Article 5 of Law
Number 5 Year 1999. The addition of the interconnection
SMS clause (off-net) in the Interconnection Agreement served
as preferred solution at that time due to the absence of legal
certainty
concerning
the
procedure
and
standard
of
implementation of interconnection SMS (off-net) particularly
relating to the adverse impact of overwhelming one way SMS
traffic; -----------------------------------------------------------------------36.10.5.
The absence of regulation concerning the procedure and
standard
implementation
of
SMS
interconnection
80
(interoperator) has caused problems between the sending and
the receiving operators, namely the imbalanced flow or traffic
of SMS due to the Broadcasting and/or Spamming SMS.
Such activities may cause overloaded or hang network
experienced by the receiving operator and furthermore
decreasing the network quality of the receiving operators or
even does not function at all. Therefore, the subscribers of the
receiving operator will experience loss due to the absence of
excellent service provided by the receiving operators. This
situation will harm the reputation of Telkomsel/The 2nd
Reported party as an operator that always maintain their
quality. In the other hand, telecommunication operators shall
also be responsible to maintain the quality of their
telecommunication network in order to avoid overload
conditions;
36.10.6.
Telkomsel/The 2nd Reported Party did not Violate Article 5 of
Law Number 5 Year 1999 considering that the “Price Fixing
Agreement” element is not fulfilled; The clause drawn up
between Telkomsel/The 2nd Reported Party and 4 (four) other
Reported Parties questioned by the KPPU does not constitute
price
fixing
agreement,
but
instead
it
constitutes
interconnection agreement pursuant to the applicable law
provision. In the other word, the interconnection SMS clause
questioned by the KPPU shall be deemed as the integral part
of interconnection agreement in order to establish a good
interconnection
system
aforementioned
issues.
as
In
well
addition,
as
preventing
Telkomsel/The
the
2nd
Reported Party neither changed the interconnection SMS rate
applicable in the market nor created new tariff.
The
interconnection SMS rates applicable in the market before or
after
the
presence
nd
Telkomsel/The 2
of
SMS
clause
are
the
same;
Reported Party only quoted the market
price or benchmark applicable at that time; ------------------------36.10.6.1.
In addition, the interconnection SMS clause in the
Interconnection Agreement was only related to
interconnection SMS rate (off-net), excluding onnet SMS rate. Furthermore, the interconnection
SMS clause questioned by the KPPU was not
present
in
all
Interconnection
Agreements
81
between Telkomsel/The 2nd Reported Party and
was not entered into with operators which
dominated the market share, but instead the
clause
was
only
present
in
4
(four)
Interconnection Agreements or entered into with 4
(four)
operators
domination.
with
Therefore,
nd
Telkomsel/The 2
small
it
market
is
share
proved
that
Reported Party neither have
any purpose nor intention to violate Article 5 of
Law Number 5 Year 1999; -----------------------------36.10.6.2.
According to the aforementioned explanation, it is
proved
that
the
conclusion
drawn
by
the
Examining Team of the KPPU in the LHPL
Number 26/KPPU-L/2007 point 116 letter b and
point
117
of
page
nd
Telkomsel/The 2
25-26
stating
that
Reported Party has committed
SMS cartel during the period of 2004 - 2007 and
2008 as well as violated Article 5 of Law Number
5 Year 1999 is incorrect and can not be proved.
Telkomsel/The
2nd
Reported
Party
neither
committed SMS cartel whatsoever nor entered
into price fixing agreement with other Reported
Parties; -----------------------------------------------------36.10.7.
Telkomsel/The 2nd Reported Party respectfully asks the KPPU
to review or consider this case in a comprehensive and
balanced manner including giving special attention to the
possible occurrence of Spamming and/or Broadcasting SMS
due to predatory pricing action; ----------------------------------------
36.10.8.
Telkomsel/The 2nd Reported Party did not Violate Article 5 of
Law Number 5 Year 1999 considering that Related Market
element is not fulfilled; As the consequence, the “Competitor”
element in Article 5 of Law Number 5 Year 1999 becomes
unfulfilled considering that the fulfillment of the element needs
a clear definition of “Related Market” in this case. Therefore,
Telkomsel/The 2nd Reported Party did not commit any
violation against Article 5 of Law Number 5 Year 1999; ---------
36.10.9.
There
are
a
lot
of
issues
experienced
by
cellular
telecommunication operators, particularly Telkomsel/The 2nd
Reported Parties due to the absence of law and negative
82
impacts which will arise due to the absence of SMS clause.
Therefore, we would like to ask the KPPU to consider all
factors stated above in a comprehensive and balanced
manner in order to make a wise decision. Furthermore, we
hope that the KPPU will be able to provide suggestion and
consideration to the government pursuant to their authority
with regard to the aforementioned issues in order to establish
a fair and competitive telecommunication market; ---------------36.11. Pursuant to the reasons, facts, evidences and the legal basis as set forth
in this Pledge and Response, Telkomsel/The 2nd Reported Party
respectfully asks the Commission Assembly of the Case Number
26/KPPU-L/2007 in order to make a decision that Telkomsel/The 2nd
Reported Party did not violate Article 5 of Law Number 5 Year 1999
concerning the Prohibition of
Monopolistic
Practices and Unfair
Competition; ------------------------------------------------------------------------------37.
Assembly has received written Response/Pleading from the 3rd Reported Party
(Indosat) as set forth hereunder (see the evidence A116): -----------------------------37.1.
Response to Facts and Findings; -----------------------------------------------37.1.1.
That Indosat, as one of telecommunication companies in
Indonesia with sufficient experience in providing SMS services,
is always committed to run their business in a professional
manner by complying with applicable laws in Indonesia,
including but not limited to the provisions of regulation in the field
of business competition law; -----------------------------------------------
37.1.2.
That the commitment of Indosat to adhere the applicable laws in
Indonesia has been indicated through cooperative attitude in
fulfilling the summons of the KPPU, providing information in
examination process, as well as submitting documents needed
by the KPPU to examine the Case No. 26/KPPU-L/2007; ---------
37.1.3.
That the true evidence of Indosat’s commitment in running their
business based on the principles of fair business competition
appears in Cooperation Agreement between Indosat and other
telecommunication operators as those stated by us in the
examination of Case No, 26/KPPU-L/2007 in the KPPU; ----------
37.1.4.
That as reflected in the Clause Matrix of the fixing of SMS Rate
in the Interconnection Agreement (page 14 of the result of
advanced examination report), in establishing Cooperation
Agreement with other telecommunication operators, Indosat has
83
never regulated or put any clause relating to SMS rate fixing,
either stated or implied, imposed by the operators to their
customers (collection rate) as one of points contained in the
Cooperation Agreement, instead they were only things related to
networks, services or facilities to be used collectively with other
operators in the Cooperation Agreement. -----------------------------37.1.5.
That as has been explained in the examination dated 9 April
2008, Indosat always regarded other operators as their business
partners, therefore when new operators determine lower rates
compared to Indosat’s rates, then Indosat will not respond by
determining any provision/clause concerning collection rate in
the Cooperation Agreement with the new operators, because
Indosat understands that lower rates constitute main “selling
point” for the new operators to gain customers; ----------------------
37.1.6.
That concerning the statement of the KPPU in points 18 and 19
of Section B (Facts and Findings) and point 83 of Section D
(Analysis) of the Report stating the presence of cross ownership
between Telkomsel, Indosat and XL, we can explain as follows: (i)
That the SMS rate was stipulated at Rp 350 by Satelindo
at the time this service was first launched in 1994. At the
beginning, the SMS service could only be used between
the
customers
of
Mentari-Satelindo.
After
the
establishment of Telkomsel and XL in 1995 and 1996
respectively, this SMS service facility was followed and
applied by Telkomsel and XL to their respective customers
(Off-Net); ---------------------------------------------------------------(ii)
At the first time Satelindo launched the SMS service
(during 1994), the shareholders of Satelindo consisted as
follows: ------------------------------------------------------------------
No
Name
Percentage of
Shares
1
PT Bimagraha Telekomindo
45%
2
Deutsche Telekom Mobilfunk GmbH
25%
(DeTeMobil)
3
PT Telkom (Persero)
4
PT Indosat Tbk
22.5%
7.5%
84
Meanwhile, the shareholders of Telkomsel at that time consisted
as follow:
No
Name
Percentage of
Shares
1
PT Telkom (Persero)
42.5%
2
PT Indosat Tbk
3
PTT Telecom BV of Netherland
4
PT Setdco Megacell Asia
35%
17.28%
5.25%
On April 3, 2001, Indosat and Telkomsel agreed to eliminate
their respective ownerships in Telkomsel, Satelindo and
Lintasarta. It was the follow up of the Ministerial Decree No. 72
Year1999 concerning the Blue Print of Government Policy on
Telecommunication mandated by Law No. 3 Year 1989
concerning Telecommunication.
With the presence of such
Agreement, then the shareholding structure in Satelindo and
Telkomsel changed, where Telkom obtained additional shares
from Indosat in Telkomsel amounting to 35% while Indosat
obtained additional shares from
Telkomsel in Satelindo
amounting to 22.5%. Indosat also bought the shares of
Bimagraha in Satelindo in 2001. Furthermore in 2002, Indosat
bought the whole shares owned by DeTeAsia Holding GmbH,
since then Satelindo was entirely owned by Indosat; ---------------(iii)
In 2002, the Government of the Republic of Indonesia divested
their shareholding in Indosat amounting to 41.94% to Indonesia
Communications Limited (ICL) and since then the status of
Indosat changed to Foreign Investment Company (PMA)
approved by the BKPM on February 7, 2003. Therefore, the
structure of Indosat’s shareholders per December 15, 2002
changed as follows: ----------------------------------------------------------
No
Name
Percentage of
Shares
1
The Government of the Republic of
14.44%
Indonesia
2
Public
3
ICL
45.19%
41.9%
85
37.1.7.
From the above explanation, it is clear that there were several
time changes of shareholding, either in Indosat or Telkomsel,
and those changes of shareholding did not relate to SMS rates
fixing committed by the respective operators. -------------------------
37.1.8.
That pursuant to the aforementioned, Indosat hereby declares
that: -----------------------------------------------------------------------------(i)
Indosat has never made or possessed any cooperation
agreement, either stated or implied, that regulates the
fixing of SMS retail rates either individually or collectively
with other telecommunication operators; ------------------------
(ii)
In determining the tariffs of their services, Indosat always
considers 3 Main Pillars, namely as follows: (1) the
compliance to the applicable regulation by referring to the
provisions and laws and regulations stipulated by the
Government, where SMS rates constitute additional
service facility pursuant to Article 23 and Article 24 of the
Ministerial Decree of Communication No. 21 Year 2001
concerning the Operation of Telecommunication Service,
Indosat as an operator is allowed to determine additional
cost for the use of such additional service facility; (2)
Service sustainability and; (3) affordability and competition;
37.2.
Conclusion-------------------------------------------------------------------------------That pursuant to the Advanced Examination of Case No. 26/KPPUL/2007 and the facts explained by us in this Response, it can be
concluded that Indosat is not proven violating Article 5 of Law No. 5 Year
1999. Therefore, we hope that the Commission Assembly will stipulate
and release Indosat from all alleged violation of Law No. 5 Year 1999 as
set forth in the Case No. 26/KPPU-L/2007. In addition, we have explained
that there were several time changes of shareholding, either in Indosat or
Telkomsel, where those changes of shareholding did not relate to SMS
rates fixing committed by the respective operators. ------------------------------
38.
Assembly has received written Response/Pleading from the 4th Reported Party
(Telkom) as set forth hereunder (see the evidence A117): ------------------------------38.1.
(A) Concerning the Authority of Business Competition Supervision
in Telecommunication Industry; ---------------------------------------------------38.1.1. That pursuant to the provision of Article 4 of Law No. 36 Year
1999, the development authority in telecommunication industry
86
of a state is granted to the Government, in this case the Relevant
Minister, namely the Minister of Communication and Information.
The
authority
is
Telecommunication
further
delegated
Regulatory
to
Agency
the
Indonesian
(“BRTI”)
formed
pursuant to the Ministerial Decree No. 31 Year 2003 concerning
the Formation of BRTI (“KM 31/2003”). Pursuant to Article No. 5
of KM 31/2003, the government delegates part of their attributive
authority to the BRTI, namely the authority in “regulatory
function”,
“supervisory
function”
and
“control
function”
(excluding “policy stipulation function,” considering that this
function is not delegated); -------------------------------------------------38.1.2. That pursuant to Article 6 letter b of KM 31/2003, the authority of
the BRTI in performing supervisory function includes their
authority
to
supervise
the
business
operation
in
telecommunication industry, exactly as follows: (i) operational
performance; (ii) business competition, dan (iii) the tools and
equipments usage, which have been confirmed in the Ministerial
Decree No. 67 Year 2003 concerning Working Relationship
between the Ministry of Communication (now partly becomes
“Ministry of Communication and Information”) and the BRTI,
particularly in Appendix A concerning Authority, section III
concerning Supervision, letter c stating that the authority of BRTI
in supervisory function constitutes (i) to supervise the operation
performance of competed telecommunication networks and
services, (ii) to supervise the business competition in the
competed telecommunication networks and services, and
(iii) to supervise the use of tools and equipments in the operation
of competed telecommunication networks and services; -----------38.1.3. Furthermore, the issuance of the Ministerial Decree No. 33 Year
2004 concerning the Supervision of Fair Competition in the
Operations of Fixed Network and Basic Telephony Service (“KM
33/2004”) confirms the fact that the authority to supervise the
operation of business competition in telecommunication
industry
is
granted
by
the
state
to
the
Ministry
of
Communication and Information, not to the KPPU. Wherein,
pursuant to the KM 31/2003 the authority is delegated by the
Minister of Communication and Information to the BRTI; -----------38.1.4. With regards to the Law No. 5 Year 1999, the Law No. 36 Year
1999 has expressly regulated that the applicable “Prohibitions”
87
are only those regulated in section III, IV and V. Excluding the
Procedures of Case Handling or Sanction (Section VII and VIII).
In implementing the authority, the BRTI should refer to the
prohibitions as set forth in the Law No. 5 Year 1999.
Furthermore, once in every 3 months, the BRTI shall report the
implementation of their duties to the Government, in this case
the Minister of Communication and Information; ----------------------38.1.5. Pursuant to the aforementioned, it is clear that in this case the
KPPU is not authorized to implement direct supervision in terms
of examining/administering justice as well as imposing sanction
against Telecommunication Operators in Indonesia. In other
words, the authority of the KPPU in implementing competition
supervisory functions is limited by other laws and regulations as
stated above. Therefore the juridical state of the Law No. 36
Year 1999 is Lex Specialist against the Law Number 5 Year
1999; -----------------------------------------------------------------------------38.1.6. That therefore, pursuant to the law principle of lex specialis
derogat legi generali, the KPPU is not authorized to examine
any alleged violation against the provision of Article 5 of Law
Number 5 Year 1999, as that committed by them which finally
resulting in the issuance of LHPL dated May 7, 2008; ---------------38.1.7. Considering that the KPPU is not authorized, we hereby file our
objection to the KPPU for committing preliminary examination or
advanced examination, including the LHPL dated May 7, 2008,
or other further actions committed with regard to the said LHPL; -38.2.
(B) About Analysis of the Elements of Violation against Article 5 of
Law No. 5 Year 1999; ------------------------------------------------------------------38.2.1. That the LHPL page 18, point 78 reading as follows: ”The 1st
Reported Party up to the 9th Reported Party have committed
SMS rate fixing in the range between Rp 250,- to Rp 350,- which
is alleged violating Article 5 of Law No. 5 Year 1999"; ---------------38.2.2. Article 5 of Law Number 5 Year 1999: "Business Actor is
prohibited to make any agreement with their competitors for
the purpose of price fixing for any product and or service which
should be paid by the customer in the same related market”; ---38.2.3. In their analysis (the LHPL page 19 point 71, the numbers are
not ordered correctly, it should be point 79), the Examining Team
has reduced the required elements in a subjective and
unilateral manner into only 2 (two) elements, namely 1)
88
Business Actor , and 2) Price Fixing with Competitors,
meanwhile the third element, namely the Related Market is only
considered as “additional element” which is not required to be
proved, but only explains the second element namely the Price
Fixing with Competitors.--------------------------------------------------38.2.4. Subjective and unilateral consideration of the Examining Team
constitutes improper/incorrect analysis and seems to be forced
thus invalid. Therefore it shall not serve as valid legal reason
to declare a violation against Article 5 of Law No. 5 Year 1999; --38.2.5. In legal perspective the three elements (namely Business
Actor, Agreement with Competitors, and Related Market) are
cumulative and their fulfillment is required to be proved, in
order to prove the violation against the said provision; --------------38.2.6. From the analysis, it is evident that the Examining Team has
forced their intention by reducing the element that shall be
fulfilled/proved, considering that the Related Market element is
not fulfilled or can not be proved in case of PT.
Telekomunikasi Indonesia,Tbk.; ---------------------------------------38.2.7. The inability to prove the fulfillment of Related Market element
for cellular SMS service and FWA (fixed wireless access) is very
clear and easy to analyze as set forth hereunder: ------------------38.2.7.1.
That cellular and FWA telecommunication services
are different each other, where:--------------------------a.
Cellular is a telecommunication service with full
mobile capability (unlimited), meanwhile the
FWA is a wireless local fixed telecommunication
service with limited mobile capability. Cellular
mobile
capability
can
reach
broader
area
(national or international), while the mobile
capability of FWA is limited in local area; ----------b.
Operational license or permit for cellular service
is different compared to the operational license
or permit of FWA; -----------------------------------------
c.
Telephone or customer terminal that can be
used to enjoy cellular and FWA services are
different and not interchangeable. In general,
cellular service uses GSM technology with
frequency of 900/1800 MHz, while the FWA uses
89
CDMA technology with frequency of 800/1900
Mhz; ---------------------------------------------------------d.
Besides general regulation which is applicable to
the
operation
of
cellular
and
telecommunication,
there
regulations
expressly
which
FWA
are
specific
distinguish
cellular from FWA services, including: ----------1)
Ministerial
Decree
of
Communication
Number 35 Year 2004 concerning the
Operation of Wireless Local Fixed Network
with Limited Mobility. This regulation only
applies to FWA service, and not to
cellular service; --------------------------------2)
Ministerial Regulation of Communication
and
Informatics
Number:
12/Per/M.Kominfo/02/ 2006 concerning the
Procedure of Tariff Fixing Conversion for
Basic Telephony Service of Cellular Mobile
Network. This regulation only applies to
cellular service, and not to FWA service;
3)
Ministerial Regulation of Communication
and
Informatics
Number:
9/Per/M.Kominfo/02/2006 concerning the
Procedure of the Fixing of Initial Tariff and
Conversion Tariff of Basic Telephony
Service through Fixed Network.
regulation
only
applies
to
This
fixed
telephone including FWA, and not to
cellular service; --------------------------------e.
The inclusion of some data by the KPPU in the
form of separated tables, namely Table 1
concerning the Number and Market Share of
Fixed Telephone, Table 2 concerning the
Number and Share of Fixed Wireless Access
Customers and Table 3 concerning the Number
and
Market
Share
of
Cellular
Telephone
Customers, successively on pages 7 and 8 of
the LHPL, strengthens our opinion that FWA and
Cellular
constitute
different
service
type,
90
meaning the Related Market of FWA is
different compared to the Related Market of
Cellular; ---------------------------------------------------38.2.7.2.
From the aforementioned differences, it can be
concluded that the playing field level of cellular
and FWA is different. Therefore the Related
Market for cellular and FWA services shall not be
considered
as
the
same.
Related
Market
difference between cellular and FWA will certainly
brings a consequence that the Related Market for
cellular SMS and FWA SMS shall not be considered
as the same, or in short, they are different; ------------38.2.7.3.
Due to different Related Market of cellular SMS and
FWA SMS, therefore the Related Market element as
referred to in Article 5 of Law Number 5 Year 1999,
is not fulfilled;-------------------------------------------------
38.2.8.
The unfulfillment of the element of Same Related Market as
required in the provision of par. (1) of Article 5 of Law Number 5
Year 1999 shall mean that there is no violation against the said
provision. Therefore, the conclusion of the Examining Team in
the LHPL point 117 stating that PT Telekomunikasi Indonesia
Tbk. has violated Article 5 par. (1) of Law Number 5 Year 1999
shall be considered as improper/incorrect conclusion. This
also applies to the conclusion of the Examining Team in the
LHPL point 116 letter b, particularly the part saying “there was
short message (SMS) rate cartel during the period of 2004-2007
established by Telkomsel and had to be followed by Telkom”,
where the conclusion shall be considered as incorrect. --------
38.2.9.
Furthermore, with regard to the 2nd element namely the element
of Price Fixing with Competitors, we have conducted an
analysis as follows: ----------------------------------------------------------38.2.9.1. That the unfulfillment of the 3rd element namely the
element of the Same Related Market, shall mean that
the FWA and Cellular products (including SMS Flexi
and SMS Seluler) constitute products which do not
compete each other, in other words FWA and cellular
are complementary;--------------------------------------------38.2.9.2. Therefore, FWA and Cellular (including SMS Flexi and
SMS Seluler) constitute products which do not
91
compete each other, thus it can be concluded that PT.
Telekomunikasi Indonesia, Tbk as the Business Actor
of FWA operator shall not be considered as
Competitor of Business Actors of Cellular operators,
including PT Telkomsel; --------------------------------------38.2.9.3. Therefore -- without necessarily considering the
presence/absence of Price Fixing --, the 2nd element
namely Price Fixing with Competitors is not
fulfilled; ----------------------------------------------------------38.2.10. The unfulfillment of the element of Price Fixing with
Competitors strengthen the reason that there is no violation
against the provision of Article 5 of Law Number 5 Year
1999;----------------------------------------------------------------------------38.3.
Concerning
SMS
Price
Fixing
Agreement
between
PT
Telekomunikasi Indonesia, Tbk. and PT Telkomsel; -----------------------38.3.1. Point 61 of the LHPL reading as follows “that according to the
information provided by Telkomsel, the clause “the SMS rate of
operators seeking for access shall not be lower than the retail
rate applied by the access provider” is contained in the
Interconnection Agreement with Telkom"; -----------------------------38.3.2. With regard to the above statement, we hereby confirm the
following points: --------------------------------------------------------------38.3.2.1.
That pursuant to Law Number 36 year 1999
concerning Telecommunication and Government
Regulation Number 52 Year
Telecommunication
Operation,
2000 concerning
interconnection
shall be the duty of every telecommunication
network operator; -------------------------------------------38.3.2.2.
That in order to perform the interconnection duty, the
said operators, in this case Telkomsel and Telkom,
shall
establish
an
interconnection
agreement,
considering that it is impossible to perform the
interconnection
duty
without
entering
into
an
interconnection agreement; --------------------------------38.3.2.3.
That PT Telekomunikasi Indonesia, Tbk. have long
entered into an Interconnection Agreement with all
telecommunication network operators, including PT
Telkomsel;-------------------------------------------------------
92
38.3.2.4.
That
the
main
focus
and
purpose
of
the
Interconnection Agreement are to agree on
technical provisions establishing interconnection
between the telecommunication networks of both
parties as well as to manage the interconnection
so that the subscribes of the respective parties
will
be
able
to
make
inter-operators
call,
including inter-operators call for SMS Flexi to
SMS Seluler reciprocally. --------------------------------38.3.2.5.
That the Interconnection Agreement containing the
clause of SMS rate that shall not be lower than the
retail rate as referred to in the LHPL point 61
constitutes the Amendment of Interconnection
Agreement made in 2003 and prevailed up to 2006,
and then amended by the new Interconnection
Agreement made by the end of 2006 which prevailed
in January 2007; -----------------------------------------------
38.3.2.6.
The addition of the clause of SMS rate that shall
not be lower than the retail rate was agreed by PT
Telekomunikasi Indonesia, Tbk. and PT Telkomsel in
order to maintain the prevention of SMS traffic
spamming between
both parties
due to the
implementation of SKA (Sender Keeps All) method,
namely a method for paying interconnection cost
where the SMS receiving operator does not receive
any payment from the SMS sending operator. There
was no intention among both parties to establish
rate cartel either in formal or material manner as
referred to in Article 5 of Law Number 5 Year 1999.
The motivation of the parties involving in this
Interconnection Agreement which is to prevent the
occurrence
of
spamming
was
justified
and
supported by the statement of Expert Witness
KRMT Roy Suryo Notodiprojo as contained in the
LHPL page 23 point 99. In the inzage process,
another documentation was found indicating that the
other Expert Staff Dr. Ir. Bambang P. Adhiwiyoto
(BRTI) also provided similar explanation, so that the
reason and motivation of the parties involving in the
93
Interconnection Agreement in order to prevent
spamming shall be considered as a reason which is
valid and does not violate any law; -------------------38.3.2.7.
That the SKA method needs to be applied in the
inter-operators SMS interconnection by considering
that this method is deemed as the most simple and
cost effective method. The implementation of SKA
pattern does not require additional equipments or
hardware/software for recording system or billing
system for inter-operators SMS traffic, as well as not
requiring inter-operators settlement or invoicing
activities. The implementation of non-SKA method
will certainly require investment and additional costs
assumed by the operators for procuring equipments,
hardware/software
system,
and
the
intended
additional equipments which in turn will potentially
increase the cost and/or rate;------------------------------38.3.2.8.
That the Amendment of Interconnection Agreement
between PT Telekomunikasi Indonesia, Tbk. and PT
Telkomsel made in 2002 which is considered by the
Examining Team as containing the clause of SMS
rate fixing was not intended to distort the SMS
market, considering that market distortion will occur
if both parties are not interconnected; --------------------
38.3.2.9.
The limitation of retail bottom price for interoperators
SMS
Indonesia,
Tbk.
between
And
PT
PT
Telekomunikasi
Telkomsel
was
implemented by both parties in order to prevent
market distortion in inter-operators SMS. The
prevention of market distortion in inter-operators
SMS shall not only be sufficient with interconnection
capability, as it is also deemed necessary to
prevent any distortion in SMS market caused by
potential retail price reduction in inter-operators
SMS by the interconnection counterparty. In addition,
the prohibition of SMS retail rate fixing which is lower
than other operators is also intended to prevent
potential SMS traffic spamming from the operators
applying lower rates. In the event SMS traffic
94
spamming occurs, it will potentially damages the
quality of SMS services provided by the operators
affected by spamming, besides they do not receive
any payment due to the implementation of SKA
method, and they will also be affected by potentially
high traffic burden of incoming SMS or at least
abnormal traffic volume. SMS traffic spamming can
be easily conducted by using special equipment or
spamming machine commonly used for broadcast
SMS for the purpose of promotional activities of
products, multilevel marketing and other information
broadcasting activities. If this situation occurs, the
operator receiving spamming SMS traffic will suffer
significant loss, while the sending operator will
remain be benefited, considering that the spamming
sender/user may be charged at retail rate by the
spamming operator;------------------------------------------38.3.2.10. That the absence of intention to commit price
fixing as referred to in Article 5 of Law Number 5
Year 1999 can be analyzed from the facts as stated
hereunder:------------------------------------------------------a.
The
types
of
telecommunication
services
contained in the Interconnection Agreement
(the Original Agreement and its Amendment)
were not only SMS products, but also voice
products for local, domestic long distance, and
international telephone services as well as
other value added services; ------------------------b.
That the products other than SMS constitute
products which gain high revenue (significantly
higher compared to the revenue of SMS
products), however there was no price fixing
clause
for
the
interconnection
of
those
products; ------------------------------------------------c.
It
shall
be
deemed
illogical
if
the
Interconnection Agreement only contains price
fixing clause for inter-operators SMS, while
other services contained in the Interconnection
Agreement
(which
potentially
gain
higher
95
revenue compared to SMS) are not provided
with price fixing clause. In other words, there
were chances/opportunities to fix the prices of
all types of services (local, domestic long
distance and international telephone services
either on-net or off-net, as well as on-net SMS
service), however the chances/opportunities
was not taken advantage by the more solid
operator (incumbent). In fact, incumbent has
the power to implement that which can not be
refused by new entrants, as refusal shall mean
no interconnection. If such situation occurs,
incumbent will never suffer from any loss, while
new entrants will always suffer from financial
loss; ------------------------------------------------------d.
From the above facts, it is well accepted by
common sense that the clause which is
considered as price fixing clause (rate cartel)
for inter-operators SMS does not constitute
as price fixing clause as that prohibited in
Article 5 of Law Number 5 Year 1999, or at
least there was no intention to establish
rate cartel; ----------------------------------------------
37.2.3.
That according to past and current applicable
regulation, SMS retail price or rate fixing is the sole
discretion of the respective operators. Therefore,
the magnitude of SMS rate or price to apply, including
the same or different amount of rate, shall be the sole
discretion of the respective operators and is not
intended to violate the provision of applicable laws.
The conviction of the absence of violation may also be
proved by the fact that the BRTI has never issued any
warning until the present time, particularly warning to
PT Telekomunikasi Indonesia, Tbk.; ------------------------
37.2.3.11. That the presence of a statement of the BRTI dated
30 May 2008 in a meeting between the BRTI and
ATSI concerning SMS rate fixing which is considered
as violating Law Number 5 Year 1999 and hindering
fair business competition (as set forth in the LHPL
96
point 66), it is hereby stated that PT Telekomunikasi
Indonesia, Tbk. did not aware of it, besides not
attending
the
meeting,
PT
Telekomunikasi
Indonesia, Tbk. is not the member of ATSI. PT
Telekomunikasi Indonesia, Tbk is not the member of
ATSI due to the fact that the company does not fulfill
the requirements to be its member, namely PT.
Telekomunikasi Indonesia, Tbk. is not a cellular
telecommunication operator company; -------------------38.3.3.
Pursuant to the aforementioned, we firmly state that the clause
of prohibition to apply retail rate for inter-operators SMS as
set forth in the Interconnection Agreement between PT
Telekomunikasi Indonesia, Tbk. and PT. Telkomsel made in
2002 was not intended to distort SMS market, instead it was
intended to avoid distortion in inter-operators SMS market
which may be caused by extreme price reduction committed
by interconnection counterparty, as well as intended to
maintain the quality of SMS transmission (accuracy and
swiftness). In other words, the interconnecting operators did
not have any intention to intentionally commit price fixing as
referred to in Article 5 of Law Number 5 Year 1999; ------------------
38.4.
(D) Concerning inter-operators SMS retail price within the interval of
Rp 250.- and Rp 350.-; -----------------------------------------------------------------38.4.1. The Board of Directors of PT Telekomunikasi Indonesia, Tbk.
determines the retail bottom price of inter-operators SMS of
TelkomFlexi FWA amounting to Rp 250.- (for Flexi Classy or
Postpaid) and Rp 350.- (for Flexi Trendy or prepaid) based on
the following considerations: -----------------------------------------------38.4.1.1.
Product Positioning of TelkomFlexi -----------------------38.4.1.1.1. Product
Positioning
basically
does
not
of
TelkomFlexi
separate
SMS
products from voice products, as well as
being placed in a relative position
against
voice
Telephony
operated
Indonesia,
product
(PSTN)
by
PT.
Tbk.,
which
of
Fixed
is
also
Telekomunikasi
therefore
the
determination of bottom price (rate) or
97
pricing method are interdependent each
other; --------------------------------------------38.4.1.1.2. In addition, although the playing field
level of TelkomFlexi products is different
compared to other cellular products, the
management also places TelkomFlexi
product in a relatively lower position
compared to other cellular products
(either cellular products provided by PT
Telkomsel, or those provided by other
operators). This positioning shall not be
interpreted that the respective prices of
the derivative products of TelkomFlexi
must
be
respective
lower
compared
prices
of
the
to
the
cellular
derivative products, but there is a
possibility that the prices can be the
same or higher compared to value
relativity of the products in an integrated
manner (related to the interdependence
between SMS Flexi service and voice
service);-----------------------------------------38.4.1.2.
The interdependence of the derivative products of
TelkomFlexi and Telkom PSTN; ---------------------------That the derivative products of TelkomFlexi, namely
voice products (local and domestic long distance
telephony) and SMS (on-net and off-net) are placed
in an interdependence position each other, namely: --a.
It is expected that the local TelkomFlexi voice
product is not substituted by SMS Flexi product,
so that the rate of SMS Flexi shall be higher
compared to the local voice rate. Therefore, it is
expected that the local voice product is more
valuable compared to the SMS product; -----------
b.
There is possibility that the TelkomSLJJ voice
product (Flexi or Fixed Telephony/PSTN) is
substituted by SMS Flexi product in order to
maintain
and
increase
the
penetration
of
TelkomFlexi customers. However, it remains
98
expected that TelkomSLJJ voice product can be
a more attractive alternative compared to the
cellular domestic long distance telephony (SLJJ),
so that the tariff should be more competitive
compared to the cellular domestic long distance
telephony (SLJJ); ---------------------------------------38.4.1.3.
The relativity against the derivative products of
cellular service; -----------------------------------------------Although the level field playing of TelkomFlexi
products is different compared to cellular products, in
determining market price or product pricing of
TelkomFlexi
and
it
derivative
products,
the
management also considers the value and relative
price against the value and price of cellular services;
38.4.1.4.
The relativity against the existing price (market price)
and the previous price (historic price); ------------------The relativity against the prices of similar products for
FWA, Fixed Telephony (PSTN), or cellular also
becomes the consideration in determining the price
or pricing product of TelkomFlexi; -------------------------
38.4.1.5.
Benchmark against pricing strategy applied by other
operators -------------------------------------------------------The pricing strategies applied by other operators are
also considered by the management in determining
the rates of TelkomFlexi products; ------------------------
38.4.2.
By first considering the above elements, the management of PT
Telekomunikasi Indonesia, Tbk. determines basic price/rate for
TelkomFlexi SMS as follows: ----------------------------------------------
38.4.3.
1.
Flexi Classy on-net SMS Rp 75.- -----------------------------------
2.
Flexi Classy off-net SMS Rp 250.- ----------------------------------
3.
Flexi Trendy on-net SMS Rp 100.- ---------------------------------
4.
Flexi Trendy off-net SMS Rp 350.- ---------------------------------
We hereby confirm that in determining the on-net SMS rate, the
management did not consider the presence or the absence of
the clause in interconnection agreement considered by the
Examining Team as the price fixing clause for SMS service,
considering that the agreement does not state any amount. In
the event the amount of off-net SMS Flexi rate is equal to the
price of cellular SMS or FWA SMS of other operators, it shall be
99
considered that it is not intended to distort SMS market,
establishing rate cartel, or even violating the provision of
Article 5 of Law Number 5 Year 1999; -------------------------------38.4.4.
In
addition,
in
their
various
promotion
programs,
the
Management of PT Telekomunikasi Indonesia, Tbk. has
implemented various promotional gimmicks for TelkomFlexi
product either for SMS or voice derivative products, including:---1.
Program Promosi Gratis Berbulan-Bulan (Free Promotional
Program for Months) or commonly known as Program GB3;
2.
Program Promosi Gratis Pulsa 100% (100% Free Talktime
Promotion Program) or commonly know as Program GP
100; and -------------------------------------------------------------------
3.
Program Promosi Trendy Dahsyat (Hot Trendy Promotion
Program); -----------------------------------------------------------------
38.4.5.
Through the above programs, the users/customers of Prepaid
TelkomFlexi (Flexi Trendy) can enjoy various discount price and
talktime bonus which can be used either for voice or SMS
service, on-net or off-net; ---------------------------------------------------
38.4.6.
The availability of these programs shall mean that the price of
off-net SMS for Flexi Trendy can be enjoyed by their users at a
price below Rp 350.- / message; ------------------------------------------
38.4.7.
However, it should be emphasized that price similarity shall
not immediately indicate the presence of rate cartel, as it
may happen coincidentally or due to the action taken by
followers. The reality in any industry may indicate that the
market price constitutes the main standard in determining
selling price; ------------------------------------------------------------------
38.5.
(E) Concerning the Conclusion in the LHPL; ---------------------------------38.5.1. There are some incorrect points in the conclusion of the LHPL
taken by the Examining Team, including: ------------------------------38.5.1.1.
There are some overlapped periods where the
Examining Team determined 3 periods, namely
2000-2004, 2004-2007, and 2007-April 2008. The
presence of overlapped periods should not be
occurred as it will produce invalid conclusion; ---------
38.5.1.2.
As explained in the above Section A, B, C, and D,
the conclusion in point 116 letter b and c as well as
point
117
constitute
incompletely
correct
conclusion, and therefore they should be corrected
100
to no cartel and no violation against Article 5 of Law
Number 5 Year 1999, particularly those involving
PT Telekomunikasi Indonesia, Tbk;-------------------38.6.
(F) Expectation to the KPPU; ------------------------------------------------------38.6.1. From the LHPL issued by the KPPU as the reaction against the
alleged violation of Article 5 of Law Number 5 Year 1999, it can
be concluded that, in fact, the Examining Team of the KPPU has
observed the examined case with narrow perspective. It is
proved by the facts in the statements, analyses and conclusions
which state that the presence of the clause which was deemed
by the Examining Team as price fixing clause for inter-operators
SMS prohibited by Article 5 of Law Number 5 Year 1999, without
considering the impact more comprehensively; ----------------------38.6.2. In the event the KPPU eventually believe and declare that there
was violation against Article 5 of Law Number 5 Year 1999 which
is based on the statements, analyses and conclusions as set
forth in the LHPL, new issue will certainly appears and adversely
impact the Telecommunication Industry. The impact that may
appear and will be difficult to prevent, including: ---------------------38.6.2.1.
New operators and operators with small number of
customers will have an opportunity to extremely
reduce their rate in order to gain new customers. If
the extreme price reduction is committed to SMS
rate, then market distortion will certainly appear,
not only against SMS product, but also in the market
of prepaid and postpaid cards; -----------------------------
38.6.2.2.
The impact of extreme price reduction will also
generate spamming SMS through SMS broadcast
generated by SMS machine commonly used for
promotional activities through SMS, multi level
marketing, provocative information distribution, or
other information distribution activities intended to the
public. It is committed by considering that SMS
media constitute the most effective media in terms of
swiftness, coverage and target, and must be read by
the recipients. Despite the current presence of antispamming
machine,
we
should
consider
the
importance of additional investment and operational
cost caused by the procurement of anti-spamming
101
machine which in turn will increase the price to be
collected to the end users or customers; ---------------38.6.2.3.
The
open
possibility
of
spamming
SMS
will
encourage operators to leave SKA method for a
paying method for SMS interconnection, in the event
this situation occurs, the operators need to provide
additional
equipments
such
as
interconnection
recording system, interconnection billing system,
interconnection
rating
system,
traffic
and
interconnection cost settlement system, as well as
system and procedure for the purpose of invoicing
and
payment,
which
require
significant
new
investment and additional operation cost. In turn, the
additional investment and operational cost will
increase the price that should be paid by the end
users/customers; ---------------------------------------------38.6.2.4.
As a public institution, the KPPU shall act more
wisely when reacting against business competition in
all industrial sectors. There are a lot of business
competition issues which are more serious and
should be prioritized by the KPPU. It is expected that
the KPPU does not act as a repressive machine by
emphasizing
their
examination/investigation
concentration
process
on
against
the
the
alleged violations of Business Competition Law,
otherwise they should provide more advise and
consideration to other institutions as well as business
actors, so that a fair business competition climate
can always be created, improved and maintained
continuously;---------------------------------------------------38.6.2.5.
The above are all our pleading, we hope it will be
considered in order to correct the analyses and
conclusions as set forth in the LHPL. Thank you very
much for you kind attention; --------------------------------
38.7.
(G) Conclusion and Expectation of the Pleading; ---------------------------38.7.1. Pursuant to the above explanation in letter A up to F, we hereby
conclude as follows:
102
38.7.1.1.
That the KPPU is not authorized to perform business
competition
supervision
in
telecommunication
industry as it is the authority of the BRTI;---------------38.7.1.2.
That
the
clause
in
the
Amendment
of
the
Interconnection Agreement which is considered by
the Examining Team as price fixing clause for interoperators SMS prohibited by Article 5 of Law Number
5 Year 1999 is not correct; -------------------------------38.7.1.3.
That price similarity shall not immediately indicate the
presence
of
rate
cartel,
as
it
may
happen
coincidentally, action taken by followers or due to
market price; ---------------------------------------------------38.7.1.4.
That PT Telekomunikasi Indonesia, Tbk. has never
involved in SMS rate cartel either in formal or
material manner. Therefore, PT. Telekomunikasi
Indonesia, Tbk. asks the Commission Assembly of
the KPPU to declare that PT. Telekomunikasi
Indonesia, Tbk. is not proven violating the provision
of Article 5 of Law Number 5 Year 1999; ----------------
38.7.2. Furthermore, we respectfully expect that the Decision to be
issued by the KPPU for the Case Number 26/KPPU-L/2007 will
free PT Telekomunikasi Indonesia, Tbk. from the alleged
violation against Article 5 of Law Number 5 Year 1999, and thus
no sanction or punishment imposed upon PT. Telekomunikasi
Indonesia, Tbk.; --------------------------------------------------------------39.
Considering that in the Commission Assembly Session, the 5th Reported Party
(Hutchison)
attended
the
session
without
submitting
any
written
Response/Pleading (see Evidence B38); ---------------------------------------------------40.
(Bakrie) as set forth hereunder (see the evidence A118);-------------------------------40.1.
CHARACTERS OF TELECOMMUNICATION INDUSTRY; -------------------------------40.1.1. Telecommunication Industry is Network Industry; -------------As a network industry, telecommunication industry has three
main economic characteristics which are influencing, as set forth
hereunder; --------------------------------------------------------------------40.1.1.1.
Economies of Scale and Scope; --------------------------40.1.1.1.1.
One
thing
distinguishes
network
industry from non-network industry is
103
the
presence
of
very
substantial
economies of scale and economies of
scope.
Providing
telecommunication
services require very significant cost in
order to build sophisticated network
infrastructure. It is reflected in the cost
structure of business actors in the field
of telecommunication indicating very
significant fixed cost. The efficiency
level of the company will be significantly
influenced by network utility level. With
such characteristics, the large number
of customers and high traffic volume will
be
significantly
efficiency
level
influenced
achieved
by
by
the
a
telecommunication operator. The larger
the traffic, the lower the production cost
for a service provided. In the context of
telecommunication
operation
in
Indonesia, the production cost of voice
service
per
minute
for
incumbent
operator with tens of million customers
will be significantly lower compared to
new
operators
with
hundreds
of
thousand or millions of customers; ------40.1.1.1.2.
Besides
economies
telecommunication
of
industry
scale,
is
also
identified by very high economies of
scope considering that a network can
be used to provide several types of
services without requiring significant
additional
investment.
Providing
additional services such as SMS facility,
for example, requires relatively low
additional cost, namely the cost to
establish an SMS Center (SMSC) in the
event the method utilized is Sender
Keep All (SKA). Another example is the
provision of 3G service by 2G operator,
104
which
requires
lower
investment
compared to the provision of 3G service
by the operator who has never built any
infrastructure for providing 2G service.
Therefore,
the
earlier
operators
generally have more comparative and
competitive advantages compared to
the new operators (new entrants); ------40.1.1.2.
Compatibilities and Standard; -----------------------------The various telecommunication services indicate the
presence
of
complementary
characteristic.
For
example, the relationship between mobile phone
(handset) as accessing tool and telecommunication
services provided by the operators. The presence of
complementary
strategies
for
characteristics
presents
telecommunication
various
operators,
for
example in Indonesia is the provision of CDMA
mobile phone at subsidized price thus lower selling
price. The strategy is intended to attract prospective
users of telecommunication services particularly
those who have never used mobile phone and dual
users (CDMA and GSM); -----------------------------------40.1.1.3.
Network Externalities; ---------------------------------------The main characteristic of the tree network industries
is
that
network
advantage
or
effectiveness
significantly depends on the number of users. The
bigger the number of customers of a network, the
larger
the
effectiveness
in
network
utilization.
Therefore, in order to increase this externality as well
as to avoid the occurrence of market domination
misuse
by
larger
scale
operators,
the
telecommunication regulatory agencies in various
countries,
including
Indonesia,
issue
policies
requiring every operator to provide interconnection
access; ----------------------------------------------------------40.1.2. Telecommunication Industry constitute High Regulated
Industry;-----------------------------------------------------------------------Telecommunication
industry
constitutes
a
fully
regulated
industry. It can be said that almost all business activities in
105
telecommunication sector are based on the regulations issued by
the government and or the Indonesian Telecommunication
Regulatory Agency (“BRTI”), from the types of service allowed to
provide, the geographical coverage of every service, what
frequencies are allowed to use, to various service standards of
the respective service. Meanwhile, the implementation of
business
activities
is
always
strictly
supervised
by
the
government, including the BRTI as the controller and regulator; -40.1.3.
The position of New Entrants in Telecommunication
Industry as Network Industry; -----------------------------------------In telecommunication industry where substansial economies of
scale exists, first mover operators that has successfully
accumulated the number of customers in a significant amount
will gain absolute cost advantage compared to the new entrants.
Added with the influence of network externalities, therefore, from
the
perspective
of
competition,
the
position
of
new
telecommunication operators is relatively weak when they have
to compete with incumbent operators in term of costumer
acquisition.
40.1.4.
The Strategy of New Entrants in Telecommunication
Industry as Network Industry; -----------------------------------------With the objective position of the new operators (new entrants) in
the market as aforementioned, therefore the new operators have
to develop an accurate and effective business strategy to be able
to survive and develop. Based on practical experience, one of
the most effective strategy to compete with incumbent operators
and to be significantly accepted by the customers or prospective
customers is strategy in determining service rate which is low
supported with reasonable service quality. The implementation of
service at low rate which sometime has to be done although it
does not reflect the real production cost, for example by
providing a service at a rate lower than the production cost
during the promotion period. The main objective of service
provision strategy at low rate is to increase customer basis and
network utilization level so that the scale of economies can be
achieved which in turn will gradually establish lower production
cost; ------------------------------------------------------------------------------
106
40.1.5.
The Impact of Actions performed by New Entrants against
Telecommunication
Market
from
the
perspective
of
Business Competition; ---------------------------------------------------With significantly low market domination, any competition activity
or strategy within the framework of telecommunication business
operation performed by new operators will not be able to
influence the market significantly, either from the side of pricing
or service quality due to lack of market power. Market control
activities can only be performed by incumbent operators as
market leader which already have large number of customers
and achieve minimum scale of economies. In network industry;
the higher the difference of the number of customers between
market leaders and new entrants shall mean the more
insignificant
the
impact
of
business
policy
and
actions
implemented by the new entrants. Such situation can be
understood from the market logic of network industry, because
any business action or strategy taken by new operators (new
entrants) either related to rate policy or service can be easily
mitigated by the reaction of the incumbent operators (market
leaders). For example, if a new operator (new entrant) determine
tariff below their production cost during substantial period of time
(other than for promotional purpose or subsidy method from
other fields of service), then the reaction of market leader
(incumbent operators) with their various strategies may hinder
the development of the new operator or at least causing higher
financial loss experienced by the new operator; ---------------------40.2.
THE POSITION OF BAKRIE IN WIRELESS TELECOMMUNICATION MARKET IN
INDONESIA; --------------------------------------------------------------------------------40.2.1. The Definition or Related Market; -------------------------------------40.2.1.1.
In order to determine the presence or the absence of
an anti-competition practice in a market as well as to
further analyze
its adverse impact against the
market, it is required to theoretically specify the exact
definition of “related market”. An agreement made by
business actors in different related markets (which do
not have production chain relevance) can not be
easily categorized as restrictive action although the
agreement contains a provision regulating price or
marketing areas. Another example is an acquisition
107
conducted by dominant business actor in certain
sector against other business actors who do not have
any relationship with them either vertically or
horizontally. This situation shall not be considered as
causing weakened competition level. With such
mindset, in an a quo case like this, we are of the
opinion that it is necessary to first specify the
definition of related market prior to further evaluate
the impact of business competition caused by the
provision of minimum SMS rate occurs between
Bakrie and XL and Telkomsel; ----------------------------40.2.1.2.
Pursuant to Law Number 5 Year 1999 Article 1,
related market is a connected market with certain
coverage or marketing area specified by business
actors for products and or services similar with/equal
to the products or services. Pursuant to the above
definition, there are two dimensions of related
markets that need to be defined, namely product
market and geographical market.--------------------------
40.2.1.3.
In the implementation of telecommunication service
in Indonesia, either in general or in regulation, there
are two types of telecommunication service, namely
PSTN/FWA and Cellular (mobile). In order to be able
to declare that both products are available in the
same market, it is necessary to first prove, from the
side of demand sustainability, that the products
compete each other or substitutable from the aspects
of
intended-use,
characteristics
and
price.
As
referred to in the Decision of the KPPU No.
07/KPPU-L/2007, the market of cellular products is
different with the market of PSTN/FWA products, due
to different characteristics and price, although their
basic utilizations are the same; ---------------------------40.2.2.
The Position of Bakrie in Indonesian Telecommunication
Market;-------------------------------------------------------------------------40.2.2.1.
Pursuant to the permit for Fixed Wireless Access
(FWA) provided by the Government through the
Minister of Communication and Informatics, Bakrie
was only allowed to provide local fixed network
108
service with radio access and basic telephony
service within the area of DKI Jakarta, West Java
and Banten pursuant to the Ministerial Decree of
Communication
Number
KP.282
Year
2004
(attached) and then the coverage area was further
expanded within the territory of Indonesia pursuant to
Ministerial Decree of Communication and Information
Number 298/KEP/M.KOMINFO/6/2007 (attached); --40.2.2.2.
Based on the above definition of related market and
telecommunication operation permit issued by the
Government,
the
position
of
Bakrie
in
telecommunication market shall be as follows: --------Service Market of PSTN/FWA 2004 - 2006
2004
Telkom
2005
2006
96,40% 94,67% 88,23%
Indosat
0,68%
1,90%
2,54%
Bakrie
2,90%
3,41%
9,21%
0,03%
0,02%
0,01%
Batam Bintan
Telekomunikasi
40.2.3.
Bakrie Telecom is a New Entrant in SMS Service Market in
Indonesia; --------------------------------------------------------------------40.2.3.1.
Bakrie offers SMS service to their customers in
Indonesia through FWA telecommunication service.
FWA market in Indonesia constitutes relatively new,
developing market. This market was established in
2004, when the government first issued the permit for
FWA
service
and
network
operation.
In
the
competition in PSTN/FWA market, Bakrie always
offers very competitive rate, either for voice or SMS
service, as indicated in the following table:--------------
On-Net
Off-Net
Voice
Rp 50/minute, Rp 1000/hour
SMS
Rp 50/SMS
Voice
Depends on interconnection rate
SMS
Rp250 (SKA) which is
conditioned due to
Interconnection Agreement
109
40.2.3.2.
We need to inform that Bakrie is an FWA operator
offering talk rate at Rp 50/minute and Rp 1000/hour
and very low on-net SMS rate at Rp 50/SMS; ----------
40.3.
PRODUCTION COST AND REVENUE OF BAKRIE TELECOM FROM OFF-NET
SMS SERVICE -----------------------------------------------------------------------------40.3.1. General Financial Condition of Bakrie Telecom; -----------------40.3.1.1.
Bakrie first launched their fixed wireless access
(FWA) service in September 2003 with brand Esia
and used CDMA technology. In the first two years of
providing telecommunication services, Bakrie have
not recorded any profit, they event suffered from loss
amounting to almost Rp 300 billion in 2004 and Rp
145 billion in 2005. Bakrie started to gain profit after
three years of operation. In 2006, they gained profit
of Rp 73 billion and Rp 144 billion in 2007. With such
profit condition, Bakrie’s ROEs were only 5% and 8%
in 2006 and 2007 respectively; -----------------------------
2004
2005
2006
2007
Profit and Loss Statement (in million rupiah)
Net Revenue
161,701
243,757
31,877
29,751
291,515
-297,978
-144,324
72,680
144,269
ROE
-132%
-17 %
5%
8%
ROA
-28%
-9%
3%
3%
EBITDA
Net Profit (Loss)
607,921 1,289,889
534,529
Business Ratios
40.3.2.
SMS Production Cost; ------------------------------------------------40.3.2.1.
On-net SMS rate of Rp 50/SMS applied by Bakrie is
actually below the production cost. Based on the
calculation made by Bakrie in 2004, each SMS
transmission costs Rp 198. With fair profit margin
according to them, namely 25 percent of the cost
production, then a fair SMS rate for Bakrie should be
Rp 248; ----------------------------------------------------------
110
SMSC
2004
Price
US$
3,071,307
Interest (5 years)
16%
2,457,046
Equipment Value (USD)
5,528,353
Rate USD
9,290
Equipment Value (IDR)
51,358,395,654
10 Years Depreciation
427,986,630
Capacity
Per hour
100,000
Utilize (Outgoing Traffic)
3%
Per Month
2,160,000
COGS
198
Margin
25%
50
Retail Price
40.3.2.2.
248
With the implementation of SKA method for SMS
interconnection, there is actually no cost difference
between
However,
On-Net
the
and
provision
Off-Net
in
SMS
services.
the Interconnection
Agreement with XL and Telkomsel states that Bakrie
is not allowed to apply SMS rate lower than the SMS
rate applied by XL and Telkomsel to their customers
in order to avoid overloaded network due to SMS
transmission from Bakrie’s customers, as well as to
avoid interruption of network performance, therefore
Bakrie has to apply different rates for off-net and onnet SMS. --------------------------------------------------------40.3.3. Revenue Gained by Bakrie from Off-Net SMS Service
compared to Total Revenue --------------------------------------------40.3.3.1.
Among the total business revenue recorded by
Bakrie in 2007, the revenue from SMS service only
accounts for 11 percent of the total revenue
consisting of 3 percent from on-net SMS and 9
percent from off-net SMS. Meanwhile, in the first
quarter of 2008, the SMS service contribution only
accounts for 19.7 percent of the total revenue,
consisting 4.6 percent from on-net SMS and 9
percent from off-net SMS; -----------------------------------
40.3.3.2.
Based on the above condition, it can be stated that
the
revenue from
off-net
SMS
shall
not
be
111
considered as the main revenue relied on by Bakrie.
Bakrie’s main revenue, pursuant to their core
activities, derives from voice service. --------------------40.3.4.
SMS Service serves as Teaser in Marketing Strategy of
Bakrie Telecom; ------------------------------------------------------------Considering that new operators (new entrants) only have low
numbers of customers and limited networks, therefore being the
customer of new operators constitute an economically risky
choice. Meanwhile, the economic profit only contributes for small
network effect benefit. In 2004, the numbers of Esia’s customers
were only 190,961 customers, while Telkomsel’s customers were
more than 30 million and XL’s customers were 3.7 million. In
2006, the numbers of Bakrie’s customers increased to 1.5 million
customers, while the numbers of Telkomsel and XL’s customers
were 63.8 million and 9.5 million respectively. With such
illustration, the only strategy that must be implemented by Bakrie
in order to attract customer is low rate strategy, they even
suffered from loss (cross-subsidize) during promotional period,
including implementing low SMS rate. Without implementing
such strategy, it will be difficult for Bakrie to gain more customers
as well as optimizing network utilization in order to gain efficiency
and to reduce the average production cost continuously; -----------
40.3.5.
No Excessive Profit from SMS Service; ----------------------------40.3.5.1. Based on the aforementioned cost calculation, we
hereby declare that the on-net SMS rate of Rp 50/SMS
applied by Bakrie constitutes a selling rate which is
below production cost. Meanwhile, the implementation
of off-net SMS of Rp 250/SMS which constitutes the
minimum SMS rate required by Telkomsel and XL and
to be applied by Bakrie through the Interconnection
Agreement, does not contribute for excessive profit,
but only reasonable profit reflecting cost structure
obstacle encountered by Bakrie; ---------------------------40.3.5.2. The absence of excessive SMS rate (as well as other
service rates) applied by Bakrie was clearly reflected
by the low ROE of -132% to -8% during the period of
2004-2007. With such negative ROE during the first 2
years, and only 5% and 8% in 2006 and 2007
respectively, it can be stated that Bakrie has never
112
applied excessive rate for all services, including off-net
SMS. Therefore, the pricing policy applied by Bakrie
during the time does not incur adverse impact against
the customers; ---------------------------------------------------
40.4.
BAKRIE PARTICIPATION IN INTERCONNECTION AGREEMENT; --------------------40.4.1. The dependence of the new operators (new entrants) to the
networks owned by the incumbent operators has made the new
operators prone against the misuse of dominant position in the
event the marketing strategy implemented by the new operators
is deemed to take over the customers of the incumbent
operators as well as their market share; -------------------------------40.4.2. The followings are practical facts encountered and experienced
by Bakrie during the process to arrange Interconnection
Agreement and during the implementation of the Interconnection
Agreement: --------------------------------------------------------------------40.4.3. The Arrangement of Interconnection Agreement ---------------40.4.3.1.
The
process
Agreement
to
arrange
specifically
the
regulated
Interconnection
off-net
SMS
minimum rate between Bakrie and other operators as
stated in the Advanced Examination Report number
26/KPPU-L/2007 section II letter B point 5.3 made
and signed in 2004 where the process took
approximately 4 months. The relatively long period to
complete a technical preparation and negotiation
process
of
interconnection.
In
fact,
the
slow
movement in making this agreement was due to
difficult discussion with regard to one of provisions in
Article 18 par. (2) concerning Charging proposed by
XL and reading as follows: “Specifically for the
Charging of SMS Service to be applied to the
customers of the respective parties, the Parties
agree that the Charging applied to the customers of
BakrieTel shall not be lower than the Charging
applied to the customers of Excelcom, namely Rp
250/SMS.” ------------------------------------------------------40.4.3.2.
Meanwhile, Telkomsel proposed another charging
pursuant to Article 22 par. (2) in the Interconnection
113
Agreement
year
2004
reading
as
follows:
“Specifically for the Charging of SMS Service to be
applied to the customers of the respective parties,
the Parties agree that the Charging applied to the
customers of BakrieTel shall not be lower than the
Charging applied to the customers of Telkomsel,
namely Rp 250/SMS.” --------------------------------------40.4.3.3.
The main reason within technical context as to why
both operators proposed the article was to prevent
the occurrence of spamming SMS. Bakrie was in the
objection considering that this provision would limit
their flexibility and prevented Bakrie from applying
low rate strategy in order to increase their customer
base. Because both operators remained firm to
include the substantial article and by considering the
reality of weak bargaining power and to secure the
investment that has been made as well as to ensure
the continuity of their business activities, Bakrie
eventually accepted the provision, despite the
adverse impact the article might have in the future
against Bakrie; -------------------------------------------------
40.4.4. The Implementation of the Agreement; -----------------------------40.4.4.1.
The 1st Low Rate SMS Program to All Operator;--40.4.4.1.1.
In October 2004, Bakrie launched a
Free SMS Program to all operators.
Due to this promotion rate, Bakrie
received a warning letter from XL. With
regard to the warning letter from XL,
through the Intercarrier Relations &
Supply Chain Director, Bakrie explained
the
situation
in
a
letter
5202/ETS.04/Dir/X/2004
Number
dated
16
October 2004 (as attached). In replying
to the letter from Bakrie, XL through
their GM Inter Carrier Relation M.
Buldansyah
sent
a
reply
letter
confirming that Bakrie had violated the
provision of Article 18 par. (2) of the
Interconnection
Agreement
between
114
Bakrie and XL through a letter Number
260/XL/ICR-ACM/XI/2004
dated
10
November 2004 (as attached). In the
reply letter, XL also conveyed the
following points: ------------------------------1.
Excelcom will review and revise the
Interconnection
Agreement
between the Excelcom and Bakrie;
2.
Excelcom will not be able to ensure
the network quality for the purpose
of SMS transmission from Bakrie
Telecom to Excelcom’s network,
particularly
related
to
the
occupation of our network for the
purpose of promotion; ----------------3.
Particularly nearing Eid Fitr where it
is estimated that the traffic will
sharply increase, Excelcom will
prioritize the traffic usage for the
customers
of
XL
and
their
interconnection partners who have
consistently
provisions
implemented
contained
in
the
the
cooperation agreement; --------------40.4.4.1.2.
Due to the issuance of warning letter
from XL, Bakrie has to stop their free
SMS program to all operators; ------------
40.4.4.2.
The 2nd Low Rate SMS Program to All Operator; -40.4.4.2.1.
In the end of August up to September
2006, Bakrie again launched Esia SMS
Program with extremely low rate. This
SMS program was slightly different
compared to the program launched in
2004. In this 2nd promotion program, the
customers were allowed to send SMS
as much as possible to all operators in
the same day of their registration by
paying only Rp 1.000. If the customers
115
pay Rp 7.000, they would be allowed to
send SMS as much as possible to all
operators
within
seven
consecutive
days. This low rate SMS service could
be extended by the customers of Esia; 40.4.4.2.2. Due to the implementation of this low
rate SMS Program, XL again issued a
warning letter addressed to Bakrie. It
was
only
several
days
after
the
launching of this program that XL was
assumed to block SMS transmission
derived from Bakrie customers. If the
previous
through
problem
could
correspondence
be
solved
between
Bakrie and XL, this time XL required
Bakrie to attend in person to XL office in
Gedung Graha XL, Jl. Mega Kuningan
on Tuesday August 29, 2006 at 14.00
Western Indonesian Time Zone. The
meeting was also attended by the
representatives from Telkomsel, Mobile8 and Sampoerna Telecom Indonesia
(STI), (The List of Attendance as
attached);--------------------------------------40.4.4.2.3.
XL chaired the meeting and showed
their domination against Bakrie. In the
meeting, Bakrie was required to explain
their low rate SMS program deemed
violating the provision of Article 18 par.
(2) of the Interconnection Agreement
with XL and Telkomsel. In addition to
explaining the points related to the SMS
program, Bakrie was also required by
XL to stop the low rate SMS promotion
program before 5 September 2006 (the
Minutes of Meeting as attached); ---------
40.4.4.2.4.
In order to follow up the meeting held in
XL office, Bakrie has to terminate the
low rate SMS program. This termination
116
plan was informed to XL through a letter
Number
dated
7407/EST.02/Direksi/IX/2006
5
basically
September
pointed
out
2006
which
that
Bakrie
understood the intention of XL and they
would immediately terminate the low
rate SMS program but they would still
comply with the provision concerning
service rate amendment as regulated in
the Decree of the Director General of
Post and Telecommunication Number
226 Year 1999; ------------------------------40.4.4.2.5. In September 7, 2006, Bakrie attended
an advanced meeting with XL. In the
meeting,
XL
asked
Bakrie
to
compromise about interconnection cost
payment
(settlement)
for
SMS
transmission targeted to the customers
of XL during the low rate SMS program,
so also on the contrary. By considering
the need for XL interconnection in the
future and due to the clause of
Interconnection
Agreement
violation,
Bakrie had to fulfill the settlement
proposed by XL. Bakrie has previously
sent a letter dated 8 September 2006
requiring
explanation
on
the
SMS
charging scheme proposed by XL to the
GM Inter Carrier Relations of XL,
through
a
letter
Number
7568/EST.02/Intercarrier/IX/2006.
In
reply to the above letter sent by Bakrie,
XL conveyed a draft of a Memorandum
of Understanding where the rate of SMS
transmission to apply during the low
rate SMS program should refer to the
rate examined by Ovum; ------------------40.4.4.2.6.
On September 11, 2006, Bakrie and XL
entered
into
a
Memorandum
of
117
Understanding agreeing several points
as
follows
(the
Memorandum
of
Understanding for SMS Transmission
between Bakrie and XL as attached): --a.
SMS Service; ---------------------------Each party shall ensure that the
SMS transmission will only be used
for
interconnection
traffic
transmission pursuant to the scope
agreed
in
the
Interconnection
Agreement; ------------------------------b.
SMS Rate; -------------------------------The Parties agree that the special
SMS rate during the implementation
of ESIA SMS Promotion Program
during the agreed Period of Time is
Rp 38 (Thirty Eight Rupiah) per
SMS, exclusive of VAT and Income
Tax (Pph 23); ----------------------------
c.
Period;------------------------------------i.
The parties agree that the
period to apply the charging
scheme
for
transmission
SMS
traffic
during
the
implementation of Esia SMS
Program is August 25, 2006 up
to October 5, 2006; --------------ii.
After October 5, 2006, the
parties
agree
to
return
to
provision of the Interconnection
Agreement applicable at that
time; ---------------------------------40.4.4.2.7. Since the issuance of warning letter by
XL, Bakrie has to stop the low rate SMS
program and it will be difficult for Bakrie
to offer low SMS rate in the future; ------40.4.5. The Amendment of the Agreement; ----------------------------------Finally, Bakrie could be free from the provision regarding the
minimum rate of SMS as aforementioned after the BRTI warned
118
telecommunication
operators
through
the
Association
of
Indonesian Cellular Telecommunication (ATSI) by emphasizing
that the provision in the Interconnection Agreement regulating
the SMS tariff constitute cartel agreement prohibited by the
applicable laws. The provision was finally revoked through the
Amendment of the Interconnection Agreement between XL and
Telkomsel; ---------------------------------------------------------------------40.4.6. The Effectiveness of the Agreement; --------------------------------40.4.6.1.
Pursuant to the above chronologies, it can be
confirmed that Bakrie has tried to exit from the SMS
rate agreement by implementing low rate SMS
promotion at a rate below Rp 250/Off-Net SMS.
Bakrie has tried twice in order to exit from the
agreement but Bakrie had to accept the pressure of
the incumbent operators (market leader); ---------------
40.4.6.2.
The action taken by Bakrie basically indicated that
Bakrie did not have any intention to apply the
minimum
SMS
rate
as
contained
in
the
Interconnection Agreement or at least agree or
bound
by
any
agreement
concerning
the
implementation of minimum SMS rate. However,
considering that new telecommunication operators
do not have sufficient countervailing power when
they have to face the incumbent operators (market
leaders), Bakrie did not have other option than to
follow what the incumbent operators wanted; ---------40.5.
RESPONSE AGAINST THE CONCLUSION OF ADVANCED EXAMINATION; --------40.5.1. In the points 116 and 117 of the LHPL, the Examining Team
concluded as follows: -------------------------------------------------------a.
“That there was a cartel for SMS rate during the period of
2004-2007 made by Telkomsel and XL which has to be
followed by Telkom, Mobile 8 and Bakrie; -------------------------
b. That
therefore
PT
Excelcomindo
Pratama,
Tbk,
PT
Telekomunikasi Seluler, PT Telekomunikasi Indonesia, Tbk,
PT Bakrie Telecom, PT Mobile-8 Telecom, PT Smart
Telecom are proven violating the Article 5 of Law Number 5
Year 1999”
40.5.2. Pursuant to this conclusion of the Examining Team, we hereby
state the following points: ---------------------------------------------------
119
40.5.2.1.
Bakrie have never had any intention to made any
agreement categorized as price fixing practice which
will
restrict
the
competition
in
wireless
telecommunication service in Indonesia. At the
beginning,
Bakrie
has
regulating
minimum
250/SMS,
considering
refused
Off-net
that
the
SMS
the
rate
provision
of
provision
Rp
may
adversely impact the development of their business.
However, their position as new operator and the
numbers of customers which were relatively low have
encouraged Bakrie to agree the provision in order to
maintain the running of their business; ------------------40.5.2.2.
Bakrie has tried to disobey the provision of minimum
SMS rate, however the pressure put by XL, such as
through warning letter where XL said that they would
not guarantee the quality of SMS transmission from
the customers of Bakrie to the customers of XL, has
encouraged Bakrie to implement the provision in
order
to ensure the proper
running
of
their
telecommunication service; --------------------------------40.6.
THERE ARE NO INTENTION TO COMMIT UNFAIR BUSINESS COMPETITION SO
THAT THERE IS NO VIOLATION AGAINST LAW NUMBER 5 YEAR 1999; ----------
Referring to the aforementioned facts, we would like to file our objection
and opinion on the analysis of the fulfillment of the violation elements of
Article 5 of Law Number 5 Year 1999; Article 1 of Law Number 26/KPPUL/2007 Year : "Business Actor is prohibited to make any agreement with
their competitors for the purpose of price fixing for any product and or
service which should be paid by the customer in the same related
market”; proposed by the Examining Team of the Advanced Examination
on the Case Number 26/KPPU-L/2007, particularly for the points not
acceptable to us, as follows: ---------------------------------------------------------40.6.1.
The Definition or Related Market; ---------------------------------40.6.1.1.
That the FWA telecommunication service offered by
Bakrie is not substitutable with cellular/mobile
telecommunication services offered by XL and
Telkomsel, so that Bakrie and Telkomsel and XL do
not run their business within the same related
market. Considering that they do not run their
business within the same related market, so that they
120
are
not
competing
business
actors
in
telecommunication service operation in Indonesia.
Therefore, any agreement made between Bakrie and
XL as well as any agreement made between Bakrie
and Telkomsel can not be categorized as agreement
with competitors, so that the element of agreement
with competitors is not fulfilled; ----------------------------40.6.1.2.
That due to the unfulfillment of the element of
agreement with competitors, then other elements
should not necessary be fulfilled; --------------------------
40.6.2.
No Cartel; ---------------------------------------------------------------------40.6.2.1.
The Interconnection Agreements made between XL
and Bakrie as well as Telkomsel and Bakrie
constitute bilateral agreement (between two parties)
instead of multilateral agreement (between more
than two parties). This Interconnection Agreement
was made based on the need for interconnection
between Bakrie’s network and XL’s network, as well
as between Bakrie’s network and Telkomsel’s
network, although the products and licenses for the
operation of services between Bakrie (FWA) and XL
and Telkomsel (Mobile) are different. Similarly to the
interconnection agreement between Bakrie and other
operators; -------------------------------------------------------
40.6.2.2.
The determination of minimum SMS rate is only
contained in the Interconnection Agreement between
Bakrie and XL as well as Bakrie and Telkomsel, and
there
is
no
interconnection
agreement
with
INDOSAT, Telkom, Hutchinson, NTS, Mobile-8,
Smart Telecom and other operators. With the
absence of agreement concerning minimum SMS
rate
between
Bakrie
and
INDOSAT,
Telkom,
Hutchinson, NTS, Mobile-8, Smart Telecom and
other operators, makes Bakrie and those operators
free to determine their SMS retail rate to their
respective customers. It proves the absence of
agreement between all operators regulating SMS
rate fixing or the absence of similarity/uniformity
provision
(rate
fixing)
in
the
respective
121
interconnection
agreements
among
operators.
Therefore the entire Interconnection Agreement
between Bakrie and each operator does not
constitute an establishment of SMS cartel,
considering that Bakrie and other operators are still
able to determine their own SMS retail rate to their
respective customers, so that the market has a lot of
options to select the available telecommunication
services or there is no rate control/arrangement in
the market; -----------------------------------------------------40.6.3.
The Existence/Validity and Effectiveness of the Agreement
with the Competitors for the purpose of Price Fixing ----------40.6.3.1.
The Interconnection Agreement between 2 (two)
operators constitutes an absolute agreement in order
to maintain the continuity and interconnection in the
operation
services.
of
telecommunication
Although
the
networks
products
and
and
licenses
between Bakrie (FWA) and other operators are
different, however they still need an interconnection.
It should also be consider as the implementation of
each operator’s duty pursuant to the applicable law
and regulation to establish interconnection with other
operators; ------------------------------------------------------40.6.3.2.
The Interconnection Agreement which specifically
regulate the minimum rate of off-net SMS between
Bakrie and other operators as referred to in the
Advanced Examination Number Report Number
26/KPPU-L/2007 section II letter B point 5.3., does
not
have
any
validity
or
existence.
The
Interconnection Agreement does not have valid legal
standing, considering that the determination of rate
for off-net SMS service as contained in the
Interconnection Agreement is not jurisdictionally in
line with the provision of Article 5 of Law Number 5
Year 1999. The new price fixing agreement can be
justified in the event the agreement is made in a joint
venture company or based on the provision of the
applicable laws. The determination of off-net SMS
service rate is not regulated in the laws and
122
regulations in the field of telecommunication, so that
the rate determination as referred to in the
Interconnection Agreement shall be void as a matter
of
law
since
the
beginning,
therefore
the
Interconnection Agreement (particularly the part
relating to the determination of off-net SMS service
rate) does not have validity/existence and invalid.
Therefore, the Interconnection Agreement was not
binding for Bakrie; --------------------------------------------40.6.3.3.
Since the arrangement
of
this Interconnection
Agreement, Bakrie has refused and did not have any
intention to arrange the determination of the
minimum rate of off-net SMS service, considering
that the applicable laws and regulations do not
require such determination. However, as a new
entrant, Bakrie does not have a favorable bargaining
power similar to other incumbent operators so that
Bakrie had to sign the Interconnection Agreement.
The incumbent operators have more pressure power
against Bakrie by using their dominant position when
negotiating the Interconnection Agreement (abuse of
negotiation position);-----------------------------------------40.6.3.4.
Considering that the determination of minimum rate
of off-net SMS service is void as a matter of law and
has been signed in a forced manner, therefore Bakrie
shall not be obliged to implement or comply with the
provision concerning rate determination. Pursuant to
the applicable laws, an agreement made in a valid
manner shall be binding as a law to the parties
involving in the making of the agreement and should
be implemented with good faith. In fact, the
Interconnection Agreement was not made in a valid
manner considering that (1) the determination of
minimum rate of the off-net SMS service was not in
line with the applicable laws and shall be void as a
matter of law, and (2) has been made by Bakrie in a
forced situation, where Bakrie as a new entrant had
an inferior economic position compared to the
incumbent operators. Therefore, Bakrie shall not be
123
obliged to implement the minimum rate determination
with good will. And Bakrie has implemented some
actions in order to exit from or to disobey the
provision. Therefore, the determination of minimum
rate
was
actually
ineffective
and
could
be
implemented by Bakrie in a loyal manner;--------------40.6.3.5.
However, the effort committed by Bakrie in order to
exit from or to disobey the determination of minimum
rate for off-net SMS has triggered a repressive action
taken by the incumbent operators that threatened
Bakrie and interrupted the proper running of their
business. As a new entrant, Bakrie did not have any
power to disobey the pressure put by the incumbent
operators, so that Bakrie have to applied the
minimum rate of off-net SMS as referred to in the
Interconnection Agreement; --------------------------------
40.6.4. The Impact of Bakrie’s Participation in the Provision of
Minimum
Rate
for
Off-Net
SMS
Service
against
telecommunication customers; -----------------------------------------40.6.4.1.
Bakrie felt that the provision of minimum rate for offnet SMS as referred to in the Interconnection
Agreement was basically did not benefit their
company. In fact, the provision of minimum rate for
off-net SMS limited Bakrie’s flexibility in applying low
rate strategy in order to increase customer basis as
well as disadvantaging their company; -------------------
40.6.4.2.
It
is
said
so
because
when
the
customers
unsubscribe due to uncompetitive off-net SMS rate
applied by Bakrie, then Bakrie will not only lose
potential revenue from SMS service, but also the
total revenue gained from the use of voice service
which contributes higher compared to the revenue
from SMS service against the total revenue gained
by Bakrie; -------------------------------------------------------40.6.4.3.
With regard to the economic impact experienced by
Bakrie due to “forced” participation in the provision of
minimum rate for off-net SMS rate established by the
incumbent
operators
and
applied
to
the
telecommunication customers, therefore pursuant the
124
aforementioned, the small numbers of customers
owned by Bakrie compared to the number of
customers owned by the incumbent operators
(market leaders); as well as the contribution of OffNet SMS revenue to the total revenue gained by
Bakrie which is extremely low; Bakrie participation in
the agreement did not harm their customers; ----------40.6.5. The Existence and Implementation of Commitment to
Attitude Change; -------------------------------------------------------------40.6.5.1.
That in the Examination Assembly dated January 7,
2007 before the Preliminary Examining Team, Bakrie
basically stated their commitment to Attitude Change
(according to what was noted by us from the Minutes
of Examination/BAP) by adjusting it with the period of
time needed to prepare the charging system for the
SMS service; ---------------------------------------------------
40.6.5.2.
Within the framework of the implementation of that
plan, on May 15, 2008, Bakrie launched new rating
concept implying SMS rate arrangement including
lower Off-Net SMS according to customers’ need.
The program is known as “Rp 1,-/karakter SMS” (Rp
1.-/SMS character);
40.6.5.3.
We hope the Commission Assembly will consider the
implementation of the plan as an attitude change
pursuant to the Commission Regulation Number 1
Year 2006 (“Perkom No. 1/2006”), and thus free
Bakrie from their status as the 4th Reported Party; ----
40.6.5.4.
It should be noted that the new rating concept
arranged by Bakrie constituted a significant paradigm
change as well as the first concept applied in
telecommunication industry in Indonesia and even
the first concept in the world; ------------------------------
40.6.6. Bakrie is the Victim of the Misuse of Dominant Position or at
least the Misuse of Negotiation Position; ----------------------------40.6.6.1.
Thus, referring to the aforementioned chronologies, it
can be stated that the true fact is that Bakrie has no
intention to implement the minimum rate for Off-Net
SMS service as contained in the interconnection
agreement. As the party which did not have any
125
intention to execute the agreement, Bakrie has tried
twice to exit from and to disobey the Interconnection
Agreement concerning the determination of the
minimum rate for SMS, which in fact harming the
business strategy implemented by Bakrie. But each
time Bakrie tried to disobey the agreement, they
would receive warning letter and the incumbent
operators would not guarantee the quality of SMS
transmission from the customers of Bakrie to the
customers of the market leader (incumbent operator);
40.6.6.2.
Pursuant to the aforementioned facts, it can be
confirmed that in this a quo case, Bakrie shall not be
considered as the actor or the initiator or voluntarily
commit price fixing action considered by the KPPU
as anti-competitive action. In this a quo case, Bakrie
shall be deemed as the “victim” of the misuse of
dominant position or at least the misuse of
negotiation position committed by the incumbent
operators (market leaders); ---------------------------------
40.7.
CONCLUSION ------------------------------------------------------------------------------Referring to the aforementioned facts and analyses on the fulfillment of
violation elements as well as the above related aspects, we respectfully
hope that the Commission Assembly will declare that Bakrie did not
violate Article 5 of Law Number 5 Year 1999 or at least Bakrie fulfilled
objective condition and action or at least Bakrie did not fulfill the entire
violation elements as previously alleged and concluded by the Advanced
Examining Team of the Case Number 26/KPPU-L/2007; ----------------------
41.
(Mobile-8) as set forth hereunder (see the evidence A119);----------------------------41.1.
CONCERNING AGREEMENT ON SMS REFERENCE RATE; -------------------------41.1.1. That in the LHPL point 116, the Advanced Examining Team
concluded that during the period of 2004-2007 a cartel was
established by Telkomsel and XL and had to be followed by
Telkom, Mobile-8 and Bakrie, where the cartel continued to
apply until April 2008 and had to be followed by Smart.
Therefore, the Advanced Examining Team basically concluded
126
that Mobile-8 (together with Telkomsel, XL, Telkom and Bakrie)
was proven violating Article 5 of Law Number 5 Year 1999; ------41.1.2. Pursuant to this conclusion of the Advanced Examining Team,
we hereby state the following points: ----------------------------------a. That in the business competition theory, the dominant
business actor having market power constitute business
actor having bigger market share or dominating essential
facilities. In network industry, such as telecommunication
industry, incumbent business actors have dominant position
as well as additional market power sourced from network
effect3 and barrier to alternative network entry on an effective
scale4; ---------------------------------------------------------------------b. That the dependence of new operators (new entrants) to the
network owned by the incumbent operators for the purpose
of interconnection causes them to be prone to anticompetitive action in the form of refusal to deal committed by
the incumbent operators when a new operator with their
business strategies are deemed will adversely impact the
position of incumbent operators in the market. This is, for
example, obvious from the statements of Smart and
Hutchinson. Smart admitted that when they entered the
market of cellular telecommunication operation in Indonesia,
it was difficult for them to obtain interconnection, although
they finally gained the interconnection, the process took a
longer period of time (see the Minutes of Preliminary
Examination for Smart). Hutchison also admitted that when
Hutchinson applied off-net SMS rate of Rp 100/SMS,
Hutchinson was warned by XL and required to correct the
rate. However, when they insisted to apply the rate of Rp
100/SMS, XL blocked every SMS from the customers of
Hutchinson (see the Minutes of Examination for Hutchinson).
It indicates that in the implementation of telecommunication
service in Indonesia, new operators are prone to anticompetitive actions committed by the incumbent operators,
including when they agreed to apply off-net SMS rate of Rp
250/SMS; -----------------------------------------------------------------3
Network becomes more valuable at the eye of consumers as the number of the subscribers is much larger
than the new business actors, so the price elasticity becomes smaller.
4
Interconnection agreement with the incumbent business actors is required in order that the market entry
can be implemented effectively.
127
c. That as a new entrant, Mobile-8 did not have market power
to operate cellular telecommunication in Indonesia. It is
obvious from the domination of market share which was only
1.62-2.86 percent during the period of 2004-2006 with only
440 BTS by the end of 2006 (compared to Telkomsel,
Indosat and XL). Therefore, pursuant to the facts, theories
and practical logics, Mobile-8 was not in a position which
controls the market, either from the perspective of rate as
well as the magnitude of rate in the operation of cellular
telecommunication
in
Indonesia.
With
regard
to
the
domination of market share, customers and networks, XL
was more superior compared to Mobile-8. As an incumbent
operator, XL had a market share of 12.50-14.93 percent
during the period of 2004-2006 or approximately 6 times the
market share of Mobile-8. In terms of network coverage, XL
already has 7260 BTSs (KPPU Decision for Case Number:
07/KPPU-L/2007), far higher compared to the numbers of
BTSs owned by Mobile-8 which was only 440; ------------------d. That therefore, we would like to confirm that Mobile-8 is only
a new entrant and is not a dominant business actor (market
leader) in the operation of cellular telecommunication in
Indonesia. With regard to the making of Interconnection
Agreement, compared to XL and other incumbent operators,
Mobile-8 was only in a position impossible to control various
negotiations related to interconnection with the incumbent
operators, including in terms of initiative and interest to the
presence or absence of the provision of minimum rate for
off-net SMS -------------------------------------------------------------e. That with regard to the provision of minimum rate of Rp
250/SMS as contained in the interconnection agreement
between Mobile-8 and XL, as stated by the Advanced
Examining Team in point 58 of the LHPL, we need to confirm
that the provision is not established or at least initiated by
Mobile-8. With their past and current objective position in the
market, Mobile-8 does not have any capacity to emphasize
their market power and economic reason (from the
perspective of marketing strategy) in order to have an ability
and intention to apply minimum rate for SMS service. In
other words, Mobile-8 was only in a position which “should
128
accept” all provisions and requirements contained in the
Interconnection Agreement conveyed by the incumbent
operators to Mobile-8. It was in order to maintain an
unobstructed market penetration and the proper running of
their business due to interconnection issue, which is
experienced by Smart and Hutchinson recently (see the
Minutes of Meeting for Smart and the Minutes of Meeting for
Hutchinson); -------------------------------------------------------------f.
In the point 58 of the LHPL, it is stated as follows: “The
aforementioned (a) type clause in the Article 6 of the
Interconnection Agreement between XL and Mobile-8
(previously known as Mobile Selular Indonesia/Mobisel
reading as follows: Specifically for the charging of interoperator SMS Service to be applied to the customers of the
respective parties, the Parties agree that the Charging
applied to the customers of Mobisel shall not be lower than
the Charging applied by XL to their customers, namely Rp
250/SMS.” (see evidence C1.18); -----------------------------------
41.1.3. The quotation inserted by the KPPU in the LHPL shall be
considered as incorrect and improper, therefore it should be
corrected that (1) Mobisel and Mobile-8 are two different
telecommunication operators and run their business separately,
(2) Mobile-8 has never had previous name as Mobisel, (3) Article
6 of the Interconnection Agreement between XL and Mobile-8
did not regulate the determination of minimum rate for SMS
service; --------------------------------------------------------------------------41.1.4. Assuming that what is quoted by the KPPU refers to the
Interconnection Agreement between XL and Mobile-8, namely
Article 18 which regulates the minimum rate of SMS service, the it
can be stated and confirmed that the wording of this provision
clearly indicates that the determination of SMS rate of Rp
250/SMS was not intended to limit the competition of SMS
rate from the side of XL, otherwise it was intended to limit the
competition of SMS rate from the side of Mobile-8, therefore
we are of the opinion that Mobile-8 shall not be blamed for the
restricted competition caused by SMS rate agreement, as
concluded by the Advanced Examining Team in the LHPL that
Mobile-8 was forced to follow the intention of XL as incumbent
operators. -------------------------------------------------------------------------
129
41.2.
CONCERNING COST, RATE AND PROFIT OF SMS SERVICE; ----------------------41.2.1.
SMS Cost and Rate; With regard to the calculation of SMS
service cost made by Ovum (in cooperation with Tritech as their
local partner), we would like to convey several points hereunder,
so that the calculation result can be properly read and
understood: -------------------------------------------------------------------41.2.1.1.
That the interconnection cost resulted from the
calculation made by Ovum constitutes the cost for
operators
which
is
already
very
efficient
implementing their business activities;
in
In order to
obtain this calculation result, Ovum collected data
from market leader operators as their sample, as
contained in the testimony of Helmi Abdullah Baasin
from Tritech, quoted from the Minutes of Examination
for Tritech as follows: “During the calculation of
interconnection cost, we [Ovum and Tritech] collected
samples
from
large
scale
telecommunication
operators constituting market leaders in their field,
considering that market leaders have the ability to
hamper the penetration of new operators and are
able to generate lower cost for telecommunication
products.” This statement clearly states that the data
used in the calculation was collected from the market
leaders, in this case the data of Telkom for fixed
telephony
(PSTN)
and
Telkomsel
for
cellular
services. Therefore, the interconnection cost resulted
from the calculation made by Ovum, namely Rp 35 /
SMS
either
for
originating
or
terminating
transmission, does not reflect the interconnection
cost that must be assumed by Mobile-8. This is
logical from the perspective of economy considering
that
the
number
and
behavior
of
Mobile-8’s
customers are extremely different compared to the
number and behavior of Telkomsel’s customers. With
tens of million customers and large amount/traffic of
services, Telkomsel is more efficient compared to
Mobile-8 (as well as other new operators) so that the
interconnection cost assumed by Mobile-8 becomes
130
far higher compared to the interconnection cost
assumed by Telkomsel; -------------------------------------41.2.1.2.
That the calculation of interconnection cost made by
Ovum is produced with a scenario of smallest
network capacity usage which is technically sufficient
to channel the traffic (see the Minutes of Examination
for Tritech). Therefore the amount of Rp 38 as
calculated by Ovum has not reflected the true
interconnection cost assumed by Telkomsel. As
stated by Tritech in their testimony, it is impossible for
operators to build network with small capacity, they
will certainly build large capacity network with regard
to their long term need. As an illustration, in 2006
when the calculation was made, Telkomsel has
operated 10,000 BTSs for long term need. At that
time, the numbers of SMS usage were 1 million SMS.
If, according to the calculation made by Ovum, to
transmit 1 million SMS requires 5000 BTS, then by
using LRIC bottom up method, Ovum will only
calculate operational cost of 5000 BTS as a cost
sufficient to transmit those 1 million SMS. Meanwhile,
the cost that must be and has been assumed by
Telkomsel to operate other 5000 BTS would not be
taken into calculation by Ovum. This is what is
referred to as smallest network capacity usage
(deemed efficient) by Ovum. Therefore, in the event
the amount of Rp 38/SMS has not reflected the
interconnection cost actually assumed by Telkomsel,
therefore that calculated cost can no longer be used
to reflect the interconnection cost that must be
assumed by Mobile-8; ----------------------------------------
41.2.1.3.
That with regard to interconnection cost assumed by
Mobile-8, as stated earlier, pursuant to the calculation
made by Tritech in 2005 with LRIC top-down method
(instead
of
bottom-up),
the
origination
and
termination cost of SMS assumed by Mobile-8 is Rp
104 respectively, so that the total interconnection
cost for an SMS is Rp 208. The LRIC top-down
method constitutes a calculation that considers all
131
costs assumed by the operator, which is different to
the bottom-up method which constitutes “expected”
service cost, as it is based on various assumptions
particularly efficiency aspect and optimization of
network usage. By using LRIC top-down method, the
calculated amount of Rp 208 actually considers the
cost that must be assumed by Mobile-8 to provide
SMS service in the current efficiency level and
network usage optimization, or at least at the time the
calculation is made; ------------------------------------------41.2.1.4.
That the above amount of Rp 208, has not reckoned
any cost assumed for marketing (advertising and
promotion) and other purposes. Therefore, we would
like to confirm that the basic rate of off-net SMS of Rp
250/SMS applied by Mobile-8, the presence or the
absence of a provision in the Interconnection
Agreement concerning the minimum rate required by
XL, constitute reasonable rate for Mobile-8 which
nearly reflects the production cost of SMS service
assumed
by
Mobile-8
and
does
not
provide
excessive profit; -----------------------------------------------41.2.1.5.
That theoretically the numbers of customers influence
the achievement of scale of economies (thus lowered
production cost) and finally will influence the profit
gained by the telecommunication operators. The
research
conducted
by
Ovum
against
cellular
telecommunication industry in Europe in 2003 clearly
indicated the above point. In their research, Ovum
found that small scale operators should assume the
cost per customer which is significantly higher
compared to larger scale operators so that it is
difficult for them to gain profit. The following is a
graphic indicating the influence of market share
domination against the profitability level of cellular
telecommunication operator in Europe (refer to
Barriers to Competition in teh Supply of Electronic
Communications Networks and Services, A Final
Report to the European Commission, 2003): -----------
132
41.2.1.6.
That pursuant to the aforementioned, we would
like to reconfirm that the SMS rate of Rp
250/SMS does not provide excessive profit for
Mobile 8. Perhaps such rate would provide
large amount of profit for incumbent operators
considering that they already have customer
share and numbers/traffic of services which are
far higher. ------------------------------------------------
41.2.2.
Profit from SMS service; ---------------------------------------------41.2.2.1.
With regard to the issue of SMS profit and rate
determination stated in the LHPL, we would like to
correct several points and give some explanation
concerning the testimony of Expert Witnesses, namely
Tritech and BRTI, as follows: ---------------------------------41.2.2.1.1. That the information obtained from the
Expert Witness KRMT Roy Suryo as
stated in point 77, reading as follows:
“New operators will offer lower rate
considering that the amount of their
investment is smaller compared to the old
operators, for example, they do not have
to build their own BTS” is a wrong
opinion and does not have any basis
and seems like an opinion which is
uttered by someone who is not an
133
expert in telecommunication industry.
BTS
constitutes
a
telecommunication
equipment that must be provided by
telecommunication operators considering
that the equipment is intended to receive
and transmit signal to cellular mobile
phone used by the customers, therefore
without BTS, every operator, either new or
incumbent, will not be able to provide their
services.
With
such
incorrect
and
misleading opinion, such as the above
example, we would like to convey that we
are uncertain with the capacity and
expertise of KMRT Roy Suryo as the
expert witness of telecommunication who
is able to provide objective and impartial
opinion
and
consideration
for
the
Commission Assembly in deciding this
case;-----------------------------------------------41.2.2.1.2. That the testimony of Tritech saying that
new operators will not sell SMS product at
a rate lower than the price applied by old
operators (point 75) shall be properly read
and understood. It is necessary to explain
that the low SMS rate applied by new
operators is not due to lower SMS cost
assumed by the new operators compared
to the incumbent operators, instead it is a
strategy
that
marketing
“must”
strategy
be
during
applied
in
promotion
period which must be conducted by new
operators in order to win new customers.
With limited numbers of network, small
numbers of customers and undeveloped
reputation, using the services provided by
new operators will be economically risky
for customers. Therefore, in order to gain
customers,
new
operators
have
to
determine lower promotional rate as an
134
incentive to attract customers to try their
services, and furthermore it is expected
that they will be permanent customer.
Therefore, lower selling rate applied by
new operators is not due to lower
production cost, instead it is intended for
competition
purpose.
We
quote
the
opinion of Massiomo Motta concerning the
reason of new business actors that always
offer
lower
selling
price
(refer
to
Competition Policy: Theory and Practice,
Cambridge University Press, 2004):“When
such switching cost exist, and one can
realistically think that this is the case for
many industries, new entrants generally
have a harder time in getting market
shares from incumbents. Firms which
have already developed a large base of
customers will have a large advantage,
since very important price cuts should be
offered by new firms to attract committed
customers.” -------------------------------------41.2.2.1.3. That
the
development
of
telecommunication technology promises
lower
production
cost
for
telecommunication services, so that, on
paper, new operators may assume lower
cost, but it should be considered that the
cost
to
provide
telecommunication
services also involves non-technology
cost. As stated in the testimony of Tritech,
the
non-technology
cost
needed
to
provide telecommunication services is
extremely high. Meanwhile, in order to
obtain locations to build BTS tower, the
cost assumed by operators nowadays is
higher compared to that in the past
considering that there are a lot of other
costs appear, such as “outlaws fee” (biaya
135
preman) and some amount of money to
be paid to local government. ----------------41.2.2.1.4. That the official statement of the BRTI in
point 74 stating: “The cost element for the
purpose of SMS rate calculation consists
of Network Element Cost (NEC) + Retail
Service Activity Cost (RSAC) + Profit
Margin where the magnitude of NEC is Rp
76, the RSCA amounting to 40% of the
number of elements for SMS rate and
profit margin of 10% of the number of
elements for SMS rate”; need to be
corrected by us. That the Ministerial
Regulation
of
Communication
and
Information Number 9 Year 2008 only
states
the
tariff
components
and
calculation method for the cost of network
elements, and has never stated any
amount and magnitude of RSAC as well
as the percentage of Profit Margin, as
referred to in Article 14 as follows: “The
collection rate of basic telephony service
and SMS additional facility shall be
calculated
by
the
Collection
rate
=
Elements
+
Cost
following
formula:
Cost
Network
of
of
Retail
Service
Activities + Profit Margin (par. 1). The
Profit Margin as referred to in par. (1)
constitutes the level of profit used by the
operators in calculating the magnitude of
the rate (par. 5). The magnitude of profit
margin as referred to in par. (5) shall be
determined by the operators (6).” ----------41.2.2.1.5. In the event the BRTI thinks that the tariff
of Rp 250 up to Rp 350 is too high by
considering that the level of profit gained
is also high, it should be emphasized that,
as aforementioned, Mobile-8 does not
gain or accumulate excessive profit from
136
the SMS rate, considering the extremely
low
numbers
of
customers
and
numbers/traffic of services, Mobile-8 has
not achieved their minimum scales of
economies (MES). Therefore, when the
incumbent operators such as Telkomsel
and Indosat reduced their SMS rate since
April 2008, Mobile-8 did not follow them
considering that they were still not able to
do that, not because of their compliance to
the Interconnection Agreement with XL,
but based on fairness consideration from
the perspective of business; -----------------41.2.2.1.6. That according to the aforementioned, we
would like to convey that pursuant to the
authority given to Mobile-8, Mobile-8 has
determined fair rates based on their scale
of economies and they have never tried to
gain and accumulate excessive profit as
indicated by the available facts; ------------41.3.
REGARDING THE CHANGE OF ATTITUDES OF MOBILE-8; -------------------------41.3.1.
In relation to the provisions on the SMS minimum rate which is
considered to restrict the competition and potentially inflict a loss
to the subscribers, Mobile-8 has changed its attitude through the
1st Amendment, dated November 23rd,
2006 and the 2nd
Amendment, dated June 4th, 2007 to the Main Interconnection
Cooperation Agreement entered into by and between Mobile-8
and XL, as an actualization of our good-faith to maintain a fair
business competition in the provision of telecommunication
services in Indonesia. The deletion of the rate regulations which
has not in fact caused a lower off-net basic SMS rate than
Rp 250/SMS is not attributed to the involvement of Mobile-8 in
the SMS cartel. As already reported previously, however, the
rate of Rp 250/SMS is fair and reasonable on the basis of the
SMS production cost structure at Mobile-8. Therefore, we
contest to the statement made by the Advanced Examination
Team in its Advanced Report, point 114, which states that the
cancellation of reducing the off-net SMS rate by Mobile-8 after
137
the amendment to the provisions on rate determination is due to
the involvement of Mobile-8 in the SMS rate cartel; ----------------41.3.2.
As already elaborated above, the rate of Rp 250/SMS is a fair
and reasonable and does not at all cause an excessive profit
accumulation to Mobile-8. It can be seen from its Financial
Report which indicates that at the first quarter of 2008, Mobile-8
obtained a minus profit of
Rp 22,3 billion, in other words,
Mobile-8 has suffered from a loss in the sum of Rp. 22,3 billion
in the said period. Therefore, the higher off-net SMS rate in the
provision of the telecommunication services in Indonesia is
generally not caused by our actions, as illustrated at the
beginning part of testimony that Mobile-8 is not an operator
which has the market strength which can influence the provision
of telecommunication in Indonesia. With its position at the
market, it is not possible that Mobile-8 to control the market,
either in respect of the rate, quantity of services, service quality
or innovation; -----------------------------------------------------------------41.4.
REGARDING SMS PROMOTIONAL RATE OF MOBILE-8; ---------------------------41.4.1.
Whereas, in an effort to increase the basis of its subscribers,
Mobile-8 frequently offers free-of-charge SMS promotion as
follows:
a. Free-of-Charge 188 SMS to all operators since September
2007 to January 2008; ------------------------------------------------b. Free SMS every recharging the deposit in the period of
February –May 2008; --------------------------------------------------c. Send 1 SMS, Get 5 SMS either among Fren subscribers or
to subscribers of other operators since May 16th, 2008; ------d. Free SMS to subscribers of all operators in the value of Rp
50 thosuands/month for a period of 6 months for the
postpaid program; -------------------------------------------------------
41.4.2.
In relation to this promotion, although the basic rate of Mobile-8
is principally determined to be Rp 250/SMS, it is however in the
fact that the subscribers of Mobile-8 have enjoyed relatively
lower rate for the SMS service. This rate is just promotional one
and does not constitute of decrease of the basic rate as
expected by BRTI, however due to the problems in respect of
the cost structure encountered by
Mobile-8, Mobile-8 keep
trying to provide the SMS with relatively low rate to its
subscribers; --------------------------------------------------------------------
138
41.5.
REGARDING THE FINANCIAL CONDITION OF PT MOBILE-8 TELECOM, TBK.
WHICH IS STILL SUFFERING FROM A LOSS (NO EXCESSIVE PROFIT EARNED
BY
PT MOBILE-8 TELECOM FROM THE OFF-NET SMS RATE); --------------------
41.5.1.
Whereas, as stated in the Decision of KPPU, Case Number:
07/KPPU-L/2007, the amount of the reasonable ROE (return on
equity) of a company indicates no excessive profit and the ROE
is 20-35%. The following table illustrates the ROE of Mobile-8;-ROE Mobile-8 2005-Maret 2008
ROE
41.5.2.
2005
2006
2007
Mar-08
-39,7%
2,2%
2,8%
-1,3%
Based on the above table, it is clear that the profit margin
obtained by Mobile-8 is very far from the description on the
excessive profit. As per March 2008,
it is not only low, the
amount of the ROE of Mobile-8 was even negative. Based on
this fact, we would like to inform that Mobile-8 has never at all
accumulated its excessive profit, even it can be said that our
profit margin is still very minimum if viewed from the business
aspect in general; -----------------------------------------------------------41.6.
CONCERNING THE IMPACTS OF MOBILE-8 BEHAVIOR ON SMS USERS; --------41.6.1.
Whereas, as we have put forward, the application of off-net SMS
base rate of Rp 250/SMS by Mobile-8 was reasonable based on
the constraint of cost structure faced by Mobile-8. The fixing of
such off-net SMS rate only resulted in reasonable profit if it was
not very small to Mobile-8. Based on it, the determined off-net
SMS base rate of 250/SMS was not a collusive price for Mobile8 so that the rate such determined had not damaged the
consumers of Mobile-8 at all, or in other words, there were no
acts of Mobile-8 that had resulted in consumer loss; ----------------
41.6.2.
Whereas, even if Mobile-8 “forced itself” to equalize its SMS rate
as that of superior incumbents (market leaders) that had many
more number
considered
as
of
consumers,
economic
which would
superiority
by
certainly be
consumers
or
prospective consumers, then the said action to “force itself”, if it
was not considered in the context of reasonable profit and
marketing strategy, constituted a “stupid action” of a new entrant
(market follower) that should not be “punished” by KPPU, as
potential
consumers/consumers
would
certainly
impose
“economic punishment”. The “economic punishment” would be
139
in the form of evasion of the available consumers from Mobile-8
to
incumbent
operators
or
logical
economic
choice
of
prospective consumers to gain maximal or optimal economic
benefit; ------------------------------------------------------------------------41.7.
CONCERNING UNFULFILLMENT OF ELEMENTS OF THE ARTICLE
THAT WAS ALLEGEDLY VIOLATED BY MOBILE-8; ------------------------41.7.1.
Alleged Price Fixing of Off-Net SMS Rate 2004-2007; ---------41.7.1.1.
Whereas, in connection with the agreement on fixing
of SMS rate between Mobile-8 and XL from 2004 to
2007, as already conveyed by us hereinabove, the
said provision was made by XL in the cooperation
agreement on interconnection offered to Mobile-8. As
already understood by the Advanced Team of
Investigators, as a new operator, Mobile-8 had a
weak bargaining position in the face of incumbent
operators. With its position as a new operator, with
limited network and minimum number of consumers,
low SMS rate instrument was a business strategy
required by Mobile-8 in order to deal with the
constraint of switching cost and the higher risk faced
by prospective users of Mobile-8 service so that the
said provision of minimum rate had actually limited
the room of maneuver for Mobile-8 to compete for
market segment of consumers against incumbent
operators. In this framework, we agreed with the
conclusion of the Advanced Team of Investigators
that the said provision had been detrimental to a new
operator such as Mobile-8; ---------------------------------
41.7.1.2.
Whereas, since the said provision on price fixing was
something that had to be followed by Mobile-8, it was
proper that Mobile-8 should be freed from the alleged
violation of Article 5 of Law No. 5/99 concerning Price
Fixing or at least Mobile-8 might not be accountable
for the restricted competition resulting from the said
provision; --------------------------------------------------------
41.7.2.
Allegation of Off-Net SMS Price Fixing 2007-March 2008;----41.7.2.1.
Whereas, we expressly deny the conclusion of the
Advanced Team of Investigators stating that postamendment of provision on price fixing, there was still
140
an off-net SMS rate cartel that involved Mobile-8. As
already conveyed by the Advanced Team of
Investigators in the Report on PL Results points 76
and 82, an oral agreement concerning rate might be
concluded if two requirements are fulfilled, namely (1)
there is the same or parallel rate and (2) there is
communication among business actors regarding the
said rate, either directly or indirectly. Using this
theory,
the
Advanced
Team
of
Investigators
concluded that the similar SMS rate occurring in the
period of 1994-2004 was not resulted from a price
cartel, as in this period the Team of Investigators
found neither agreement on SMS rate among
Telkomsel, Indosat, and XL nor communication
among
however,
these
the
three
Team
operators.
of
Unfortunately,
Investigators
was
not
consistent to use this theory for the period of 2007March 2008; ----------------------------------------------------41.7.2.2.
Whereas, to the extent of what we have read from
the Report on PL Results including from the results of
enzage that we have conducted, the Team of
Investigators and the available evidences could not at
all show nor prove any communication between
Mobile-8 and XL as well as with other operators
related to SMS Rate. Therefore, we conclude that
Mobile-8 had never been involved in oral agreement
on price in the period of 2007-March 2008 and in fact
Mobile-8 had never made any communication at all
with other operators related to fixing of Mobile-8’s
SMS Rate. We would like to convey that with regard
to fixing of SMS Rate, Mobile-8 always acted on the
basis of reasonable business considerations in
accordance with the company’s condition and market
situation. Mobile-8 had not in the least ever desired,
intended and wanted to be involved in any acts
whatsoever that might result in unhealthy business
competition
in
the
establishment
of
telecommunications in Indonesia; -------------------------
141
41.8.
CONCLUSION; -------------------------------------------------------------------------Based on the above explanation, we would like to convey conclusions as
follows; -------------------------------------------------------------------------------------41.8.1.
Mobile-8 had not in the least ever desired to practice unhealthy
business competition in the form of SMS price fixing. Whereas,
the provision on SMS’ minimum price of Rp 250/SMS found in
the Cooperation Agreement on Interconnection between Mobile8 and XL was not our intention and we were in the condition of
having to accept the said provision in order to maintain the
sustainability of our business operation; --------------------------------
41.8.2.
Mobile-8 had never committed any acts resulting in loss to the
users of Mobile-8’s SMS, as the SMS Rate determined by us
was a reasonable price in accordance with the cost structure of
currently objective Mobile-8’s SMS Rate, so that, and as a
matter of fact, Mobile-8 had never taken advantage from the
profit of SMS rate between Mobile-8 and XL and accumulated
excessive profit. Moreover, accumulatively, until today the
financial condition of Mobile-8 was still in loss. The data of
Mobile-8’s Financial Statement show that in Quarter I of 2008,
Mobile-8 had minus profit gain of Rp 22.3 billion or, in other
words, Mobile-8 had experienced a loss of Rp 22.3 billion in the
said period. In the said period, the condition was the same as
the previous period, namely with Mobile-8’s SMS base price and
promotional price here and there; ---------------------------------------
41.8.3.
Mobile-8 had never been involved in an unwritten agreement
concerning fixing of SMS rate in the period of 2007-March 2008.
Whereas, the amount of SMS rate determined by Mobile-8 in
this period was purely based on business considerations
reasonable to Mobile-8 in the level of efficiency, optimum use of
network, and cumulative and the last financial condition that was
still losing money; -----------------------------------------------------------
42.
Considering that in the Hearing of the Commission Council, the Commission
Council had received a written Response/Defense from the Reported Party VIII
(Smart) as follows (vide A120): ----------------------------------------------------------------42.1.
Whereas, the Reported Party VIII, previously PT Indoprima Mikroselindo
but now had become PT Smart Telecom, hereinafter referred to as Smart,
was a legal entity established under the laws and regulations of the
Republic of Indonesia that was engaged in business operation in the field
of telecommunications, and had conducted commercial launching on 3rd
142
September 2007 as a new operator (new entrant) that also participated in
telecommunications market in Indonesia; -----------------------------------------42.2.
Whereas, the presence of the Reported Party VIII with CDMA technology
in Indonesia had enlivened the competition of telecommunications
business in Indonesia and provided the public with opportunity and
freedom to choose telecommunications services, particularly cellular
phone services with CDMA technology; --------------------------------------------
42.3.
Whereas, the Reported Party VIII as a new telecommunications operator
required interconnection services among telecommunications networks or
‘interconnection’ with other operators so that the Reported Party VIII’s
consumers
could
be
interconnected
with
other
operators.
INTERCONNECTION is a very important service of an operator in order
to provide optimum telecommunications services for its consumers. In
order to secure certainty and transparency in the provision and services
of interconnection among telecommunications providers, the Government
has issued the Regulation of the Minister of Communications and
Informatics
No.
08/PER/M.KOMINFO/02/2006
concerning
INTERCONNECTION; -----------------------------------------------------------------42.4.
Whereas, in order to obtain the said interconnection, the Reported Party
VIII that was a new operator requires interconnection services from other
operators that function as Access Finders. The Reported Party VIII had
to submit application for interconnection services and access to important
facilities for interconnection to other operators (Access Providers); -------
42.5.
Whereas, as an Access Finder, in accordance with the Ministerial
Regulation 08/2006, the Reported Party VIII should be obligated to
comply with the Interconnection Offering Document (”DPI”) from each of
Access Providers, but there were several matters that were either overt or
covert to be negotiated by the Reported Party VIII with Access Providing
Operators with certain reasons based on the policy of each of the said
Access Providing Operators; ---------------------------------------------------------
42.6. Based on the Report of Advanced Investigation of the Case, there were
two problems related to the Reported Party VIII, namely: --------------------42.6.1. Whereas, PT Smart Telecom was alleged to have had no choice
but committed an SMS price cartel in the period from 2007 to April
2008; -----------------------------------------------------------------------------42.6.2. Whereas, PT Smart Telecom was alleged to have violated Article
5 of Law No. 5 Year 1999; ---------------------------------------------------42.7.
DEFENSE; Discussion of Facts; ---------------------------------------------------
143
42.7.1. -Whereas, in its analysis, the Team of Investigators had assessed
2 (two) elements that had to be fulfilled in order to determine that
an violation had occurred, namely: 1) the Business Actor, 2)
Agreement on Price with a Competitor; ----------------------------------42.7.2. -Whereas, still with all of high honor and respect to any efforts of
the Team of Investigators that through all stages in the hearing
process had found the “facts and findings” from its own
perspective or version, until providing conclusion that as if the
act of the Reported Party VIII fulfilled the elements as contained in
the Report on Investigation, then in this part please allow us, the
team of Legal Advisors of the Reported Party VIII, to clearly show
the facts disclosed in the hearing that are not supportive of the
said conclusion; ---------------------------------------------------------------42.8.
Whereas, in order to get the truth and justice, please allow us the
Reported Party VIII to convey allegations of defense as follows: -----------42.8.1. -Inconsistency of the Team of Investigators;-----------------------42.8.1.1.
Whereas, perusing and studying the Report on
Advanced Investigation of the Case Number 26/KPPUL/2007, it turned out that there was inconsistency of the
Team of Investigators in conducting investigation into
the alleged violation of Article 5 of Law No. 5 Year
1999, where in the part of the analysis the Team of
Investigators had used/assessed 2 (two) elements that
had to be fulfilled in order to be classified as a violation,
where one of the elements was Agreement on the
Price with a Competitor as referred to in point 71; -----
42.8.1.2.
Whereas, from the perspective of the agreement, the
Reported Party VIII had made a change or amendment
to the Agreement concerning deletion of the clause on
SMS
price
fixing/cartel
by
the
signing
of
the
Agreement’s First Amendment Number Exelcomindo:
1321
A/XXXII.5.4520/XL/VI/2007
and
Number
Primasel: AMD.122/LO-BOD/IPM/RAI/VI/2007 and the
First
Amendment
Number
ADD.1246/LG.05/PD-00/VI/2007
Telkomsel:
and
Number
Primasel: AMD.123/LO-BOD/IPM/RAI/VI/2007 dated
25th June 2007, meaning there were no more
agreements on the price cartel entered into by the
Reported Party VIII and other operators, which was
144
confirmed by the Team of Investigators in point 108
formally stating that the SMS price cartel had been no
more in effect as of year 2007; ------------------------------42.8.1.3.
Whereas, therefore, if the Team of Investigators was
consistent with the 2 (two) elements made as guidance
to assess/test whether there was a violation of Article 5
of Law No. 5 Year 1999, then the Reported Party VIII
should be declared as not proven to have conducted
price cartel; --------------------------------------------------------
42.8.2. The Reported Party VIII
as a New Entrant Has Weak
Bargaining Power; -----------------------------------------------------------42.8.2.1.
Whereas,
looking
back
to
the
Interconnection
Cooperation Agreement entered into by the Reported
Party VIII and the Reported Party I as well as the
Reported Party II, it was based on the position of the
Reported Party VIII as a new operator (new entrant) in
Indonesian telecommunications market that has no
choice but making cooperation with other operators
that were incumbent and had relatively controlled the
market segment to widen network and gave the best
services to consumers so as to be an alternative for the
public in general and consumers in particular in utilizing
communications technology; ---------------------------------42.8.2.2.
Whereas, however, considering the position of the
Reported Party VIII as a new comer, its bargaining
power was certainly very small if it had to face other
operators that had controlled the market so that it was
in this case also influential when it had to enter into
cooperation agreement with the Reported Party I and
the Reported Party II, then the Reported Party VIII
could not be free either to conduct negotiation in order
to amend the clauses of agreement; in other words, the
Reported Party VIII followed and agreed more on the
clauses stipulated by the Reported Party I and the
Reported Party II; ------------------------------------------------
42.8.2.3.
Whereas, it is necessary for the Reported Party VIII to
state that before the signing of Cooperation Agreement
on Interconnection with XL and TELKOMSEL, the
Reported
Party
VIII
had
submitted
several
145
recommendations
TELKOMSEL’s
for
the
clauses
of
XL
and
Interconnection Offering Document,
one of which was the recommendation on SMS.
(Minutes of Meeting between TELKOMSEL and
SMART, previously PRIMASEL, dated 15th Januari
2007); --------------------------------------------------------------42.8.2.4.
The consideration of XL and TELKOMSEL to require
the Reported Party VIII to agree on the said clause that
was alleged as violating Article 5 of Law Number 5
Year 1999 was that XL and TELKOMSEL tried to
prevent and/or avoid imbalanced flow of SMS traffic ,
namely the flow of SMS traffic from operators with
cheaper SMS rate to the other direction, considering
that the SMS rate arrangement is still SKA (Sender
Keeps All); ---------------------------------------------------------
42.8.2.5.
Whereas, as additional information, the Reported
Party VIII in carrying out the agreement had to comply
with the Interconnection Offering Document (DPI), in
which among others were the ’terms and conditions’ as
already stipulated by other operators as Access
Providers’. In the ’terms and conditions’ there were
negotiable matters but there were also non-negotiable
matters; -------------------------------------------------------------
42.8.2.6.
Whereas, therefore, in our opinion, the clause on SMS
rate
in
the
said
cooperation
agreement
on
interconnection constituted a conditio sine qua non
that could not be avoided by the Reported Party VIII as
an integral part of the entire agreement, which was
certainly also experienced by other operators; -----------42.8.2.7.
Whereas, however, there was still a problem of
different opinion on the fixing of the said minimum
price, where according to the Expert Witness KRMT
Roy Suryo, price fixing by operators was acceptable in
order to prevent spamming, which was confirmed by
incumbent operators stating that the clause on fixing of
minimum price was established in order to prevent
sudden increase of SMS traffic; ------------------------------
42.8.3. Amendment of Agreement Has Been Made; -------------------------
146
42.8.3.1.
Whereas, from the perspective of the agreement, the
Reported
Party
VIII
had
made
Amendment
of
Agreement concerning deletion of the clause on SMS
price
fixing/cartel
by
the
signing
of
the
First
Amendment agreement Number Exelcomindo: 1321
A/XXXII.5.4520/XL/VI/2007
and
Number
AMD.122/LO-BOD/IPM/RAI/VI/2007
Primasel:
and
First
Amendment Number Telkomsel: ADD.1246/LG.05/PD00/VI/2007
and
Number
Primasel:
AMD.123/LO-
BOD/IPM/RAI/VI/2007 dated 25th June 2007, meaning
that there was no more price cartel agreement
conducted by the Reported Party VIII and other
operators, which was confirmed by the Team of
Investigators in point 108 stating formally that the SMS
price cartel had been inapplicable as of the year 2007;42.8.3.2.
Whereas, this was as already confirmed previously by
the Reported Party VIII in the Preliminary Investigation
on 6th December 2007 before KPPU Panel, the
Reported Party VIII and XL and SMART with
TELKOMSEL, on 25th June 2007 deleted Article 18
paragraph
2
Cooperation
Agreement
on
Interconnection of SMART-XL and Article 28 paragraph
2 Cooperation Agreement on Interconnection of
SMART-TELKOMSEL through Amendment of the said
Cooperation Agreement on Interconnection. With the
said Amendment, it can be stated that: --------------------42.8.3.2.1.
Whereas, there is no clause that can be
stated that SMART had violated Article 5
of Law Number 5 Year 1999; ---------------
42.8.3.2.2.
Whereas, there is no certain amount that
must be paid by Consumers as alleged
by the KPPU Panel, considering that the
Reported Party VIII had deleted the
clause that was alleged by the KPPU
Panel as violating Article 5 of Law
Number 5 Year 1999 on 25th June 2007.;
42.8.4. Whereas, as already known that the Reported Party VIII
conducted commercial launching on 3rd September 2007, so that
the commercial telecommunications service to the public was
147
conducted
after
the
date
of
amendment
with
XL
and
TELKOMSEL. Therefore, it can be concluded that THERE WERE
NO SUBSCRIBERS OF ANY OPERATORS WHO WERE
DAMAGED by the implementation of the said Agreement,
considering that the Agreement and the amendments thereof were
applied after 3rd September 2007; ----------------------------------------42.8.5. Whereas, in accordance with the law of obligations applicable in
Indonesia, an agreement that has been cancelled before there is
any implementation of contents/fulfillment of the agreement itself,
then the said agreement shall be deemed as having never existed;
-------------------------------------------------------------------------------------42.8.6. Whereas, the off-net SMS rate of the Reported Party VIII currently
determined of Rp 250/SMS (excluding VAT) is not the application
of the Cooperation Agreement on Interconnection between the
Reported Party VIII - XL and the Reported Party VIII TELKOMSEL as alleged by the KPPU Panel. Seen from economic
scale, the telecommunications network of the Reported Party VIII
both currently and at the time of launching in the beginning of
September 2007 had covered several big cities in Java, namely
Jakarta, Bogor, Bandung, Semarang, Yogya and Surabaya. So
had the network of interconnection with other operators. In other
words, the telecommunications network that had been established
was already quite wide and the investment was already quite big.
This resulted in quite big capex cost, including the existing opex.
On the other hand, the number of the Reported Party VIII’s
subscribers had not reached the optimum point. Then, the
estimated calculation (considering that accurate date cannot be
obtained yet) of the Reported Party VIII’s SMS service was: retail
services activities unit cost (Opex) of Rp 143 (off-net Prepaid);
and Rp 149 (off-net Postpaid), while network services activities
unit cost (Capex) was Rp 70 (off-net Prepaid); and Rp 73 (off-net
Postpaid). Thus, SMART’s off-net SMS of Rp 250 (Rp 275
including VAT) had only provided very small margin (see
Statement of Retail Services Cost); ---------------------------------------42.9.
Change in Consumer Behavior; --------------------------------------------------42.9.1. -Whereas, if it turns out that materially the SMS rate had just been
lowered by the Reported Party VIII after issuance of an
Announcement by the Government through the Directorate
General of Post and Telecommunications concerning Reduction of
148
SMS rate on 1st April 2008, this was conducted by the Reported
Party to prevent and avoid a price war among operators that is
feared to result in unhealthy competition; --------------------------------42.9.2. -Whereas, a price war among operators was very possible to
occur because the number of operators was increasing in
Indonesian telecommunications market, which affected consumer
behavior to change due to more convenience and freedom to
choose one operator among the others where one of the
considerations would be inexpensive price besides, certainly, the
wide reach of service of the operator concerned; ----------------------42.9.3. -Whereas, would the KPPU Panel be please to put into
consideration that the service price of a telecommunications
service product is very dependent upon how much is the fixed and
variable costs. Hence, the calculation of a telecommunications
service product of each Operator will be different. It is impossible
for an Operator that has just stepped into the field of
telecommunications and another Operator that has been long
engaged in the same field will bring about the same service price
even though the infrastructure is the same. This is because the
behavior, the traffic and the number of subscribers must also be
considered; ---------------------------------------------------------------------42.9.4. -Whereas, based on the above, then the statement of the KPPU
Panel that PT. SMART telecom was alleged to have violated
Article 5 of Law Number 5 Year 1999 was not actually a legal fact
found neither in the Preliminary Investigation nor in the Advanced
Investigation;--------------------------------------------------------------------42.10. Juridical Discussion on Elements of Violation; ------------------------------42.10.1. Whereas, in the investigating process of any case whatsoever,
the most important part of the whole process is the proving
about fulfillment or unfulfillment of the elements being alleged,
accused, or violated; -------------------------------------------------------42.10.2. Whereas, as mentioned above, the Team of Investigators in
investigating this case to prove the violation of Article 5 of Law
No. 5 Year 1999 had used or assessed 2 (two) elements that
had to be fulfilled in order to be concluded that a violation had
occurred, namely: 1) the Element of Business Actors, and 2) the
Element of Price Agreement with Competitors; ----------------------42.10.3. Concerning the Element of Business Actors; --------------------------
149
Whereas, in its report the Team of Investigators had been
accurate and able to prove that the Reported Parties in general
and PT Smart Telecom as the Reported Party VIII are legal
subjects in the form of legal entities being established and
domiciled or conducting activities in the legal territory of the state
of the Republic of Indonesia, so therefore the element of
business actors had been fulfilled; --------------------------------------42.10.4. Concerning the Element of Price Agreement with Competitors; -42.10.4.1. Whereas, as we have studied from the Report of the
Team of Investigators, it turns out that the Team of
Investigators has evidently found a fact following the
signing of the agreement amendment made by the
Reported Party VIII both with the Reported Party I
and the Reported Party II that, formally, the SMS
price cartel had no more been applicable; --------------42.10.4.2. Whereas, therefore, the Element of Price Agreement
with Competitors was not fulfilled, meaning legally
the Reported Party VIII was not proved as having
violated Article 5 of Law No. 5 Year 1999; --------------42.11. CONCLUSION; --------------------------------------------------------------------------Whereas, based on the above description of ours as the Team of
Counsels, with all due respect, we would like to convey conclusions as
follows: -------------------------------------------------------------------------------------42.11.1. That PT Smart Telecom (the Reported Party VIII) was not
proven to have conducted an SMS price cartel in the period of
2007 up to April 2008; ----------------------------------------------------42.11.2.
That PT Smart Telecom was not proven to have violated
Article 5 of Law No. 5 Year 1999; ---------------------------------------
43.
Considering that in the Hearing of the Commission Panel, the Commission Panel
had received a written Response/Defense from the Reported Party IX (NTS) in
the Advanced Investigation as follows (vide A121, C9.27): -----------------------------43.1.
In the Preliminary Investigation Report, it was stated that the Alleged
Violation was as follows: PT. Excelcomindo Pratama, Tbk (“XL”), PT.
Telekomunikasi Selular (“Telkomsel”), PT. Indosat, PT. Telekomunikasi
Indonesia, Tbk (“Telkom”), PT. Hutchinson CP Telecommunication
(“Hutchinson”), PT. Bakrie Telecom (“Bakrie”), PT. Mobile-8 Telecom
(“Mobile-8”), PT Smart Telecom (“ Smart “), as the Reported Parties have
determined SMS (Short Message Service) price at the interval of Rp 250
150
- Rp 350 that is alleged as having violated Article 5 of Law No. 5 Year
1999; ---------------------------------------------------------------------------------------43.2.
Article 5 of Law No.5 Year 1999 : “Business Actors shall be prohibited
from making agreement with their competitors to determine price on some
goods and/or service that must be paid by consumers or subscribers in
the same related market.” --------------------------------------------------------------
43.3.
NTS expressly DENIES the statement of the Team of Preliminary
Investigation concerning an alleged violation in the form of fixing of SMS
rate as mentioned above. NTS as a Cellular Telecommunications Service
Operator had never had any initiative since the beginning in SMS
price fixing (“SMS cartel”) ranging from Rp 250 up to Rp 350, and
had never at all desired to violate Article 5 of Law No. 5 Year 1999
(“UU No.5/1999”); -----------------------------------------------------------------------
43.4.
Whereas, with the clarification as will be explained hereunder, it should be
considered that the Alleged Violation by NTS was not proven;--------------
43.5.
CLARIFICATION AND EXPLANATION ON FACTS;--------------------------43.5.1.
Background for the signing of Agreement that was alleged
as carrying the Clause of Price Fixing; -----------------------------43.5.1.1.
Whereas, the reason for KPPU to allege that there
was a violation of Article 5 of Law No.5/1999 because
there was cooperation agreement on interconnection
among operators as follows: ------------------------------(i)
Cooperation
Agreement
between
PT
Excelcomindo Pratama (“XL”) and NTS on
Interconnection
of
STBS
GSM
Excelcom
Network and STBS DCS - 1800 Natrindo
Network dated 28th May 2001 Number NTS:
139 /LE-NTS/INS/VII/2001 and Number XL:
210.A/XXIII.C1519/VI-2001 that was amended
by
the
First
Addendum
263.A/XXV.C.213/XII-2001;
130/LE-NTS/INS/VII/2001
December
2001
(“XL
Number
XL:
Number
NTS:
dated
12th
Interconnection
Agreement”);
(ii)
Cooperation
Agreement
between
PT
Telekomunikasi Selular (“Telkomsel”) and NTS
on Interconnection of STBS GSM Telkomsel
Network and STBS
DCS - 1800 Natrindo
Network dated 12th December 2001 Nomor
151
NTS: 001/LE-NTS/INS/NE/I/02 and Number
Telkomsel: PKS.504/LG.05/PD-00/XII/2001 that
was amended by the First Adendum Number
Telkomsel:
ADD.503/LG.05/PD-00/XII/2001;
Number NTS: 020/LE-NTS/Add/NE/II/02 dated
14th
December
2001
(“Telkomsel
Interconnection Agreement”);-----------------------43.5.1.2.
Whereas, Telkomsel Interconnection Agreement and
XL Interconnection Agreement hereinafter shall be
jointly referred to as the “Interconnection Agreement”;
43.5.1.3.
Whereas, article 18 (4) in XL Interconnection
Agreement
and
article
16
(4)
in
Telkomsel
Interconnection Agreement that were alleged as
carrying the clause of price fixing by KPPU read as
follows; ---------------------------------------------------------43.5.1.4.
Article 18 (4) of XL Interconnection Agreement:
“Even though the Parties are aware that the price
imposed to SMS users is the authority of each Party
so that they are entitled to fix the price by their own to
be imposed to their respective users, Natrindo agrees
that the price imposed by Natrindo to its users may
not be lower than the price imposed by Excelcom to
its users from time to time”; ---------------------------------
43.5.1.5.
Article
16
(4)
of
Telkomsel
Interconnection
Agreement: “The price that is imposed to SMS users
is the authority of each Party so that they are entitled
to fix the price by their own to be imposed to their
respective users with restriction that the price
imposed by Natrindo to its users may not be lower
than the price imposed by Telkomsel to its users.
Natrindo will adjust the price imposed to its users not
later than 3 (three) months after the notice on price
changing has been submitted by Telkomsel to
Natrindo, which is considered as publicizing time in
case Telkomsel changes the price to be imposed to
its users”; -------------------------------------------------------43.5.1.6.
Whereas, we need to clarify that the incumbent
Board of Directors of NTS had not been involved at
all in the signing of both Telkomsel Interconnection
152
Agreement and XL Interconnection Agreement.
Whereas, the said Interconnection Agreement was
signed by the previous Board of Directors of NTS,
namely Handoko Anindya Tanuadji and Warsito Hans
Tanudjaja
as
President
Director
and
Director
assigned by the previous shareholders ((i) PT
Asianet Multimedia; (ii) PT Reksa Puspita Karya, and
(iii) PT Adiwarta Perdania) based on Deed of
Establishment of NTS No. 1 dated 2nd October 2000
drawn up before Notary Myra Yuwono, S.H.; ----------43.5.1.7.
Whereas, based on Deed No. 18 dated 11th
September 2007 drawn up before Notary Siti
Safarijah, S.H. that had obtained approval of the
Minister of Law and Human Rights No. W7-HT.01.1013407 dated 25th September 2007, transfer of
shares had occurred resulting in the shift of control
over NTS to the business group of Saudi Telecom
Company; --------------------------------------------------------
43.5.1.8.
Therefore, it is expressly and simply proven that the
shareholders and the incumbent Board of Directors
of NTS had not at all been involved in the execution
of Interconnection Agreement that was alleged as
carrying the said clause of price fixing; ------------------
43.5.1.9.
Whereas, even though the incumbent Board of
Directors of NTS had legally to “account for” such a
clause, quod non, based on the information obtained
from old employees, we might assume that the
previous management of NTS had signed the
Interconnection Agreement that was alleged as
carrying the clause of price fixing requested by
existing operators, it was solely intended to protect
business necessity of NTS. The existing operators
requested for such a clause with the reason to
prevent disruption to the network due to spamming
(rubbish SMS) from new operators. Adherence to
“sender keeps all” system where income went to the
SMS sending operators, it was anticipated new
operators would create SMS spamming as their
marketing strategy. By the fixing of SMS minimum
153
price, it was expected that new operators would not
apply marketing strategy by selling cheap SMS,
which might disrupt the network due to load of traffic;
43.5.1.10. As additional information, the position of NTS in that
year of 2001 was as the only GSM 1800 network
operator with regional license for East Java. In its
development, however, it turned out that this concept
could not be implemented because later NTS was not
supported to apply the concept of National Roaming;
43.5.2.
Deletion of Clause on Price Fixing; ----------------------------------43.5.2.1.
Whereas, the new management of NTS through the
incumbent President Director, i.e. Erik Aas, had
signed the amendment of Interconnection Agreement
that deleted the provision that was alleged as
carrying the clause of price fixing. The said
amendment in detail is found in the agreements as
follows; ----------------------------------------------------------(i) The Second Amendment of XL Interconnection
Agreement
Number
XL:
1444.A/XXXII.S.4644/XL/XII/2007 and Number
NTS: 277/JKT-NTS/XII/2007 dated 3rd December
2007 that had deleted the provision of Article 18
(4)
(“Amendment
of
XL
Interconnection
Agreement”); ----------------------------------------------(ii) The
Third
Amendment
of
Telkomsel
Interconnection Agreement Number Telkomsel:
ADD.2231/LG.05/PD-00/XII/2007
and
NTS:
dated
275/JKT-NTS/XII/2007
Number
10th
December 2007 that had deleted the provision of
Article
16
(4)
(“Amendment
of
Telkomsel
Interconnection Agreement”); ------------------------43.5.2.2.
Whereas, NTS that was just decided as the Reported
Party by on 13th December 2007 based on Decision
of
KPPU
Nomor:
86/PEN/KPPU/XII/2007
on
Advanced Investigation of the Case No. 26/KPPUL/2007, so that when the said KPPU’s advanced
investigation was decided and the preliminary
investigation report was issued on 13th December
2007, NTS had deleted Article 16 (4) and Article 18
154
(4) that were alleged as carrying the said clause of
price fixing. Therefore, the alleged violation of Article
5 of Law No.5/1999 is not proven; ----------------------43.5.3. At product launching, the SMS rate of NTS was Rp 60/SMS
both off-net and on-net, so that it is prima facie proven that
NTS was not involved in what is called by KPPU as the “SMS
Cartel”; --------------------------------------------------------------------------Whereas, on 28th February 2008 NTS applied its new SMS rate of
Rp 60/SMS both off-net and on-net. The SMS rate applied by NTS
at the official launching of its product called AXIS was a prima
facie proof (a strong and undebatable proof) that even though
what was called as the SMS cartel really existed, quod non, NTS
was not at all INVOLVED in the said activity;-------------------------43.6.
CLARIFICATION
AND
EXPLANATION
ON
THE
RESULT
OF
ANALYSIS OF KPPU’S TEAM OF INVESTIGATORS; ----------------------43.6.1.
Whereas, we need to clarify that NTS is not the Reported Party
in the Report on the Preliminary Investigation of the Case
Number 26/KPPU-L/2007, proven by the statement of KPPU on
page 2 of the said Preliminary Investigation Report, with the title
of Alleged Violation, KPPU stated “The Reported Party I up to
the Reported Party VIII, namely: Exelcomindo, Telkomsel,
Indosat, Telkom, Hutchinson, Bakrie, Mobile – 8, and Smart,
which are alleged to have violated Article 5 of Law
No.5/1999…”, and NTS was not at all in the list of the Reported
Party in the said report; ----------------------------------------------------
43.6.2.
Whereas, in the stage of preliminary investigation, NTS was
never investigated nor summoned even once by KPPU as the
Reported Party; ---------------------------------------------------------------
43.6.3.
Whereas, when the Advanced Investigation was decided on
13th December 2007, NTS had deleted the article that was
alleged as carrying price fixing, which was proved by the signing
of Amendment of XL Interconnection Agreement on 3rd
December 2007 and Amendment of Telkomsel Interconnection
Agreement on 10th December 2007, showing that the date of
deletion of the said clause that is alleged as carrying price fixing
was before decision on advanced investigation, so that when
KPPU’s advanced investigation was going on, there was no
violation of Article 3 of the Law No. 5/1999; ---------------------------
155
43.6.4.
Therefore, the alleged violation based on the report of the
Preliminary Investigation results is not proven, considering that
as already explained above, when the advanced investigation
was decided, NTS had deleted the clause that is alleged as
carrying the said price fixing; ---------------------------------------------
43.6.5.
Whereas, despite having ever signed the Interconnection
Agreement, NTS had neither desire nor intention to violate
Article 5 of Law No. 5/1999 by fixing the market price so as to
make uncompetitive price, considering that NTS’s share in
cellular market is only about 0.015%. Seen from the number of
subscribers, in the said year of 2001 NTS only had about 25,000
subscribers who were only limited in the region of East Java.
Such number of subscribers was very small in comparison to the
number of subscribers owned by the incumbent operators.
Since NTS had no significant market segment and very small
and limited number of subscribers, then NTS had no any role in
“fixing” SMS price applicable in cellular market. Therefore, if it
was true that there was price fixing, NTS had no ability
whatsoever in the said price fixing, considering that its market
segment was very small and insignificant so that it was
impossible for it to disrupt business competition or distort SMS
market in Indonesia (De minimis Rule principle) and damage
public interest in a broad sense; ------------------------------------------
43.6.6.
Whereas, the agreement or application of the price being
imposed by NTS to its users not permitted to be lower than the
price imposed by the incumbent operators to their users was
solely based on business necessity so that NTS could
immediately get interconnection with the network owned by the
existing operators; -----------------------------------------------------------
43.6.7.
Whereas, NTS can understand the logics of the Team of
Investigators in its analysis that in case an agreement had been
cancelled, the SMS rate of each operator should be lower, but in
fact, the SMS rate fixed by several operators was still the same.
In connection with NTS, the SMS rate of NTS that had not
lowered at that time was a marketing strategy to avoid
publication of a new SMS rate before the product was officially
launched into the market. NTS’s plan was to apply the price of
Rp 60/SMS both off-net and on-net at the product launching,
and this was proven to have been conducted by NTS on 28th
156
February 2008 when NTS launched its service commercially in
the region of Surabaya and East Java. The said launching in
East Java was then followed by the region of West Java in
March and end of this April for Jabotabek region. Based on this
fact, it is clear that NTS was not involved in what is called “tacit
collusion” or SMS cartel by KPPU; --------------------------------------43.6.8.
Whereas, the statement of KPPU on page 9 the first paragraph
line 7 of the Preliminary Investigation Report that states “so that
there is indication that the cartel has still existed up to now even
though not in the explicit form through an agreement, but more
like as a tacit collusion” is not true at all, at least it is prima facie
proven not true when being applied to NTS;---------------------------
43.7.
LEGAL CLARIFICATION AND EXPLANATION; -------------------------------43.7.1.
When the advanced investigation was decided for the Case No.
26/KPPU-L/2007, NTS had deleted the clause that was alleged
as carrying price fixing. Therefore, it is simply and evidently
proven that the Interconnection Agreement that had ever been
signed by NTS had been amended, especially by deleting the
provision that was alleged as carrying price fixing. Therefore,
when KPPU investigated NTS, there was no more violation as
alleged by KPPU. Therefore, for the sake of law, it is proper if
NTS is declared not proven to have violated Article 5 of Law
No. 5/1999; --------------------------------------------------------------------
43.7.2.
Whereas, the opinion and logics of the Team of Investigators on
page 9 paragraph 1, from the Preliminary Investigation Report of
the Case Number: 26/KPPU-L/2007 stating that “The price that
is not lower in the least after the said amendment indicates that
the deleted clause of price fixing has not affected SMS rate. This
is contrary to the assumption that deletion of the said clause will
result in competitive SMS rate, so there is indication that the
cartel has still existed currently…”, had been denied through the
FACT that the SMS rate of NTS is Rp 60/SMS both off-net and
on-net, so it was beyond the interval of Rp 250 - Rp 350 as
stated by KPPU. Therefore, it was just prima facie proven that
NTS had not violated the Law No. 5/1999 as alleged by the
Team of Preliminary Investigation of the Case Number:
26/KPPU-L/2007;-------------------------------------------------------------
43.8.
CONCLUSIONS; -------------------------------------------------------------------------
157
43.8.1.
Whereas, strongly and undebatably (prima facie) it is proven that
NTS since the beginning had never had any initiative in an
agreement to fix SMS rate or SMS cartel, as the SMS rate
applied by NTS of Rp 60/SMS was beyond the interval of Rp
250 - Rp 350 that was alleged by KPPU as price fixing (SMS
cartel); --------------------------------------------------------------------------
43.8.2.
Even if NTS is considered as having ever signed the agreement
carrying the clause of price fixing, it was solely due to business
necessity and technical reason in order to promptly receive
interconnection with the incumbent operators. However, at the
stage of advanced investigation to NTS by KPPU, the clause
that carried the said element of price fixing had been deleted
through amendment of the interconnection agreement; -----------
43.8.3.
Based on this legal defense and clarification, we would like to
request respectfully that NTS be declared as NOT PROVEN TO
HAVE VIOLATED Article 5 of the Law No. 5/1999; ---------------
44.
Considering that thereafter the Commission Panel deems to already have got
sufficient proof and evaluation to make Decisions; ---------------------------------------REGARDING THE LAW
On the basis of the Advanced Examination Report (hereinafter referred to as “AER”),
the Opinions or Defenses of the Reported Parties, letters, documents and other
evidences, the Commission’s Assembly assesses and concludes whether or not a
violation has been committed by the Reported Parties in the a quo case. In conducting
the assessment, the Commission’s Assembly makes the elaborations in some phases,
i.e., firstly, the AER regarding the violations; secondly, the identities of the Reported
Parties; thirdly, the formal aspect; fourthly, the market of the concerned party; fifthly,
material aspect; sixthly, conclusion; seventhly, other natters to be considered; and
eighthly, decision dictums and closing part. ----------------------------------------------------------1. The AER regarding the Violations ---------------------------------------------------------------1.1
Regarding the violation committed by the Reported Parties, the Examining
Team in its report basically states that the 1st Reported Party, the 2nd
Reported Party, the 4th Reported Party, the 6th Reported Party, the 7th
Reported Party and the 8th Reported Party have entered into an agreement
which results in the off-net SMS cartel in the period of 2004 to April 2008. On
this ground, the Examining Team concludes that 1st Reported Party, the 2nd
Reported Party, the 4th Reported Party, the 6th Reported Party, the 7th
158
Reported Party and the 8th Reported Party have violated Article 5 of Law
Number 5 Year 1999 ---------------------------------------------------------------------------2. The Identities of the Reported Parties: --------------------------------------------------------2.1
The Reported Parties in this case are as follows: ---------------------------------------2.1.1
The 1st Reported Party is PT Excelkomindo Pratama, Tbk. (“XL”),
having its office at Graha XL, Jl. Mega Kuningan Lot. E4-7 No. 1,
Jakarta 12710, a business actor in the form of a legal entity,
incorporated under the Laws of the Republic of Indonesia – a limited
liability company whose all articles of association as promulgated
plated in the State Gazette of the Republic of Indonesia, dated
September 1st, 2005, No. 70, the Supplementary State Gazette No.
9425 and its amendment as promulgated in the State Gazette of the
Republic of Indonesia, dated December 27th, 2005, No. 103, the
Supplementary State Gazette No. 1218 and with reference to the
Company’s last composition of management as promulgated in the
Deed No. 121, dated November 23rd, 2007, drawn up before Sutjipto,
SH, which carries on business in the telecommunication services; --------
2.1.2
The
2nd
Reported
Party
is
PT
Telekomunikasi
Selular
(“Telkomsel”), having its office on Jl. Gatot Subroto No. 42, Jakarta
12710, a business actor in the form of a legal entity incorporated
under the Laws of the Republic of Indonesia, a limited liability
company with the Notarial Deed, drawn up before Poerbaningsih Adi
Warsito, SH, No. 181, dated May 26th, 1995 as lastly amended by the
Deed No. 21, dated April 21st,2005, drawn up before Mrs. Djumini
Setyoadi,
SH,
MKN,
which
carries
on
business
in
the
telecommunication services; --------------------------------------------------------2.1.3
The 3rd Reported Party is PT Indosat, Tbk (“Indosat”), having its
office on Jl. Medan Merdeka Barat No. 21, Jakarta 10110, a business
actor in the form of a legal entity incorporated under the Laws of the
Republic of Indonesia, a limited liability company with the Notarial
Deed, with the Notarial Deed, drawn up before MS Tadjoeddin No. 55,
dated November 10th, 1967, as lastly amended by the Notarial Deed,
drawn up before Sutjipto, SH, No. 31, dated May 5th, 2006, which
carries on business in the telecommunication services; ----------------------
2.1.4
The 4th Reported Party is PT Telekomunikasi Indonesia, Tbk.
(“Telkom”), ”), having its office on Jl. Japati No. 1, Bandung - 40133,
a business actor in the form of a legal entity, incorporated under the
laws of the Republic of Indonesia, a limited liability company whose all
articles of association as promulgated in the State Gazette of the
159
Republic of Indonesia, No. 5, dated January 17th, 1992,
the
Supplementary State Gazette No. 210 as already amended, lastly
promulgated in the State Gazette of the Republic of Indonesia No. 45,
dated May 4th, 2002, Supplementary State Gazette No. 5495, which
carries on business in the telecommunication services; ---------------------2.1.5
The 5th Reported Party is PT Hutchison CP Telecommunication
(“Hutchison”), having its office at Menara Mulia lantai 10, Jl. Gatot
Subroto Kav. 9-11, Jakarta 12930, a business actor in the form of a
legal entity, incorporated under the Laws of the Republic of Indonesia
– a limited liability company with the Notarial Deed drawn up before
Rachmad Umar, SH, No. 18, dated March 18th, 2000, as lastly
amended by Deed on Statement of Resolution of the Shareholders’
Meeting of PT Hutchison CP Telecommunications, drawn up before
the Notary Muhammad Ridha, SH, which carries on business in the
telecommunication services; ---------------------------------------------------------
2.1.6
The 6th Reported Party is PT Bakrie Telecom (“Bakrie”), having its
office at Wisma Bakrie 2nd Floor, Jl. HR Rasuna Said Kav. B-1,
Jakarta 10350, a business actor in the form of a legal entity
incorporated under the Laws of the Republic of Indonesia, a limited
liability company with the Notarial Deed, drawn up before Muhani
Salim, SH, No. 94, dated August 13th, 1993, as already adjusted in the
Notarial Deed drawn up by Sovyedi Adasasmita, SH, No. 5, dated
September 24th, 1998 which has been promulgated as promulgated in
the State Gazette of the Republic of Indonesi, No. 26, dated March
30th, 1999, Supplementary State Gazette No. 1934 year 1999, whose
articles of association have been amended several times and lastly by
the Notarial Deed drawn up by Agus Madjid, SH, No. 6, dated
February
3rd,
2006,
which
carries
on
business
in
the
telecommunication services; --------------------------------------------------------2.1.7
The 7th Reported Party is PT Mobile-8 Telecom, Tbk. (“Mobile-8”),
having its office at Menara Kebon Sirih, 18-19th Floors, Jl. Kebon Sirih
No. 17-19 Jakarta 10340, a business actor in the form of a legal entity
incorporated under the Laws of the Republic of Indonesia, a limited
liability company with – a limited liability company whose all articles of
association as contemplated in the Notarial Deed No. 202, dated July
27th, 2005, drawn up before Sutjipto, SH, which carries on business in
the telecommunication services; ----------------------------------------------------
2.1.8
The 8th Reported Party is PT Smart Telecom (“Smart”), ”), having
its office on Jl. H. Agus Salim No. 45 Jakarta Pusat, a business actor
160
in the form of a legal entity incorporated under the Laws of the
Republic of Indonesia, a limited liability company with – a limited
liability company with the Notarial Deed drawn up before Sutjipto, SH,
No. 60, dated August 16th, 1996, which has been amended several
times and lastly by the Notarial Deed drawn up before Sri Hidianingsih
Adi Sugijanto, SH, No. 32, dated September 29th, 2006, which carries
on business in the telecommunication services; -------------------------------2.1.9
The 9th Reported Party is PT Natrindo Telepon Seluler (“NTS”),
having its office at Gedung Citra Graha 3rd Floor, Jl. Jend. Gatot
Subroto kav. 35-36 Jakarta 12950, a business actor in the form of a
legal entity, incorporated under the Laws of the Republic of Indonesia
– a limited liability company whose all articles of association as
promulgated plated in the Supplementary State Gazette of the
Republic of Indonesia No. 5820, dated June 10th, 2005 and drawn up
before Aulia Taufani, SH, as a substitute for the Notary, Sutjipto, SH,
which carries on business in the telecommunication services; --------------
3. Formal Aspect -----------------------------------------------------------------------------------------3.1
Furthermore, before assessing and making a conclusion on the merits of the
case (material aspect), the Commission’s Assembly
firstly assesses the
formal aspect as responded by the Reported Party, namely with regard to the
Jurisdiction of the Commission in handling the business competition case in
telecommunication sector; --------------------------------------------------------------------3.2
That in their opinions and defenses, Telkomsel and Telkom state that the
Examination conducted by the Commission in the case No. No. 26/KPPUL/2007 is in the contrary to the laws and regulations which are specifically
applicable to the absolute authority of the BRTI as the tasks on the
supervision of the business competition in the telecommunication services
shall fall within the specific authority of the BRTI; ----------------------------------------
3.3
To consider whether the Commission has the jurisdiction in handling the
business competition case in telecommunication sector, the Commission
Assembly sees, Firstly, regarding the contents of the general provisions of
Law Number 5 Year 1999, Secondly, regarding Law Number 36 Year 1999
concerning Telecommunication (“Law Number 36 Year 1999”), and Thirdly,
concerning the Decree of Minister Number 31 Year 2003 on Establishment
of the Indonesian Telecommunication Regulatory Body (BRTI)); --------------------
3.4
Firstly, the purpose of the establishment of Law Number 5 Year 1999 as
contemplated in the considerations, point b and c is to provide equal
opportunities to each citizen to participate in the production and marketing
process of goods and/or services in a fair, effective and efficient business
161
climate so as to encourage the national economic growth and implementation
of the fair market economy. It is also to provide a guarantee for every person
to carry on business in Indonesia in a fair and reasonable competition
situation as to prevent the centralization of the economic power to certain
business actors; ---------------------------------------------------------------------------------3.5
The consideration as contemplated in Article 3 of Law Number 5 Year 1999
concerning the objectives of the establishment of Law Number 5 Year 1999 is
to promote the interests of the public and improve the efficiency of the
national economy, to create a conducive business climate through the
implementation of the fair business competition, prevent the monopolistic
practice and/or unfair business competition as well as to establish the
effectiveness and efficiency in the business activities; ----------------------------------
3.6
The operation of such considerations and objectives is illustrated in Article 4
to Article 29 of Law Number 5 Year 1999 which contains some restrictive
norms applicable to the business actors in carrying out their business
activities; -------------------------------------------------------------------------------------------
3.7
In order to ensure the effective enforcement of a law, there must be an
institution granted with authority to uphold the norms already stipulated in the
said law. This also applies to Law No. 5 Year 1999 as referred to in Article 30
paragraph (1) of Law No. 5 Year 1999 stating that in order to supervise the
enforcement of Law No. 5 Year 1999, the Business Competition Supervisory
Commission has been established; ---------------------------------------------------------
3.8
It is also affirmed by Article 1 paragraph 18 of Law No. 5 Year 1999 stating
that the Business Competition Supervisory Commission is a Commission
established to supervise business actors in running their business activity so
as to prevent monopolistic practice and/or unfair business competition; -----------
3.9
Then the duties imposed to the Commission in detail are described in Article
35 of Law No. 5 Year 1999. In order to perform its duties effectively, the
Commission is provided with the authority described in Article 36 of Law No.
5 Year 1999; --------------------------------------------------------------------------------------
3.10 Article 50 of Law No. 5 Year 1999 gives exemption to certain types of
agreement or action but not at all mentioning any exempted sectors; -------------3.11 Based on all of the above descriptions on Law No. 5 Year 1999 and purposes
of establishment, duties and authorities owned by the Commission, it is not at
all visible that there is any intent of Law No. 5 Year 1999 to exempt certain
sectors from application of Law No. 5 Year 1999, either written or implied; ------3.12 Therefore, the authority of the Commission in supervising and upholding Law
No. 5 Year 1999 shall apply to all business actors doing their activity in any
sectors, including business actors in telecommunication sector; --------------------
162
3.13 Secondly, one of the purposes for establishment of Law No. 36 Year 1999 as
referred in considerant of point d of Law No. 36 Year 1999 is to arrange and
rearrange operation of telecommunication; ----------------------------------------------3.14 One of arrangements in Law No. 36 Year 1999 in Article 10 paragraph (1)
and (2) of Law No. 36 Year 1999 states that in the operation of
telecommunication it is prohibited to conduct activities that may result in
monopolistic
practice
and
unfair
business
competition
among
telecommunication service operators in accordance with the said laws and
regulations; ---------------------------------------------------------------------------------------3.15 In the explanation of the said Article, the said applicable laws and regulations
is Law No. 5 Year 1999 concerning Prohibition from Monopolistic Practive
and Unfair Business Competition and the implementing regulations thereof; ----3.16 That
therefore,
the
norms
of
competition
in
the
operation
of
telecommunication cannot be released from the existence and application of
Law No. 5 Year 1999; --------------------------------------------------------------------------3.17 This is consistent with the description already explained by the Commission
Assembly in the first part that there are no specific industrial sectors being
exempted from the enforcement of Law No. 5 Year 1999 which in this case
has been reconfirmed by Article 10 of Law No. 36 Year 1999 that refers to
Law No. 5 Year 1999; -------------------------------------------------------------------------3.18 Reference of Law No. 5 Year 1999 as the norms of competition in the
operation of telecommunication does certainly not only refer to certain parts
in Law No. 5 Year 1999 but to the whole provisions in Law No. 5 Year 1999,
including
Chapter
VI
concerning
Business
Competition
Supervisory
Commission whose purposes of establishment as well as duties and
authorities have been explained by the Commission Assembly in the first
part; ------------------------------------------------------------------------------------------------3.19 Thirdly, Indonesian Telecommunication Regulation Body (“BRTI”) was
established by virtue of Decree of the Minister of Transportation Number: KM.
31 Year 2003 concerning Establishment of Indonesian Telecommunication
Regulation Body (KM 31 Year 2003) as development from the enforcement of
Article 4 of Law No. 36 Year 1999 as argued by Telkomsel and Telkom in
their opinion or defense; ----------------------------------------------------------------------3.20 Further in its opinion or defense, Telkomsel stated that the duties of BRTI as
referred to in Article 6 point b KM 31 Year 2003 were: ---------------------------------Supervision over operation of telecommunication networks and
operation of telecommunication services, namely:
1) operational performance;
2) business competition;
163
3) use of telecommunication tools and apparatus.”
3.21 The Commission Assembly considered such authorities of BRTI were not
contradictory to the authorities of the Commission but in line with and even
create convergence between both of them. To be more evident, the
Commission Assembly states that the Commission does not only have duties
to supervise but also has authority to take legal action against business
actors who breach Law No. 5 Year 1999, while BRTI as referred to in the said
provision of KM 31 Year 2003 has only the authority to supervise; -----------------3.22 This statement of Commission Assembly is also supported by the fact that
there has been harmonious cooperation between the Commission and BRTI
so far in connection with the issue of unfair business competition in
telecommunication sector, and there has never been any dispute on
authorities between the Commission and BRTI in connection with the
enforcement of Law No. 5 Year 1999; -----------------------------------------------------3.23 Based on the above description, the Commission Assembly considers that
KPPU is an institution that has authority to investigate the suspected breach
of Law No. 5 Year 1999 and impose sanctions to business actors who are
proven to have breached Law No. 5 Year 1999 in accordance with the
purposes of its establishment as well as duties and authorities already
stipulated in Law No. 5 Year 1999. The existence of BRTI is very supportive
of the Commission’s duties, especially in supervising business competition in
telecommunication sector and has never obscured the duties of each
institution with respect to enforcement of Law No. 5 Year 1999; --------------------3.24 Based on the explanation already put forward above concerning the
Commission’s authorities, the Commission Assembly then considers the
suspected breach in this case as follows: ------------------------------------------------4. The Market Concerned ------------------------------------------------------------------------------4.1
Before making evaluation whether there was a breach or not, the
Commission Assembly firstly describe discussion on the market concerned in
this case, namely as follows: -----------------------------------------------------------------4.1.1
Whereas, the LHPL of the Investigating Team in principle stated that
in making analysis whether there was a breach of Article 5 of Law No.
5 Year 1999, the Investigating Team considers that there must be at
least two fulfilled elements, namely: 1) Element of Business Actor, 2)
Element of Agreement on Price with a Competitor. On the other hand,
the element of the market concerned is an additional element that is
not mandatory to be proved but only clarifies the second element,
namely agreement on price with a competitor; ---------------------------------
164
4.1.2
With respect to the above discussion on the market concerned, in
their opinion or defense, Telkomsel, Telkom and Bakrie in principle
stated their objection because the Advanced Investigation Team in
LHPL had not specified discussion on the market concerned in
analyzing the suspected breach in this case; ------------------------------------
4.1.3
Whereas, in its opinion and defense, Telkomsel stated that the
Investigating Team of KPPU in LHPL No. 26/KPPU-L/2007 page 19
point 71 stated that the element of the market concerned is an
additional element that was not mandatory to be proved. This is a
fundamentally erroneous statement. This statement is not in
accordance with the content of Article 5 of Law No. 5 Year 1999 and
not consistent with the decisions of KPPU in previous cases; --------------
4.1.4
Whereas, in its opinion or defense Telkom stated that the
Investigating Team had forced its wish by reducing the element that
had to be fulfilled/proved, because in fact the element of the market
concerned was not fulfilled or could not be proved for PT.
Telekomunikasi Indonesia, Tbk.; ---------------------------------------------------
4.1.5
Whereas, in its opinion and defense Bakrie stated in this case KPPU
should give definition on the element of the market concerned. Since
the telecommunication service offered by Bakrie was not a mutual
substitute for that offered by XL and Telkomsel, Bakrie and Telkomsel
and XL were not in the same market concerned; -------------------------------
4.2
In connection with discussion on the market concerned, the Commission
Assembly has opinion as follows: ----------------------------------------------------------4.2.1
Whereas the element of Article 5 of Law No. 5 Year 1999 argued by
the Investigating Team in the LHPL is not appropriate; ----------------------
4.2.2
However, in the second element, namely agreement on price with its
competitors, then in order to determine that the parties in the said
agreement are competitors of one another, the said parties must be in
the same market concerned; --------------------------------------------------------
4.2.3
Therefore, in order to prove the said second element, besides having
to prove that there is an agreement, the market concerned must be
firstly defined so as to identify whether the parties in the said
agreement are competitors of one another; -------------------------------------
4.2.4
To make it easier, the second element should be divided into “price
agreement” and “competitors”, where the element of competitors must
be proved by making analysis of the market concerned; ---------------------
4.2.5
By means of that logics, the Investigating Team’s statement in the
LHPL becomes more accurate that the element of the market
165
concerned in Article 5 of Law of No. 5 Year 1999 is an additional
element, as the discussion on the market concerned is aimed to prove
the element of “competitors” so that it is not necessary anymore in
order to avoid redundance; ---------------------------------------------------------4.3
Based on the above description, the Commission Assembly makes analysis
of the market concerned as follows: --------------------------------------------------------4.3.1
The market concerned in accordance with Article 1 point 10 of Law
No. 5 Year 1999 shall be the market related to a certain marketing
coverage or area of business actors for the same or similar goods
and/or services or substitution for the said goods and/or services;---------
4.3.2
The market related to certain coverage or area in the law of business
competition is known as geographic market, whereas the same or
similar goods or services or substitution for the said goods or services
is known as product market. Therefore, analysis of the market
concerned is made through analysis of product market and
geographic market;---------------------------------------------------------------------
4.3.3
Product Market; ----------------------------------------------------------------------4.3.3.1
In essence, the objective of product market analysis is to
determine the types of goods and/or services that were
similar or dissimilar but were the substitution therefor that
were competitive with one another. In order to make this
analysis, a product must be viewed from a number of
aspects, namely: use, characteristics, and price; ------------------
4.3.4
Use; --------------------------------------------------------------------------------------4.3.4.1
Short Messages Service or SMS that becomes the object in
this case is the additional service owned by all operators of
cellular
and
Fixed
Wireless
Access
(FWA)
telecommunication services; --------------------------------------------4.3.4.2
The use of SMS is to send one-way short messages from
one owner of handset to another handset owner. Voice
communication has a different use because there is
exchange of messages occurring directly or two-way at the
same time; whereas in the use of SMS, the message is only
one way. Other features that are generally found in
telecommunication services and may function identically to
SMS are among others: voice mail, Multimedia Messaging
Service (“MMS”) and push e-mail, all of which have functions
to deliver one-way short messages; -----------------------------------
166
4.3.4.3
Therefore, from the perspective of use, SMS is substitute for
voice mail, MMS, and push e-mail;-------------------------------------
4.3.5
Characteristics; -----------------------------------------------------------------------4.3.5.1
Even though they have the same use, there are significantly
different characteristics between SMS and other features
that have identical use. SMS feature is the feature sent and
received in the form of text messages, which are different
from voice mail that is sent and received as voice messages.
SMS messages are channeled through signaling canal,
whereas MMS and push e-mail use data canal. As a result,
SMS feature can only send and receive text messages,
whereas MMS enables delivery and receipt of pictures,
music, voice records, animation, video, and other files of
multimedia. On the other hand, push e-mail besides being
able to cover multimedia messages can also send and
receive messages wider than the messages of multimedia in
nature, such as delivery and receipt of softcopy documents
in various formats; ---------------------------------------------------------
4.3.5.2
In addition, SMS pricing pattern is calculated on the basis of
number of deliveries without any fee being spent by SMS
receivers, which is different from voice mail that uses pricing
pattern based on duration, whereas MMS and push e-mail
use pricing pattern based on the number of data used, so
that both senders and receivers of voice mail, MMS, and
push e-mail must also pay in accordance with their pricing
pattern. Exemption applies to the users of Bakrie’s SMS that
uses price pattern based on the number of sent text
characters that is newly applied, but without omitting the fact
that only SMS senders who pay the said service, whereas
SMS receivers do not spend any expenses so that despite
the different pricing pattern applied by Bakrie, SMS features
are different from those of other message delivery so that
they cannot substitute for one another; -------------------------------
4.3.6
Price; -------------------------------------------------------------------------------------4.3.6.1
With respect to the price, in general the price of SMS feature
per delivery shall be in a range much cheaper than voice
mail, MMS, and push e-mail. Exemption applies to push email service taking into account the size of the delivered e-
167
mail and the price of data applied by each operator, so that
the price of push e-mail services may vary. This is different
from the price of SMS that is fixed per delivery with
exemption of SMS feature provided by Bakrie with the price
dependent upon the number of characters used. But in
general, with respect to the price, SMS cannot be substituted
by voice mail, MMS, and push e-mail; -------------------------------4.3.6.2
Therefore, the product market in this case is SMS service,
which is separate from voice, voice mail, MMS, or push email services; ----------------------------------------------------------------
4.3.7
Geographic Markets;----------------------------------------------------------------4.3.7.1
The objective of analysis of geographic markets is to clarify
in which market areas the defined products have competed
with one another. ----------------------------------------------------------
4.3.7.2
As an added value service from both cellular and FWA
operators, the existence of SMS services will follow the
available network of the operator concerned; -----------------------
4.3.7.3
In connection with the marketing coverage or area, there are
no impediments found from the side of both technology and
regulation for cellular operators to market their products in
the whole Indonesian territory provided that the operators
concerned have already had their network availability; -----------
4.3.7.4
Therefore, the geographic market in this case is the whole
Indonesian territory; --------------------------------------------------------
4.3.8
In their opinion or defense, Telkomsel, Telkom, and Bakrie stated in
principle that the market concerned was divided into cellular
telecommunication market and FWA market; -----------------------------------
4.3.9
The Commission Assembly deemed that since the nature of the
service was its added value, which was an auxiliary service to the
voice service as the main service, then the analysis of voice product
market was different from the analysis of SMS product market; ------------
4.3.10 As a service of added value, SMS is automatically available when an
operator develops network for voice service. Therefore, differences in
use, characteristics, and voice service prices between cellular
telecommunication operators and FWA telecommunication operators
shall not be applicable when being used to make analysis of SMS
services; ---------------------------------------------------------------------------------
168
4.3.11 The Commission Assembly deemed that the difference of cellular and
FWA telecommunications was not relevant in the use of SMS services
provided by each operator, both cellular and FWA. Based on market
analysis of the above products, difference of cellular operator and
FWA operator licenses would not affect the analysis of use,
characteristics, and price of SMS services; -------------------------------------4.3.12 Therefore, the Commission Assembly deemed that the market
concerned in this case was SMS services in the whole Indonesian
territory, both provided by cellular operators and FWA operators; -------4.3.13 This indicated that every telephone operator that provided SMS
services to its customers was in the same market concerned; -------------5. Material Aspects --------------------------------------------------------------------------------------5.1
The Investigating Team in the LHPL concluded that there was a breach of
Article 5 of Law No. 5 Year 1999 -------------------------------------------------------------
5.2
The provision of Article 5 of Law No 5. Year 1999 reads in full as follows:--------(1) “Business actors shall be prohibited from making agreements with
their business competitors to fix the price of goods and/or services
that must be paid by consumers or customers in the same market
concerned” -------------------------------------------------------------------------(2) The provision as referred to in paragraph (1) shall not be
applicable to:-----------------------------------------------------------------------a. an agreement made for a joint-venture business; or ---------------b. an agreement based on an applicable law;-----------------------------
5.3
In the LHPL, the Investigating Team states that XL, Telkomsel, Telkom,
Bakrie, Mobile-8, and Smart have breached Article 5 of Law No. 5 Year 1999.
The opinion or defense of all Reported Parties will be considered at the
same time in the analysis of fulfillment of elements made by the Commission
Assembly as follows; --------------------------------------------------------------------------
5.4
The Commission Assembly considered that the elements of Article 5 of Law
No. 5 Year 1999 that had to be fulfilled in stating whether there is a breach or
not shall be: ---------------------------------------------------------------------------------------
5.5
5.4.1
Business Actor --------------------------------------------------------------------------
5.4.2
Price Fixing Agreement ---------------------------------------------------------------
5.4.3
Competitor -------------------------------------------------------------------------------
Analysis of fulfillment of every element of the above Article 5 of Law No. 5
Year 1999 shall be as follows: ---------------------------------------------------------------5.5.1
Business Actor -------------------------------------------------------------------------5.5.1.1
The business actor as referred to in Article 1 point 5 of Law
No. 5 Year 1999 shall be: ------------------------------------------------
169
“Every individual or business entity, either in the form of a
legal entity or non-legal entity established and domiciled or
doing activity in the legal territory of the state of the Republic
of Indonesia, either severally or jointly by means of an
agreement, operates various business activities in economic
sector” ------------------------------------------------------------------------5.5.1.2
In accordance with the discussion on the identities of the
Reported Parties in the LHPL and Identities of the Reported
Parties in the above section of Law, the Commission
Assembly considered that XL, Telkomsel, Indosat, Telkom,
Hutchison, Bakrie, Mobile-8, and Smart are business entities
established and domiciled in Indonesia Indonesia and doing
business activities in economic sector in the legal territory of
the state of the Republic of Indonesia so as to fulfill the
definition of business actor in accordance with the provision
of Article 1 point 5 of Law No. 5 Year 1999; -------------------------
5.5.1.3
Whereas, there were no doubts about the fact that the
Reported Parties were business actors as also disclosed by
no opinion or defense about this matter from the Reported
Parties regarding their identities and business activities in
the legal territory of the state of the Republic of Indonesia
accepted by the Commission Assembly; -----------------------------
5.5.1.4
Whereas, therefore, the Commission Assembly considered
the element of business actor was fulfilled; ------------------------
5.5.2
Price Fixing Agreement; -------------------------------------------------------------5.5.2.1
The agreement as referred to in Article 1 point 7 of the Law
No. 5 Year 1999 was: ----------------------------------------------------“An act of one or more business actors to bind themselves to
(an)other one or more business actors in any name
whatsoever, either in writing or not in writing” -----------------------
5.5.2.2
In the law of competition, an agreement not in writing
regarding price can be concluded in case two requirements
are fulfilled: 1) there is a similar or parallel price 2) there is
communication between/among business actors regarding
the said price; ---------------------------------------------------------------
5.5.2.3
The Investigating Team has found several agreements in
writing regarding off-net SMS price fixed by operators as one
unity of Cooperation Agreement on Interconnection as seen
170
in the Matrix of Clause on SMS Price Fixing in the following
Cooperation Agreement on Interconnection: -----------------------Matrix of Clause on SMS Price Fixing
Operator
XL
Telkomsel Indosat Telkom Hutchison Bakrie
Mobile-
Smart
NTS
STI
√
√
-
8
XL
Telkomsel
-
-
-
-
√
√
√
√
(2005)
(2004)
(2003)
-
√
-
(2002)
Indosat
-
-
Telkom
-
√
-
(2004)
(2006) (2001)
√
√
-
(2007) (2001)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2002)
Hutchison
√
-
-
-
√
√
-
-
-
(2004)
(2004)
√
-
-
-
-
-
√
√
-
-
-
-
-
(2006)
(2007)
√
√
-
-
-
-
-
-
(2001)
(2001)
-
-
-
-
-
-
-
-
(2005)
Bakrie
Mobile-8
(2003)
Smart
NTS
STI
5.5.2.4
So that formally, this was already included in the category of
cartel conducted by XL, Telkomsel, Telkom, Hutchison,
Bakrie, Mobile-8, Smart, and NTS; -------------------------------------
5.5.2.5
The Investigating Team considered that the SMS price
agreement entered into by the operators was only effective
for off-net SMS price, whereas the Investigating Team
considered that since the year of 2004 the agreement that
fixed the minimum price of on-net SMS had not been
effective, even though formally the agreement on SMS price
fixing was just amended in the year of 2007 upon issuance
of the Circular Letter of ATSI No. 002/ATSI/JSS/VI/2007
dated 4th June 2007; -------------------------------------------------------
171
-
-
5.5.2.6
The Investigating Team considered that in the period of
2004-2007 there was occurrence of an off-net SMS price
cartel; --------------------------------------------------------------------------
5.5.2.7
Based on information from new entrant operators to the
Investigating
Team,
in
conducting
interconnection
negotiations, new entrant operators had had no bargaining
position enough to facilitate their interest in the said
interconnection
agreement.
Likewise,
when
incumbent
operators put forward the clause on minimum SMS price, the
new entrant operators had not been in the position to refuse
the said clause; ------------------------------------------------------------5.5.2.8
Based on information from incumbent operators, the said
clause on minimum price fixing was used to prevent
fluctuated SMS traffic from new entrant operators to
incumbent operators; -----------------------------------------------------
5.5.2.9
The Investigating Team considered that the worry of the
incumbent operators should have not been anticipated by
means of price instrument as it would result in financial loss
to new entrant operators as well as prospective consumers
of SMS service. This was also justified by the Expert Witness
Mas Wigantoro who stated that the Cooperation Agreement
on Interconnection that fixed the final price has been faulty;-----
5.5.2.10 Thereafter the Investigating Team saw there was no direct
change upon amendment of SMS price agreement by each
of the operators, as post-amendment SMS price was still the
same as that before amendment. The Investigating Team
considered there were two possibilities for that matter: 1) that
the cartel of SMS price was still effective, 2) the agreed SMS
price was the price in market equilibrium so that whether
there was an agreement or not, the created SMS price would
remain the same; ---------------------------------------------------------5.5.2.11 After 1st April 2008, operators reduced SMS price without
change of both internal and external prices for SMS service.
Therefore, the Investigating Team considered that operators
could charge cheaper SMS price to consumers far before the
interconnection price reduction by the Government. The said
delayed SMS price reduction was solely because the cartel
agreement among operators was still effective even though
formally it was already amended in 2007; ---------------------------
172
5.5.2.12 In the period of 2007 – April 2008 out of the new three
cellular services (Hutchison, Smart, and NTS-Axis), only
Smart complied the cartel agreement. Hutchison, despite
has signed the cartel agreement formally has never effected
it materially. Even though NTS-Axis formally signed the
cartel agreement in 2001, but because Axis was just
launched in 2008, after revocation of the clause on price
cartel,
then
materially
has
never
effected
the
said
agreement; ------------------------------------------------------------------5.5.2.13 Whereas, in its opinion or defense, XL stated that XL’s
motivation to sign the Cooperation Agreement that contained
a clause on price fixing was to maintain stabile network
instead of establishing a cartel; ---------------------------------------5.5.2.14 Whereas,
even
though
XL
signed
the
Cooperation
Agreement that contained a clause on price fixing, it was
conducted without bad faith or intention to establish a price
cartel. This type of clause was to prevent spamming with its
main objective to maintain stabile network; ------------------------5.5.2.15 Whereas, the operators who were declared by the
Investigating Team as proven to have breached Article 5 of
Law No. 5 Year 1999 had various reasons in fixing their SMS
base price. Therefore, it was not true if after the period of
amendment of Cooperation Agreement that there was a
material SMS price cartel, because formally and materially
there was no agreement whatsoever among the said
operators to fix SMS price. On the other hand, by means of
their respective promotional strategy, these operators even
conducted a “war of price” to attract consumers as many as
possible through promotional programs that finally offered
very cheap effective rate for SMS as well as voice products; --5.5.2.16 Whereas, in its opinion and defense, Telkomsel stated that
the clause on (off-net) interconnection SMS was not a
realization of intention for price fixing but a way out chosen
because there were no legal provisions on interconnection
SMS so that Telkomsel needed to provide self-regulatory
provisions; -------------------------------------------------------------------5.5.2.17 In order to cope with or prevent the problems of SMS
Broadcasting, SMS Spamming and telemarketing actions,
Telkomsel used a way out through the clause on
173
interconnection SMS in its Cooperation Agreement on
Interconnection with several telecommunication operators.
This choice was actually more a good will or a realization of
Telkomsel’s good will to realize proper, fair, and balanced
telecommunication interconnection activities that were not
detrimental to any one of the telecommunication operators.
The said choice was made not with intention or plan to fix the
price so as to gain optimum profit. Telkomsel had no
unlawful intention or motivation at all; -------------------------------5.5.2.18 The clause on interconnection SMS in the Cooperation
Agreement on Interconnection between Telkomsel and 4
(four) telecommunication operators was not a price fixing
agreement, so that the elements of Article 5 of Law No. 5
Year 1999 were not fulfilled. Therefore, Telkomsel did not
breach Article 5 of Law No. 5 Year 1999;----------------------------5.5.2.19 Whereas, in its opinion or defense, Telkom stated that the
main intention and the focus of the Interconnection
Agreement was to agree on technical provisions so as to
realize interconnection between telecommunication networks
of the two parties and enable the whole customers of each
party making cross-operator calls, including cross-operator
calls from Flexi SMS to Cellular SMS and vice versa; ------------5.5.2.20 Whereas, the Interconnection Agreement that contained the
clause on SMS price that might not be lower than retail price
as referred to in the LHPL point 61 was the Amendment of
Interconnection Agreement drawn up in year 2002 and
effective
until
2006,
which
was
then
amended
by
Interconnection Agreement drawn up at the end of 2006
being effective as of January 2007; -----------------------------------5.5.2.21 The SMS price contained in the clause might not be lower
than the retail price agreed by PT Telekomunikasi Indonesia,
Tbk and PT Telkomsel in order to maintain that there would
be no SMS traffic spamming between the parties in
connection with the SKA (Senders Keep All) pattern, namely
the pattern of interconnection fee payment where the
operator on SMS receivers’ side did not receive any payment
whatsoever from the operator on the senders’ side. There
was no intention at all between the parties to establish a
174
price cartel both formally and materially as referred to in
Article 5 of Law No. 5 Year 1999; -------------------------------------5.5.2.22 Whereas, in its opinion or defense, Bakrie stated that the
Cooperation Agreement on Interconnection between Bakrie
and all operators was not establishment of SMS price cartel
considerint that Bakrie and other operators could remain
determine by themselves the SMS retail price to each
customer; -------------------------------------------------------------------5.5.2.23 Bakrie had never at all intended to make an agreement that
could be classified as a price fixing practice that could
restrict
competition
in
the
operation
of
wireless
telecommunication services in Indonesia. The provision that
regulated minimum off-net SMS price of Rp 250/SMS had
been refused by Bakrie since the beginning as the said
provision could harm the development of Bakrie’s business
activity. However, with its position as a new operator and
very small number of customers, Bakrie had no choice but
agreed on the said provision in order to maintain Bakrie’s
business activity; ----------------------------------------------------------5.5.2.24 SMS minimum
price fixing
was
only found in the
Interconnection Agreement between Bakrie and XL and
Telkomsel, and mot in the interconnection agreement among
Indosat, Telkom, Hutchison, NTS, Mobile-8, Smart Telecom,
and other operators. With the absence of SMS minimum
price fixing among Bakrie and Indosat, Telkom, Hutchinson,
NTS, Mobile-8, Smart Telecom, and other operators, then
Bakrie and the said operators were free to fix SMS retail
price to their respective customers. This proved that there
was no agreement among all operators that regulated SMS
price fixing, nor there was any uniformity/similarity of
provision (on price fixing) in each interconnection agreement
between one operator and another operator; ----------------------5.5.2.25 Therefore, the whole Interconnection Agreement between
Bakrie and each operator was not or did not constitute an
establishment of SMS cartel, considering that Bakrie and
other operators could remain fix SMS retail price by
themselves to each of their customers so that the market
had many choices to select the available telecommunication
175
service products or there was no control/arrangement of
price in the market; -------------------------------------------------------5.5.2.26 Whereas in its opinion or defense, Mobile-8 stated that
Mobile-8 was a new entrant that had no market power or
control over essential facility so that it was in a position that
could not or was unable to control various negotiations
related to interconnection including the provision on
minimum off-net SMS price; -------------------------------------------5.5.2.27 Whereas the provision on minimum SMS price contained in
the Cooperation Agreement on Interconnection between
Mobile-8 and XL had not come or at least was not the
initiative of Mobile-8; -----------------------------------------------------5.5.2.28 Whereas in its opinion or defense, Smart stated that the
Cooperation Agreement on Interconnection entered into by
Smart and Xl and Telkomsel was based on the position of
Smart
as
a
new
entrant
operator
in
Indonesian
telecommunication market that had no choice but entered
into cooperation with other operators that have existed
(incumbent operators) and relatively controlled market
segments in order to widen its network and provide the best
service to its customers so as to be an alternative for the
public in general and the customers in particular in utilizing
telecommunication technology; ---------------------------------------5.5.2.29 The consideration that XL and Telkomsel required Smart to
agree on the clause suspected to have breached Article 5 of
Law No. 5 Year 1999 was that XL and Telkomsel tried to
prevent and/or avoid imbalanced flow of SMS traffic, namely
the flow of SMS traffic from operators that fixed much
cheaper SMS price to the other way, considering that the
agreement on SMS price was still SKA (Senders Keep All); ---5.5.2.30 Smart had made a change or Amendment of Agreement
containing deletion of the clause on SMS price fixing/price
cartel by the signing of agreement of First Amendment
Number Exelcomindo: 1321 A/XXXII.5.4520/XL/VI/2007 and
Number Primasel: AMD.122/LO-BOD/IPM/RAI/VI/2007 and
the
First
Amendment
ADD.1246/LG.05/PD-00/VI/2007
Number
and
Number
Telkomsel:
Primasel:
AMD.123/LO-BOD/IPM/RAI/VI/2007 dated 25th June 2007,
meaning that there was no more agreement on price cartel
176
conducted by Smart and other operators, which was affirmed
by the Investigating Team at point 108 stating formally that
the SMS price cartel has been null and void since the year
2007; -------------------------------------------------------------------------5.5.2.31 Whereas in its opinion or defense, NTS stated that it had
never had initiative since the beginning in an agreement to
fix SMS price or SMS cartel, as the SMS price applied by
NTS of Rp 60/SMS was out of interval of Rp 250 to Rp 350
which was suspected by KPPU as price fixing (SMS cartel); --5.5.2.32 Even if NTS is considered to have ever signed agreement
containing a clause on price fixing, the said matter was
solely due to business necessity and technical reason in
order to be able to immediately obtain interconnection with
the incumbent operators. However, at the stage of advanced
examination of NTS by KPPU, the clause that contained the
said element of price fixing had been deleted by means of
amendment of interconnection agreement; ------------------------5.5.2.33 With respect to the element of price agreement as described
in the above Matrix of Clause on Price Fixing, the
Commission
Assembly
considered
the
Advanced
Investigating Team had made a correct analysis that there
was an agreement that contained a clause on SMS price
fixing among XL, Telkomsel, Telkom, Bakrie, Mobile-8, and
Smart even though later the said agreement was amended
upon issuance of
the Circular
Letter
of
ATSI
No.
002/ATSI/JSS/VI/2007 dated 4th June 2007; -----------------------5.5.2.34 The Commission Assembly considered that the motive of XL
and Telkomsel to contain the clause of price in the
Cooperation Agreement on Interconnection was to prevent
spamming by new entrant operators instead of establishing a
cartel. This was conducted because the Government had not
made regulations on SMS price calculation so that
Telkomsel needed to make self-regulatory provisions.
However, the Commission Assembly considered that the
said worry of XL and Telkomsel should have not been
contained in a form of agreement specifying a clause on
price fixing; -----------------------------------------------------------------5.5.2.35 The Commission Assembly considered that the Advanced
Investigating Team has been correct in its analysis regarding
177
Bakrie, Mobile-8, and Smart stating that new entrant
operators had no bargaining position or were in weak
position
when
the
Cooperation
Agreement
on
Interconnection was drawn up so that they had to comply
with anything stipulated by the incumbent operators; ------------5.5.2.36 Whereas even though the agreement that specified the
clause on the said fixing had been amended so that there
was no more Cooperation Agreement on Interconnection
that specified a clause on price fixing, the Commission
Assembly
considered
that
materially,
the
said
price
cartel/fixing was still effective. This is proven from the fact
that reduction in SMS price had occurred just after the
Government through the Directorate General of Post and
Telecommunication
had
announced
the
reduction
of
interconnection price on 1st April 2008; ------------------------------5.5.2.37 Whereas, therefore, the Commission Assembly considered
that the Advanced Investigating Team had been correct in
stating that there had been an off-net SMS price cartel in the
period of 2004-2007 conducted by XL, Telkomsel, Telkom,
Bakrie, and Mobile-8, and materially the said cartel was still
effective until 1st April 2008. Meanwhile, Smart was just
involved in this SMS price cartel at its commercial launching
on 3rd September 2007; --------------------------------------------------5.5.2.38 Moreover, the Commission Assembly added that the position
of each operator in the market could not be neglected and
would
affect
negotiation
process
that
resulted
in
interconnection agreement. As disclosed by the Investigating
Team and new entrant operators in their opinion or defense,
new entrant operators were in weak position that they had to
follow the clause provided by incumbent operators, which in
this case was SMS minimum price; ----------------------------------5.5.2.39 In other words, the minimum price in off-net SMS service
was fixed by incumbent operators, which in this case were
XL and Telkomsel, without other choices but to be followed
by new entrant operators; -----------------------------------------------5.5.2.40 Regardless of incumbent operators’ motive and weak
position of new entrant operators, both formally and
materially, price agreement had been entered into by SMS
service providing operators as described in the Matrix of
178
Clause on SMS Price Fixing, in the period of 2004 up to
April 2008; ------------------------------------------------------------------5.5.2.41 Therefore, the element of price fixing agreement was
fulfilled; ---------------------------------------------------------------------5.5.3
Competitors; ----------------------------------------------------------------------------5.5.3.1
In accordance with the definition of the market concerned
that has been defined by the Commission Assembly as
referred to above, namely SMS services in the whole
Indonesian territory, then the Commission Assembly has
identified the business actors being within the said market
concerned as follows: ----------------------------------------------------5.5.3.1.1 XL; ----------------------------------------------------------------5.5.3.1.2 Telkomsel; ------------------------------------------------------5.5.3.1.3 Indosat; ----------------------------------------------------------5.5.3.1.4 Telkom; ----------------------------------------------------------5.5.3.1.5 Hutchison; -------------------------------------------------------5.5.3.1.6 Bakrie; -----------------------------------------------------------5.5.3.1.7 Mobile-8;---------------------------------------------------------5.5.3.1.8 Smart; ------------------------------------------------------------5.5.3.1.9 NTS; --------------------------------------------------------------5.5.3.1.10----------------------------------------------------------------------Sampoerna Telecom Indonesia; ----------------------------
5.5.3.2
Based on the description in the element of price fixing
agreement as referred to above, it is known there has been a
material price agreement conducted by: ----------------------------5.5.3.2.1 XL; ----------------------------------------------------------------5.5.3.2.2 Telkomsel; ------------------------------------------------------5.5.3.2.3 Telkom; ----------------------------------------------------------5.5.3.2.4 Bakrie; -----------------------------------------------------------5.5.3.2.5 Mobile-8;---------------------------------------------------------5.5.3.2.6 Smart; -------------------------------------------------------------
5.5.3.3
XL, Telkomsel, Telkom, Bakrie, Mobile-8, and Smart were
within the same market concerned as already identified
previously by the Commission Assembly, indicating that one
operator was competitive with another operator; ------------------
5.5.3.4
5.6
Therefore, the element of competitors was fulfilled; -------------
Impacts; --------------------------------------------------------------------------------------------
179
5.6.1
Before arriving at the dictum of the decision, the Commission
Assembly considered the impacts occurring in the market concerned
as a result of SMS price cartel conducted by operators as follows: -------
5.6.2
The Investigating Team in the LHPL mentioned that the cartel had
resulted in loss to new entrant operators and consumers, but did not
elaborate further the calculation of loss resulting from the said cartel; ---
5.6.3
In its opinion or defense, XL stated that the results of OVUM’s
research on interconnection price could not be simply applied to fix
SMS price, as OVUM had not considered other parameters of cost; -----
5.6.4
XL respectfully applies to the KPPU Assembly, in order to avoid
complication or a new problem that may place burden on and disrupt
operational activities of operators in the form of vexatious litigation,
not implicate the issue of the breach of Article 5 of Law No. 5 Year
1999 that was inadvertent in nature with consumer loss; --------------------
5.6.5
The reason for XL to submit this application was based on the facts
that: (i) the SMS price applied by XL was reasonable and inexcessive
price, and this was supported by the scientific research conducted by
ITB Team; (ii) the consumers of XL products enjoyed effective price in
line with their respective needs through the promotional program run
by XL; and (iii) currently, there are no objective parameters to
measure whether an SMS price is reasonable or not reasonable,
considering that there have been no legal regulations that regulate
this SMS price; --------------------------------------------------------------------------
5.6.6
XL had not gained “excessive” profit with the price structure of both
SMS and voice fixed for its customers. Therefore, it was logic if its
consumers had not suffered any loss from the said XL’s price
structure. The price fixed by XL was a reasonable price and in line
with the objective condition applicable for XL; ----------------------------------
5.6.7
In its opinion or defense, Telkomsel stated that the revenue from offnet SMS was only 16% on average from the total SMS revenue
gained by Telkomsel, while 84% of the revenue came from on-net
SMS price; -------------------------------------------------------------------------------
5.6.8
In its opinion or defense, Bakrie stated there was no excessive profit
from SMS service; ----------------------------------------------------------------------
5.6.9
The application of off-net SMS price of Rp 250/SMS, which was the
minimum limit of SMS price required by Telkomsel and XL to be
applied by Bakrie through Interconnection Agreement had by no
means resulted in excessive profit but reasonable profit that reflects
the constraint of cost structure faced by Bakrie; -------------------------------
180
5.6.10 In its opinion or defense, Mobile-8 stated that OVUM’s calculation had
not reflected the SMS cost of Mobile-8. The result of OVUM’s
calculation by means of LRIC top-down method on the SMS cost of
Mobile-8 was Rp 208, excluding promotional and other costs so that
the base price of Mobile-8’s SMS of Rp 250 was a reasonable price
for Mobile-8; ----------------------------------------------------------------------------5.6.11 Mobile-8 had not accumulated excessive profit as visible in low ROE
since the year of 2005; ---------------------------------------------------------------5.6.12 The Commission Assembly considered that as a matter of fact the
cartel could not eliminate the real consumer loss in the market
concerned; -----------------------------------------------------------------------------5.6.13 The said consumer loss was in the form of (i) lost opportunity for
consumers to have cheaper SMS price, (ii) lost opportunity for
consumers to use more SMS services at the same price, (iii) other
intangible loss of consumers, (iv) limited alternatives to be chosen by
consumers during the period of 2004 up to April 2008; ----------------------5.6.14 The Commission Assembly explained that the loss suffered by
consumers was caused by the behavior of operators in the form of
price cartel and not related to the calculation of profit enjoyed by the
operator concerned. Therefore, the argument that there was no
consumer loss because there was no excessive profit argued by XL,
Bakrie, and Mobile-8 was not relevant; ------------------------------------------5.6.15 The actual calculation of the above consumer loss requires in-depth
economic analysis with support of adequate data. In this case LHPL
only submitted estimated SMS cost based on the research of
interconnection price conducted by OVUM and formulation of SMS
cost calculation by BRTI; ------------------------------------------------------------5.6.16 The Commission Assembly affirmed that whether there was consumer
loss or not, it was not a proving element for a cartel. Therefore, even if
the impact of consumer loss was not proven, the cartel would remain
an action of anti-competition; -------------------------------------------------------5.6.17 However, the Commission Assembly considered necessary to give
description on consumer loss resulting from the said cartel behavior
as follows: ------------------------------------------------------------------------------5.6.18 Based on financial statements of the 6 (six) Reported Parties, namely
XL, Telkomsel, Telkom, Bakrie, Mobile-8, and Smart held by the
Commission Assembly, it was disclosed that the total revenue of the
said operators from year 2004 to 2007 was Rp 133,885,000,000,000
181
(one hundred and thirty-three trillion eight hundred and eighty-five
billion Rupiah) with details as follows: --------------------------------------------
Table.1. Revenue of Cartel Acting Operators (in Billion Rupiah)
Total
Year
Telkomsel
XL
M-8
Telkom
Bakrie
SMART
Pendapatan
(Rp)
(Rp)
(Rp)
(Rp)
(Rp)
(Rp)
Industri
(Rp)
2004
14,765.08
2,528.48
124.91
575.40
275.03
n.a
18,268.91
2005
21,132.91
2,956.38
482.60
1,449.70
369.06
n.a
26,390.65
2006
29,145.19
4,437.17
751.19
2,806.20
829.36
n.a
37,969.10
2007
38,799.00
6,459.77
1,117.74
3,372.39* 1,503.39
4.00
51,256.29
Total
103,842.18
16,381.81
2,476.44
8,203.69
4.00
133,884.95
2,976.84
Source: Operators’ Financial Statements.
* calculated from multiplication of ARPU by the number of customers (Telkom’s Annual
Report of Year 2007)
5.6.19 Based on the above Table of Revenue, the market segments among
cartel actors were as follows: -------------------------------------------------------Table 2. Market Segments of Cartel Actors
Year
Telkomsel
XL
M-8
Telkom
Bakrie
SMART
2004
80.82%
13.84%
0.68%
3.15%
1.51%
n.a
2005
80.08%
11.20%
1.83%
5.49%
1.40%
n.a
2006
76.76%
11.69%
1.98%
7.39%
2.18%
n.a
2007
75.70%
12.60%
2.18%
6.58%
2.93%
0.01%
Average
78.34%
12.33%
1.67%
5.65%
2.01%
Source: Processed Data
5.6.20 Based on the data submitted by the Reported Parties, the
Commission Assembly has used the lowest norm of off-net SMS
revenue, i.e. 4.8%, which constituted 16% of Telkomsel’s SMS
revenue while SMS revenue was 30% of the total revenue in 2007;------5.6.21 Out of all losses suffered by consumers, the Commission Assembly
focused on calculating the difference between off-net SMS revenue at
off-net SMS cartel price and off-net SMS price at competitive market
during the period of cartel (from the year of 2004 to 2007); ----------------5.6.22 The Commission Assembly considered that the norm of competitive
off-net SMS price was reflected by the price unit that was nearer to
the SMS service fee. In this case, the Commission Assembly has
used the interconnection fee of origination (Rp 38) and termination
182
(Rp 38) resulting from calculation of OVUM, plus the fee of Retail
Service Activities Cost (RSAC) 40% or interconnection fee and profit
margin 10% of interconnection fee, which was the approach provided
by the government. Based on the calculation, the estimated
competitive price of off-net SMS was Rp 114 (one hundred and
fourteen Rupiah); ----------------------------------------------------------------------5.6.23 Out of the range of off-net SMS cartel price between Rp 250 and Rp
350, the Commission Assembly has used the lowest cartel price as a
norm in the calculation of consumer loss; --------------------------------------5.6.24 Using the difference between the revenue at cartel price and the
revenue at competitive price from off-net SMS of the six operators, the
consumer loss was Rp 2,827,700,000,000 (two trillion eight hundred
and twenty-seven billion seven hundred million Rupiah) with details as
follows: -----------------------------------------------------------------------------------
Table 3. Calculation of Consumers’ Financial Loss
Based on the Proportion of Cartel Acting Operators’ Market Segments (in
Billion Rupiah)
Year Telkomsel
XL
M-8 Telkom
Bakrie
SMART
Total
2004
311.8
53.4
2.6
12.2
5.8
385.8
2005
446.3
62.4
10.2
30.6
7.8
557.4
2006
615.5
93.7
15.9
59.3
17.5
801.9
2007
819.4 136.4
23.6
71.2
31.8
0.1
1,082.5
Total
2,193.1 346.0
52.3
173.3
62.9
0.1
2,827.7
Source: Processed Data
5.7
Considering that based on Article 50 of Law Number 5 Year 1999, the
Reported’s activity was not included as exempted activity; ---------------------------
6. Conclusions --------------------------------------------------------------------------------------------6.1
Considering that based on the above considerations and description, the
Commission Assembly has arrived at conclusions as follows: ----------------------6.1.1
Whereas XL, Telkomsel, Telkom, Bakrie, and Mobile-8 have
established an off-net SMS price cartel in the range of Rp 250 - Rp
350 in the period of 2004 up to April 2008; --------------------------------------
6.1.2
Whereas Smart followed the said SMS price cartel at its commercial
launching on 3rd September 2007; -------------------------------------------------
6.1.3
Whereas Indosat, Hutchison and NTS were not proved to have
established an off-net SMS price cartel -------------------------------------------
183
6.1.4
Whereas as the result of the said cartel, the consumers were
financially injured at least Rp 2,827,700,000,000 (two trillion eight
hundred and twenty-seven billion seven hundred million Rupiah); ---------
7. Considering that the Commission Assembly is not in authorized position to impose
the sanction of indemnity for consumers; --------------------------------------------------------8. Considering that the cartel behavior conducted by XL, Telkomsel, Telkom, Bakrie,
Mobile-8, and Smart was a serious breach of fair competition; -----------------------------9. Considering that because of the said serious breach, the Commission Assembly
deems necessary to impose the sanction of penalty to the said cartel actors; ----------10. Considering that before imposing penalty, the Commission Assembly has
considered the matters that mitigate the circumstances of each Reported as
follows: ---------------------------------------------------------------------------------------------------10.1 Bakrie; ---------------------------------------------------------------------------------------------10.1.1 Whereas, Bakrie had ever fixed SMS price below the agreed price but
was warned to increase it back;----------------------------------------------------10.1.2 Whereas, Bakrie as a new entrant was in a weak bargaining position; --10.1.3 Whereas, Bakrie had reduced and changed the SMS price fixing
pattern; ----------------------------------------------------------------------------------10.2 Mobile-8; ------------------------------------------------------------------------------------------10.2.1 Whereas, Mobile-8 as a new entrant was in a weak bargaining
position; ----------------------------------------------------------------------------------10.3 Smart; ---------------------------------------------------------------------------------------------10.3.1 Whereas, Smart as a new entrant was in a weak bargaining position; ---10.3.2 Whereas, the period of Smart’s participation in the SMS price
agreement was the shortest among other operators; ------------------------11. Considering that before imposing penalty, the Commission Assembly has
considered the matters that aggravate the circumstances of several Reported
Parties as follows: --------------------------------------------------------------------------------------11.1 XL; --------------------------------------------------------------------------------------------------11.1.1 Whereas, XL was an operator that was active to discipline cartel
members that endeavored to provide off-net SMS price below that in
the cartel agreement; -----------------------------------------------------------------11.1.2 Whereas, XL was an operator that had the most clauses on off-net
SMS price agreement compared to other operators; ------------------------11.2 Telkomsel; ----------------------------------------------------------------------------------------11.2.1 Whereas, Telkomsel with a big market force was the business actor
most benefited by the SMS price cartel; -----------------------------------------11.2.2 Whereas, Telkomsel was not cooperative in providing the necessary
data and information; ------------------------------------------------------------------
184
11.3 Telkom; --------------------------------------------------------------------------------------------11.3.1 Whereas, Telkom was not cooperative in providing the necessary data
and information; ------------------------------------------------------------------------12. Considering that based on the said considerations, the Commission Assembly
decides a penalty for each operator, with due observance of deterrent effects, the
operator’s activity in disciplining other cartel members, the number of clauses in
price fixing in the Cooperation Agreement on Interconnection, market segments
among cartel members, cooperativeness of the Reported Parties in the
examination, bargaining position of new entrant operators, as follows: -------------------12.1 XL in the amount of Rp 25,000,000,000 (twenty-five billion Rupiah);---------------12.2 Telkomsel in the amount of Rp 25,000,000,000 (twenty-five billion Rupiah); -----12.3 Telkom in the amount of Rp 18,000,000,000 (eighteen billion Rupiah); -----------12.4 Bakrie in the amount of Rp 4,000,000,000 (four billion Rupiah);---------------------12.5 Mobile-8 in the amount of Rp 5,000,000,000 (five billion Rupiah); ------------------12.6 Smart is not imposed with penalty as Smart is the last new entrant so that it
has the weakest bargaining position; ------------------------------------------------------13. Considering that before deciding this case, the Commission Assembly had
considerations as follows: ---------------------------------------------------------------------------13.1 Whereas, until today there have been no government regulations that
regulate the pattern and formulation of SMS price calculation and SMS
interconnection pattern in order to prevent traffic load that is not balanced
among operators; -------------------------------------------------------------------------------13.2 Because of that condition, Telkomsel as the operator with the biggest market
segment had initiative to take self-regulatory measures that were then
followed by XL but contradictory to Law No. 5 Year 1999; ---------------------------13.3 The said measures of Telkomsel and XL were attached as part of
interconnection agreement among operators, so that new entrant operators
had no other choice but followed the said required SMS minimum price; --------13.4 Despite in weak bargaining position, new entrant operators are still obligated
to always comply with the applicable laws and regulations, in this case Law
No. 5 Year 1999, so that weak bargaining position cannot be used as
justification for an unlawful act; -------------------------------------------------------------14. Considering that the duties of the Commission as referred to in Article 35 point e of
Law No. 5 Year 1999, the Commission Assembly recommends the Commission to
give recommendations and considerations to the Government and related parties
to immediately draw up regulations on SMS interconnection that are not
detrimental to consumers; ----------------------------------------------------------------------------15. Considering that based on the above facts and conclusions, and in view of Article
43 paragraph (3) of Law Number 5 Year 1999, the Commission Assembly: ------------
185
DECIDES
1. To declare that the Reported Party I: PT Excelkomindo Pratama, Tbk.,
Reported
Party
II:
PT
Telekomunikasi
Selular,
Reported
Party
IV:
PT Telekomunikasi Indonesia, Tbk., Reported Party VI: PT Bakrie Telecom,
the Reported Party VII: PT Mobile-8 Telecom, Tbk., Reported Party VIII: PT
Smart Telecom are proven to have validly and convincingly breached Article
5 of Law No. 5 Year 1999; --------------------------------------------------------------------------2. To declare that the Reported Party III: PT Indosat, Tbk, the Reported Party V :
PT Hutchison CP Telecommunication, the Reported Party IX: PT Natrindo
Telepon Seluler are not proven to have breached Article 5 of Law No. 5 Year
1999; ------------------------------------------------------------------------------------------------------3. To punish the Reported Party I: PT Excelkomindo Pratama, Tbk. and the
Reported Party II: PT Telekomunikasi Selular each to pay penalty of Rp
25,000,000,000.00 (twenty-five billion Rupiah) that must be paid to the State
Treasury as the payment for income from penalty of breach in the field of
business competition of the Department of Trade, Secretariat General of
Work Unit of Business Competition Supervisory Commission through a
Government bank with code of revenue 423755 (Income from Penalty of
Breach in the Field of Business Competition); ----------------------------------------------4. To punish the Reported Party IV: PT Telekomunikasi Indonesia, Tbk. to pay
penalty of Rp 18,000,000,000.00 (eighteen billion Rupiah) that must be paid to
the State Treasury as the payment for income from penalty of breach in the
field of business competition of the Department of Trade, Secretariat General
of Work Unit of Business Competition Supervisory Commission through a
Breach in the Field of Business Competition); ----------------------------------------------5. To punish the Reported Party VI: PT Bakrie Telecom, to pay penalty of Rp
4,000,000,000.00 (four billion Rupiah) that must be paid to the State Treasury
as the payment for income from penalty of breach in the field of business
competition of the Department of Trade, Secretariat General of Work Unit of
Business Competition Supervisory Commission through a Government bank
with code of revenue 423755 (Income from Penalty of Breach in the Field of
Business Competition); -----------------------------------------------------------------------------6. To punish the Reported Party VII: PT Mobile-8 Telecom, Tbk. to pay penalty
of Rp 5,000,000,000.00 (five billion Rupiah) that must be paid to the State
Treasury as the payment for income from penalty of breach in the field of
business competition of the Department of Trade, Secretariat General of
186
Work Unit of Business Competition Supervisory Commission through a
Breach in the Field of Business Competition); ----------------------------------------------This decision is decided through mutual consensus in the Hearing of the Commission
Assembly on Tuesday, 17th June 2008 and read out before the hearing that is
declared open for public on Wednesday, 18th June 2008 by the same Commission
Assembly comprising of Ir. Dedie S. Martadisastra, S.E., M.M. as the Chief of
Commission, Erwin Syahril, S.H. and Ir. M. Nawir Messi, M.Sc. each as Member of
Commission, assisted by Dinni Melanie, S.H. as the Registrar.
Chief of Assembly,
Signed,
Ir. Dedie S. Martadisastra, S.E., M.M.
Member of Assembly,
Member of Assembly,
Signed,
Signed,
Erwin Syahril, S.H.
Ir. M. Nawir Messi, M.Si.
Registrar,
Signed,
Dinni Melanie, S.H.
187

Translate Putusan Kartel SMS _LENGKAP

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