The Application of Rohman-Stork Price Basket to Unlock the Complexities of Cellular Price in Indonesia
CPRafrica 2012/CPRsouth7 Conference, Port Louis, Mauritius
15 Pages Posted: 13 Sep 2012
Date Written: September 05, 2012
Indonesia’s Telecommunication sector is a huge market given the current Indonesia’s population of nearly 240 million. By the end 2010, cellular market recorded a dramatic boost and the number of active SIM cards reached around 220 million. Currently, eight mobile operators compete fiercely for market share. Products, prices and choice of discounts and specials change frequently. The pricing structure of cellular services in Indonesia is unique. Besides conventional price discrimination between on-net (calling on the same network) and off-net (calling from one network to another) and peak and off-peak rates, accumulative discounts, friends and family discounts and cash (airtime) backs are being used. Prices differ also by region and distance. Billing is either in minutes or seconds. Flat rates for voice, SMS and data in any permutation compliment the product offerings. The complexity of product design and pricing is amplified by misleading advertising. “Zero” or “free services” are advertised with the small print listing the limitations thereof and even in some circumstances stating that tariffs may change without prior notice. A straight product comparison is hardly possible for a layman, which inhibits customers from making an informed decision on which prepaid product best fits their preferences. This finding suggested the importance of price transparency to ensure that consumers are well-informed concerning the range of services and prices available. To do so, Indonesian Telecommunication Regulation Agency (BRTI) could use price baskets to create transparency and monitor price developments in the market. Another measure BRTI could undertake to prescribe any advertisement ton include the cost for a price basket defined by BRTI.
Keywords: competition, market, transparency, price basket, cellular, Indonesia
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