Abstract

Transforming of telephone kiosk to Internet café business to form a complete telecenter is not an easy task in Indonesia. Technology drawback and unreadiness to adopt the internet and greater investment cost will prevent a traditional telephone kiosk owner to become a netcafé operator. The following story reflects recent condition of ICT in Indonesia.

Introduction

Telephone kiosks have grown fast enough in Indonesia. Within three years since 1997 there are more than 40,000 telephone kiosks or wartels in the whole country With a population of 210 millions and telephone density of 2.93 per hundred people there are only 6.3 millions lines in service in Indonesia installed by PT Telkom, the local telco. This wartel system had helped the minority to survive throughout the crisis then and now the hangover still jammed the Indonesian economy.

Wartels usually are traditionally runs and family oriented home business and not operated as a complete office system as telecenter might have. The wartel itself is easily to operate with no proper training necessary on how to operate the telephone or how to call long distances and how to place international calls. The customers can do the calls for themselves without help. How to make the wartel sustainable would depend on several reasons such as location, population served and services being offered. As an example a typical wartel can be located in just a suburb residential area with dense population of 10,000 people and services can range from faxing, postal, photocopying, and soft drinks.

The internet can be considered new to the society especially in the rurals and giving a non-traditional way for customers to communicate other than using the old telephones. It would take sometime for the traditional wartel operators to grasp the new technology brought in. They have to be taught on how to connect to the internet and harness the information. The internet is becoming common by means of growing interest to browse and using emails through internet cafés.

Cost consideration

A small wartel system can consist of two telephone booths with display metering system. The calls in Indonesia are measured by means of duration and distances. Vast distances in Indonesia make the calls expensive. A local call will be measured by duration of how long the call is placed by the customer. A billing system will charge the customers for duration of calls that would also depend on distances where the calls are to be placed.

A minimum investment of 1,000USD can form a wartel with two telephone booths connected to a computer and a printer to record and provide the billing system. A minimum of 10sqm space is adequate to accommodate a table, chairs and booths for the callers. A payback period of 12 to 18 months is expected to repay the basic investment. The wartel system is operated on commission basis from PT Telkom who gives up to 30% discount for the first 300USD gross monthly and 22.5% for income more than 300USD. This will give moderate income for family oriented home business owners.

Larger wartels can consist of four to 18 phone booths those are scarcely found in the suburb area and usually opened in business districts of major cities in Indonesia.

At this time of writing there is not yet adjustment in sharing agreement between wartel operators and PT Telkom. In coming regulation, PT Telkom will reduce this commission and the wartels will have to markup the rates for calls duration and distances. Calling charges between wartels will not be the same anymore. This new telecom regulation will reform the wartel system and the operators will have to compete head on with themselves and to provide better services to the customers ie by adding netcafé to existing wartels.

Combining a wartel and netcafé in the same place could form a telecenter with more services to be offered. This combination can create better social activities for the community with lower cost of doing communication by means of the internet.

Offering netcafé business to wartel operators?

Netcafés are growing fast enough on Indonesia. Today there are about 1000 netcafés mushrooming throughout Indonesia which have at least two million internet users or a mere 1% of total population. Despite the growing interest of internet users, the economy has not got back to normal. People still runs on subsidized fuels, rice, electricity and many others. Banks money are deposited back to the central bank instead of providing loans into the real sectors. Interest rate still runs high at 13% for deposited money and lending rates can go up to 30%. Therefore only good money keeper can go into the netcafé business. The banks will not finance the startup netcafés or telecenters as they are afraid the business won't payback. The netcafé business is categorized in the SME sector.

The SME's loans with less than rupiah 5 billions (US$ 714,286) consist of 141,114 debtors or 97.39% of total debtors with rupiahs 11,835 billions which is only 4.97% of total debt value.

A netcafé will need at least five terminals for a startup to become sustainable. A netcafé owner will have to pay others than telephone cost like ISP cost, more electricity for the PCs and air conditioning, payrolls for well trained staffs on shifted basis. Those requirements should be considered. Although telephone connection is locally charged, a twelve hours daily for uninterrupted internet connection will charge the owner a huge sum and the telephone cost will be the most component of total monthly cost.

I don't think that a wartel owner can be easily changed into netcafé operator because of the nature of technology as they are not ready yet and greater cost of investment. A small netcafé can consists of five PCs, a server, a printer, computer tables, air conditioning, software (operating system and internet program), UPS, and a billing system. The computers are connected to form a LAN system so each terminal can browse the internet. Offered in the netcafé are browsing, chatting, gaming and also PC rental.

Basic investment of a netcafé can be as low as 5,000USD system which is five times of a wartel using perhaps secondary computers or old 486 computers. I've seen this using 486 computers with 32MB memory and doing well.

A standard netcafé system can consist of P-233 computers with 32MB memory, a 33.6/56kBps modem, and a P-II 300 server using coaxial cable for the LAN connection. A better system can consist of Celeron 300 computers with 32MB memory, a 56kBps or ISDN modem, and still a P-II 300 server. Using UTP cable connection would provide a faster solution but will take more investment for the hub etc and thereto longer, up 36 months, payback period for the basic investment. Other facilities include desktop inkjet printer, and a color scanner for added service.

Conclusion

The technology drawback and greater investment cost will create a block to wartel owner to become a netcafé operator. Most netcafé owners initiate not as wartels because they have knowledge in the internet technology, mostly owns computer shops, and they have equipments to be invested in the netcafés. Big netcafés with at least 20 terminals are owned by computer shops or hardware distributors.

Service would become a priority to form a long lasting customer loyalty. Service in the netcafé can be defined as faster internet access and lower cost of internet charging to customers. A standard rate of 1.00USD per hour is common for the netcafés in Indonesia.

The staffs in the netcafé would have to use their spare time to design homepages and start e-commerce solutions. The netcafé can also provide a VoIP system so users can do voice calls as is in the telephone booths. The e-commerce solution will provide a way of global trading. These are other things that will give added value to basic netcafé services other than browsing, chatting, gaming, and emails.

Adding a netcafé in the wartel will indeed boost the economy by giving a chance for the owner to do something else than just operating a telephone kiosk. This kind of service industry will help the real sector to run and uplift the society by adopting easily to adapt new technology with a minimum of basic investment.

For conclusion of this writing, I would have suggested that traditional wartel in Indonesia could grow for itself without becoming a netcafé and the more technological savvy can initiate a netcafé business with modest investment needed. As for the socio-economic consideration, these netcafés have created better social activities for a lesser cost of doing communication and more democratic ways of information exchange.

The author can be contacted at h_suwono@sby.dnet.net.id

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