Mobile Phone Access doubled between 2007 and 2009, With Young Adults Creating New Social Habits

Download/Share (pdf)

The mobile phone market in Indonesia has grown substantially in recent years, with household access doubling between 2006 and 2009; according to survey results. Indonesia is a moderately competitive growth market, with estimates that the country’s mobile subscriber base may increase to 130.5 million in 2010. The three main mobile service providers are Excelcom (XL), PT IndoSat (an incumbent provider), and Telkomsel (PT Telkom). The Indonesian mobile market is known for its low average revenue per user (ARPU) and high levels of so-called "churn"--the loss of an existing customer to a competitor. Despite these tendencies Indonesia’s mobile carriers have proven capable of consistently turning a profit.(1)

Indonesia's mobile market is also prone to large fluctuations, recently exemplified by the reported loss of 1 million customers by mobile provider XL, owned by PT Excelcomindo. In the first quarter of 2009, subscribership in XL droppiedfrom 26 million to 25 million. XL attributed this sudden loss to its decision to raise the purchase price of its prepaid SIM cards. According to the company’s president, Hasnul Suhaimi, XL did this purposefully to reduce the number of people who buy XL cards for one-time use and then throw them away.(2) According to its own estimates, XL is still anticipating that it will reach its goal of 30 million users by the end of 2009.

Chart 1

According to the regional ICT policy think tank LIRNEAsia, as of February of 2009 Indonesia had one of the lowest monthly prepaid mobile costs within the region. The average monthly prepaid mobile cost for a “Low User”, as defined by the OECD, is $2.91, below the Philippines ($4.83) and Malaysia ($4.23). Similarly, the estimated monthly cost for “Medium” ($7.13) and “High” ($14.55) prepaid users in Indonesia are less than most of its neighbors. The only country with lower estimated monthly costs is Thailand.(3)

While over half (56 percent) of our survey respondents reported household access to a mobile phone, only 40 percent stated that they personally owned a mobile phone, suggesting that some 16 percent of the population relies on family members for mobile phone access. Young adults are the most likely to personally own a mobile phone, as 70 percent of those with home access have their own phone.

While household sharing of a mobile phone expands overall access, one cannot assume that all members of a household have full or consistent access to a mobile phone. If someone is required to borrow a mobile phone, this may inhibit their ability to receive phone calls or SMS and may limit their ability to fully exploit the benefits of a mobile phone.

Survey data further supported the prevalence of phone sharing, even beyond an individual’s immediate household. Thirty-nine percent of those without access to a cell phone have used one in the past and a vast majority of this group (99 percent) did so by borrowing the phone from a friend or extended family member. Among those who do not have home access to a mobile phone but have used one in the past, only 13 percent have used a mobile phone kiosk.

Survey data also indicates that recent mobile phone adopters tend to spread access to others. Because of the prevalence of mobile phone sharing, particularly among family members, an increase in personal mobile ownership will translate into a wider level of access beyond the individual. As Chart 1 highlights, the increase in personal ownership from 2008 to 2009 (7 percent) among low-income individuals compared to an 18 percent increase in household access--a more than two to one ratio.

Gathering news on a mobile phone is increasingly popular and tends to rise along with educational attainment and income. That said, still-heavy reliance on family and friends as sources for information, even when using a mobile phone, points to the continued importance of word-of-mouth in Indonesian society. When asked about sources of information on current events, survey respondents indicated that word-of-mouth (conversations with friends and family members) was the second most consistently used means of learning about current events, as 46 percent do so at least weekly. As explained above, this traditional means of news gathering has been carried over to new mediums.

Chart 2

Possession of a mobile phone in Indonesia, as in many countries, has substantial social value. How a phone looks, what functions it has and how language is used when calling or texting, all carry important social-cultural meaning. For most Indonesians, bahasa Indonesia is their lingua franca, yet it is not their mother tongue. Any number of regional languages may be their preferred language in the home. However, when using SMS-text messaging, an amalgamation of bahasa Indonesia, Western languages and slang is often used, particularly among young adults.(4)

Chart 3

On the island of Java, the use of Malay as a mobile language has also become popular because it is prevalent in mass media. Young people are using a slang or street language known as bahasa gaul when texting. As B. Barendregt explains, “bahasa gaul is the language of chatting, e-mail, and SMS. Texting in this sense is not just exchanging chitchat, but chitchatting in a very modern way, through both the technology and the language that are used.”(5)

(1) “Low ARPU and High CHURN - Indonesian Mobile Operators STILL manage High Profits.” Wireless Federation. 11 November 2008. Accessed August 2009. http://wirelessfederation.com/news/13407-low-arpu-and-high-churn-indonesian-mobile-operators-still-manage-high-profits/.

(2) “Indonesia's XL Loses 1 Million Customers.” The Jakarta Post. 27 April 2009. Jakarta, Indonesia. Accessed August 2009. http://www.cellular-news.com/story/37205.php.

(3) "Mobile Benchmarks: Southeast Asia." LirneAsia. February 2009. Accessed August 2009. http://lirneasia.net/wp-content/uploads/2007/08/09-02-sea-baskets-explained-v1-0.pdf

(4) Barendregt, Bart. “Sex, Cannibals, and the Language of Cool: Indonesian Tales of the Phone and Modernity.” The Information Society. Taylor and Francis Group: 24 (2008).

(5) Ibid.