Regulation becomes strangulation for Indonesian content

The burgeoning mobile content industry in Indonesia has been brought to its knees by a moratorium imposed the Indonesia Telecommunication Regulatory Body (BRTI) and the Ministry of Communication. The action has effectively stopped all sales of premium mobile content over the existing mobile networks and stems from a spate of consumer complaints, in excess of 9,000, over the suspicious and unaccountable loss of pre-paid credit balances.

Mobile phone content providers called for better regulation following the public outcry over unwanted services that deduct credit from users with pre-paid accounts, but it seems no-one is quite sure who is to blame.

Indonesian consumer groups, including Voice of Humanism, went as far as encouraging mobile phone users to turn off their phones to protest against unwanted service costs. The group identified the main areas of concern. The first involves fraudulent text messages that ask the user to transfer a sum of money for reasons ranging from the welfare of a relative or to participate in a quiz. The second being text messages offering cheap loans. Both use SMS and are categorized as spam.

The third type is premium content subscription. Once a customer subscribes, it is complicated or impossible for them to leave the service. The recurring charges for these services then effectively erode their cellphone credits.

Yusuf Hasnoputro, an official at the Indonesia Chamber of Commerce, said on Friday that the content industry was on the verge of a total shut down as the public called for an end to unwanted mobile phone services.

The industry consists of about 400 content provider companies that employ about 2,000 people and generate around Rp 4 trillion ($450 million) in revenue annually from more than 15 million customers, Yusuf said.

“If they want to kill this infant industry, go ahead. But as an infant, we should be nurtured and regulated instead of being killed,” he said. “As an infant industry, we are bound to make mistakes,” Yusuf said.

That may be so but the content industry, which is apparently unable to regulate itself, has effectively brought upon the cessation of all premium content sales on mobile networks in the country. Mobile operators, surprisingly quiet through the whole debacle have had to cease all billing for premium content and null existing contracts. As one network President Director remarked, "we are having to start from scratch and our customers will have to consciously re-subscribe to content services."

Although no operator is willing to discuss potential revenue losses industry viewers estimate they could be as high as 5 to10 per cent and it may take years to restore the lost sales, let alone gain the confidence of their customers. Questions have also been asked regarding the potential involvement of the operators, whether they were aware of the fraudulent activities and, if they were, why they did not attempt to stop them. Control from network operators, with whom mobile content providers collaborate, is a factor as they are the ones who initially choose which providers are eligible for their networks.

Communications and Information Technology Minister Tifatul Sembiring ordered all mobile phone providers to stop premium services, including premium text messaging and ring back tones, that cut phone credit.“This phone credit stealing has caused public unease. Without the phone user’s consent, phone credit is being billed,” Tifatul said. “This is not fair and should be stopped.”

Tifatul said the decision would not put an end to the creative methods used by content providers. Consumers who are interested in accessing their service can register again. BRTI also told all operators that cut phone credit illegally to return the credit and report the data to BRTI. “The policy was made to stop illegal phone credit billing,” Tifatul said. “This is the same as huge thefts of public money.”

There are now some 150 million users of cellphone services in the country and unscrupulous content providers stood to make large profits through those scams. A commission of the House of Representatives plans to set up a working committee to probe the growing controversy behind mobile phone service providers charging customers for unwanted services.