Indonesia’s Telecommunications Regulatory Body plans to hike the price of SIM cards to a minimum of IDR 100,000 ($10). At the moment, you can snatch a SIM card for as cheap as IDR 2,000 ($0.2).
The Indonesian government’s reasoning for doing so is to avoid churn rates, or the rates of inactive and scorched numbers. Currently, that rate is around 20 percent in Indonesia, meaning that one out of five customers are changing their numbers every month.
If you look at the graphic above, Indonesia and Vietnam have the highest churn rates, and that the phenomenon tends to correlate with the prevalence of pre-paid mobile SIMs, since pre-paid means that there’s no binding contract.
The government also argues that higher SIM prices can also help reduce the use of special sim-boxes that can fraudulently route an international call so that it appears to the telco to be a local call. This practise is said to potentially cause a total loss of IDR 770.8 billion ($77 million) to the entire telco industry in Indonesia.
Back to the year 2000
If the plan is passed into law, things would go back to early 2000-ish when SIM cards were very expensive in Indonesia. The price went down due to increasing numbers of telcos in Indonesia aggressively fighting over subscribers. The result was cheaper SIM cards, cheaper SMS plans, cheaper voice plans, and even cheaper internet data packages. This is good for consumers, but side-effects were seen in more and more SMS spammers and scammers, as well as lower quality internet services.
Essentially, the cheap price of SIM cards has driven a consumer habit of buying and throwing away the numbers, exhausting available phone numbers, and complicating telco’s data on their active customers. Telcos almost get no direct profit by selling SIM cards, and with churn rate as high as 20 percent, they’re finding it hard to keep new customers. Plus, it is argued, people don’t like it when their friends keep changing numbers.
Having announced this plan for raised prices, SMS spammers and scammers might be starting to stockpile cheap SIM cards. But in the long run, we would expect the policy to take effect in reducing spammers and scammers as they lose more money from having to buy pricier SIMs. But consumers may also have difficulties adapting to the new policy and higher prices, and so we might see a wave of social media-based protests in response.
(Editing by Anh-Minh Do and Steven Millward)