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Top1. Introduction
Rapid development in economics, politics, technology and other sectors has brought changes (to) towards human life. Globalization has brought new dimensions towards human being life that was once fairly limited. Globalization allows human being to access to information and has resulted in what is called the information age. Recently, there has been significant increase in information and as the result, human beings need convenient instruments to obtain and deliver information. One of the instruments is telecommunication service. Telecommunication service has significant influence towards the national economic growth. The government has issued several policies and regulations on the national telecommunications sector in which private institutions can participate in development and management of the telecommunications sector, more particularly cellular telecommunication.
Having been launched in 1994, GSM (Global System for Mobile Communication) has provided an alternative communication system for the public. It is said that GSM is more convenient than landline provided by Telkom. Until recently, cellular telecommunication has become the most popular telecommunication business in Indonesia. Cellular telecommunication is not only dependable but also spread all over Indonesia allowing communication between people living in other cities or even across island.
In Indonesia, GSM is closely associated to cellular or mobile phone. Vast network of operations and distribution and habit of showing off one’s belonging encourage people to use GSM cellular. It is estimated that the value of the national cellular industry in 2007 is 80 trillion rupiahs (BPS, 2007). The number almost doubled the value in the previous year, which is 45 trillion rupiahs.
To attract investors or publications, there are cellular phone operators who keep their customers’ numbers on “always on” even though they never bought voucher for top-up. These operators wished to maintain high number of customers. Take PT Indosat cellular as an example. In September 2017, the number of PT Indosat cellular customers dropped 170,000 from 12.87 million to 12.70 million customers (PT Indosat, 2017). Negative growth in the number of customers occurs because PT Indosat deleted all numbers that had been inactive for more than three months immediately. XL and Telkomsel took the same steps despite efforts to cover it up. They avoided selling their products on sale because it will result in negative growth. As a matter of fact, without selling their products on sale and the positive growth of customers, their average income of each customer kept declining.
Negative growth (a phenomenon showing behavior of cell phone provider customers who switched operators or deactivate their cards) also took place in terms of market share of some cellphone providers. Amidst increasing number of customers, market share of Telkomsel declined from 55.9% in March, 2016 to 51.2% in December, 2017. In other words, market share of Telkomsel was -8.5% (PT Telkomsel, 2017). Furthermore, the market shares of Indosat from 27.1% to 26.1% making the growth -3.8% (PT Indosat, 2017). At the opposite, the market share of Excelcomindo increased from 16.9% to 22.7% making the growth +34.0% (PT Excelcomindo, 2017).
The fundamental issue in cellular phone industry is the lack of customer loyalty, more particularly those who use pre-paid number. These customers tend to change their numbers within the same provider or even switch to another provider. When customers are using landline, operator can disconnect their phones and delete their data immediately. Cellphone providers can inactivate their customers’ prepaid numbers at least three months after they are activated. Prepaid number customers may only use their number a week and then throw them away. Therefore, on March, 2017, the number of customers reached 88.5 millions (BPS, 2017). The number may remain the same or even decrease in the following years. It is predicted that, from 88.5 million cellular customers, 4 millions are prepaid customers.