Telkom: Making a Great Leap in IPTV

Telkom, the largest telecom services company in Indonesia, increased its IPTV subscriber base from less than  100 thousand to one million with the partnership of ZTE in 2015. This year Telkom has set up a more aggressive target to develop three million IPTV users. ZTE Technologies interviewed Joddy Hernady, project director for TV-Video Business of Telkom. He shared Telkom's IPTV strategy and its cooperation with ZTE.

Telkom is the largest telecom services company in Indonesia that provides mobile, internet and data services. What are the keys to your competitive advantages and leading position?

The key reason why Telkom has been the No.1 operator for so long is that we have completely integrated services ranging from fixed to mobile data and videos. The Indonesian telecom market is basically a mobile market and Telkom owns the biggest share. Telkom is also the only operator in Indonesia that provides both fixed and mobile services covering the whole Indonesia. With the vast infrastructure coverage we have established a large sales and operation team throughout the country. We can leverage this advantage for both off-line and online services. The current online hotel booking is not available for all hotels in Indonesia except for star hotels in big cities. However, Telkom's sales staff throughout Indonesia can help non-star hotels offer online services. The large sales team can give us more chances to cooperate with more companies that usually cannot be approached by online players. This advantage will certainly support our on-line services that will be created in the very near future so that we are able to compete with online/internet players in online services.

To gain an upper hand in the market, operators are thinking of transforming their services and networks. What do you think are the main issues and challenges faced by operators in Asia right now? How do you think Telkom can compete in the current challenging environment?

If we are talking about network and service transformation, three key things will become our challenges: people, process and technology. And amongst this, people are the most important one because people will drive to change the process, tools and technology. We are now entering the internet and digital era, many new internet players have been born, and many of them are threatening the telco's traditional services. We are being disrupted now. The answer for this is we need to go to other industries and build a new arena to sustain our growth. Internet has changed everything. There is no border any more amongst industries. What we have now is a new arena or a new digital ecosystem involving so many industries. Hence, we need new people who understand this trend, and we need people from various background and various industries as well. This is a big challenge for all telcos who are almost from homogeneous background with relatively old people.
Our company is also facing this situation. To overcome this, we are strengthening our organization by putting more resources into digital business. We will create a new digital business department under Director Digital and Strategic Portfolio. With the digital organization, we will explore more our key capabilities so that we can leverage all our mediation capabilities such as payment, big data and digital advertising to improve internal process effectiveness, strengthen our core products, and help other companies develop their businesses. We want to be the best platform enabler for the new digital ecosystem in Indonesia We will also explore the areas in which Telkom can enter digital services and provide amazing digital experience to our customers.
In the process of transforming our network and infrastructure, we have to see the global trend. We believe that everything will be based on video in the future. Video consumption will increase from time to time and this is a global trend. Our current network and infrastructure is not ready for videos, so we are moving to change it based on internet and video-centric concept. This is a new challenge for us because we need to learn new technologies and also to change supporting systems, processes and the mind of people. With a video-centric network and infrastructure, we will be able to deliver all digital services in very good quality and best experience.
Since we are not strong in R&D as other mainstream operators, we are trying to follow them in selecting major new technologies. For example, it is completely new for us to implement fiber to the home, so to get a better know-how, we are cooperating with three leading Asian telecom operators China telecom, SK telecom, and NTT this year. We want to keep up with the benchmark of their technologies, business process and people's capability. This is not easy but necessary.

Why did Telkom select ZTE as its partner for IPTV? How does IPTV fit in Telkom’s overall business strategy?

Telkom started its IPTV project in 2010. ZTE was among top 5 global vendors at that time. With its advanced, proven technology, ZTE owns extensive experience in IPTV. Also ZTE offered the most favorable commercial conditions. These are the main factors we selected ZTE as our partner for IPTV.
However, we slowed down the pace of IPTV development in 2012 until 2014, because we started developing TV business focusing on internet services like OTT. After two years we found out the direction was not absolutely right. Since 2015, we have adjusted our video strategy and started to deploy IPTV as a bundle of services with broadband and voice to increase our customer base. The bundled service brand is IndiHome. We offer free 1000-min call  for voice, several broadband packages that customers can choose, with the lowest one being 10 MB per second of internet, and more than 100 TV channel options. With current 4 million broadband users, we are ambitious to develop our key voice and broadband users into IPTV users. IPTV is used as a tool for customer retention, but we will develop additional features such as OTT video and advertising platform to make IPTV as a new revenue driver.

How would you comment on the cooperation so far, and how is Telkom benefiting from it?

Telkom and ZTE have worked so closely that our subscriber base has increased from less than 100 thousand to one million. No other pay TV operators in Indonesia could achieve the same result in one year. We have got full support from ZTE in terms of capacity, expansion, and platform development. This year we have set up a more aggressive target to develop three million IPTV users, and by 2020 we will target to increase up to 16 million Indihome users. ZTE is supporting us well for our IPTV development. In our R&D, we have established a joint innovation center. In our operation, ZTE has put resources to work with us on platform development, operation and maintenance.

Can you briefly describe your IPTV service offerings and how customers have responded?

Currently, we have more than 100 IPTV linear channels bundled with voice and broadband. We can also provide video on demand, karaoke and home shopping. 300 video channels on demand will be added next month, and more new features such as OTT services will be added so that our customers will have more and better choices.
Telkom is a leading operator that provides affordable bundled services to meet user needs. There are a plenty of opportunities and potentials to develop home video entertainment because we have around 60 million households in Indonesia. Our challenge now is not on the demand but on the supply itself. How can we deploy our fiber infrastructure quickly to serve our growing customers? Starting this year, we will introduce TV and video services based on IPTV and OTT technologies. Both IPTV and OTT services will be integrated in one set-top box. We are doing this, because young people, especially netizens, may prefer to choose OTT services which enable them to watch programs anywhere at any time, while others still prefer to watch linear TV/video services that are available on IPTV. To serve various customers, we will analyze their behavior from time to time so that we can offer a diverse combination of content to satisfy them. The OTT platform has been tested, and we will put OTT services into commercial use soon.

4K represented by HD video is becoming a trend in the era of big video. How do you plan to develop your IPTV services?

Telkom has done a 4K trial with ZTE, and it turned out to be a success. But in practical implementation, we should consider the readiness of a 4K ecosystem. We have to make sure our users have the 4k television before we provide 4k content. We are in the process of negotiating with some 4K content providers and we will have at least two 4K channels in 2016. We are also in the process of making 4K miniseries in cooperation with local production house. We will invite our famous actors who play in Raid and Star Wars to be key actors for the 4K miniseries. In 2015, Telkom and ZTE established a strategic collaboration by setting up a joint innovation center (JIC) for big video (IPTV and OTT) in Indonesia. The JIC will be responsible for creating the latest technologies, seeking valuable partners, and developing and operating new value-added services.

What do you think can ZTE improve to create more value for Telkom's development in the future?

The success of Indihome has given an impetus to operators in Indonesia who plan to offer IPTV services. To take the lead and be more competitive in the market, Telkom needs to add more features and services to the platform and make its content distinctive that improves user experience. Currently, it takes much time on developing features and user experience/user interface. This is because ZTE's main R&D team works in China. I hope in the future some key R&D work related to the development of electronic program guide (EPG) or user experience/user interface would be done in Indonesia to make deployment faster. Each market is unique. As far as I know, in China there is no advertisement-based mechanism on IPTV, but in Indonesia we are offering IPTV not only based on subscription but also on advertisement. With more resources from ZTE, we can leverage the JIC to speed up our new service commercialization, make the analysis closer to our market and update our platform features more quickly to meet user needs.