Indonesia overview
•World's largest archipelago-17,000 islands
•Poses a challenge in rolling out communication infrastructure and providing access to 241 million inhabitants of Indonesia, 4th most populous country in the world.
Project Objectives
What are the conditions that gave rise to WiFi becoming the access technology of choice for Internet in Indonesia?
Can WiFi access innovation in Indonesia be replicated in other developing countries?
What steps need to be taken for higher Internet growth in Indonesia?
Will highlight lessons learnt from Indonesian study that have regulatory relevance.
What is WiFi? Family of IEEE 802.11 standards with different throughputs for
wireless data transmission: 802.11 (2Mbps); 802.11b (11Mbps); 802.11a (54Mbps); 802.11g
(54Mbps). Range varies depending on use of antenna, surroundings,
transmission power. Typical 50m can be extended to 5kms. Many countries (USA, EU, Indonesia etc.) have unlicensed portion
of 2.4 Ghz (2400 Mhz to 2483.5 Mhz) including use of spread spectrum technology for uncoordinated sharing of band.
5Ghz to unlicense or not? 5.8 Ghz suitable for long range communication.
Advantages: Quick deployment time, low-cost, minimal rights of way needed, “free” bandwidth.
Disadvantages: Prone to interference, weather conditions, steep range/bandwidth tradeoff, doesn’t offer carrier class reliability.
Internet penetration
1.03 1.75 3.76 9.64 6.86 34.53 60.97 47.17 50.88
- 0.01 0.02 0.07 0.02 0.44 23.3 18 10.1
InternetUsers
Broadband users
0.17 0.39 0.4 2.4 3.81
11.95
23.32
33.89
52.49
0
10
20
30
40
50
60
Per 100 inhabitants
Internet Subscribers 2003
Internet growth rate comparison
India’s CAGR for an eight-year period between 1998-2005 was 58.4% in comparison with Indonesia’s CAGR during the same period of 35%.
Internet Subscriber Growth: Indonesia & India
10
900
30003300
3800
5550
400 581 667.002 865.7061087.428
1500
5450
0
1000
2000
3000
4000
5000
6000
Year1995
Year1996
Year1997
Year1998
Year1999
Year2000
Year2001
Year2002
Year2003
Year2004
Year2005
India
IndonesiaTh
ou
sa
nd
s
Typical ISP Network
Infrastructure Network
Access Network
Twisted copper pair
ADSL
Dialup
Fiber optic
Link to higher tier ISP
ISP A
ISP B
ISP C
Coax cable
Cable modem
Network Reality-Indonesia
Infrastructure NetworkAccess Network
Neighbourhood Network $35/pm
Corporate Customer $200/pm
UTP Cable
ISP A
WiFi 2.4
IIX
Ethernet Ring
Microwave
ISP B
ISP C
Ethernet
School B
School C
Wifi 5.8WiFi
5.8
HouseSchool A$4000/pm (Internet link+ international bandwidth)
ADSL
UTP Cable
Uniqueness of Indonesian WiFi
WiFi deployed in Indonesia but in unique manner: Not inside home; not available for free. Blurring of access and infrastructure network; used as
backbone; up to curb WiFi, last mile aerial cable. Many tiered retailing of Internet service…. WHY? To recover high Internet retail prices
What gave rise to peculiar access network in Indonesia?
Regulatory environment Non-independent regulator
DG POSTEL is an unit of the Ministry of Communication & IT Two regulatory bodies: DG POSTEL & BRTI BRTI under-staffed, powers under transition, chairman is DG of
POSTEL Exclusivity clauses extending historical monopolies
Indonesian govt owns 51% share in PT Telkom & 15% in Indosat plus “golden share”
Structure of licenses preventing ISPs from deploying infrastructure
Licenses for Telecom Network & Service providers No local loop unbundling
Exclusivity until 2015 No regulation of leased line prices
Non-regulation of uncompetitive market
Market environment
Lack of competition in infrastructure sector
Resulting in high leased line prices
High international backbone prices
Proliferation of unlicensed “reseller-ISPs”
Telecom services
Telecom operations
Fixed wireline local
Exclusive right 1996-2010 PT Telkom
Fixed domestic LD
Exclusive right 1996-2005 PT Telkom
Fixed wireless local
Limited competition (Satelindo)
Fixed international
Duopoly 1995-2004 (Indosat, Satelindo)
Mobile Competitive (Satelindo, Excelkomindo, Telkomsel etc.)
Internet service provision
Competitive Currently 124 ISPs official, 54 unlicensed
No competition
Limited competition
Competitive
Annual Leased line prices 2Mbps Link
Data compiled from Lokanathan, lirneasia.net, EU 10th report, interview with Indonesian ISP & Network Service Provider
Ratios India EU1:47.9 1:3.8
RatiosIndia EU1:5.9 1:4.9
2Mbps link 2km 200km
Indonesia US$18,000 US$45,000
India US$376.00 US$7,603
EUBenchmark (Denmark)
US$4,802 US$9,219
Comparison of Internet Prices (monthly) for Business Users in Indonesia & India
0500
1000150020002500300035004000
64 kbps 128 kbps 256 kbps 512 kbps 1 mbps
Bandwidth
USD
$
Indonesia
India
Data from Indonesian ISP provider & BSNL, India
Bandwidth Indonesia India Ratio
64 Kbps US$393 US$128 3.0:1
128 Kbps US$639 US$230 2.8:1
256 Kbps US$1180 US$396 3.0:1
512 Kbps US$2596 US$612 4.2:1
1 Mbps US$3776 US$970 3.9:1
Data from PT Telkom, Indonesia & BSNL, India
Comparison of ADSL Retail Prices
(monthly) in Indonesia & India
Bandwidth Indonesia* India** Ratio
384 KbpsUsage limit: 1 GB* 2GB**
US$74 USD$23 3.2 : 1
512 KbpsUsage limit: 2 GB* 5GB**
USD$93 USD$41 2.3 : 1
Lessons from the Indonesia Hostile environment (regulatory & market) led to WiFi innovations
by ISPs in the access and backbone network: High price of leased lines from incumbent, in many cases non-
availability and denial of access. ISP license conditions forbidding deployment of infrastructure. High retail prices for Internet service leading to sharing of connections
via WiFi.
In countries without a competitive or regulated leased line market, ISPs may find WiFi to be viable option for reaching customers and hauling data.
Given a choice, ISPs interviewed in Indonesia would prefer alternatives to WiFi. May also be the case in more “favorable” environments.
Number of studies have shown the correlation between lower leased line prices and rapid diffusion of the Internet (Petrazzini & Guerrero 2000; Fan 2005;)
Indonesia may be sitting on the cusp of explosive Internet growth if conducive regulatory and market conditions are created.