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PTC 3rd
Annual Report on
Broadband
Indonesia:
Connecting Diversity
Available April 2015
at www.ptc.org
USC.marshallElizabeth Fife, Ph.D. Editor
Urban
Rural
Entire
3G
• 3G subscription has room for growth
• Much opportunity for Broadband Growth
• Solid economic outlook will support industry growth
Indonesia’s Economic and Strategic Importance
Geography, dramatic economic growth and sheer size of market
Tech-savvy youthful market and rapidly
growing middle class (Consulting companies
estimate rapid economic growth, largest market for tablets in SE Asia)
Planned network investment (Telkom to spend $3.7 billion on broadband in 2015)
Indonesia’s Telecom Challenges
Economic and Spatial Access Inequality but future revenues dependent on mobile data
service revenues
Increasing Mobile Use and Decreasing Revenue
Dominance of Mobile – Prepaid Market
Lack of Fixed Broadband Infrastructure
Digital Divide is a Spatial Divide
Unique aspects of Indonesia…
• ICT-related benefits have not widely diffused into economy or society in Indonesia
• Income not always determining factor in ICT access - geography matters
• Geographical disparities should be recognized as factor affecting unequal distribution
of ICT benefits
Source: Rohman and Bohlin (2011)
Unlocking Telecom Opportunities
Further industry development
requires substantial
network investment
cellular subscriptions dwarf fixed-line and fixed-
wireless subscriptions
Mostly 2G now – leap to 4G will require significant
equipment investment
Potential for 3G and LTE: operators unsure about
demand
Remote areas – lack
access
What do Indonesian customers do on their mobile
phones?
87.2%
96.6%
75%
77.6%
70%
57.6%
65%
62.6%
Emerging Economy Challenges
Transparency
Institutional capacity
Weak regulatory
environment
Need for skilled labor
force
Poor infrastructure
Difficult geography
Agricultural Reform & Education: keys to
Indonesia’s national information society
100%
71%
100%
87.7%
83.3%
96%
83.3%
81%
Expectations for investment in Indonesia’s mobile
networks in rural areas in the next 2-3 years
37.5% 37.5%
25%
Broadband Drivers to Meet Needs
Societal Institutional
Economic Technological
innovation and buy-in
ICT training and education to
support usage
Societal Drivers
Institutional Drivers
Strengthening independent telecom/ICT regulators so stakeholders can be organized and plans implemented
Developing processes with transparency at all stages and levels
Developing mechanisms to effectively implement and coordinate master plans
Readiness factors for Indonesia - and other
emerging markets
Investing in Network
Government’s role is
foundational
• Support for rural network investment
• Create stable enforcement of policy and laws
• Transparency
• Execution of legislation
New ideas are needed for network
infrastructure to grow
Economic Drivers
Rising incomes but unequal development
Developing lead applications: sectors likely to facilitate growth of
broadband: e.g. government, education, health
Core activities needed to increase investment
in Indonesia’s broadband
91.7%
96%
96%
91.7%
96%
96%
91.7%
Technological Drivers
Company Profile: Biznet
Unique among Indonesia’s
service providers in the
range of services offered and innovative
models intended to
reach a broad range of users
Focus on meeting and encouraging demand in areas of Indonesia that the large operators have not addressed
• pass 200,000 homes with cable TV, they have over 350 wi-fi spots
• laid more than 11,000 km of fiber optic cable
• international points of presence in major global cities including London, Seoul, and Hong Kong
High expectation for rapid growth of broadband
network infrastructure in next 2-3 years
25%
62.5%
12.5%
Facilitation of convergence between fixed and cellular
networks
Training, other support
Consulting
E-commerce and Mobile Payment
systems
Integrating cellular and online services
Mobile system security
Data centers
Unlocking Telecom Opportunities
(In-country Interviews)
Positive economic outlook: 5% CAGR 2010-18
Sources: The Economist Intelligence Unit & with permission from Ericsson Consumer Labs to use data charts)
3.0
5.6
5.45.7
6.4
3.1
6.8
4.2
7.4
2.5
5.8
0 2 4 6 8
Bubble size = GDP 2014 in USD
In P
erce
nta
ge
GDP Growth 2014
Australia
Bangladesh
Indonesia
Malaysia
Myanmar
New Zealand
Philippines
Singapore
Sri Lanka
Thailand
Vietnam
*Based on local country currency
Australia, $1,487 B
Bangladesh, $153 B
Myanmar, $47 B
Sri Lanka, $74 B
Singapore, $324 B
Malaysia, $333 B
New Zealand, $181 B
Philippines, $293 B
Thailand, $397 B
Vietnam, $187 B
Indonesia, $861
B
Wrap-up
• mobile services - low quality
with uneven coverage outside
urban areas, low capacity in
highly populated areas
• potential for developing
sector (higher speeds,
data services) if
infrastructure is in place
• continued economic
growth is necessary for
telecom investment to
progress
• connectivity to a network that
will support advanced
services is fundamental key to
growth
• spatial divide as well as economic divide - highest
levels of Internet penetration in western islands, in
east limited access to fixed broadband due to poor
backbone infrastructure
PTC BBR3: 8 Parts
Co
nn
ecti
ng
Div
ers
ity • current
snapshot of Indonesia’s telecom market
• Mobile broadband overview
• Indonesia’s last mile challenge
Ind
on
es
ia’s
Po
ten
tia
l: p
reva
ilin
g
res
ea
rch
on
th
e t
ele
co
m m
ark
et
an
d
ec
on
om
ic d
eve
lop
me
nt • Review of
academic sources
• Overview of industry and consultancy studies
Ind
ustr
y L
an
dscap
e • Indonesia’s telecom industry: competition and consolidation
• Major mobile players: profiles and current activities
• Tower business
• InternationalgGateways: submarine cable development
• Indonesia’s IT industry: data centers, cloud and M2M
Ind
on
esia
’s P
olicy a
nd
R
eg
ula
tory
Dyn
am
ics • Indonesian
Broadband Plan
• Palapa Ring Project
• Spectrum Availability and allocations
• outdated and minimal existing infrastructure, physical infrastructure (roads, electrical power)
PTC BBR3: 8 Parts
Pro
sp
ec
ts f
or
En
ab
lin
g In
do
ne
sia
’s
Mo
bile
an
d B
roa
db
an
d G
row
th
• Broadband Technology Choices for Indonesia’s archipelago
• Economy: diversification and momentum
• Societal Challenges: the skills gap
• Political Challenges: reform and stability
• Wrap-up: Social, Economic, Technology and Political Forces and Industry Growth
Th
e B
us
ine
ss
Cas
e f
or
Ind
on
esia • Increasing ARPU
in the Consumer Market
• Services and sectors that can support network sustainability
• Growth Sectors and Services
De
fin
ing
Dem
an
d:
Ex
pert
Su
rvey
Fin
din
gs • Indonesia’s
mobile consumer: summary of current survey data
• Customer profiles and addressable markets
Co
nclu
sio
n
Interviews (Academia)
• Broer, Rizal, Bandung, Institut Teknologi Bandung, University of Bandung
• Danar, Wikan, Professor, ITB, Institut Teknologi Bandung
• Hendradjaya, Bayu, Data and Software Engineering Research Division, School
of Electrical Engineering and Informatics, Institut Teknologi Bandung
• Irawan, Yoke Saadia, Anatomy and Physiology, eLearning, Telemedicine,
Biomedical Engineering, School of Electrical Engineering and Informatics,
Institut Teknologi Bandung
• Mengko, Tati, Head of Biomedical Engineering, Research Division, School of
Electrical Engineering & Informatics
• Setiawan, Agung, Medical Image Processing, Research Division on Biomedical
Engineering, School of Electrical Engineering and Informatics, Institut
Teknologi Bandung
Interviews (Industry)
• Hassan, Wan Faizal, XL Axiata
• Baasir, O. Marwan, Head of Regulatory & Government Relations, XL Axiata
• Chapelard, Frederic, Leader, Wireless Transmission, Global Business
Management, Trustee, Alcatel-Lucent Foundation, Alcatel-Lucent
• Higgins, Michael, President, Managing Director, Alcatel-Lucent Singapore
• Houlahan, Anthony, Head of Strategy, Southeast Asia and Oceania, Ericsson
• Aidi, Laili, Strategy Manager, Southeast Asia, Asia and Oceania, Ericsson
• Kusma, Adi, President, Director, Biznet
• Tellum, Brian, Cornerstone Capital Partners
• Yan, Jeffrey, Director of Technology Policy, Asia, Microsoft
Interviews (Governments and NGOs)
• Maeda, Kyotaro, First Secretary, Telecommunication and ICT Attache,
Embassy of Japan in Indonesia
• Tayyiba, Mira, Deputy Director for Post, Telecommunication and IT, Ministry of
National Development Planning/National Development Planning Agency
(Bappenas)
• Setiawan, Denny, Head of Group, Fixed and Land Mobile Services, Directorate
of Spectrum Policy and Planning, Director General of Resources and Standard
(DG SDPPI), MCIT
• Ratnawulan Oktovani, MASTEL Masyarakat TeleMatika Indonesia, Secretariat
• Santosa, Setyanto, Chairman, MASTEL, Masyarakat TeleMatika Indonesia
• Thoyib, Eddy, Executive Director, Masyarakat TeleMatika Indonesia, MASTEL
Side Bar Contributors
Author Affiliation Sidebar
Shishir
Belbase
Asian Development Bank Building Revenues in Emerging Markets
Amanda
Hu
Alcatel-Lucent Mobile Market Drivers in Growth Economies:
Indonesia
Mina Jun Visiting Scholar, Marshall School of Business,
University of Southern California,
SungkyungKwan University (SKKU)
Samsung’s Strategy in Southeast Asia
Ibrahim
Rohman
Chalmers University of Technology, PTC
Young Scholar 2014
Demand for Broadband in Southeast Asia
Rashid
Shafi
Sr. Exec. VP & Chief Strategy Officer, Multinet,
Pakistan Private Ltd.
Francis
Pereira
Assoc. Clinical Prof. Marshall School of
Business, University of Southern California
Policy Drivers in Select Asian Markets
David
Sawcer
Assoc. Prof. Keck School of Medicine,
University of Southern California
Indonesia’s Health and the Potential of ICTs
Sandy
Walsh
Dir. Social Innovation Group, Asia Pacific,
Cisco
Cisco’s Networking Academies in Indonesia:
providing technical training for the modern
workforce
Pakistan Philippines Thailand
PTC BBR4
Possible Markets for 2016
• 150 million mobile
subscribers, 7-10%
have smartphones,
77% of mobile phone
population between
21 and 30 yrs.
• 105 million mobile
subscribers, solid
growth, investment in
broadband, penetration
low (7 million).
• ARPU comparable to
Indonesia
• 96.3 million mobile
subscribers, 66%
rural, 30% are 3G