Enter the net: Increasing access across the archipelago

In order to build a vibrant technology sector, internet access must be made easy. For this task Indonesia has developed several plans. The penetration of broadband in the country is estimated to be at 2.2% as of 2011. A major part of the problem has been Indonesia’s geography, which makes setting up a broadband network very complicated when compared to most other countries. Almost two-thirds of DSL subscriptions come from Jakarta, while Sumatra has a 20% share.

NETWORK EXPANSION: The first step in boosting internet access is a programme called the Palapa Ring, a plan to extend the national broadband network to 440 regencies and municipalities in all 33 provinces that is now under way. It calls for 35,280 km of submarine fibre-optic cable to be laid, as well as 21,807 km of overland cable. As of mid-2011 about 42,000 km had been completed, linking Sumatra, Kalimantan, Java and Sulawesi – four of the country’s largest islands. Also connected are Bali and the two island chains of West and East Nusa Tenggara. Next to be wired are Indonesia’s territory on the island of Papua and Maluku, a group of islands between Papua and Sulawesi. The Palapa Ring has been financed by the ICT Fund, with money from the telecommunications firm payments that are part of their universal service obligation.

LINKING UP: The next step is to get the developing national grid linked to last-mile networks in the localities. For this purpose the government has formed the Meaningful Broadband Working Group (MBWG), a public sector advisory body created by presidential decree in 2006 that includes relevant public agencies and private sector technology and telecommunications companies. The involvement of the public sector has been essential, as bringing broadband access to many of the country’s far-flung islands would not be profitable for private players. MBWG is focused on customers whose potential internet usage would be too light for the private sector to serve and remain profitable.

The MBWG plans to spend $9.2bn increasing the broadband penetration rate to 30% by 2014, a target originating in a University of Chicago study that concluded 30% would be the minimum needed for Indonesia to remain competitive in the region. The MBWG’s published outline of goals and methods cites South Korea, Hong Kong and Singapore as models to emulate. “These early adopters of broadband have now leaped ahead of Asia’s slow movers with the result that the gaps between nations with a critical mass of broadband and those that lack broadband grew exponentially, with the high-broadband group enjoying faster speeds at lower prices and, of course, rising incomes,” according to a paper authored by the MBWG.

About $4.3bn will be spent linking the existing fixed line network of Telkom, one of Indonesia’s two mostly state-owned legacy telecommunications providers, to last-mile networks around the country. The group’s founding document states that funding will come from a mix of commercial and non-commercial investors, including funding agencies such as the World Bank.

GROUND RULES: The MBWG is also considering setting minimum speed requirements for broadband downloading and uploading, as well as other standards, and is studying how countries like Malaysia and India have managed similar tasks. According to data from the International Telecommunications Union, MBWG’s goal of a 30% penetration rate would imply a subscriber base of 73.4m by 2014, up from about 1.9m at the end of 2010. One challenge MBWG will face is ensuring rates are kept affordable. Its calculations would leave the major internet service providers, which are now currently also the major wireless telephony companies, with 65m new customers whose average revenue per user is estimated to be no higher than $2 to $3.

The plan also intends to have state agencies promote greater local website development with the objective of lowering costs, increasing income, teaching essential skills and bringing government services to users online. Programmes of social utility include the creation of websites that offer advice on how to quit smoking or how to create small businesses, among others.