Ensuring broadband connectivity : A mounting task for Jokowi

Ensuring broadband connectivity : A mounting task for Jokowi Ibrahim Kholilul Rohman  ;   The writer, who obtained his PhD in technology management and economics at Chalmers University of Technology in Gothenburg, Sweden, is an ICT industry analyst who lives in Seville, Spain

JAKARTA POST, 06 September 2014

                                                                                                                       

                                                      

The recent presidential election boasted a high turnout and increased the hopes for president-elect Joko “Jokowi” Widodo. Several areas need to be tackled by Jokowi, among which a major concern is related to the Information and Communication Technology (ICT) sector, one of the fastest-growing and promising sectors in the country. Even though the telecommunications sector has been experiencing a decline in growth in the last couple of years, from around 30 percent in 2008 to around 12 percent in 2012, these figures still surpass economic growth, which is around 5 to 6 percent annually. Talking about ICT, the availability (access) and use of broadband are two tasks that the new government should prioritize. Current broadband access and use in Indonesia are clustered in several major cities due to limited access, especially in the western part of the country. The Indonesian Internet Service Providers Association (APJII) reported that the total number of Internet users (both fixed and mobile) was around 60 million by 2012. Additionally, the Central Statistics Agency (BPS) reported that a fraction of the 58 percent of Internet users was connected via their cell phones. On one hand, the development of wireless technology is an on-script phenomenon in countries like Indonesia. Literature reviews often propose that wireless technology plays a crucial role in the expansion of rural telecommunication networks in developing countries (Reynolds and Samuels, 2004; Galperin, 2004). More importantly, mobile technologies not only offer a substantial cost advantage over fixed-line infrastructure for rural networks, but are also better suited to serving the demands of rural low-income populations (Proenza, 2006). On the other hand, when we place a higher target for broadband connectivity as having a general purpose technology (GPT) impact, the current broadband situation in Indonesia might not suffice. Broadband connectivity should be a key enabler where the pervasive uses of such technology in a wide range of sectors generalize productivity gains transferred to the rest of the economy. Additionally, not only will broadband improve productivity levels through remote monitoring, logistics management and online procurement, it will also allow people access to information to stimulate economic activity and ensure the implementation of good governance. Therefore, the impact on developing countries is more critical and moves beyond merely an economic impact (Kelly et al., 2009). One aspect inhibiting the more widespread productive use of broadband access concerns the lower speed of broadband in Indonesia. Recent speed data obtained from speedtest.net/ookla ranks Indonesia as being among the slowest broadband countries in Asia, and even in ASEAN. At the same time, it should also be noted that it might not be worth waiting for private operators to provide better connectivity in wireless technology, at least in the short term. Almost all private telecom operators in Indonesia are now struggling to maintain their financial performance levels. The Meryl-Lynch Bank of America (MLBoA) reported that the average revenue per user (ARPU) among Indonesia’s operators declined significantly from 2006 to 2012. PT Telkomsel, for instance, once generated about Rp 80,000 (US$6.8) of ARPU in 2006, more than double the amount in 2012. The same report also showed that on average, nearly Rp 70,000 of ARPU was generated in 2006, 40 percent higher than the average revenue for each operator in 2012. Knowing that the private sector might not be able to provide broadband connectivity (with a decent quality and speed) nationwide, a comprehensive plan prepared by the government — called the Indonesian Broadband Plan (IBP) — is seen as a breakthrough policy that specifically targets fixed broadband access as its key aim. The plan was a mandate given by the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) 2011-2015 under the connectivity working group. This plan aims to boost the development of broadband infrastructure throughout Indonesia, led by four main actors: the Office of the Coordinating Economic Minister, National Development Planning Board (Bappenas), Communications and Information Ministry and the Telecommunication Society (MasTel). The IBP puts the running targets in relation to the quality of the broadband services available. For instance, in urban areas, it expected that 16 percent of households would have access to a fixed broadband connection of 3 Mbps by 2014, with the aim of that number increasing to 71 percent of the population by 2019 with a connection speed of 20 Mbps. The plan also aims to achieve 100 percent connection at all public facilities (schools, hotels, hospitals, health clinics, government offices, public spaces and police stations) by the end of 2019. To realize this plan, fiber-optic cables will be linked, especially through unconnected areas. The projects will be undertaken by PT Telkom, while the installation of fiber-optic cables in non-commercial areas will be handled by the Communications and Information Ministry using Universal Service Obligation (USO) funds. The big question is: Will the infrastructure development be implemented according to the plan in the IBP? Telkom is the only company committing to build the backbone connection based on the IBP document. However, given the recent macroeconomic turbulence (weaker exchange rates) and the fact that the vast majority of Telkom’s revenue is generated from Telkomsel (60 to 70 percent), the milestones in the project’s schedule might face some uncertainty; even including those projects that have been completed in Maluku and Papua. In addition, the government’s Telecommunications and Informatics Funding Provision Management Agency (BP3TI) is currently under scrutiny following some suspicions concerning the procurement of Internet service centers. The projects were initially USO programs aimed at increasing Internet penetration in rural areas. This factor has further delayed the second phase of the Palapa Ring tender, which is one of the IBP’s flagships. As these cases are currently being investigated in the courts, the communications ministry has also decided to reassess the program. Being a late starter in broadband planning, Indonesia can enjoy the advantage of using the latest technology and so be in a better position than many other countries, as far as the introduction of next-generation networks are concerned. Thus, any prolonged delays in installation could result in the technology moving close to obsolescence, casting doubt over its maintenance and requiring replacement. ●