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 Special Country Focus: 4G in Indonesia By Basharat Ashai, Market Analyst, APAC & MEA Contact the author at basharat@maravedis-bwa.com |
Indonesia ranks as 5th in terms of the number of Internet users by country in Asia, according to data released by www.internetworldstats.com. One explanation for Indonesia's high number of Internet users is its huge population. With over 240million people, it is the third largest country in Asia, after China and India. Despite the country having an Internet user base of 25 million, as of Q2 2009 the broadband connectivity stands at less than 2 million. Indonesia is struggling to get broadband connectivity off the ground with its limited fixed-line infrastructure. The number of fixed line connections remains lower than 10 million. This opens up big opportunities for wireless broadband technology to provide broadband internet services to the many rural and underserved areas, given that around 80% of Indonesia's population lives in rural areas. The government of Indonesia has realized the need for wireless broadband and has recently awarded licenses in the 2.3 GHz and 3.3 GHz band. WiMAX spectrum was allocated to a number of operators in 2009. The allocations were based on zones (there are presently 15 zones in Indonesia). Of the 73 telecom companies that participated in the bidding, 8 winners were chosen for the 15 franchise zones. Each regional zone will have a maximum of two operators. The eight winners are Telkom, Indosat, Internux, First Media, Jasnita, Berca, Indonesian WiMAX Consortium (a consortium comprising Comtronics Systems and Adiwarta Perdania), and WiMAX Indonesia. The highest bids came from First Media with IDR121.2 billion (US$12.3 million) and Internux with IDR110.03 billion (US$11.6 million), while Telkom’s bid was the lowest with IDR755 million (US$80,835) for Papua and IDR533 million (US$57,000) for Maluku. The tables below show the spectrum allocation details in Indonesia.
Under the license rules it is mandatory for Indonesian WiMAX license holders to deploy 802.16d equipment. Unlike its neighbouring country Malaysia, which allocated 2.3 GHz spectrum for mobile WiMAX, it is surprising that Indonesia chose 802.16d technology. The explanation perhaps lies in the fact that the government already spent approximately US$2 million in 2008 to support 802.16d R&D in Indonesia. It would not have been percieved well had the government suddenly changed its policy in favour of 802.16e-2005. In addition, local companies were taken into cognizance before the government decided to chose 802.16d. Not paying any heed whatsoever to the growing success of neighbouring Packet One Network’s 802.16e-2005 deployment in the 2.3 GHz band, the majority of local companies supported 802.16d standard for WiMAX deployment in Indonesia. Indosat M2, First Media and Telkom Indonesia have serious plans to deploy 802.16d WiMAX in the 2.3 GHz band. Telkom will deploy 2.3 GHz network on Central Java, East Java; Papua, Maluku and North Maluku, and North Sulawesi. To encourage national industry to contribute in the WiMAX deployment the government has announced that 2.3 GHz license holders are obligated to utilize 30% local content for CPE and 40% for base stations. Telkom Indonesia and other operators who are planning to deploy 802.16d WiMAX in the 3.3 GHz band in Indonesia have already entered into the purchasing phase. Telkom is expecting to deploy its WiMAX networkin the first quarter of 2010. Telkom will deploy a 3.3 GHz WiMAX network on North Sumatra, Central Sumatra, South Sumatra; Banten and Jabotabek (Jakarta, Bogor Tangerang, Bekasi), West Java, West Kalimantan, and East Kalimantan. In emerging economies like Indonesia, a network can initially be deployed for fixed/nomadic broadband, requiring lower CAPEX and slowly evolving to support full mobility in line with revenue growth. The government of Indonesia is planning to hold an 802.16e Mobile WiMAX auction in 2011. With mobile WiMAX still a few years away from deployment in Indonesia, 3G technology has an early market entry advantage. However, the 3G market is still in its infancy in even three years after service was launched. Five 3G licenses were auctioned in 2006 to Telkomsel, Excelcom and Indosat, and in 2004 to Hutchinson and Natrindo. Despite the country having a cellular subscriber base of over 150 million (as of mid-2009), the 3G subscribers represented only about 7% of total mobile subscribers in early 2009. Uptake of 3G services is slow because 3G handset pricing is not affordable enough to attract users. However, this has not hampered the future network development plans of the mobile players. Telkomsel and Indosat are developing HSPA+; Telkomsel has developed this service in Jakarta and other cities. In 2010, Telkomsel is planning to target 24 cities for launching HSPA+. Indosat has also announced that it will be upgrading its current 3G network to HSPA as a precursor to its ultimate goal of setting up a 4G LTE wireless network. POSTEL, the Indonesian telecom regulator, has allowed operators together with vendors to conduct LTE trials. There is no official announcement yet about the frequency bands for commercial LTE deployments in Indonesia. The 2.5 GHz band is now fully utilized for BSS (Broadcast Satellite Services). POSTEL is currently studying how to optimize this band for possible use of BWA (regardless of network type- LTE /WiMAX). It is also studying the use of LTE in the 700 MHz band and the development of UHF Digital Dividend Mobile Broadband in ITU Study Groups and Asia Pacific Telecommunity forums. However, the biggest challenge is for broadcasters (and also broadcasting authorities) to release the band for Digital Dividend. Digital Terrestrial TV has not yet started in Indonesia. POSTEL is strongly urging the Minister of Communcation and IT to migrate from analog to digital TV as soon as possible. The only feasible LTE implementation is spectrum refarming in 900 MHz/1800 MHz (and 2.1 GHz UMTS band) of current GSM/HSDPA operators. For more information you can contact the author at basharat@maravedis-bwa.com |
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