Findings from Indonesian study WiFi Access Innovations by LIRNEasia researchers, Divakar Goswami & Onno Purbo were presented at a press conference at the Jakarta Hilton, Indonesia on October 1. The results from the study have been covered by Indonesian newspapers. The news story by Rakyatmerdeka is online and can be found here. The study findings can be found here.
Divakar and Onno identified high leased prices as the main factor forcing ISPs to deploy their own WiFi-based networks to connect customers to the last mile. Leased line prices in Indonesia are about three to four times the price for similar bandwidth in India or the European Union. In the case of a 2mbps local link, Indonesian prices are more than 48 times the price compared to India. This is the primary reason why Internet service in Indonesia is also three to four times as expensive compared to many other Asian and European countries. Internet penetration in is 0.4%, much lower than its ASEAN counterparts and the Asian average of 2.4% (ITU 2003).
According to the researchers, non-independent regulation coupled with a non-competitive market environment for telecommunication services are the contributory factors for high leased line prices and consequently of low penetration of the Internet in Indonesia. The silver lining is that Indonesia may be sitting on the cusp of explosive Internet growth if conducive regulatory and market conditions are created.