Broadband users can now self-regulate the bandwidth provided by the operators with the help of software which will be made available for free.

Bhutan InfoComm and Media Authority (BICMA), in a move to facilitate the operators give better services and to emphasis evidence-derived regulations, tied up with LIRNEasia, an ICT policy and regulation think tank. LIRNEasia is based in Sri Lanka but works in all the South Asian countries and some South East Asian countries.

LIRNEasia had earlier presented a study on broadband quality in Bhutan. The study showed that the quality of connectivity among the national internet service providers was not up to acceptable international standards.

“It was revealed that one of the most pressing problems is connecting two internet service providers (ISPs) called “peering”. It shows that the quality of peering is not satisfactory,” said Wangay Dorji, the head of telecommunication division of Bicma.

The internet speed of the ISPs in Bhutan was above the international benchmark, which is 300 millisecond return trip time.

He said that Bicma felt the need to do something. “If we do not do anything, the traffic within Bhutan cannot be exchanged at the international level. If it has to be exchanged internationally, it has a lot of cost as well as bandwidth utilisation.”

As a regulator, rather than being reactive, we want to be proactive, he said.

The slides presented by LIRNEasia on 9th May 2011 on the AT tester findings can be found HERE

LIRNEasia’s preliminary round of mobile broadband quality testing in selected locations in Western Province unveils both hopes and issues. The good news is that the quality of both key pre-paid mobile broadband services is satisfactory, in majority of locations. However, unusual quality drops in several places indicates that this performance is not always a certainty. In general, a mobile broadband user in Western Province can expect a reasonable quality unless a rare issue like the distance from a tower or a higher number of simultaneous users hinders it.

LIRNEasia tested the broadband quality of the popular pre-paid High Speed Packet Access (HSPA) broadband connections of the two key providers. Packages offered by the third provider were not tested only because the operator prevented pinging from outside the network. Mobile test applications newly developed and released by Zamsana PLC, were used on mobile handsets for testing. To further simulate the true conditions the tests were done on public transport.

We saw little reason testing mobile broadband quality from fixed locations. It should be done on the move as that is how it is used. We could have done it from a car, but purposely did it from a bus to examine how conditions beyond our control can affect the performance.

Testers used mobile test applications developed for Symbian and Windows CE, the two most popular mobile operating systems used in Sri Lanka. They took both stationary and on the move readings at key points along four main roads from Colombo to Kalutara, Negombo, Avissawella and Nittambuwa. Apart from the download and upload speeds, the two most common parameters the tools recorded Return Trip Time or RTT (the time taken by data packets to reach a destination server and return), Jitter (the variation in RTT), Packet Loss (what percentage of packets were lost on the way) and the availability. The actual values were compared with the promises of the operators or, if no operator specifications were available against international standards.

Mobile broadband quality testing is a part of LIRNEasia’s broadband Quality of Service Experience (QoSE) benchmarking work. With its partner organization‐ the Indian Institute of Technology, Madras, LIRNEasia has been testing broadband quality since the beginning of 2008. The first tests were conducted manually. Later the test methodology was standardized and a software application was developed to get more accurate results. First round of testing was done only in Colombo and Chennai, but now the scope is expanded to cover New Delhi, Dhaka, Mumbai and Bangalore.

A direct approach to monitor Quality of Service Experience (QoSE) would be for the regulator to reach deep into the innards of the telecom network to install monitoring equipment and take remedial actions as per the licenses or the governing statute whenever the data indicate below‐standard performance, says LIRNEasia. Dearth of financial and human resources can be a key challenge for such an approach. The second approach is based largely on user activism. Educated users are expected to voluntarily contribute their time and computing resources towards building a performance database which in turn will be used in creating the bigger picture.

A comprehensive methodology to benchmark Broadband Quality of Service Experience (QoSE), based on the latter approach has been developed jointly by LIRNEasia and the TeNeT Group of the Indian Institute of Technology Madras (IIT‐M). While there is no barrier for regulators to use it, the methodology is largely user centric. Instead of depending on one time pinging, this methodology uses AT‐Tester, an open source software tool to monitor all crucial QoSE broadband metrics over a longer period, on both weekends and weekdays, covering peak as well as off‐peak traffic. The traffic is also monitored within segments, ISP, local and international.

(The figure above shows the average peak time download speed to an international server offered by the pre‐paid mobile broadband packages of the two key mobile broadband providers on a selected date. The ceiling is the promised speed of 1 Mbps. Speeds may vary depending upon the type of the handset, time of the day, number of simultaneous users connected to a tower and the weather conditions. Please click on image for an enlarged version.)

While I do believe that (a) the Director of Information is on the face unqualified to serve as DGT, and that (b) the Department of Information has no role to play in a modern democratic society, I do not think that any of these feared things will happen.

Whatever the DGT does, he has to do under the Law, the Sri Lanka Telecom Act, 25 of 1991, as amended. According to the Act, the DGT does not have legal authority; all authority lies with the Commission, a five-person body chaired by the Secretary of the relevant Ministry, at the present time Mr Lalith Weeratunge, Secretary to the President. The DGT is a member ex officio and until now, the only full-time member. The other members are part-time, one qualified in law, another in finance and so on. The DGT is the CEO of the Regulatory Commission and must act under the direction of the five-member commission.

The Commission has to act as specified in the Act and other relevant legislation (and of course the Constitution). If it acts outside these powers or if it exercises these powers without adhering to natural justice, it can be checked under the writ jurisdiction of the Court of Appeals, as set out in Article 140 of the Constitution. Fundamental rights cases may also be brought against it before the Supreme Court.

Let us take the case of licensing news websites. Can the TRC do this?

The Act specifies several kinds of licenses and a permit. It is an offence to do the acts covered by these licenses and permit, without being issued these licenses and permits. Action may be taken when the terms and conditions of the said licenses and permits are violated.

The first question then is whether the operation of news websites requires a license under Act 25 of 1991, as amended. We can without much difficulty exclude the licenses for cabling, frequencies and frequency emitting apparatus etc. The core issue is whether a news website requires a license under s. 17.

Section 17 states that:
“(1) Subject to the provision of section 20, no person shall operate a telecommunication system in Sri Lanka except under the authority of a licence granted by the Minister in accordance with subsection (2).
(2) The Minister may grant the licence referred to in subsection (1) on the recommendation of the Authority, provided he shall have the power to reject such recommendations for reasons assigned and grant a licence in his own discretion.”

Section 20 is about certain kinds of activities in contiguous spaces and/or within organizations and is not of relevance to the present discussion. The key phrase is “telecommunication system in Sri Lanka.” Anything that falls within the definition of a “telecommunication system in Sri Lanka,” and does not fall within the exclusion specified in s. 20, requires a license.

A “telecommunication system” is defined in Section 73 as “a system for the conveyance by the agency of electric, magnetic, electro-magnetic, optic, electro-chemical or electromechanical energy, of
(a) speech, music and other sounds ;
(b) visual Images;
(c) information for human comprehension that is intended for presentation in a two dimensional form, consisting of symbols, phrases or sentences in natural or artificial languages, pictures, diagrams and tables ; or
(d) signals serving for the actuation or control of machinery or apparatus.”

One may access a website using a telecommunication system licensed under the Sri Lanka Telecom Act, but that does not mean that the website is a telecommunication system that requires a license. In short, the TRC does have the authority to license Internet Service Providers, through whose facilities we gain access to websites; but it does not have authority over the websites. It is possible for the TRC to include specific license conditions in the license issued to ISPs that may include restrictions about filtering and such, but as far as I know such conditions were not included in the ISP licenses that were issued since the 1990s and even if the TRC tries to include them it may find itself violating the Constitution.

Living in war conditions caused the citizens of this country to yield fundamental rights in the name of assisting the fight against terrorism. We must get back to asking “under what authority?” whenever someone in government seeks to prohibit something or get us to do something. There does not seem to be any legal authority for the TRC to do any of the actions they are allegedly planning to take.

Quo warranto, TRC?

The NYT today carried a story that says many of the things we have been talking about for the past two years.

Tracking the speed of Internet service is becoming more and more important as everyone asks the Internet to do more than handle e-mail messages and Web pages. A few lines of text can take its time arriving, but applications sending voice calls or streaming video become unusable if there is too much delay in delivery.

Some Web sites and software packages let users test the speed of data through their Internet service provider, or I.S.P. All the providers offer a glimpse at the quality of the connection, but that information is just one bit of data; each new request for a Web site or a file involves dozens of computers, and any of them could be a weak link.

“Even in Web browsing, pages are getting more complicated,” Professor Odlyzko said. “You click on a link and you end up setting dozens of connections. Ads are being served. You end up doing a database lookup. Any extra latency gets compounded because you have many, many stages.”

The difference between the QoSE problem in the US and the rest of the world is that they live practically inside the Internet cloud. The entire discussion about what the ISP is responsible for does not apply in our parts, where the ISP has to get us to the Internet cloud through Singapore or wherever. ISP’s responsibility is not limited to the ISP domain, but extends to the first landing in the continental US (a point we took from the Singapore IDA). When we used the AT Tester in N America, we tested it using sites in Europe.

We said (a) broadband is above 256 kbps, not 128 kbps; (b) minimum bandwidth requirements should be valid beyond the ISP domain; (c) operators should maintain predetermined contention ratios; (d) bandwidth ultilisation should be above 75% on average; (e) latency < 85 ms for local and <300 ms for international and (f) user surveys are important but should be supplemented by user testing which gives a more objective measure. LIRNEasia also offered assistance if BTRC plans user testing.

Downloads: Consultation Paper and LIRNEasia’s Response.

Is broadband quality a subject of interest only to urban top-of-the ladder users?

Not necessarily. With the latest developments in telecom services broadband access is increasingly becoming a reality to rural populations as well, even in developing countries. The penetration levels might not be the same but should that mean quality should be compromised for rural users?

Broadband quality is critical for telecenters where a link is usually shared.

LIRNEasia introduces its AT-Tester software application for any users to find out how far the operators keep their promises for quality broadband. This is developed using open source software by a group of researchers from IIT Madras and available freely for download from www.broadbandasia.info.

The tests can be conducted by any user, with least effort and within few minutes. No more than basic computer literacy is required. All you need is a PC running Windows XP connected to Internet. (Other operating systems will be supported in near future).

AT-Tester is different from popular broadband performance testing tools (speedtest.net, for example) because:

• It is more accurate: AT-Tester measures the throughput rates while actually downloading/uploading files. It does not calculate them using empirical formulae and ping data.

• It is more comprehensive: Unlike most other tools, AT-Tester does not confine testing to an end server. It tests the throughput to three servers, namely (a) the local ISP; (b) another server within the same country and (c) a server in US. This helps pinpointing the bandwidth bottlenecks.

• It tests more parameters namely,

i. Download speed (kbps/Mbps)
ii. Upload Speed (kbps/Mbps)
iii. RTT (milli seconds)
iv. Jitter (milli seconds)
v. Packet-Loss (%)
vi. Availability (%)

The software is developed in such a manner that minimal configuration is required by the user.

The software is already customized to be used by the telecenter operators in Sri Lanka. They can report the performance results district-wise. (For example, a telecenter operator in Panamura can report under Ratnapura, not Colombo) Our objective is to develop a more descriptive picture of broadband performance instead of depending solely on testing in major cities.

Telecenter operator in any country can use this but needs a prior customization. (We will ask you some fundamental information like your ISP, promised speeds of the package and location) Unlike incase of speedtest.net we need this information as we go deeper in our testing. It can be done with least hassle for any country on request.

For more information Please write to: chanuka [at] gmail [dot] com

In a decision that defies all logic, the federal agency told the coalition of 55 ISP’s that Bell Canada’s decision to discriminate against particular applications and types of content was “not discriminatory” because Bell throttled both wholesale and retail customers in an equal fashion.

“Based on the evidence before us, we found that the measures employed by Bell Canada to manage its network were not discriminatory. Bell Canada applied the same traffic-shaping practices to wholesale customers as it did to its own retail customers,” said Konrad von Finckenstein, Q.C., Chairman of the CRTC.

CAIP and advocates of Net Neutrality argued that, if Bell and other internet service providers can’t keep up with subscriber demands and must throttle traffic, then they should implement neutral measures for dealing with internet congestion rather than arbitrarily picking on one type of application and content.

Read the full story in Digital Home Canada here.

Vint Cerf, who can fairly be described as one of the godfathers of Internet has endorsed Barack Obama in the US presidential race, saying that his decision is swayed by Obama’s stance on net neutrality – the question of whether content providers should be charged more for different content by the “pipe” providers.

Extracts:

We believe that the Internet should remain an open environment. It’s vital to innovation. Companies like Google, and Yahoo, and eBay, and Amazon, and Skype and so on, got their start without having to get permission from any ISP or any broadband provider to offer services. They simply acquired access to the internet, put their services up and then made them available to the general public.

We think that’s the best way for the Internet to evolve and I’m pleased to say that in the upcoming presidential elections, the two candidates have rather different views of this particular matter. Senator Obama in particular sees things the way I do which is that the Net should remain open, fully accessible and providing access on a non-discriminatory basis to the people who want to offer new services on the network.

The CEO of a Pakistan ISP, Mr Wahaj us Siraj, said that the situation in Pakistan was very different, with plenty of capacity available on the undersea cables and low contention ratios (1:4) being used. Prices of international capacity had come down radically in recent times, he said, and now amount to only around 25 per cent of costs. I responded that we need to start testing in Pakistan soon, because this further illustrates the value of the AshokaTissa methodology, which allows the diagnosis of where problems exist which may vary from location to location. He was followed by Mr Undugodage, who was the driving force behind the introduction of ADSL to Sri Lanka, who said that they tried to give customers service equivalent to BT, using contention ratios of 1:15. This contrasted with the speaker from BSNL who blurted out that the standard contention ratio in his company was 1:20.

How is it that there can be so much variation in key parameter affecting the customer experience in three countries?

The slides that I used are here.

Comcast, a leading US ISP, has just announced caps on downloads.  If this is the future for rich country users, can there be any doubt about what the future for BOP users in poor countries?

However, while Bangladesh’s policy is designed to attract fresh competition by keeping its existing operators and their shareholders (foreign and Bangladeshi) out of the spectrum bids, India has opted for a different route.

India has restricted BWA bidding to only those who either hold an ISP or a unified access service (UAS) licence, thereby either forcing companies to acquire ISP/UAS licenses before the bidding or keeping away new entrants who are unable to acquire such licences due to price or time constraints.

“Other contrasts are equally striking and show up uncomfortable flaws with India’s auction guidelines,” says a telecom analyst. While India’s BWA guidelines are just four pages, Bangladesh’s is a 57-page invitation for applications for grant of licence. This includes a 30-page licence agreement and detailed terms of interconnection/tariffs.

Read the full story in The Times of India here.

Part of the problem was in the business model established in Philadelphia and mimicked in so many other cities, Mr. Settles said.

In Philadelphia, the agreement was that the city would provide free access to city utility poles for the mounting of routers; in return the Internet service provider would agree to build the infrastructure for 23 free hotspots and to provide inexpensive citywide residential service, including 25,000 special accounts that were even cheaper for lower-income households.

But soon it became clear that dependable reception required more routers than initially predicted, which drastically raised the cost of building the networks. Marketing was also slow to begin, so paid subscribers did not sign up in the numbers that providers initially hoped, Mr. Phillis said.

Prices for Internet service on the broader market also began dropping to a level that, while above what many poor people could afford, was below what municipal Wi-Fi providers were offering, so the companies had to lower their rates even further, making investment in infrastructure even more risky, he said.

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Outbound PSTN and mobile calls will first terminate in the ICX. Then the calls will be processed in the IGW followed by getting routed to overseas via BTTB’s submarine cable station. Similar path will be followed for the inbound overseas calls.

Foreign investments and joint ventures are strictly prohibited. Even the non-resident Bangladeshis are not eligible to invest.

Incumbent private operators (PSTN, mobile and ISP) are not allowed to apply for the IGW and ICX licenses. But the state-owned BTTB gets both the licenses. The newly enacted international lonng distance telecoms policy mandates these conditions.

Prof. William Melody, Arno Wirzenius and Anatul Fateh have detected numerous inconsistencies in this initiative. Their comments were published Sunday.

LIRNEasia researcher, Divakar Goswami, was also interviewed. The interview is featured in the online edition here. The interview is in bahasa. The English text of the interview is below:
1. How’s the growth of ICT in Indonesia for along 2006 (as we see from regulations, infrastructure development (hardware and software), human being, ICT industry etc)?

Information and Communication Technology sector (ICT) in Indonesia is one of the most dynamic sectors of the economy contributing most to GDP growth rate (around 16%) than any other sector. The ICT sector in Indonesia is dynamic, growing and profitable. Compared to the past, the regulatory environment is more transparent, pro-market, pro-growth and therefore pro-poor.

ICT Sector

Wherever competition has been introduced, growth has been spectacular; those sectors lacking competition have grown more slowly. Take the example of the mobile sector that has added 6.6 million subscribers during the first half of the year and where operators have aggressively invested in infrastructure. For the year 2006, we may see an investment of more than $2.5 billion dollars made in the mobile infrastructure as the existing operators gear up to face the challenge from Hutch and Maxis who are rapidly rolling out their infrastructure. The mobile operators have been expanding their network at a frenetic pace: Since the end of 2005, Telkomsel has increased its number of base stations from 7,741 to 12,156 a growth of 57 percent; Excelcomindo’s base stations during that same period have grown from 3,620 to 6,052, a growth of 67 percent. Despite making substantial investments, mobile companies continue to be profitable. Excelcom and Bakrie Telecom that had losses in 2005 have made profits this year.

The fixed sector’s performance on the other hand is poor. The growth of fixed line phones per 100 inhabitants will probably be negative this year as the number of fixed phones remain stagnant and the population increases. Because of Telkom’s de facto monopoly in the fixed line market it is unlikely that the company has any incentives to invest in this sector and nor can investment come in from other operators if the sector is not fully opened up to competition.

Many have argued that why bother with fixed if mobile is doing so well. Since most of Internet service provision is currently relying on fixed infrastructure, the lack of fixed line growth means that there is also no growth in Internet subscribers. According to BPS’ survey from 2005, there are an estimated 10.3 million Internet users who access the Internet from home, office, warnets etc. For a country of 222 million that is less than 0.05 percent of the total population that use the Internet. If one looks at Telkom’s broadband subscribers, it stands at a pathetic 35,000. What are the reasons for this and how can we bridge this digital divide?

The significant cost components of an Internet Service Provider (ISP) in Indonesia are its leased line and international bandwidth costs. As my WiFi study on Indonesia (available on www.lirneasia.net/projects) has shown, leased line prices in Indonesia are around 48 time the price in India for a comparable link. International bandwidth costs are also a couple of times higher compared to countries in the region. Both the domestic and international leased lines have limited competition and hence the prices tend to be high. This translates to nearly $4000 in monthly leased line and internet connectivity costs (512 Kbps) for an ISP. Taking into consideration the average income of an Indonesian, it is astronomical sum! No wonder Internet access in Indonesia is unaffordable to the vast majority and will continue to be so unless competition is introduced in the “big pipes”—in the domestic and international backbone infrastructure markets.

Broadband penetration will continue to be low as long as there is only one provider of ADSL. Hopefully, in the future, competition from wireless broadband providers will lower the prices and make it more affordable for Indonesian people.

ICT Regulation

The Ministry and BRTI have undertaken a number of pro-growth initiatives in the last year or two. It has successfully conducted 3G auction that has been widely perceived as the most transparent licensing in Indonesia’s history. Two new mobile operators have been introduced and the increased competition will hopefully drive down mobile retail prices and make them more affordable for those in the “bottom of the pyramid.” A new cost-based interconnection regime has been introduced, which mandates cost-oriented interconnection and provides enforcement “teeth” to the regulators. When implemented from 2007, it will hopefully promote fixed-line competition and ensure greater transparency in this contentious area.

BRTI’s regulation to implement a phased reduction of leased line prices based on cost calculations may help lower Internet retail prices and help diffusion of Internet connectivity.

However, there are a number of regulatory barriers that are preventing faster growth of the sector. Indonesia has an archaic licensing framework that may have been relevant 10 years ago, but not anymore. Converged services where voice, data, video may be combined blurs the boundary between traditional fixed and mobile services. Indonesia’s regulatory environment is simply not relevant to converged IP-based networks like the New Generation Network (NGN) that are being ushered in all across the globe. The current licensing framework is not technology neutral and has different rules and licensing requirements based on a particular technology. This has resulted, for example, in a situation where the regulator is trying to prevent Bakrie Telecom and Telkom Flexi from providing full mobility services because their license treats them as fixed operators although the CDMA technology can be used to provide full mobile services that will significantly enhance the utility of the service to customers.

Why Bakrie Telecom is licensed to provide service in only two regions is beyond my understanding. When a country does not have enough telecom infrastructure I would think it is in the interest of the Government and the public if an operator is allowed to build a network throughout the country. There are many other serious problems with the licensing framework which I will not get into, but this by far remains an area where more of the Government’s energies should be focussed.

Most of the operators I have spoken to, with the exception of Telkom, feel that although the current regulatory structure is better than what existed previously, it is still not independent in its decision-making. If you look at the structure of the organization it is apparent that BRTI is embedded within the Government that also controls two of the largest telecom operators in the country, Telkom and Indosat. The credibility of BRTI’s decisions will be considerably enhanced among the operators and other stakeholders if it were reformed and given more independent powers and separated from DGPT. The small degree of independence for BRTI has shown impressive results in terms of investment that has come into the sector. Imagine the investor confidence if a fully independent regulator can be put in place?

2. Is there any progress in 2006 than 2005? If yes, what is the indicator?

The following graph indicates quite clearly the progress of the ICT sector from 2005 till half of 2006:
The number of mobile phones in Indonesia per 100 inhabitants has increased quite significantly from 21.6 in the end of 2005 to 24.32 in the middle of this year. The number will probably go up by the end of the year, although growth from 2005 to 2006 may not be as rapid as from 2004 to 2005. However, with the introduction of Hutch and Maxis in the mobile sector, we should see more rapid growth in the number of mobile subscribers who are added to the network at the end of 2007. More competition in the mobile sector will lower mobile retail prices that are quite high compared to the region and make it more affordable to those on the “bottom of the pyramid.”

Although the penetration of fixed wireless access (FWA: CDMA) seems to grow slowly from 2005 to 2006, it does not reflect the impressive performance of Bakrie Telecom that has grown its network from 0.3 million to 1.3 million in less than a year. The slowing growth of FWA is primarily because Telkom Flexi shed a significant number of non-revenue generating subscribers from its network.

3. If no progress or stagnant, would you please to explain it?

Fixed wireline penetration has been negative because of a lack of competition in that sector. In a country with such low penetration one does not expect to see negative growth rates. Telkom, the monopoly provider, has no incentive to invest in fixed line infrastructure in the absence of competition.

Internet penetration numbers from 2006 are not available although growth in the number of Internet subscribers will continue to remain low because Internet prices remain unaffordable to a vast majority of Indonesian. Furthermore, only 3.74 people out of 100 own a PC in Indonesia. Of those PC owners only 27 percent use their PCs to access the Internet. Low PC ownership and low Internet use even among those who own PCs are also other factors that are contributing to stagnant Internet growth.

4. What do you think about the commitment of Indonesia’s government or Information Communication Department (Depkominfo)?

In view of the past year’s performance, I believe that the Minister Sofyan Djalil is someone who would like to reform the ICT sector and bring more competition to develop ICT infrastructure and lower prices. However, as an outsider, one gets the impression that not everyone in the Depkominfo is on the same page as the Minister. Furthermore, since the Indonesian government is dependent on dividends it receives from Telkom, it is probably hard to take decisions that may affect the profitability of the company. It is therefore crucial to separate the policy and regulatory functions. Let the Depkominfo develop policy and leave the day to day business of regulating the ICT sector to the BRTI.

5. What is the important think in this year that must be done by the government but not yet finished?

The Government has been collecting Universal Service Obligation (USO) funds from operators to roll out basic telephone service to 40,000 villages in Indonesia that do not have any connectivity. A least-cost subsidy auction was supposed to be held this year to disburse the USO funds in a transparent manner. However, a Ministerial decree is awaited to launch this very critical program to extend access to the digital “have-nots.” It is hoped that the auction will be held soon and will be open to all network operators (fixed and mobile).

6. What do you think about Dewan Teknologi Informasi (Information and Technology Council) formed by The President SBY? Are you optimist or pessimist with this council?

The formation of the National Information and Communication Technology Council (NICTC) by the President Susilo Bambang Yudhoyono, is a very important development for Indonesia’s ICT sector. It signals the recognition at the highest level of government that the ICT sector is important for Indonesia’s development and growth. Since the lapse of the 1999 Blueprint, the ICT sector in Indonesia is rudderless. Although the Government has good intentions, many of the policy/regulatory actions have been taken on an ad hoc basis without the guidance of a coherent vision. So a number of decrees have been issued that are overlapping and licensing is being done on an ad hoc basis. For infrastructure sectors with high sunk costs and long gestation periods, like for telecoms, there must be continuity and coherence in the Government’s policies.

Clear vision informed by the views of the various stakeholders can make the Council a guiding hand that can lead the sector to a higher trajectory of growth. The leadership can remove many hurdles imposed by bureaucracy and narrow vested interests.

The first meeting of the Council will be key in defining the objectives that the Government and other stakeholders aim to achieve for the ICT sector. The success of the Council will depend on it developing a time-bound road map or action plan that lays out what the Government would like to see achieved and in what time frame. When the Technical Coordination meeting is held every three months, they would be in a position to evaluate the implementation of the action plans. The biannual Council meeting led by the President would ideally evaluate progress of the action plans, make changes when required and bring to task parties that are responsible for delays in implementation. If that happens, watch the Indonesian ICT sector take-off like a rocket!

8. According to you, what must they do to make a good ICT implementation? And what improvement we can do next?

Good implementation of ICT projects must take into consideration sustainability of the projects when funding stops. For example, it is laudable that Qualcomm has provided wireless access to high schools in Way Kanan in Lampung and plans to connect 59 villages with “warcells,” cellular kiosks. However, the key to success to these projects is to develop a financially viable model to sustain this initiative when Qualcomm stops funding this program. As Grameen in Bangladesh has shown with the Village Phone Program, it is possible for a company to provide connectivity to rural villages in a profitable manner. Because Grameen is making profits from providing telephone connectivity to villages it is in its own interest to expand the service to more villages and in turn help bridge the digital divide.

(Note: Price data is not yet included; will be done as the tariff data is collected)
The Indonesian telecom sector has seen three waves of liberalization.

• 1st Wave: 1991-1996 (Private investment in sector-financial
  crisis)
  Creation of Satelindo, 2nd International service provider in 1993.
  Partial privatization of PT Indosat (65% Govt retains control) in
  1994
  Exclusivity granted to PT Telkom for fixed local 2010 and long distance 2005 before it was partially privatized in 1995 (66% but government retains control).
  GSM licenses provided to Satelindo & Telkomsel subsidiaries of two incumbents in 1994.
  GSM license issued to PT Excelcomindo in 1996, competitive provider with no financial links to government.
  ISP licenses issued
• 2nd Wave of Reforms
  1999-2004 (Post crisis-Change of guard)
  Telecom Act of 1999 separating policy & regulatory functions, allowing increased private participation
  Ending of cross-ownership between government owned telcos
  Premature ending of PT Telkom’s exclusivity
  Creation of duopoly for fixed sector
  Ministerial decree (KM 31/2003) creating BRTIRegulatory Body
  Merger of Satelindo with PT Indosat, Telkomsel with
  PT Telkom
• 3rd Wave of reforms
  2005- present (New government of Yudhoyono)
  Unlicensing of 2.4 GHz
  Licensing of three Fixed Wireless Access (FWA) providers, two incumbent and Esia (Bakrie Group).
  Auction of 5 3G licenses to Telkomsel, Excelcom, Indosat, Hutchinson, Lippo-Maxxis
  Licenses granted to 15 VoIP operators including major operators
  USO fund established (Regulation No. 15) in 2005 where all operators contribute 0.75% of gross revenue.
  Government regulation (GR2/2006) on mandated cost-based interconnection
  Reference Interconnect Offer to be submitted by all operators to
  BRTI, dominant operators’ RIO will be published.
  Tariff regulation for leased lines

What were the drivers of growth?
Initially the government allowed domestic investment. Then the government decided to attract foreign investment via concessions with the promise of reform.
Lorraine Carlos Salazar says: who exactly are these stakeholders who supported entry of FDI in the sector? 
DG: Mastel, the Ministry
Before the Asian Crisis, there was a lot of interest in Eastern Asia, however after the Crisis, much of the Investment dried up. Government was then forced to undergo reform (driving the 2nd wave of reform).
Lorraine Carlos Salazar says: Did the incumbent wanted FDI?
Payal Malik says:  lack of domestic resources were the drivers for the incumbent being open to FDIs, as in the case of Thailand.  They were not averse to FDIs because it went into their own networks and it wasn;t competition
Divakar: Incumbent benefited from the FDI b/c it allowed them profit from the other companies, without risk. Lack of domestic resources were the drivers for FDI
Third wave of reforms driven by the promise by the current government to end corruption. Unlicensing of the 2.4Ghz band was driven by a civil society campaign. Recognition of merits of competition due to the success of the mobile sector) also added to the motivation.
2006 has seen a lot of growth, and investment in infrastructure. E.g no. of base stations has doubled since the start of the year.
absence of interconnection regime led to pvt companies choosing to invest in mobile rather than fixed.
fixed wire-line growth has not changed since 2005; given falling population, fixed teledensity is likely to fall.
PT Telekom’s fixed wireless subscriber has actually dropped – because many signed up for the ‘Flexi’ package for free minutes; once the free minutes were all used up, many discontinued use (and moved to Easia which have very low rates).
Fixed wireless operators are only allowed to operate within certain area codes. To circumvent restricted mobility for the fixed wireless subscriber, operators allow call forwarding and temporary roaming.
While many argue that Java has ‘all the phones’, its teledensity is actually fairly low; the issue is Java has a high population.
The graph on Slide 19 shows Easia’s ARPU increasing (unlike what is normally seen), however the data is being checked.
Easia’s spends a lot on advertising; they are a highly recognized brand.
Payal Malik says: Just for reference, Fixed wireless is not important in India so no separate data on ARPUs
Lorraine Carlos Salazar says: yes, same with Philippines and Thailand I think
In the mobile sector, Telkomsel, Indosat and Excelcomindo are the main players. the other companies are starting up.

Although mobile service is cheaper in Indonesia in absolute terms, it is relatively expensive (relative to monthly GNI).
When mobile market share is calculated as % of sector revenues (as opposed to subscribers), there is a change in the shares. The incumbent has a 68% share, as opposed to 55%. Directionally, the market share doesn’t change, but exact shares do.
Vasana – how practical is it to calculate in this way?
Divakar  – it’s a controversial issue.
Distribution of telecom access (Slide # 27) shows that there are a multiple mobiles within households.
When Indonesia is compared to the other ASEAN countries, its performance is quite poor.
Harsha de Silva: Singapore – Internet penetration is higher than fixed line penetration; why?
Divakar: access is through WiFi (ubiquitous WiFi coverage in Singapore) as well as mobile Internet.
ADSL is almost invisible (Slide 29) b/c the incumbent owns all the infrastructure.
Household PC ownership is low; Internet access via those PCs is EVEN lower.
Telecom regulatory performance:
Lorraine Carlos Salazar says: please clarify– the regulator is separate from the Dept of Telecoms? What does the latter do? still own the former fixed line monopoly is it?
Divakar: Not really separate, b/c of Chairman BRTI is also the Director of Dept of Telecoms.
Most of regulatory activity is done by BRTI.
Not telecom policy to guide the decisions and direction that the ministry is taking. Although the ministry is quite active in making decisions, there is a lack of coherence in the actions / decisions that are being taken.
Lorraine Carlos Salazar says: with regards issuances– are they hiring external consultants? who are writing these issuances?
Divakar: consultants are being hired to do various things; but in terms of writings and decrees, they are competent enough to do these on their own.

Lorraine: Is there really a plan or policy on telecoms lib, which provides guidance on the issuance of licenses? or is to ad hoc and open to  or lobbying, rent-seeking, etc.?
It is actually an opportunity if licenses are given in an ad hoc manner, b/c there is opportunity to illustrate to the Minister where a license will be useful, and there will be a hope that the Minister will give that license.
Rohan: Yes, but there is also another side of ‘ad hoc’ behavior (eg giving a license to your brother)
Divakar: the process is much more transparent now than before, and public consultations are mandatory by law.
TRE assessment:
Mobile sector has scored well on Mkt entry – this is b/c entry has been open; auctions were held as recently as last year. 3G operators are also allowed to provide 2G services
Bottlenecks in the fixed sector cause problems in other sectors, such as banks not being able to have points of presence (via credit card sales points).