LIRNEasia's push for liberalization of Indonesia's IPLC market gets traction?

LIRNEasia’s push for liberalization of Indonesia’s IPLC market gets traction?

Posted on May 16, 2007 / 2 Comments

Divakar Goswami made a presentation at Indonesia’s ICT 2007 Summit and Technoconference in Jakarta on May 3, 2007 organized by the President’s ICT Council, the Indonesian ICT Ministry, the Chamber of Commerce and MASTEL, the telecom industry association.

In his presentation titled Backbone of convergence: Getting the foundation right, Divakar argued that without sufficient “big pipes” (domestic and international backbone) the potential of convergence and NGN services will not be realized. Indonesia’s inadequate international backbone infrastructure and high prices have acted as a bottleneck to the development of the Internet in the country. For example, Indonesia’s international private leased line circuit (IPLC) to Singapore costs 21 times the price of equivalent service from India based on route kilometers. Divakar contented that the Government’s plan of licensing one additional international operator will neither stimulate international gateway infrastructure nor bring down international bandwidth prices sufficiently.

His policy recommendation was that Indonesia’s international gateway needed to be fully liberalized. It is a win-win for the Government that gains increased revenue from grey market traffic that comes into the legal channel, more international infrastructure gets built and more cables land into the country improving redundancy and resiliency of the network to outages (a la Taiwan earthquake of Dec 26, 2006), it lowers Internet connectivity and IDD prices for consumers and most operators gain from improved international access and lower wholesale prices.
About a week after the Summit, DGPOSTEL, one of two ICT regulatory bodies in Indonesia, proposed an amendment to Article 35 of Regulation 20 that would allow domestic leased line providers to connect directly to an international cable or set-up its own landing stations to land cables to provide international private leased circuits. Voice is excluded from this service for which one needs to have an IDD license. This amendment is targeted for international data connectivity to bring down international bandwidth charges. There are about four to five domestic leased line providers who can take advantage of this amendment.

Currently there is a duopoly (PT Telkom and PT Indosat) in the IPLC market. This amendment falls short of full liberalization of Indonesia’s IGW but may be a baby step towards reducing the outrageously high bandwidth prices in Indonesia.

2 Comments

harsha de silva
May 18, 2007, 7:38 pm
good presentation. i am sure the action of the policy makers is at least somewhat related to your continuous work in indonesia. not only LIRNEasia, but indonesia is going to miss you!
Divakar Goswami
May 19, 2007, 9:48 pm
Thanks Harsha. Although I would like to believe I will be missed in Indonesia, I wouldn’t be surprised if there are many sighs of relief! :)