I will talk about the Indonesian example. The trigger for the study was a study published by LIRNEasia in 2005. This found that leased line prices in Indonesia were multiples of those in Asia. Leased lines are large capacity pipes. In some cases the prices were 48 times those in India. The study also showed there was considerable distortion in downstream markets.
Prices were very high, WiFi became very popular, only available in high dense urban areas. Really the triggers, high lease prices and distortions downstream, let LIRNEasia to publish these results, and it had an impact in the Indonesian market. What sort of an impact did it have, and was LIRNEasia’s research the trigger for the drop in prices?
I came in about 2007 to do this assessment. The 2005 study meant that there was a two year period. The analysis that was done to analyze the impact was done at the micro level, companies and service providers. One of the other things that was happening in India at that time, one of the first things the Indian regulator had done, the first task, there was a 90% reduction in leased line prices in 1999. This was a first step towards telecom reforms. Leased lines were being used to subsidize various activities of the incumbent. It was extremely important that any reform focus on leased lines.
By late 2007 the regulator in Indonesia had actually called in an expert from India to assist with planning the decline of leased circuit prices. One of the immediate impacts was calling in someone from the benchmark country to work with the regulator. The second important result of the research, I asked a number of people, was LIRNEasia’s response the trigger, more often than not I did get a response, certainly no one question that the study did get the regulator to actually look at leased circuit prices.
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