A routing error on April 2 made it briefly appear that Indosat controlled a large part (some 320,000 of 500,000 networks) of the Internet for about two hours, said Renesys. The problem was promptly addressed but still caused trouble for companies such as Akamai and Chevron. It also caused a flood of traffic to hit Indosat’s network, according to Renesys. Once someone makes such an assertion, typically via an honest mistake in their routing policy, the only question remaining is how much of the world ends up believing them and hence, what will be the scale of the damage they inflict? Events of this nature, while relatively rare, are certainly not unheard of and can have geopolitical implications, such as when China was involved in a similar incident in 2010.
Qatar Telecommunications Co QTEL said on Saturday it would begin tender offers for shares in Indonesian telecoms firm PT Indosat on Tuesday to lift its stake to 65 percent, the maximum allowed. Indonesia limits foreign ownership in the telecommunication sector to a maximum of 65 percent for mobile phone operators and 49 percent for fixed-line operators. Two tender offers would begin concurrently in Indonesia and the United States at 7,388 rupiahs ($0.661) per share and would expire on Feb. 18, Qtel said.
Hutch’s entry into Indonesia’s mobile market as the 5th significant operator has started putting downward pressure on mobile calling prices, as I had predicted in my Oped piece Lower mobile prices: Through competition or profit regulation? in January of 2007. It is too early to call it a “price war” as the article below does, but the signs that prices are coming down is evident. Indonesia’s mobile retail prices are some of the highest in Asia and there is enough room for the prices to drop further. Currently, Hutch’s competitors are reacting by issuing promotions to match the new entrant’s offering, but this does not per se signify a permanent cut in prices.
Most Indonesians access the Internet primarily using fixed wireline infrastructure, mostly dialup. Because of lack of competition in the fixed line sector due to various reasons fixed line growth has been stagnant which has also affected Internet growth in the country. Not only are no new lines being added to bring more homes online, the inadequate backbone infrastructure in large swathe of the country makes deployment of broadband services unviable even if incumbent’s local loop bottleneck could be bypassed. However, yesterday’s Wall Street Journal (March 15, 2007) seems to suggest that high speed 3G wireless technology like HSDPA can bring broadband on a large scale to Indonesians. It (misleadingly) implies that since HSDPA is merely a software upgrade to 3G networks it will not require any new major telecom infrastructure investment in Indonesia.
The Indonesian government imposed unreasonable burdens on the new entrant for international service in a recently issued White Paper 140. LIRNEasia highlighted the unfairness of burdening new entrants with obligations that the two existing incumbents (Telkom & Indosat) were not subjected too in comments it submitted to DGPOSTEL (one of the two regulatory bodies): 4.4 The Indonesian policymakers may have misunderstood the concept of asymmetric regulation. Asymmetric rules place additional burdens on dominant group of providers that other operators are not subjected to. In the current White Paper, many additional burdens are imposed on the new entrant that are not imposed on the two incumbents, PT Telkom & PT Indosat.