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Indonesia's Wifi Access Innovation

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Indonesia's Wifi Access Innovation Indonesia’s WiFi Access Innovation Divakar Goswami & Onno Purbo Indonesia overview •World's largest archipelago-17,000 islands •Poses a challenge in rolling out communication infrastructure and providing access to 241 million inhabitants of Indonesia, 4th most populous country in the world. Project Objectives n What are the conditions that gave rise to WiFi becoming the access technology of choice for Internet in Indonesia? n Can WiFi access innovation in Indonesia be replicated in other developing countries? n What steps need to be taken for higher Internet growth in Indonesia? n Will highlight lessons learnt from Indonesian study that have regulatory relevance. What is WiFi? n Many countries (USA, EU, Indonesia etc.) have unlicensed portion of 2.4 Ghz (2400 Mhz to 2483.5 Mhz) including use of spread spectrum technology for uncoordinated sharing of band. n 5Ghz to unlicense or not? 5.8 Ghz suitable for long range communication. n Industry developed IEEE 802.11 (2Mbps), 802.11b (11Mbps) and 802.11g (54Mbps) standards for high rate data transmission. ¨ Advantages: Quick deployment time, low-cost, minimal rights of way needed, “free” bandwidth. ¨ Disadvantage: Prone to interference, weather conditions, steep range/bandwidth tradeoff, doesn’t offer carrier class reliability. Internet penetration Internet Subscribers 2003 60 52.49 50 40 33.89 Per 100 30 23.32 inhabitants 20 11.95 10 2.4 3.81 0.17 0.39 0.4 0 India Pakistan Indonesia Thailand Asia Avg Malyasia S. Korea Hong Kong Singapore Internet 1.03 1.75 3.76 9.64 6.86 34.53 60.97 47.17 50.88 Users Broadband - 0.01 0.02 0.07 0.02 0.44 23.3 18 10.1 users Internet growth rate comparison Internet Subscriber Growth: Indonesia & India 6000 5550 5000 India 5450 Thousands Indonesia 4000 3800 3300 3000 3000 2000 1500 1087.428 900 865.706 1000 581 667.002 400 0 10 Year Year Year Year Year Year Year Year Year Year Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 India’s CAGR for an eight-year period between 1998-2005 was 58.4% in comparison with Indonesia’s CAGR during the same period of 35%. Link to higher tier ISP ISP C Fiber ISP A Typical ISP Network optic ISP B Infrastructure Network Twisted Coax copper pair cable Access Network Dialup ADSL Cable modem Network Reality-Indonesia ISP B Ethernet Ring Ethernet IIX School C WiFi 2.4 Microwave ISP A ISP C School B Wifi 5.8 Infrastructure WiFi 2.4 WiFi 5.8 Network Corporate Customer $200/pm Access Network UTP House Cable School A $4000/pm (Internet link+ international bandwidth) Neighbourhood Network $35/pm Uniqueness of Indonesian WiFi n WiFi deployed in Indonesia but in unique manner: ¨ Not inside home; not available for free. ¨ Blurring of access and infrastructure network; used as backbone; up to curb WiFi, last mile aerial cable. ¨ Many tiered retailing of Internet service…. ¨ WHY? To recover high Internet retail prices What gave rise to peculiar access network in Indonesia? Regulatory environment ¨ Non-independent regulator n DG POSTEL is an unit of the Ministry of Communication & IT n Two regulatory bodies: DG POSTEL & BRTI n BRTI under-staffed, powers under transition, chairman is DG of POSTEL ¨ Exclusivity clauses extending historical monopolies n Indonesian govt owns 51% share in PT Telkom & 15% in Indosat plus “golden share” ¨ Structure of licenses preventing ISPs from deploying infrastructure n Licenses for Telecom Network & Service providers ¨ No local loop unbundling n Exclusivity until 2015 ¨ No regulation of leased line prices n Non-regulation of uncompetitive market No competition Market environment Telecom Telecom Limited competition services operations Competitive Fixed wireline Exclusive right local 1996-2010 PT Telkom ¨ Lack of competition in Fixed Exclusive right infrastructure sector domestic LD 1996-2005 PT Telkom ¨ Resulting in high Limited competition leased line prices Fixed wireless local (Satelindo) ¨ High international Fixed Duopoly 1995-2004 backbone prices international (Indosat, Satelindo) ¨ Proliferation of Mobile Competitive unlicensed “reseller- (Satelindo, ISPs” Excelkomindo, Telkomsel etc.) Internet Competitive service Currently 124 ISPs official, 54 provision unlicensed Annual Leased line prices 2Mbps Link 2Mbps link 2km 200km Indonesia US$18,000 Ratios US$45,000 Ratios India EU India EU 1:47.9 1:3.8 1:5.9 1:4.9 India US$376.00 US$7,603 EUBenchmark US$4,802 US$9,219 (Denmark) Data compiled from Lokanathan, lirneasia.net, EU 10th report, interview with Indonesian ISP & Network Service Provider Comparison of Internet Prices (monthly) for Business Users in Indonesia & India 4000 3500 3000 2500 Indonesia USD$ 2000 India 1500 1000 500 0 64 kbps 128 kbps 256 kbps 512 kbps 1 mbps Bandwidth Bandwidth Indonesia India Ratio 64 Kbps US$393 US$128 3.0:1 128 Kbps US$639 US$230 2.8:1 256 Kbps US$1180 US$396 3.0:1 512 Kbps US$2596 US$612 4.2:1 1 Mbps US$3776 US$970 3.9:1 Data from Indonesian ISP provider & BSNL, India Comparison of ADSL Retail Prices (monthly) in Indonesia & India Bandwidth Indonesia* India** Ratio 384 Kbps US$74 USD$23 3.2 : 1 Usage limit: 1 GB* 2GB** 512 Kbps USD$93 USD$41 2.3 : 1 Usage limit: 2 GB* 5GB** Data from PT Telkom, Indonesia & BSNL, India Lessons from the Indonesia n Hostile environment (regulatory, market & infrastructural) spawned WiFi and related innovations in Indonesia. n Until, leased line prices are regulated in Indonesia or effective competition is introduced in this sector, Internet diffusion will remain sluggish. n This will be true of other countries who want to adopt WiFi without a competitive or regulated leased line market. n Number of studies have shown the correlation between lower leased line prices and rapid diffusion of the Internet (Petrazzini & Guerrero 2000; Fan 2005;) ISP in Jakarta Using WiFi as Access.
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