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Indonesia Internet Case Study 3. the End of the Free Internet Market

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Indonesia Internet Case Study 3. the End of the Free Internet Market Indonesia Internet Case Study 3 The End of the Free Internet Market 31 Market developments TelkomNet calculates subscribers based on usage over the last month# Indonesia connected to the global Ironically, Telkom had been prevented Internet in 1994, as a result of from entering the ISP market prior to pioneering efforts by the academic and 1997# At that time, the government research community# One of the first wanted to promote new players in the links was a 64 Kbps line to the US, market, especially Small and Medium opened in May 1994 by the Indonesian Enterprises (SMEs)# However the SMEs Science and Technology Network did not perform well so the law was (IPTEKnet)# PT Indo Internet (Indonet) changed to allow bigger companies in claims to have been the first commercial and to attract investment# ISP, launching services in 1994# By the end of 1995, there were some 16 ISPs, Indosat also provides ISP services and 20'000 users and 640 Kbps of had over 40'000 dial-up subscribers international Internet connectivity#5 At at the end of 2000# Growth was the beginning of 2001, there were some stagnant in 2000# Indosat claims that 150 licensed ISPs of which about 60 this was partly related to delays in obtaining leased lines from Telkom# Another factor was the launch of 'free' (users still have to pay telephone dial- up charges) Internet access by LinkNet in April 2000# By the end of 2000, LinkNet had signed up 197'000 subscribers, making it the country's largest ISP# LinkNet had hoped to make money through advertising and e-commerce transaction fees since Telkom refused to share telephone usage charges# Night food stall - Jakarta This model provided unsustainable# LinkNet was forced to terminate its were actually providing service and over 150 Mbps of international Figure 31: Internet market bandwidth# For the year ending 2000, there were an estimated 400'000 Internet dial-up subscribers translating to roughly two million users, or just ,QGRQHVLDQÃ,QWHUQHWÃXVHUV under one per cent of the population#6 3HQHWUDWLRQ È The number of users has doubled over the last two years, following a period of 8VHUV 6XEVFULEHUV stagnancy during the brunt of the È financial crisis# È È È È Despite the large number of ISPs, the market is dominated by a handful of companies# The largest paying ISP is Telkom's TelkomNet with just over 100'000 subscribers at the end of 2000# Many of these users are utilizing TelkomNet's Instan service# As no Source: APJII, ITU prior registration is required, 10 3 The End of the Free Internet Market free service in March 2001, and it now network and connect to the charges like other ISPs# It has lost international network# Indonesian most of its subscribers who chose not ISPs are allowed to have their own to stay on a pay plan# international connections# However, they must lease lines (primarily 2Mbps Thus far there has been scarce foreign E1s) from the local telephone investment in the ISP sector# One exchange to their modem banks to exception is M-Web of South Africa provide dial-up access# Several have that purchased 35 per cent (maximum complained about delays and the foreign investment allowed at that terms for leasing lines from Telkom# time) of Cabinet in August 2000# For example, according to one ISP, the Cabinet in turn owns Satunet, which connection charge for an E1 is claims to be one of the leading Rp 13 million# The monthly Indonesian portals with some half a subscription is Rp 13 million# Although million daily page views and Telkom receives the local telephone 80000 e-mail users# charge for dial-up Internet traffic, if an ISP does not deliver a certain 32 Tariffs amount of traffic per month over the E1 line, then it must pay Telkom the There are two Internet dial-up options difference# Postel is aware of this issue in Indonesia# One is Telkoms ISP, but has not done anything about it# TelkomNet, which has a nationwide dial number and charges Rp 160 per The Indonesian ISP Association minute (1#5 US cents)# This amount (APJII), a non-profit organization, includes the telephone usage charge# operates a domestic traffic exchange The other model is a regular ISP plan (Indonesian Internet Exchange or to which telephone usage charges IIX)# Virtually all ISPs are members#7 apply# The prices basically work out There are two nodes to which ISPs can the same# Indonesias Internet pricing connect# The IIX has a 100 Mbps is relatively high considering the low backbone# There are no port or traffic levels of income in the country (see charges; ISPs simply pay the cost of Figure 3#2)# their connection to IIX# The IIX reduces the cost of international 33 Interconnection connections by keeping local Internet traffic within Indonesia# In addition, ISPs require local, national and several of the larger ISPs maintain international connections to provide private peering arrangements# access to customers, create a national 34 Broadband Figure 32: Internet dial-up tariffs Until recently, leased lines or VSATs satisfied demand for fast Internet 30 hours per month, US$, May 2001 access# However these solutions have proven expensive and Indonesia is 34.69 now turning to broadband access technologies such as ADSL and cable modem# Telkom is conducting ADSL 26.18 trials and expects to launch the service soon# Telkom plans to install around 6000 ADSL lines within the next year in the Jakarta area# Meanwhile Indosat 11.84 10.73 has plans to install a wireless DSL network in Surabaya, and, through its Lintasarta subsidiary, in another 15 cities#8 The Indonesian market for fast Internet access has been Singapore Malaysia Indonesia Vietnam estimated at 1#2 million#9 Source: ITU Kabelvision <www#kabelvision#com>, with around 23000 cable television 11 Indonesia Internet Case Study subscribers, launched its Kabelnet Telkom also provides broadband Internet access through cable modem satellite delivery through a service service in Jakarta in September 1999# dubbed Turbonet# This hybrid solution At the beginning of 2001, there were downloads data at speeds up to 1#5 some 4000 subscribers# Forecasts call Mbps via the Telkom 1 satellite to an for some 300000 cable modem 80-centimetre antenna# Data is subscribers in the Jakarta area alone uploaded via a dial-up telephone by 2004#10 Thus far, Kabelvision is the connection# Bandwidth is shared only cable television company in the depending on the number of country, but there are plans for others# customers# It costs around Rp eight Telkom recently concluded an million per month (around US$ 700)# agreement with Alcatel for the latter A number of Internet cafés in remote to supply a Hybrid Fibre Coax (HFC) areas are using it# One drawback is and cable modem network to be that rain has an effect on service constructed in Jakarta and quality# Surabaya#11 5 Soegiardjo Soegijoko, Onno W Purbo, Widiadnyana Merati, Priyono Sutikno, Intan Achmad Computer Networking in Indonesia: Current Status and Recommendations for its developments Institute of Technology Bandung January 1996 <wwwpanasiaorgsg/itb/apng2htm> 6 Adam Creed Indonesian Net Subscriptions To Double This Year APJII Newsbytes 2 January 2001 http://wwwnewsbytescom/news/01/159955html 7 According to data on APJIIs web site, there were 81 members in March 2001 However according to a network diagram dated November 2000, only 37 had connections to the IIX at November 2000 See wwwapjiiorid 8 http://wwwairspancom/press/Press2001/PR13b062001htm 9 See Siemens PTTelkom Indonesia installs DSL broadband subscriber access technology Press Release 7 November 2000 10 Craig Kuhl Indonesias Sole MSO, K@ablevision, Sets Sights on Growth Multichannel News International July/August 2000 11 Alcatel delivers broadband Internet to Indonesias PT Telkom Press Release 20 April 2001 http://wwwcidalcatelcom/doctypes/newsrelease/20010420jhtml 12 4 Mosques and Warnets 4 Mosques and Warnets Indonesia has made whereby private entrepreneurs resold impressive strides in telephone service through call enhancing access to centres#12 By May 2001, there were communications over around 2'500 Warnets in Indonesia# the last decade# Prior to There is no need for an Internet the financial and license to operate a Warnet# Some political crisis of 1997, companies are planning to franchise, Indonesia had one of giving their Warnets a common name the fastest growing and look# fixed networks in the world# Teledensity The Indonesian Internet Kiosk quintupled between Association (AWARI) is working with 1990 and 2000, from Warnets to do more than just provide 0#59 to 3#14# The simple Internet access# One promising percentage of with a area is distance education# AWARI has telephone jumped from a Memorandum of Understanding with just over one to over the Open University (Universiti Mosque - South Jakarta ten# Although fixed Terbuka) for distance learning# There telephone line growth are some 300000 distance-learning has slowed since the students in Indonesia so the potential crisis, it is almost a miracle that is immense# AWARI is also working there has been any expansion at all# with the Ministry of Education to put Nonetheless, significant barriers to Internet kiosks in vocational schools# universal service remain with some Another area is e-commerce where 90 per cent of Indonesian homes small businesses are using the without a fixed telephone# Warnets to exchange e-mails with customers# This could be extended to Almost 90 per cent of Indonesia's provide more sophisticated electronic population practices Islam, making it capabilities such as assistance with the country with the largest
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