1. Divakar Goswami & Onno Purbo
Indonesia’s WiFi Access Innovation Usable Knowledge for Growing the Telecom Sector Park Hotel, New Delhi, March 6, 2006
Divakar Goswami
& Onno Purbo

2. Research Objectives
Why does Indonesia have more Wi-Fi deployed to connect to the Internet than most developing countries?
What lessons can we learn from WiFi innovations in Indonesia for other developing countries?
What steps must be addressed for hastening Internet growth in Indonesia?

3. What is WiFi?
Wi-Fi is based on a family of standards that allow data to be transmitted at high speeds wirelessly up to 15 kilometres away.
(2Mbps); b (11Mbps); a (54Mbps); g (54Mbps).
Where wired infrastructure is poorly developed (rural regions) wireless technologies like Wi-Fi, can be a viable solution to bridge digital divide.
Many countries, including USA, EU, India, Indonesia etc. have unlicensed portion of 2.4 Ghz band necessary for Wi-fi.
Advantages: Quick deployment time, low-cost, minimal rights of way needed, “free” bandwidth.
Disadvantages: Prone to interference, weather conditions, steep range/bandwidth tradeoff, doesn’t offer carrier class reliability.

4. Why WiFi?
Has WiFi deployment in Indonesia led to higher Internet access compared to other developing countries?

5. Internet penetration
1.03
1.75
3.76
9.64
6.86
34.53
60.97
47.17
50.88 -
0.01
0.02
0.07
0.44
23.3 18
10.1
Internet Users
Broadband users

6. Internet growth rate comparison
India’s CAGR for an eight-year period between was 58.4% in comparison with Indonesia’s CAGR during the same period of 35%.
Per capita: Indonesia-$3500, India-$3100

7. Why Study WiFi in Indonesia?
There is more WiFi deployment in Indonesia than most developing countries:
40 towns and cities in different islands have WiFi deployed by entrepreneurs
WiFi deployment in other developing countries (Cambodia, Costa Rica, India, Bhutan etc.) small-scale, experimental basis, non-commercial.
Compared to developed countries, WiFi uniquely deployed in Indonesia

8. Typical ISP Network Fiber optic Coax cable Twisted copper pair ADSL
Link to higher tier ISP
ISP A
ISP B
ISP C
Typical ISP Network
Coax cable
Cable modem
Twisted copper pair
ADSL
Dialup
Infrastructure Network
Access Network

9. Network Characteristics-Indonesia
ISP A
WiFi 2.4
IIX
Ethernet
Ring
Microwave
ISP B
ISP C
School B
School C
Wifi 5.8
WiFi 5.8
House
School A
$4000/pm (Internet link+ international bandwidth)
ADSL
UTP Cable
Infrastructure Network
Neighbourhood Network 50 houses+ $35/pm
Corporate Customer $200/pm
UTP Cable
Access Network

10. Uniqueness of Indonesian WiFi
WiFi deployed in Indonesia in unique manner:
Not inside home; not available for free.
Blurring of access and infrastructure network; used as low-bandwidth backhaul; up to curb WiFi, last mile aerial cable.
Many tiered retailing of Internet service.

11. Innovations Around Constraints
Inadequate supply of network infrastructure-”backbone” & leased lines
WiFi fills “missing link”
High price of last mile infrastructure, i.e., domestic leased lines
WiFi provides service at substantially lower costs
High price of international bandwidth
“Unlegal” use of satellite for international link
High retail price of Internet Service
Unlicensed reseller-ISPs using WiFi to recoup high price

12. Annual Leased Line Prices-Domestic & International
2Mbps link
2km
200km
Indonesia
US$18,000
US$45,000
India
US$376.00
US$7,603 EU
Benchmark
US$4,802
US$9,219
Ratios
India EU
1: :5
Ratios
India EU
1: :4
Full-circuit
INDOSAT
(Incumbent)
DT Putra
(Satellite link)
India
(price ceiling)
EU (Denmark)
Benchmark
2 Mbps
US$108,528
US$146,400
US$29,555
US$36,868
India EU 1: :3
India EU
1: :4.0
Data compiled from Lokanathan, lirneasia.net, EU 10th report, interview with Indonesian ISP & Network Service Provider

13. Bandwidth Indonesia India Ratio 64 Kbps US$393 US$128 3:1 128 Kbps
4:1
1 Mbps
US$3776
US$970
Data from Indonesian ISP provider & BSNL, India

14. Comparison of ADSL Retail Prices (monthly) in Indonesia & India
Bandwidth
Indonesia*
India**
Ratio
384 Kbps
Usage limit:
1 GB* 2GB**
US$74
USD$23
3 : 1
512 Kbps
Usage limit:
2 GB* 5GB**
USD$93
USD$41
2 : 1
Data from PT Telkom, Indonesia & BSNL, India

15. Barriers to Market Participation
Limited competition
Competitive
No competition
Telecom services
Telecom operations
Fixed wireline local
Exclusive right PT Telkom
Fixed domestic LD
Exclusive right PT Telkom
Fixed wireless local
Limited competition (PT Telkom & Indosat )
Fixed international
Duopoly (Indosat & PT Telkom)
Mobile
Competitive (Satelindo, Excelkomindo, Telkomsel etc.)
Internet service provision
(Quasi?) Competitive Currently 124 ISPs official, 54 unlicensed

16. Barriers to Internet Growth: Some Solutions
Inadequate supply of network infrastructure
(a) introduce more players to extend network [policy]
(b) government invests in rolling out network
High leased line prices
(a) introduce more players in leased line market [policy]
(b) regulator introduces access regime for leased lines
(b) regulator compels operators to lower prices
High price of international bandwidth
(a) introduce more players in international gateway market [policy]
(b) regulator issues price ceiling like in India
High Internet retail prices
The above steps will take care of high retail price
Is Policy & Regulatory environment conducive to above solutions?

17. Regulatory environment
DG POSTEL is an unit of the Ministry of Communication & IT
Two regulatory bodies: DG POSTEL & BRTI
BRTI under-staffed, powers under transition, chairman is DG of POSTEL
Minister of Communications
and Information Technology
Telecommunications
Regulatory Committee (BRTI)
DDG of Adm. Affairs
DGPT
DDG of
Telecom & IT
DDG of
Frequency Management
DDG of
Standardization
DDG of
International Affairs
DDG of
Pos
Notes :
BRTI (Indonesian Telecommunications Regulatory Body)
Line of Command
Line of Coordination
Report to

18. Regulatory environment
Exclusivity clauses extending historical monopolies
Indonesian govt owns 51% share in PT Telkom & 15% in Indosat plus “golden share”
Structure of licenses preventing ISPs from deploying infrastructure
Licenses for Telecom Network & Service providers
No local loop unbundling
Exclusivity until 2015
No regulation of leased line prices
Non-regulation of uncompetitive market

19. Lessons for the Indonesia
Wi-Fi “innovations” in Indonesia are not a result of enlightened policy designed to extend communication infrastructure to unserved areas but rather a workaround solution to hostile market and regulatory conditions.
Any sustainable development of Internet growth in Indonesia must address policy & regulatory environment-credible regulatory reform
For quickest results, regulator must reduce leased line prices. Number of studies have shown the correlation between lower leased line prices and rapid diffusion of the Internet (Petrazzini & Guerrero 2000; Fan 2005;)
Findings from this study are being used by stakeholders and media to pressure government to lower leased line and international bandwidth prices.

22. Lessons for India & developing countries
Hastening of broadband Internet deployment in India & developing countries if ISPs can use Wi-Fi in the access network to bypass incumbent’s local loop.
Wi-Fi can bridge digital divide by providing Internet connectivity leap-frogging difficult terrain and lack of wired infrastructure in rural areas.
Wi-Fi deployment can be commercially viable.