IMPLEMENTATION OF UNIVERSAL TELECOMMUNICATION SERVICE OBLIGATION IN INDONESIA

1
IMPLEMENTATION OF UNIVERSAL TELECOMMUNICATION
SERVICE OBLIGATION IN INDONESIA

• Lessons from 1st year of implementation
• challenges and opportunities
• Dr-techn. Danang Parikesit Mr. Benyamin Sura
• GoI/ILO Rural Infrastructure Development Head of
  Sub Directorate Special
• Project Coordinator Telecommunication and USO
• Lecturer, Gadjah Mada University Dir. Gen. Post
  and Telecommunication
• Government of Indonesia
• Mr. Agus Taufik Mulyono
• PMU USO Implementation 2003/2004
• Lectiurer, Gadjah Mada University

2
STRUCTURE

• USO in Indonesia concepts and principles
  revisited
• Status of USO implementation
• Implementation issues beyond financing
• Future challenges

3
USO in Indonesia concepts and principles
revisited

• Access to infrastructure as a basic need of
  Indonesian citizen
• Impacts to local economic development and
  (subsequently) poverty reduction
• Creates an ownership
• Proactive role of central government agency

4
Current condition

• High teledensity in urban areas 11 25
• VOIP Operators 5 (Indosat, Telkom, Satelindo,
  Atlasat, Gaharu)
• FWA Operators 3 (Indosat, Telkom, Ratelindo)
• Low teledensity in rural areas 0.2
• 43,022 (64.4) out of 66,778 villages with no
  telephone access
• Infrastructures
• 8 million fixed lines
• 16 million mobile phone users
• 7.5 million internet users

5
The availability of rural infrastructure as a
foundation for the fulfilment of basic needs and
social and economic development needs to reduce
poverty, creating employment opportunity and
promoting regional development Sumber Summary
Report Rural Infrastructure for Development,
2003, CGI Meeting, Tim Koordinasi Pengembangan
Infrastruktur Perdesaan Menko Perekonomian
WATER
HEALTH
MARKET
EDUCA- TION
ENERGY
TRANS- PORT SERVICES
ROAD RIVERSEA
6
Deployment procedure combined top down criteria
and technology choice vis-à-vis bottom up proposal

• How could local government request the
  installation of rural telephone facilities?

USO request from local government
Deployment of USO facility
Project Pipeline USO Dit.Gen POSTEL
7
FINANCING PRINCIPLES

• SIMPLE
• PRACTICAL
• REASONSBuilding public trust
• Local government capacity to manage financial
  affairs
• Good corporate governance

8
Technology criteria

• Compatible with the standard
• Interoperate/integration
• Upgradeable
• Scalable
• Transparent for administration purposes
• Non-obsolescence

• Availability
• Suitability
• Proven
• Robust
• Terrain compatible

9
TECHNOLOGY OPTIONS Hybrid/mixed interconnection
medium

• OPTIONS
• Fixed Line
• Most cost effective
• High reliability
• Low maintenance rate
• High user density
• Wireless Local Loop
• Farther distance (10 Km)
• Medium user density
• Point to Point Microwave
• Farther distance (15 Km)
• Medium user density
• VSAT
• Unlimited distance
• Almost independent of other infrastructure
• Relatively simple and quick to deploy
• Low user density

• ISSUES
• Fixed Line
• Limited by distance (5 Km)
• Physical labor intensive
• Dependent on other infrastructure
• Terrain dependent
• Wireless Local Loop
• Higher cost
• Require other infrastructure
• Lower possibility of terrain obstruction
• Point to Point Microwave
• Higher cost than WLL
• Require other infrastructure
• High possibility of terrain obstruction
• VSAT
• Highest cost of deployment and operational
• Highest frequency of maintenance

10
USO Implementation 2003

• TOTAL DEPLOYMENT 3,010 lines
• SUMATERA 1,009 lines
• JAVA (Banten) 40 lines
• KALIMANTAN 573 lines
• EASTERN INDONESIA 1,388 lines
• PFS TECHNOLOGY 2,975 SST
• V-SAT TECHNOLOGY 35 SST

11
Implementation issues

• Human resource and local implementation capacity
• Supporting infrastructure energy
• Geographical disparity
• Government subsidy for OM

12
Results from post implementation evaluation -
construction

• Planned 7,500 villages 870 municipalities
• Implemented 3,010
• Problems
• Very limited time for procurement required
  complicated logistical undertaking
• Require information dissemination
• Availability of electricity and transport
  services to the location of installation

13
Results from post implementation evaluation -
operation

• Test-run for 2003 implementation
• In some locations operated during working hours
  and not publicly placed
• Community organizations not yet established to
  ensure its financial and technological
  sustainability require training and capacity
  building
• Subsidized tariff may create future operation
  burden
• Organization to monitor operation

14
Future challenges

• USO Technology options
• Technology management Interconnection, Frequency
  and license
• Pricing
• Organization Government management and
  financial management
• Capability of national telecom industry

15
Challenges in transition managing changes in a
dynamic business climate

• TO
• Access and service criteria (achievement 2010
  onward)
• All community groups outcome-based program
• Open provision least cost through tender
  including IP based telephony
• USO-specific technology management
  interconnection, frequency and license
• Adjusted/differentiated price (?)
• USP claim
• Industry contribution
• Adjusted Revenue finance/audit issues (good
  corporate governance practice)
• USO fund management/organization

• FROM
• Access criteria (1 line/village basic
  telephony) up to 2010 for 43,022 villages
• Rural focused output-based program
• Limited service provider (due to
  capacity/technology)
• Business as usual technology management
  (frequency and interconnection charges are
  temporarily waived)
• Common price
• revenue
• Government expenditure and an immediate 0.75 of
  Industrys Gross Revenue minus bad debt and
  interconnection charges (corporate governance
  issues)
• Government management