Recommended strategy

1
Recommended strategy policy for broadband in
Indonesia

By Jan van Rees, World Bank
2
Contents

• Current status
• Main issues to be addressed
• Broadband backbone
• Mobile/wireless Broadband
• Fixed Broadband
• Investments required
• Role of Central Government
• Recommended Regulation
• Role of local Government
• Role of Public works and PLN
• Conclusions and proposed Time Schedule

3
Current status of Broadband in Indonesia

• In West-Indonesia the main fiber optic backbone
  between all provinces is in place
• Submarine routes to abroad are available and new
  routes are added
• Broadband access still in early stage
• Mobile Internet/broadband shows rapid growth and
  is the main broadband access for individual users

4
Regional comparison

5
Broadband Quality
Source Global broadband quality study sponsored
by Cisco
6
Main issues to be addressed

• Broadband backbone
• Inter province backbone in Sumatra-Java-Kalimantan
  -Bali-South Sulawesi exists
• East Indonesia is missing (Palapa Ring East)
• Extension to many Kabupaten still to be
  implemented
• Mobile/wireless Broadband
• 3G deployed on part of the network in 2100/1900
  MHz band, focused on cities
• WiMAX auctioned
• Requires cost-effective mobile broadband
  everywhere
• Fixed Broadband
• Monopoly on copper infrastructure ADSL (up to 1
  Mb/s, Speedy, PT Telkom)
• Monopoly on cable TV network
• Very limited Fiber To The Home
• Requires large scale fiber optic deployment

7
Backbone investments required

• Palapa Ring East 186 million
• Completing Palapa Ring East with
  Sorong-Manokwari-Biak-Jayapura and
  Sorong-Fak-Fak- Timika-Merauke. Estimated at
  145 million
• Extension to remaining Kabupaten
  Sumatra-Kalimantan- South Sulawesi, 9.820 km,
  113 million of which 31 million is expected to
  be not feasible commercially
• Extension to Kabupaten in Eastern Indonesia. If
  possible 225 million. However most non-coastal
  Kabupaten in Papua lack any infrastructure to lay
  fiber optic cable along (no roads, pipelines,
  etc.). Some intermediate use of microwave might
  be required.
• Total 444 million (part of) 225 million
  Kabupaten
• extensions in Eastern Indonesia

8
Mobile/Wireless broadband access investments
required

• Passive infrastructure (towers and facilities)
  already established
• Upgrade of active radio network required (3G
  everywhere, future upgrade to LTE)
• Backhaul from towers to backbone
• On the largest network about 5.000 out of 32.000
  basestations are 3G. Current 3G spectrum is not
  cost effective for rural roll-out (would require
  many more towers). However if 850/900 MHz is used
  a simple overlay can be deployed. Estimated
  costs 500 1000 million
• Backhaul is crucial. Could cost around the same
  amount as the active infrastructure
• Note Short-term, activate EDGE feature
  everywhere
• instead of only GPRS

9
CAPEX/OPEX impact
Source GSA Information Paper UMTS 900 September
4th, 2008
10
Fixed broadband access investments required

• Future requirement is 100 Mb/s, many countries
  are deploying FTTH (like Singapore, Australia,
  etc.)
• Main investment (50-80) is passive
  infrastructure
• The largest investment in the future telecom
  infrastructure will be in the migration to fiber
  optic access networks
• Assuming 800/home then the replacement of
  current copper network (8 million lines) would be
  in the order of magnitude of 6400 million.
  Connecting up to 40 million homes would increase
  this to 32000 million
• Smart and opportunistic deployment required to
  reduce investment level
• Note
• Short-term, deploy ADSL on all copper networks,
• increase speed to technology limit (20 Mb/s)
  where
• possible

11
Analysis

• The mobile (broadband) market is highly
  competitive. Operators have made, and continue to
  make, multi-billion investments each year
• The number of mobile operators/networks is quite
  high and consolidation should be anticipated.
  Fewer mobile networks more MVNOs are a likely
  scenario.
• Use of lower frequency bands (850/900 MHz) is
  critical for cost-effective mobile broadband
  everywhere
• Fixed broadband (ADSL) over copper wires, has
  been more or less a monopoly business although
  cable Internet is a competitor. Investments have
  been limited
• A more competitive fixed broadband market is
  required. This implies a transition from
  monopoly on copper to competition on fiber.

Source Point Topic Broadband by technology Q4
2008
12
Central Government role

• Timely issuance of permits and rights of way
• Facilitate coordination between entities
  responsible for different infrastructures for
  example ensuring that construction of new roads,
  railways, power lines and pipelines provides for
  co-location of fibre-optic cables. Such practice
  is widespread around the world for new
  infrastructure development
• Financial incentives like a minimum subsidy for a
  backbone extension to a marginal Kabupaten in
  return for Open Access and early deployment (ICT
  fund)
• Demand aggregation

13
Regulatory measures required (1)

• Infrastructure sharing.
• For towers this has already been done. This
  should be extended to include other passive
  infrastructure like ducts, poles, dark fibers,
  etc.
• Open access requirements
• Passive infrastructure for essential and not
  easily replicated infrastructure
• Active layer/service layer. IP level is open and
  net neutrality should be maintained
• The transition from monopoly on copper to
  competition on fiber implies that a fully
  unified license is provided
• Licensed operators can deliver all services
  (local, SLJJ, SLI, Mobile, Internet, IPTV, etc.),
  typically over the broadband access. Current
  legacy regulation focused on individual services
  should be phased out
• This is a prerequisite for a competitive fixed
  broadband market.

14
Regulatory measures required (2)

• Equal access to buildings
• Remove all monopoly practices related to access
  to the building and the in-building cable system.
• Allow non-Telco entities (construction companies,
  real estate developers, local Government) to
  construct and provide passive infrastructure.
  However mandate open access
• Number portability (mobile fixed) for consumer
  protection and additional competition
• Mobile/wireless broadband
• Allow in-band migration to 3G/4G technologies
• Release more spectrum for the long-term (700 MHz,
  2500 MHz).
• 700 MHz requires an accelerated migration from
  analogue to digital TV to free-up the Digital
  Dividend
• 2500 MHz is currently mostly used for satellite TV

15
Regional/local Government role What can be done
to accelerate deployment?

• Timely issuance of permits and rights of way
• Provide and prepare passive infrastructure
  whenever constructing other infrastructure like
  roads.
• Example
• Kabupaten without extension to the backbone and
  without
• fiber infrastructure
• Invest in the passive infrastructure to lower the
  barrier for entry. Stand-alone or as co-investor.
• Aggregate initial demand (schools, puskesmas,
  Government offices) and tender this demand in
  return for early service and deployment of open
  access backbone and local fiber optic network

16
Public Works role

• By default Public works should incorporate the
  need for ducts whenever constructing roads, etc.
• Arrange a general agreement between Telcos and
  the Government with respect to the use of passive
  infrastructure.

17
PLN role

• PLN is operating a very large passive
  infrastructure of power lines and electricity
  access network on poles.
• Fair and equal access to this passive
  infrastructure is important to deploy
  cost-effectively.
• Arrange a general agreement between Telcos and
  PLN with respect to the use of this passive
  infrastructure.

18
Conclusions

19
Conclusions (1)

• The future of telecom is Broadband (10 Mb/s
  today and 100 Mb/s tomorrow).
• Fixed broadband is essential to provide real high
  capacity cost-effectively
• Mobile broadband can be deployed fast to provide
  initial connectivity
• Main backbone (West East) and extension to all
  Kabupaten in West Indonesia South Sulawesi
  requires a remaining investment of 444 million.
  
• Remaining (in particular non-coastal) Kabupaten
  in East Indonesia Eastern Indonesia might require
  intermediate solutions like microwave
• Transition from monopoly on copper to
  competition on fiber through regulatory steps
• Fully Unified License for all services and
  phase out of legacy service by service
  regulation.
• Infratructure sharing
• Open access

20
Conclusions (2)

• Mobile broadband in the lower frequency bands
  (850/900 MHz) is critical for cost-effective
  rural deployment
• Short-term fixes based on existing
  infrastructure
• Deploy ADSL at all local PSTN switches. Where
  there is copper there should be ADSL
• Activate the EDGE feature on the GSM network
  everywhere to provide, almost instantly, better
  mobile internet all over Indonesia
• Use demand aggregation and investments in passive
  infrastructure to accelerate fiber optic roll-out
  of backbone and access.
• Consider use of the USO/ICT fund for those areas
  which are commercially not feasible.
• Local/regional Governments can play an important
  role to realise broadband in their area. However
  it is important that the Central Government
  arranges the regulatory prerequisites to create a
  competitive fixed broadband market.

21
Proposed time schedule

22
ANNEX Why Lower frequency bands are critical
for rural mobile broadband

23
Why are lower frequency bands so important?

• 850 and 900 MHz bands offer a much better
  coverage than 2100 MHz
• Many countries do have very extensive rural areas
  which could benefit from 3G (mobile as well as in
  fixed deployment) to deliver telephony and
  broadband service
• Typically spectrum use in rural areas is less
  intensive making it easier to allow in-band
  migration to 3G at much lower cost
• Examples
• Telstra Next G network (850 MHz). Covers gt
  2.000.000 km2
• Elisa Finland/Estonia (900 MHz)
• Vodafone New Zealand (900 MHz), Australia under
  construction
• Optus in Australia (900 MHz)
• AIS Thailand (900 MHz)
• Europe is anticipated to accept UMTS 900 widely,
  many trials/plans on-going

24
No of UMTS basestations required

• A lower frequency band results in a much more
  cost efficient roll-out in rural areas. UMTS 900
  is already standardised.

Source UMTS Forum presentation
25
Cell Coverage Comparison in typical urban case
Source GSA Information Paper UMTS 900 September
4th, 2008
26
CAPEX/OPEX impact
Source GSA Information Paper UMTS 900 September
4th, 2008
27
Example Telstra HSDPA at 850 MHz

• 3GPP standard allows gt 200 km. Telstra
  demonstrated 2 Mb/s even up to 200 km for high
  elevation basestations and free of obstructions

Source Telstra presentation at Mobile World
Congress in Barcelona 2008
28
Co-existence issues

• UMTS 900 ? GSM 900 uncoordinated (2.8 MHz)
• UMTS 900 ? GSM 900 co-located (2.6 MHz)
• UMTS 900 ? GSM 900 micro/pico cells (gt 2.8 MHz)
• Suggested frequency arrangements

Source ECC Report 82