Costly leased lines hamper Internet
Costly leased lines hamper Internet
Leony Aurora, The Jakarta Post, Jakarta
High prices of leased lines for domestic and international links
in Indonesia, which can be up to 48 times more expensive than
other countries, is hampering the development of the Internet and
should be regulated, a study shows.
The annual domestic leased line fee for a two-kilometer link
with a capacity of 2 Megabits per second (Mbps) here is
US$18,000, an overwhelming 48 times more expensive than the $376
applied in India, according to a study conducted by LIRNEasia, a
regional ICT policy and regulation capacity building
organization, in August.
The Indonesian price is quadruple the price applied in Europe,
where an average person earns 25 times more than an average
Indonesian in a year, said director of organizational development
and projects of LIRNEasia Divakar Goswami, who conducted the
study with Indonesian information and communication technology
(ICT) expert Onno Purbo, recently.
The annual fee for an international link from the country's
second biggest telecommunication firm PT Indosat of $108,528,
according to the study, compares to $36,868 charged in Denmark
and $29,555 in India.
"Such high leased line prices result in high Internet prices
for customers, which in turn creates a barrier to rapid Internet
diffusion in Indonesia," Goswami said.
Internet penetration -- measuring the ratio between the number
of customers and population -- in Indonesia is estimated to be
0.6 percent by the end of this year.
Indosat president director Hasnul Suhaimi said high leased
line prices were the result of not having sufficient numbers of
users. "We have not reached the economic scale yet for the
development of leased lines," he said.
He added that the international fee had declined by some 50
percent in the last four years due to competition with other
providers.
"Indonesian prices are going down. It's just that (prices) in
other (countries) are falling more rapidly," said Hasnul.
Goswami suggested that the government make a thorough effort
to regulate fees for leased lines so that Internet could be
provided more cheaply.
One obstacle may be that the government controls shares in the
country's largest telecommunication firm PT Telkom and also
Indosat. The supposedly independent Telecommunications Regulatory
Body (BRTI) is chaired by the Ministry of Communications and
Information's director general of Post and Telecommunications,
Basuki Yusuf Iskandar.
"It would be hard for BRTI to make policies that could reduce
revenues for the two companies," said Goswami.
Chairman of the Indonesia Infocom Society (Mastel) Giri Suseno
Hadihardjono said that in India, such regulations did not put
telecommunication companies out of business -- in fact, they
developed instead.
"We cannot simply copy (India). We have to take into
consideration the local conditions," said Giri. The government,
he said, had to make up its mind on whether the initial decline
in revenues caused by the lower prices was worth the boost in
Internet usage.
"Of course, if it's cheaper, more people will use the
Internet," he said.
Indonesia has adopted the United Nations' target to ensure
that 50 percent of the population gets Internet access by the
year 2015.
Table
Annual leased line prices in Indonesia and other countries
----------------------------------------------------------------
Domestic
----------------------------------------------------------------
2Mbps* link Indonesia India EU benchmark
----------------------------------------------------------------
2 km $18,000 $ 376 $4,802
200 km $45,000 $7,603 $9,219
----------------------------------------------------------------
International
----------------------------------------------------------------
2 Mbps $108,528 $29,555 $36,868
----------------------------------------------------------------
Mbps: Megabits per second
Source: LIRNEasia