Govt plans another tender on 3G licensing

Govt plans another tender on 3G licensing

Rendi A. Witular, The Jakarta Post, Jakarta

The government plans to repeat the tender process in July for
companies wishing to be granted a license for advanced third
generation (3G) cellular technology.

The bid process is part of its efforts to modify the
telecommunications frequency allocations to make them more
inefficient.

Maximizing the frequency allocation will enable the country to
reap at least Rp 3 trillion (US$319 million) in proceeds from the
licensing fees alone, which later can be used to install standard
telephone lines down to the village level in several parts of the
country that still have no access to telephones.

"We want to maximize the use of the 3G frequency bands so it
can be used by more operators. Proceeds from these bands will be
used for development in rural areas," said Minister for
Information and Telecommunication Sofyan Djalil at the State
Palace on Wednesday.

Sofyan said the tender would be held next month after
President Susilo Bambang Yudhoyono signed a government regulation
on the minimum licensing fee, in addition to the completion of an
audit on the use of existing frequencies awarded to cellular
operators.

The government has granted PT Natrindo Telepon Seluler/Lippo
Telecom and PT Cyber Access Communications (CAC) -- an affiliate
of Thailand's leading cellular operator Telecom Orange Asia -- 3G
licenses and allocated a frequency spectrum in 2003.

However, the government has become frustrated at the lack of
progress by the two companies in making use of the licenses.

It was not immediately clear how the companies would react to
the government's new plan.

With 3G technology, cellular operators can provide multimedia
facilities at faster speeds and with much more data than the
outmoded cellular technology now being used here, which is
classified as 2.5G. The 3G technology will also allow users to
send, receive and download audio and video files much faster.

Sofyan said that there were 45 megahertz (Mhz) of 3G frequency
currently available, and that would be on offer in the upcoming
tender, with each operator allocated between 5 Mhz and 10 Mhz.

Sofyan, however, refused to disclose the cost of the
frequency. For comparison purposes, a 5-Mhz frequency allocation
costs approximately US$80 million in Australia and between $10
million and $20 million in the United States.

"Proceeds from the licensing tender will be used to help
people living in remote villages by providing them with fixed-
line of satellite-based telephone systems," he pledged.

Based on the ministry report, at present, less than 5 percent
of the country's 220 million people can enjoy access to fixed-
line phones.

Sofyan also said that the ministry would also order existing
operators, which currently use the wide-band Code Division
Multiple Access (CDMA) technology not to use the 3G frequency in
their operations since it would disrupt the frequency of the 3G
operators.

"I will ask all cellular operators with CDMA technology not to
use the 3G frequency. They need to comply with the government
regulation or face sanctions," warned Sofyan, while adding that
the sanctions could include the revocation of the CDMA operating
license.

CDMA technology allows the use of fixed-wireless service -- a
phone service with limited cellular mobility designated areas
that were first introduced in this country about two years ago.