Govt to raise USO fee to 1% from 0.75% to boost fixed-line development

The Jakarta Post, Jakarta

Moving to speed up the development of rural communication infrastructure, the government is set to increase the universal service obligation (USO) fee to 1 percent next year, a ministry official says.

Currently, under Government Regulation No. 28/2005, all telephone operators must set aside 0.75 percent of their annual revenue for the state's rural telephone program called USO.

The regulation is effective as of July and applicable retroactively from the beginning of 2005.

"We will need around Rp 5 trillion to provide communication access to 43,000 underdeveloped villages nationwide. With the current 0.75 percent it might take eight years to do so," said Ministry of Communications and Information director general of Post and Telecommunications Basuki Yusuf Iskandar on Monday.

With the increase, it is likely that all villages, numbering more than 65,000 across the country, will be able to enjoy fixed line communication in the next five years.

Under the current scheme, the state would collect Rp 2.5 trillion in five years.

Meanwhile, apart from the private-participation scheme, the government has set aside Rp 88.5 billion from the state budget to set up telephone connections in 5,351 villages throughout the country.

Next year, it targets to provide 27,000 connections in 10,000 villages.

Indonesia is among the countries with the lowest telephone density in Asia. In 2004, only 8.8 million of the country's 220 million people had access to fixed-line phones, prompting a more rapid growth in cellular phone users.

In comparison, Malaysia reported in 2003 that 25 percent of its population had fixed-line telephones.

Minister of Communications and Information Sofyan Djalil signed a memorandum of understanding on Monday on the USO program with the Minister of Home Affairs and the Minister of the Empowerment of Underdeveloped Areas. The latter ministries are to provide data on which villages shall be prioritized.

The USO program in Indonesia uses satellite-based Very Small Aperture Terminal (VSAT), Internet Protocol based connections, Portable Fixed Satellite or Fixed Wireless Access, as many of the islands in the archipelago cannot be reached by fixed cables.

The government has appointed four operators to implement the rural telephone program, namely PT Pasifik Satelit Nusantara (PSN), PT Citra Sari Makmur (CSM), PT Telkom and PT Mandara Selular Indonesia.

Within the USO program, once the villages have access to fixed-line communications, they will also be upgraded with Internet connection.

According to data from the International Telecommunications Union (ITU), the telephone penetration rate in Indonesia stands at 8 percent on average for both fixed lines and cellular phones, while the computer penetration rate is about 4 percent.