ICT market penetration still low

The Jakarta Post, Jakarta

An old villager depicted in a TV advertisement longs for a phone call from his son. When the phone rings, the father's whole face lights up, like it's a miracle.

In another setting, a busy executive enjoys a moment of down time as a child calls his cell phone to say hello.

Touching maybe, but the country's telecommunications sector has a harsher reality to contend with: no more than 15 percent of its population of 220 million currently enjoy such a privilege, according to data from the International Telecommunications Union.

As of last year, there were a total of 8.7 million fixed-line and 22.7 million cellular subscribers here. By and large, the nation is lagging behind its Asian peers in its telecommunications penetration index -- a ratio of telephone lines in service or cellular subscribers per 100 people -- (4.2 for fixed line and 12.43 for cellular).

In comparison, Malaysia's telephone penetration index stood at about 25 percent in 2003.

The low index is among problems voiced out in the proposed blueprint of Indonesia's Information and Telecommunications Technology (ICT) 2005-2015 drafted by the Indonesian ICT Society.

"In the proposed blueprint materials we stress the importance of the convergence of all related aspects of telecommunications and the maximal use of technology," Indonesian ICT society chairman Giri Suseno said.

One suggestion offered is to speed up telecommunications network expansion in rural areas.

At present, urban areas such as Greater Jakarta have a penetration index for fixed lines of more than 30 percent, while at the same time, regions in most parts of the country have an index of less than 5 percent.

To accelerate the infrastructure network needed to boost market penetration, Giri suggested that the government issue more network facilities provider licenses with incentives, such as lower licensing fees.

Still, "giving licenses to operators should not only be for the sake of increasing the penetration index," he said, it should also ensure that the medium is extensive and not only available in urban areas.

Although the government has started implementing the Universal Service Obligation (USO) program to install fixed-line phones in villages, it has not reached the right target, while its continuity is questionable, the report said.

As of 2004, under the USO program, the government has provided 5,615 phone lines in villages throughout the country.

Given the scale of investment needed to build the infrastructure, the government also needs to promote the development of local manufacturers that support the sector, so that they could supply cheaper components for the infrastructure projects.

Data from telecommunications service providers shows that the telecommunications sector would need yearly hardware supplies from supporting the manufacturing industry to the amount of Rp 22 trillion (about US$2.4 billion) to Rp 30 trillion.

Domestic ICT manufacturers -- started in the mid 1970s and pioneered by state-owned PT INTI and the National Electronics Agency (LEN) and later followed by several private companies -- is estimated to provide only 2 percent or 3 percent of the demand. (003)