This special page is published in observance of World Telecommunications Day, which is celebrated worldwide on May 17. The special page reports the challenges and opportunities in the country's telecommunications sector.

USO project: Connecting the unreachable

Hendarsyah Tarmizi The Jakarta Post/Jakarta

In May 1844, Samuel Morse transmitted the first message by telegraph. The message was heard 37 miles away and it changed history, forever.

The apt message, "What has God wrought?", transmitted 160 years ago, marked the dawn of the telecommunications age. Within a decade, telegraphy had become a routine public service.

Although World Telecommunications Day has been celebrated every year to commemorate the signing of the first International Telegraph Convention in Paris on May 17, 1865, the hard work of Samuel Morse should not be forgotten.

Today, many people cannot imagine daily life without the use of increasingly sophisticated information and communications technologies (ICTs) -- from television and radio to mobile phones and the Internet.

Yet, for millions of people in the world's poorest countries, there remains a "digital divide" that excludes them from the benefits of ICTs.

The same situation exists in Indonesia. Telecommunications technology has become a basic need for many people living in major cities. A mobile phone has become a must-have item even for high school students.

In stark contrast, for millions of people living in villages, telephone services remain a luxury, let alone for other millions of people living on isolated islands in the vast archipelago.

The investment climate in the telecommunications sector has become much more positive since the removal of state-owned telecommunications carrier PT Telkom's monopoly on domestic fixed-line telephone services.

However, Telkom and new players in fixed-line telephony such as Indosat, which previously focused its services on international telecommunications, are still reluctant to expand their fixed-line services.

Low charge rates for domestic telephone services remain the main factor in the slow development of the country's fixed telephone lines.

Although fixed telephone rates have increased by nearly 35 percent since 1991, operators still think the existing rates are too low to generate a reasonable return.

To develop an infrastructure of fixed lines is much more costly than providing mobile phone services using Global System for Mobile Communication (GSM) or the Code Division Multiple Access (CDMA)-based fixed wireless services. That might explain why many telephone carriers are focusing their operations in urban areas, with either GSM or CDMA technology, rather than providing services in rural areas, which generally lack business potential due to their small population and the low purchasing power of the inhabitants.

To rely on existing telecommunications operators in providing telephone connections for these isolated areas is certainly not fair. But their contribution to help reduce the isolation is necessary.

Within this context, the government has adopted the Universal Service Obligation (USO) concept to cope with the digital divide in Indonesia. Under this concept, , existing telecommunications operators are required to provide 0.75 percent of their revenues to help finance the USO project.

At present, at least 43,000 villages are not reached by fixed-line telephone services, or about 60 percent of the country's total.

The first USO project, which was launched in November 2003 under the recommendation of the International Telecommunications Union (ITU), covered 3,010 villages with the use of Portable Fixed Satellite (FPS) and Very Small Aperture Terminal (VSAT) technology. The Rp 45 billion (about US$5.3 million) project was financed from the state budget because the operators were not yet ready at the time to provide their contribution.

However, the government is hoping that, from the start of this year, the USO project, which will last until 2015, will be financed by funds to be collected from the operators.

Under the 2003 project, qualifying villages should be located at least 20 kilometers from the closest point of the existing fixed-line network.

"The distance will gradually be reduced in the coming projects so that locations closer to existing facilities will also be covered," said Bambang Dian, spokesman of the directorate general of posts and telecommunications.

In implementing the 2003 project, the government appointed two satellite-based operators, PT Pacific Satelit Nusantara (PSN) and PT Citra Sari Makmur.

PSN was asked to provide satellite-based connections in 2,975 isolated locations in Sumatra, Kalimantan, Sulawesi and Papua with its FPS technology, while Citra was appointed to install connections in 35 locations in Kalimantan and East Nusa Tenggara with its VSAT.

Each location or village was given one satellite-based telephone connection, to be used as a public phone. The service is subsidized by the government so that villagers will pay only as high as Telkom's fixed line tariff.

"PSN has completed all the installment work and now awaits the second project," PSN's spokesperson Chrisma A. Albanjar said. She added that each FPS telephone connection cost Rp 13.5 million to build, including a Rp 750,000 prepayment card.

She said that once the call units were finished, the head of the village could buy a new card through PSN kiosks located in the regency capital.

"With such a public phone available, farmers can now check commodity prices in nearby towns," she said. "For them it is important because they can now decide the best time to sell their produce in town," she added.

Bambang said that the government was still preparing the tender for the second phase of the USO project.

No details were yet available, but he said that the project would continue according to the existing schedule.

With the reluctance of operators to provide telephone services in rural areas, the USO project has become the only hope for millions of inhabitants in remote villages to escape their isolation from the outside world.