Siemens, NEC link to boost Indonesian telecoms

Siemens, NEC link to boost Indonesian telecoms

Phelim Kyne, Dow Jones/Jakarta

German engineering conglomerate Siemens AG is partnering with Japan's NEC Corp. on a Rp 559 billion (US$57.39 million) fiber optical telecommunications upgrade aimed at bringing Indonesia's creaky domestic network up to international standards, a Siemens executive said.

The project reflects Indonesia's efforts to overhaul its ruinous infrastructure as a means of luring back desperately needed foreign investors deterred by Indonesia's shambolic telecom, road, port and rail networks.

Foreign direct investment into Indonesia slid 26 percent on year in 2004 to $10.3 billion.

Siemens and NEC will lay a modern network of land and underwater fiber optic cables linking the islands of Java, Sumatra, Kalimantan and Batam, the "gateway to Singapore, Malaysia and Thailand", PT Siemens Indonesia fixed networks head Markus Strohmeier told Dow Jones Newswires.

The two firms won the contracts for the Jasuka project from PT Telekomunikasi Indonesia (Telkom), the country's largest telecoms operator.

The Jasuka project will create the first three of PT Telkom's "master plan" of eight ring fiber optical networks linking the islands of Sumatra, Java, Kalimantan and Sulawesi, NEC Corp.'s Submarine Networks Division marketing manager, Takashi Kodama, said. He did not elaborate on how much the deal is worth to NEC.

Strohmeier said, "(After this project) the country will be linked internationally with high (telecom traffic) capacity that's very reliable and that's what we don't have today."

Siemens will receive Rp 154 billion for providing the transmission technology for the undersea cable portions of the project. NEC will provide and install the cable. The German firm will also source and install both the cable and transmission technology for the land-based portions of the project.

Strohmeier insisted a national telecom system upgrade is long overdue.

"Try picking up your phone now and calling Papua province (and) you'll have a success rate of about 10 percent," he said.

Indonesia faces enormous geographical and technical challenges to integrating its constituent islands into a reliable, modern telecommunications network.

"Indonesia is scattered over many islands, a (technological) problem the western world has hardly ever faced," Strohmeier said.

The country's current telecommunications network hinges on antiquated microwave systems supported by relay towers strung throughout the archipelago and first-generation undersea fiber optical cables.

Strohmeier said those systems are not capable of supporting the traffic, reliability and security that more modern technology allows.

"There's a spark going to Kalimantan, a spark going to Sulawesi... but then a fishermen rips (the cable) apart," he said.

The Jasuka project is just the first step in upgrading and linking Indonesia with state-of-the art telecoms technology.

Indonesia's government tendered a large-scale, countrywide fiber-optical linkage project at the Infrastructure Summit in January.

But Strohmeier cautioned that the proposed national "ring of rings" fiber optical network project poses potentially crippling funding challenges for Indonesia's cash-strapped government.

"We estimated that if done in (the government's) design, (the project) will cost $1 billion because there will be so many landing points (from) sea to land....which isn't exactly cheap."