Telecom tower sharing urged for efficiency

Anissa S. Febrina, The Jakarta Post, Kuala Lumpur

To make the telecommunications sector more efficient, the Indonesian government should promote and regulate the concept of infrastructure sharing, in which firms share the costs of building telecommunication towers, a major Malaysian firm says.

"Infrastructure sharing will result in a more cost-efficient industry, as it would require lower capital expenditure," Maxis Communications Bhd. CEO Jamaludin Ibrahim said last week.

Jamaludin said that in Indonesia building such infrastructure was among the most challenging parts of the business, with many potential problems occurring during site acquisition.

Maxis, which is about to enter the Indonesian telecommunications market through its subsidiary PT Natrindo Telepon Seluler in developing 3G services, said that finding sites to develop tower infrastructure in Indonesia has been a problem.

Currently, there are around 20,000 telecommunication towers all over Indonesia. With the ever-increasing growth in the sector, the number was estimated to grow to 43,000 units by 2007.

The average investment to construct a 30-meter to 72-meter tower was between Rp 600 million (about US$60,000) and Rp 1 billion, while tower-sharing has not been common in Indonesia.

The development of the concept in Malaysia began in 2001, when several state governments asked telecommunications firms to share their towers to maintain the aesthetic nature of the environment, and to encourage more efficient coverage nationwide as well as to lower costs.

Aside from that, the policy also aims at reducing the number of towers, thus reducing exposure to radiation to nearby inhabitants.

The approach is now being implemented by three main telecommunication companies in Malaysia: Maxis Communications Bhd., Celcom Bhd. and DiGi Telecommunications Sdn Bhd. According to its website, Maxis as of last June was sharing nearly 43 percent of its towers with other players.

As an alternative to infrastructure sharing amongst existing service providers, the concept of a third party provider of infrastructure facilities is also being promoted. Under this concept, the third party would build the infrastructure and lease capacity or space to existing providers.

Indonesia already has eight third party companies under the Telecommunications Tower Constructors Association (Aspimtel), which have built and leased around 1,000 towers as of this year, of which 60 percent were located in Java and Bali.

The companies intend to triple this number by 2007.