Costly leased lines hamper Internet
Leony Aurora,
The Jakarta Post, Jakarta
High prices of leased lines for domestic and
international links in Indonesia, which can be up to
48 times more expensive than other countries, is
hampering the development of the Internet and should
be regulated, a study shows.
The annual domestic leased line fee for a
two-kilometer link with a capacity of 2 Megabits per
second (Mbps) here is US$18,000, an overwhelming 48
times more expensive than the $376 applied in India,
according to a study conducted by LIRNEasia, a
regional ICT policy and regulation capacity building
organization, in August.
The Indonesian price is quadruple the price applied in
Europe, where an average person earns 25 times more
than an average Indonesian in a year, said director of
organizational development and projects of LIRNEasia
Divakar Goswami, who conducted the study with
Indonesian information and communication technology
(ICT) expert Onno Purbo, recently.
The annual fee for an international link from the
country's second biggest telecommunication firm PT
Indosat of $108,528, according to the study, compares
to $36,868 charged in Denmark and $29,555 in India.
"Such high leased line prices result in high Internet
prices for customers, which in turn creates a barrier
to rapid Internet diffusion in Indonesia," Goswami
said.
Internet penetration -- measuring the ratio between
the number of customers and population -- in Indonesia
is estimated to be 0.6 percent by the end of this
year.
Indosat president director Hasnul Suhaimi said high
leased line prices were the result of not having
sufficient numbers of users. "We have not reached the
economic scale yet for the development of leased
lines," he said.
He added that the international fee had declined by
some 50 percent in the last four years due to
competition with other providers.
"Indonesian prices are going down. It's just that
(prices) in other (countries) are falling more
rapidly," said Hasnul.
Goswami suggested that the government make a thorough
effort to regulate fees for leased lines so that
Internet could be provided more cheaply.
One obstacle may be that the government controls
shares in the country's largest telecommunication firm
PT Telkom and also Indosat. The supposedly independent
Telecommunications Regulatory Body (BRTI) is chaired
by the Ministry of Communications and Information's
director general of Post and Telecommunications,
Basuki Yusuf Iskandar.
"It would be hard for BRTI to make policies that could
reduce revenues for the two companies," said Goswami.
Chairman of the Indonesia Infocom Society (Mastel)
Giri Suseno Hadihardjono said that in India, such
regulations did not put telecommunication companies
out of business -- in fact, they developed instead.
"We cannot simply copy (India). We have to take into
consideration the local conditions," said Giri. The
government, he said, had to make up its mind on
whether the initial decline in revenues caused by the
lower prices was worth the boost in Internet usage.
"Of course, if it's cheaper, more people will use the
Internet," he said.
Indonesia has adopted the United Nations' target to
ensure that 50 percent of the population gets Internet
access by the year 2015.
==================================
Annual leased line prices in Indonesia and other
countries
Domestic
2Mbps* link Indonesia India EU benchmark
2 km $18,000 $ 376 $4,802
200 km $45,000 $7,603 $9,219
International
2 Mbps $108,528 $29,555 $36,868
Mbps: Megabits per second
Source: LIRNEasia
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