Internet charges may drop by half in 4 years

Andi Haswidi, The Jakarta Post, Jakarta

The telecommunications regulatory body is preparing a number of policies in order to gradually lower Internet charges, currently among the highest in the world, by 50 percent within four years.

"Compared to other countries, our Internet connection charges are too high. We have studied what causes this, and have also responded through various policies and initiatives," Indonesian Telecommunications Regulatory Board (BRTI) spokesperson Heru Sutadi told The Jakarta Post on Sunday.

According to the latest figures from the International Telecommunications Union, Indonesia is 47th in the world in terms of lowest Internet tariffs, with the average charge in Indonesia being US$5.07 per 100 kilobytes per second on a direct connection to an Internet service provider, or what is also known as a leased line.

The is far more expensive than other countries in the region, such as Singapore, in 18th place on $1.59, Thailand, in 24th on $2.38, Malaysia, in 28th on $2.57, and Vietnam, in 40th on $3.69.

Meanwhile, the three cheapest countries are Japan in first place on $0.007, South Korea in second on 0.008 and Taiwan and China in joint third, both on $0.18 each.

Heru said that under the new Information and Communications Technology (ICT) infrastructure road map, the government hoped to reduce broadband charges by more than half to about $2.40 per 100 kilobytes per second by 2011.

The most significant step on the road to lower charges, he said, would be a review of the regulations on the determining of fixed-line charges.

"The existing price formula, which was introduced in 1998, is no longer suitable for current conditions. We will reevaluate this so as to produce connections that are approximately 40 percent cheaper," he said.

The reason behind the current high charges, he said, was the lack of competition for connection to the international backbone between dominant players such as PT Telkom and PT Indosat.

"The dominant players in the market were able to set pricing as they pleased. Now, we have issued licenses to new players so as to encourage more competition," he said.

Another step designed to expand the supply of network connections, he said, was the Palapa Ring project, which aimed to link the entire archipelago with a fiberoptic network that would serve as the national backbone not only for voice services but also for the Internet.

Earlier in November, BRTI reported that internet penetration in Indonesia amounted to only 9.1 percent of the total population, giving about 20 million active users, 70 percent of whom are located in Greater Jakarta. The country also had some 7,602 Internet kiosks.

"The current cost of fiberoptics has declined from Rp 5 million (about $538) per two kilometers previously to Rp 3 million. That too will lower costs and help speed up network expansion," Heru said.

Aside from introducing new regulations and holding tenders for the development of the network, the government also plans to make a number of technical improvements next year, including better Internet protocol (IP) address and Internet exchange (IX) management, improved domain-name service administration, and migration from IP version 4 to IP version 6.