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Jakarta Post

Bandwidth block, devices slow 4G adoption in the country

Bandwidth block, devices slow  4G adoption in the country
Khoirul Amin
Jakarta   ●   Tue, March 10, 2015

Big dish: An Indosat technician repairs a microwave antenna at a base transceiver station (BTS) in Jakarta. Despite having been rolled out in December last year, Indonesia'€™s 4G/LTE is still far from ideal, with a lack of service and prohibitively expensive devices posing big challenges. JP/Ricky Yudhistira

Three months after the launch of long-term evolution (LTE) technology, the adoption of the new telecommunications service by the local market has shown little progress as only a handful of customers have started using the system commonly known as 4G LTE.

Domestic cellular operators PT Telekomunikasi Selular (Telkomsel), PT XL Axiata and PT Indosat have attracted fewer customers than expected to the new service.

As of January, Telkomsel'€™s 4G netted 30,000 of the operator'€™s around 138 million subscribers, while XL attracted around 15,000 of its 59.6 million subscribers.

Indosat, meanwhile, has not revealed any data on its 4G subscribers, but says it has attracted mostly corporate customers.

Nitin Mahajan, principal at the Singapore-based Roland Berger Strategy Consultants, said the massive adoption of 4G/LTE technology would only happen if the service could provide faster Internet than the popular 3G network.

Running on 900 MHz frequency band with 5 MHz spectrum, the three operators'€™ 4G speed currently hits between 35 and 36 Mbps, far below the ideal 4G speed of 100 Mbps.

'€œAround 10-20 MHz bandwidth block [spectrum band] should be dedicated for 4G/LTE, only then can a meaningful experience be delivered,'€ Mahajan told The Jakarta Post.

The Communications and Information Ministry has responded to the limited spectrum issue by planning band refarming on the 1800 MHz frequency, which will enable operators to have wider bandwidth blocks for their 4G services.

The band refarming is set to be completed by the end of this year, providing contiguous bandwidth block allocation of 22.5 MHz, 10 MHz, 20 MHz and 22.5 MHz for XL, PT Hutchinson 3 Indonesia, Indosat and Telkomsel, respectively.

Mahajan said that while the refarming would definitely help operators deliver better 4G service, the government should also consider releasing more spectrum, including those of the 700 MHz frequency for 4G to help significantly reduce price per megabyte.

Indonesian Telematics Society (Mastel) chairman Setyanto Santosa said another core challenge for Indonesia'€™s Internet speed '€” including that of 4G '€” was heavy traffic on mobile broadband.

'€œAlmost 90 percent of data traffic in Indonesia was carried on mobile broadband, resulting in limited Internet speed on mobile devices,'€ he said.

Ideally, the composition rate between fixed and mobile broadband should be 60 percent and 40 percent, he said.

'€œWe hope the execution of the government'€™s five-year broadband plan will eventually help the country move toward that ideal condition,'€ Setyanto said.

In October last year, the government officially launched the US$22 billion broadband plan to provide Internet access to the majority of Indonesia'€™s population, both in urban and rural areas.

The multiyear project aims to see fixed broadband and mobile broadband penetrate 30 percent and 100 percent of the urban population, respectively, by 2019.

It also aims to deliver fixed and mobile broadband to 6 percent and 52 percent of the rural population, respectively.

Muhammad Budi Setiawan, the director general for post and telecommunications at the Communications and Information Ministry, said previously he was upbeat that the migration from 3G to 4G would be relatively fast if all plans ran smoothly.

Roland Berger'€™s Mahajan, meanwhile, warned that the adoption of 4G should also be supported by affordable 4G-ready handsets in the market.

'€œ['€¦] the 4G could reach massive adoption if Indonesia has sub-$100 phones [4G-ready],'€ he said.

Using examples of 4G adoption in Singapore and Malaysia, Mahajan said that the two countries had their ecosystems in place when their telecommunications operators rolled out the service.

Singapore'€™s 4G penetration currently hits around 50 to 70 percent, driven by its strong iPhone ecosystem, he said.

In Malaysia, meanwhile, 4G/LTE coverage reached around 40 to 50 percent, with a penetration rate of around 20 percent, he added.

While Indonesia is currently preparing to build a 4G device ecosystem, the number of 4G-ready handsets available in the market remains very small.

As of February, only around 5 percent of a total of 4 million imported smartphones were 4G-ready, according to data from the Industry Ministry.

Fajar Jaman, an analyst with IDC Indonesia, said that the massive adoption of 4G/LTE was not likely to happen anytime soon in the country.

'€œLet'€™s not forget that Indonesia is still a large feature phone market and the switch from 2G to 3G remains an uphill battle for the next couple of years,'€ he said.

More than 70 percent of Indonesia'€™s cell phone owners currently still use the 2G network, while the remaining use the 3G network, according to the Communications and Information Ministry.

Publicly listed local electronics component maker PT Sat Nusapersada, which assembles smartphones for various brands, stated recently that it was committed to helping the country develop its 4G device ecosystem.

'€œWe plan to spend between $8 million and $10 million to boost our output capacity to 3 million smartphones a month,'€ Sat Nusapersada president director Abidin said, adding that the target realization heavily depended on the enactment of the government'€™s plan to impose a 40 percent local content policy on 4G handsets by 2017.

The firm currently assembles 20,000 smartphones a month, some of which are 4G handsets.

Most 4G-ready handsets are currently produced by global manufacturers, such as Apple, Samsung and Sony.

Samsung recently stated that it would ask that the local content requirement be lowered to 20 percent as it plans to build a factory in Indonesia.

US Trade Representatives (USTR), meanwhile, has stated that it shares concerns on the government'€™s plan to impose the 40 percent local content policy and reiterated that information and communications technology should be openly available in the Southeast Asia'€™s largest economy.