Satellite provider PT Satelit Nusantara Tiga, part of the PT Pasifik Satelit Nusantara (PSN) consortium, and French-Italian aerospace manufacturer Thales Alenia Space (TAS) signed the agreement on the project, which is being managed by the Communications and Information Ministry. The PSN consortium will be the lead contractor and operator of the project.

 

The satellite seeks to boost connectivity in the country and is expected to provide free internet access for 150,000 public facilities, including schools, regional government offices and healthcare facilities.

 

Satria will have a throughput capacity of 150 billion bits per second (Gbps), three times the capacity of the nine telecommunication satellites that Indonesia currently uses, according to Communications and Information Minister Johnny G. Plate.

 

“This satellite project is part of the nation’s program to lessen the disparity in internet access and increase the number of internet users,” Johnny told reporters on Thursday, adding that the project showed the country’s robust investment climate for telecommunications infrastructure even during the COVID-19 pandemic.

 

The satellite, funded through a public-private partnership (PPP) scheme, is expected to be operational by 2023, the ministry said.

 

Despite Indonesia’s large number of internet users, the country’s internet penetration rate remained at 64 percent in January 2020, according to DataReportal, lagging behind neighboring Brunei, Singapore and Thailand, where internet penetration rates exceed 70 percent.

 

The Communications and Information Ministry said in June that approximately 12,500 villages in the country had no access to the internet.

 

Johnny said there were many investment opportunities in the telecommunications sector, as the country would require a satellite capacity of about 900 Gbps by 2030.

 

“The preparatory work agreement will also ensure that the manufacturing of the satellite will be conducted on time within the contract and marks that the funding agreement will also take effect,” the minister added.

The government plans to cooperate with United States firm SpaceX to launch the satellite.

 

It plans to use an availability payment scheme to repay the project’s investors in periodic installments over 15 years.

 

Availability payment is a fee structure in which a public agency makes periodic payments to the private sector to provide infrastructure services of a specified standard.

 

The project will be funded through a mixture of export credits from France and China, worth $425 million, and equity of $125 million, according to PSN president director Adi Rahman Adiwoso.

 

Export credits are government financial support, direct financing, guarantees, insurance or interest rate supports provided to foreign buyers to assist in the financing of a purchase.

 

“This payment scheme is a great one because there are the advantages of low interest rates, longer payback periods and overall great savings,” Adi said.

 

The ministry’s telecommunications and information accessibility agency director, Anang Latif, said the ministry was optimistic that the Satria project would be launched on time given the persistent growth in the telecommunications sector during the COVID-19 crisis.

 

The information and communications technology (ICT) sector grew 9.6 percent and 10.88 percent year-on-year (yoy) in the first and second quarters this year, while the economy contracted 5.32 percent in the second quarter, according to Statistics Indonesia (BPS) data.

 

“We are on the right track for investment in the ICT sector and to accelerate digitalization,” Anang said.

 

Last year, the government launched its $1.3 billion Palapa Ring broadband project, a 35,000 kilometer fiber optic network that spans the archipelago.

 

Anang said the satellite would support the Palapa Ring project as satellite transmissions could reach rural areas that had yet to be connected to the fiber optic network.

 

The ministry plans to start building the satellite’s ground infrastructure, such as fixed or mobile transmission and reception points, in 2022, he said.

 

Indonesia Information Communication Technology Institute executive director Heru Sutadi suggested that the Satria project be upgraded to meet the country’s internet needs over the next 15 years.

 

“Because of COVID-19, each household now needs roughly 20 Mbps for seamless video calls and streaming, among other things. Offices definitely need more than that,” he told The Jakarta Post on Friday. “I think our bandwidth needs in 2023 will also increase rapidly, so it is wise to upgrade Satria’s capacity.”

 

He added that the government could double Satria’s capacity to 300 Gbps or reduce the internet recipient points to reach the maximum bandwidth need.

 

"Satellite projects are very expensive. We also need to consider the investment needed to build the supporting ground infrastructure," he said. "The government can surely negotiate to increase Satria's capacity for no additional fee."