A Lack of Infrastructure Development and an Independent Regulatory Authority Leaves Internet Access Limited and Sporadic

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Internet access in Indonesia is limited by many of the same problems that other developing countries experience, whether in Africa or South Asia. A lack of infrastructure development has limited the expansion of internet connectivity to rural areas, exacerbated further by the country’s geographic spread among thousands of islands. The development of a fiber-optic network in Western Indonesia has been sporadic because telecommunication operators and institutions have not integrated their networks, resulting in higher costs for access, including for the web. In addition, the lack of an independent telecommunications regulatory authority and unified licensing has slowed the implementation of new ICT innovations such as rural wifi licenses and the use of WiMax.

Chart 1

In response, at the first Indonesia Infrastructure Summit in Jakarta in January 2005, the Indonesian government announced its intention to form a consortium of telecoms and commission it to build a fiber-optic network throughout Indonesia. The Palapa ring project aims to link Sumatra, Java, Kalimantan, Nusa Tenggara, Sulawesi, Maluku and Papua and eight existing network connections or "backhauls" through an estimated total 35,280 kilometers of undersea and 21,870 kilometers of underground fiber-optic cable.(1)

In July 2007, seven Indonesian telecommunications operators joined the project’s consortium, but planning stalled after one firm removed itself in 2007 and two more withdrew in August and September of 2008. The companies blamed the hefty investment required and long time lag before returns would be realized. Project construction was pushed back once again in mid-2009 after one of Indonesia’s leading telecoms, Excelcom, withdrew from the grouping. The remaining telecom operators are PT Telekom, PT Indosat and PT Bakrie, construction is now slated to begin in December 2009.(2)

While telecommunications infrastructure continues to lag, Indonesians are finding new and innovative means of gaining web access. The inadequate supply of network infrastructure, both of backbone and leased lines, has resulted in wifi being chosen as a substitute for filling the 'missing links' in the network, both as a backhaul link and as a last-mile solution. The high price of domestic leased lines has meant that internet service providers (ISPs) and others have relied on a more cost-effective solution in the form of wifi links.(3)

What has also made Indonesia unique is that wifi is not deployed primarily as a network for the home but is rather used as an access network to connect large customers such as schools and cybercafés. Wifi has been used a means of access and as a patch for network infrastructure. The wireless link is deployed as a low-capacity backhaul to carry data over large distances. ISPs are also using aerial cable to connect homes rather than wifi because it is cheaper to deploy.(4) ISPs have also taken to connecting directly through satellites to the country’s internet backbone, bypassing the high price of international bandwidth. The high retail price of internet service has spawned a large number of unlicensed reseller-ISPs to recoup the high price.

Chart 1

Unfortunately, wifi deployment in Indonesia has not led to higher Internet penetration, compared to other developing countries in the region. Home access to a computer or the internet remains very much dependent on location, even among the most educated and affluent. A lack of rural infrastructure development raises the cost of a home internet connection and unreliable sources of electricity in rural areas diminish a person’s capability to operate a computer.

Because of these structural constraints household access to a computer or the internet is primarily in hands of the affluent and the best educated. The presence of internet cafés or Warnet cafés, primarily in urban areas, has expanded internet access for those in the middle-income bracket.(5) However, the percentage of regular internet users (weekly) continues to be minimal for those with a middle-income (5 percent). Survey data also indicates that there continues to be a gender divide in the use of the internet, even among those with a post-secondary education. While 30 percent of men with a post-secondary education use the internet on a weekly basis only 16 percent of women do so.

Chart 2

In general, student and young adults showed a much greater level of access to most ICTs and exhibited higher levels of weekly use, particularly with mobile communications and the internet. Besides being more likely overall to use the internet, young adults are much more likely to use social networking sites or to watch video online on website like youtube.com. Fifty-six percent of young adults who have used the internet in the past year have accessed a social networking website. The most popular is Friendster.com, followed by Facebook.com which has only half the audience. Student respondents show an even higher rate of accessing social networking sites (63 percent).

Indonesian is the dominant language used to access online content, followed by English. However, a larger percentage of young adults (50 percent) and students who are internet users are more likely to use English than other demographic groups. Young adults are also more likely to conduct a greater variety of online activities, leading all other age groups in every activity. Young adults are much more likely to conduct interactive and social activities such as using chat rooms, social networking websites, or reading/posting on blogs. Shopping on the internet has not caught in Indonesia as this activity is negligible among all demographic groups.

Chart 3

Education and income have an impact on where an individual accessed the internet. As education also reflected an individual’s earning potential, it affected whether one was able to afford home internet access, whether a person’s workplace had an internet connection and whether they could develop e-skills. Students and young adults are more likely than others to gain access to the internet at educational institutions and internet cafés, while those age 30 to 44 are more likely to access the internet in their workplace. Accessing the internet through mobile devices is becoming more popular, the top three mobile service providers offer 3G mobile or 3.5G HSDPA services. However, these services have not spread to rural regions, 75 percent of mobile internet users reside in urban areas.

(1) “Consortium to tender Palapa Ring network procurement.” The Jakarta Post. 30 January 2008. Accessed August 2009. http://www.thejakartapost.com/news/2008/01/29/consortium-tender-palapa-ring-network-procurement.html.

(2) Perez, Pamela. “Palapa Ring project delayed until December.” CommsDaily International. 27 July 2009. Accessed August 2009. http://www.commsday.com/node/402.

(3) Goswami, Divakar. “Wifi ‘Innovation’ in Indonesia: Working Around Hostile Market and Regulatory Conditions.” LIRNEasia.May 2006. Colombo, Sri Lanka. Accessed August 2009. http://www.ictregulationtoolkit.org/en/Publication.3502.html

(4) Ibid.

(5) Minges, Michael. “Kretek Internet: Indonesia Case Study.” International Telecommunications Union. March 2002. Geneva Switzerland. http://www.itu.int/ITU-D/ict/cs/indonesia/material/IDN%20CS.pdf.