SPEECH BY
DIRECTOR GENERAL OF
POSTS AND TELECOMMUNICATIONS
At
TECHNO PRE EMINENCE 2000 CONFERENCE
“Indonesian Government perspective on Wireless Business”

Distinguished Participants,
Ladies and Gentlemen,

Assalamu’alaikum Warahmatullahi Wabarakatuh

It is with  pleasure that I would like to extend my grateful appreciation to all participants to the “Sixth TPE Connectivity 2000 Conference”. 

At the same time, I would like also to extend my deepest gratitude to the organizer who has made every effort to organize this reputable conference for the sixth time. My thankfulness and appreciation are  also forwarded to the speakers and experts in the wireless telecommunication field who have actively participated in this conference.

Ladies and Gentlemen:

The Indonesian government realize that in many respect, especially in telecommunication sector, the global environment has dramatically changed. The very rapid development of telecommunication technology and business environment  have  reinforced the emergence of new fundamental  and new  perspectives regarding how the telecommunications business is conducted. One phenomena of the new environment which creates a major impact on the industry is the convergence of information technology and media or broadcasting.  It is for this reason that Indonesia has  also been deregulating  its national telecommunications industry by implementing the law 36/ 1999. Indonesia has endorsed a competitive market of telecom services. Competition has been basically designed to start from duopoly of the telephony market. 

The new law has been effectively in effect since  8 September 2000. Several objectives of the new act are :  promoting a fair competition atmosphere, the improvement of consumer protection, the adjustment  of government role in  facilitating and guiding competition so that it will be done in  the most appropriate manner, and the broader opportunity for private sectors with different business size and capacity to participate  in the development of telecommunication sectors. 

The government intend to break the monopoly and gradually liberalizing the market. This means that new operators will be given the chance to participate especially in the non – regulated elements of the industry but at the same time it is the task of the government to also assure that the market will develop , grow consistently from time to time and the consumers are benefiting the competitive environment so that they become the real winner. In this regards, deregulation must be implemented with  the right strategy and the right pace. 

As early as September 1999, the government has launched the blue print of Indonesian Telecommunication industry  which describes the market segmentation, the operator, the competition scheme and the schedule of competition. Blue print can be seen as the guideline for industry restructurization. 

Let me say few words on the mobile cellular industry in Indonesia. The mobile cellular industry is one of the hottest sector globally. Indonesia of course is not an exception. The cellular market of Indonesia has been started even before AMPS came to Indonesia. At this moment we have a whole range of service offering by the operators, ranging from the old NMT 450 systems, the analog AMPS , the GSM 900 and also coming the DCS 1800. Everybody certainly expect that the industry will grow. This shall lead to a situation where operators of the former services ( for instance the three AMPS operators) might probably considering a consolidation among  themselves and then renewing the technology ( for instance replacing AMPS with CDMA at the same frequency band) . Those operators which have been licensed to construct infrastructure for  still in-the-market and growing technology need to build the infrastructure and start offering the service to the public as soon as possible, while the two incumbent who will operate also mobile cellular service in the future shall  integrate their mobile business into their selected GSM subsidiary.

Ladies and Gentlemen:

Wireless systems provide more flexible access and in some respect offers some advantages over the fixed phone. But for many people and community the mature fixed telephone will still be a preferred affordable communication services. Therefore every where on earth the mobile wireless and the fixed telephone service will still complement each other although I must admit that in some developed community the cellular wireless has surpassed the number of fixed line in service.

Progress has been planned by the wireless mobile world and 3G has been universally agreed as the current objectives of the mobile cellular technology and Indonesia will certainly moving towards the same direction. Looking at the speed Indonesia normally adopt to implement a new technology then we might think that 3G will come to Indonesia two years after its widely commercial introduction in developed economies in this region. That might happens some time in the year 2003 or 2004. So, the government together with the industry and community will have a good chance to collectively plan the coming of 3G in Indonesia. We are watching how the European market has gone through the early adoption of 3G service in their market and I believe there are many lesson that we can learn from other experience.

I would strongly suggest to the industry that the introduction of new technology and services should be heavily be based on  in-depth research of demand and market ananlysis in the very competitive market of cellular business. 

Regarding the licensing permit, the government has made all necessary effort to go into a contract-like of license that contains the detail description of the rights and obligation of the licensee with regards to the license that is awarded. In the near future this contact-like license will assure the development of the market and competition as we all wish to see. Licensing regime will also adopt principle like  : simple procedures; a transparent, fair and non-discriminative process; balancing the multi operators competitive environment with the sustainable growth of the player and overall industry. The granting of a license for the use of radio frequency spectrum and satellite orbit shall be based on the availability of radio frequency spectrum allocated for the operation of telecommunications, including broadcasting according to its allocation.
If the availability of radio frequency spectrum and satellite orbit cannot meet the demand or needs of telecommunications operations, among other ways of obtaining licenses may be through an auction or beauty-contest mechanism.

Basically, we may classify the wireless application in two major categories, wireless access and wireless transport / backbone. There are several technologies providing wireless access, such as wireless local loop, broadband wireless, cellular, VSAT, GMPCS, etc. The wireless access will play a very vital role since the access to customer relatively needs more investment. While the wired access, even though it may have much more capacities through fiber optics, but the implementation is relatively more difficult and takes more time.

However, we must notice the important rule of wireless transport / backbone, such as microwave links, tail links, radio links, etc. Unfortunately, most of new wireless access technologies occupying the same frequencies as the wireless transport frequencies. For instance in the band 1.7 – 2.2 GHz, which will be used by the new GSM-1800 / DCS operators, IMT-2000 operators, GMPCS operators, there are significant number of existing microwave links. 

The above-mentioned emerging wireless access may also need microwave links / radio links to interconnect their Base Stations or from Base Station to Control Central. Due to the rain attenuation and technical availability of higher frequencies, the availability for microwave links, and wireless backbone/transport, in Indonesia is very limited. The government would like to encourage the use of wireless backbone/transport as efficient as possible. 

The most difficult problem for  implementation of 3G is the migration the existing user, such as microwave link, sharing the same frequencies. It will cost a lot of money, time and effort. There are several proposed solutions. One solution is geographical separation between two systems sharing the same frequency. To do that, location identification of existing users is essential

The other solution is transitional implementation of 3G. By doing that, the government does not issue new license for other system than 3G occupying same frequencies. The government also does not issued renewal license for existing system in the near future (to be determined depend on the location).

The fee for the right of use radio frequency spectrum is a kind of compensation for the use of the frequency according to the license obtained. In addition, the fee for the use of the frequency is also intended as a means of supervision and control, so that the radio frequency as a limited natural resource can be utilized to the maximum level.

The amount of the cost for the use of the frequency shall be determined based on the type and width of the frequency band. The type of frequency will affect the quality of the operation, whereas the width of the frequency band will affect the capacity/amount of information that can be conveyed/ transmitted.

Regarding interconnection, every telecommunications network operator shall have the right and obligations for interconnection from other telecommunications network operators. The exercise of the rights and obligations shall be carried out based on the principle of : efficient utilization of resources; compatibility of the system and the telecommunications equipment; increase of service quality; and sound competition which is not mutually damaging. In this regards, the APEC principle on interconnection will be adopted as the basic rules of interconnection in Indonesia.

Finally all telecommunication technologies, especially the wireless technology including 3G are operated for the purpose of supporting the unity , integrity and a better life of the nation, to enhance the welfare and prosperity of the people fairly and equitably, to support economic growth and government activities and to enhance relations among nations

At this point I would like to close my introductory notes that shall lead us into the panel discussion on  “ How telecommunication companies and cellular companies position to face 3G business challenges in Indonesia”. I really hope that this panel discussion will be of great benefits for all of us and to this country and will become a real engine of growth of the economy of this country.

Thank you very much.

Wassalamu’alaikum Warahmatullahi Wabarakatuh

Jakarta, October 3, 2000 

SASMITO DIRDJO
Director General of Post and Telecommunications