Syahrial Ali's Blog

Welcome to Mr. Tifatul Sembiring, as a new Indonesian Minister of Information and Communication. Since October 21st 2009, Mr. Tifatul replaces Mr. Muhammad Nuh, who now appointed as Education Minister in the 2nd term of Mr. Yudhoyono as Indonesian President.

Tifatul, previously was a president of Partai Keadailan Sejahtera, a party which has supported Yudhoyono since his firm term in 2004. Below are bio data of the new Minister.

Name: Tifatul Sembiring, Ir.
Born: Bukittinggi, Sumbar, 28 September 1961
Education: Sekolah Tinggi Ilmu Manajemen Informatika dan Komputer, Jakarta, & International Politic Center for Asian Studies Strategic Islamabad, Pakistan.
Work experiences: PLN, 1982-1989 & Director of Asadudin Pres, Jakarta.

Tifatul Sembiring programed in 100 first days his work as Inforcom Minister, to implement 100 computer villages, a village with computer literacy. This program is part of grand design to implement 10.000 computer village in 2014.

Tifatul also determines the computerization system can enter all through the foundation of the community from the educational agency, the business, to the government officer in the lowest level. Computerize government will reduce the corrupted activities as officer will not receive any cash. They just receive the docket or payment receipt.

Congratulation Mr. Tifatul and we are waiting for your positive contributions for this department and for the country.

According to the data released by DG Postel, Telkomsel is the highest payer of spectrum frequency fee. Up until end of June 2009, Telkomsel has paid just above IDR 1.6 trillion, which consist of Rp. 929b (900 MHz) and Rp. 724b (1800 MHz). Indosat comes second with IDR 940b, followed by XL with IDR 700b. Bakrie is the highest payer for CDMA operator with IDR 230b. The total spectrum fee until end of June is IDR 4.2 trillion.

Currently DG Postel released a consultation for spectrum fee based license. The white paper has been released. It can be downloaded here.

The pressure to spectrum fee stuck up since a few years ago. This was triggered with the cost that must be paid using current system, apparatus license. In this scheme, as written in the previous posting Indonesian Spectrum Levy, operator will pay as they build new equipments which use spectrum frequency. From time to time, the figures will increase and nowadays it has become so high. Just take Telkomsel for example. It has 2x30Mhz spectrum in 900MHz and 1800MHz. Until June 09, they have already paid, IDR 1.6 trillion or more than IDR 26b per MHz. This figure is far higher than 3G spectrum fee, with just IDR 16b per MHz.

The purpose this consultation is to make an equal treatment for all industry which uses the spectrum frequency. However, for the time being the focus is the cellular industry in which spectrum frequency is the vital element of the business. In this consultation, people are encourage to submit their comment to the DG Postel, from Oct 16th to the end of the month.

According to InMobi Network Research data, Indosat the second largest cellular operator in Indonesia leads the mobile internet service with the market share almost 75%. Indosat mobile data service serves almost 3 million subscribers. This figures is far higher than Telkomsel and XL.

From this 3 million subscribers, Indosat gets IDR 1.4trillion or equivalent to 15.6% of its total revenue in first semester 2009. This figures is slightly higher than the 2008 figures with just IDR 1.28 trillion.

InMobi also noted that the young people (18-27 years) are the highest (53%) customers of mobile internet and 82% of the users are men.

For your information, Indosat has served mobile data services since a few years ago ahead of its competitors.

BWA tender auction just finished a couple of months ago. The total license fee was about IDR 458,414b or equivalent to IDR 15.3 per MHz (total 15MHz TDD). Meanwhile, 3G tender in 2006 has resulted about IDR 800b (total 25MHz, FDD) for the Indonesian government, or IDR 32b per MHz. People may eager to know what is the Indonesian rule for the spectrum levy?

Actually Indonesia has a mixed treatment concerning spectrum frequency levy. For instance, both 3G and WiMAX licenses include the spectrum levy. So, the winners will just pay the license on yearly basis and they do not need to pay the spectrum levy. They can build their network freely and they still pay the same amount of money every year. On the other hand, the GSM & CDMA license holders will have to pay the spectrum levy according to apparatus used. They payment will increase every year as the network grows. The former is known as the spectrum license while the latter is known as the apparatus license.

Let’s compare this two type of spectrum levies. In terms of simplicity, everyone will agree that the spectrum license will be easier than the apparatus license. With regards to fund, which is more interesting for operator?

Old fashioned license scheme (apparatus license) do not oblige the license holder to pay any money to get the license. They only pay when they build their network. If they do not build any network for a limited time, the regular will take the license back. In this way, operator will have time to build the network and at the same time they just spend a small amount of money to pay the spectrum levy.

The spectrum license on the other hand requires operator to pay in advance before the build their network. This will create problem for some new entry operators.

Which one is cheaper?
As written above, at the beginning, the apparatus license only requires a small amount of money to pay the spectrum levy. However in the long run, this figure will increase significantly and at one time it will be more than the spectrum license. Take Telkomsel or Indosat for example. Both operators pay more than IDR 1 trillion a year for 30MHz spectrum in GSM and DCS spectrum, or it is more than IDR 32b per MHz, the value of 3G spectrum levy.

Many countries in the world have changed their licensing scheme. Most of them are moved to spectrum license. Indonesia is also moving toward this and in the near future will change their licensing scheme to spectrum license. Apparatus license on the other hand will still be used for instance for a microwave link .