Syahrial Ali's Blog

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 .

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