Syahrial Ali's Blog

Public Relation Information and Communication Ministry, Gatot S. Dewa Broto announced that two BWA Tender Winners namely PT. Rahajasa Media Internet (Konsorsium Wimax Indonesia) and Konsorsium PT. Comtronics Systems with PT Adiwarta Perdania have sent official withdrawal letter. Actually both consortia have been given opportunity to fulfill their commitments up to April 26, 2010. However, they did not make use this opportunity. Before the time expires, both consortia have decided to stop the process. Meanwhile, regulator has also canceled PT Internux BWA license because this company has failed to fulfill their commitment since February 22nd this year.

According to the BWA tender result, PT. Rahajasa Media Internet (Konsorsium Wimax Indonesia) won in 3 regions (Papua, Maluku and North Maluku, and Riau Islands (Batam and Bintan) with the total bidding value almost IDR 2.7 billion for 3 regions. Meanwhile Konsorsium PT. Comtronics Systems with PT Adiwarta Perdania also won in 3 regions namely West Java (outside Bodetabek), Central Java and East Java with the total bid almost IDR 74.5 billion. Internux was the winner for Jabodetabek with the bidding price of IDR 110 billion.

With this situation, West Java will only be supplied by IM2, Central and East Java by Telkom, Papua and Maluku with North Maluku by Telkom and Riau Island by Berca Hardaya Perkasa.

Telecommunication Business owners are still waiting for the following regulation since the absence of the second winner for that 7 regions.

Since last Tuesday, the BWA auction has been started and finished yesterday. Below are the  result.

As can be seen, each region has 2 winners as there are two block available for this auction. The total price is IDR 458,414b. This price is about 9 times of reserved price which is only IDR 52,132b. Congratulation to all of the winners.

After waiting so long, finally last week Finance Department agreed with the reserved price proposed by Communication and Information Department. The total reserved price for both blocks (30MHz, TDD) are IDR 52.35b. The price varies from the cheapest IDR 45m per block (Zone 10, Maluku and North Maluku) to the most expensive IDR 15.16b  (Zone 4, Jakarta, Bogor, Tangerang and Bekasi).

Compares to 3G reserved price, BWA reserved price is much cheaper. 3G reserved price was IDR 100b for 5MHz FDD (or 10MHz), or  IDR 10b/MHz.  BWA reserved price on the other hand was only IDR 52.35b for 30MHz (TDD), or IDR 1.745b/MHz or just 17.5% of 3G price.

Many parties were questioning about the high price for the Jakarta and the surrounding areas. They think that this price was too high, but they were very happy with other price.

There were 73 participants and this will probably reduce for some number  when they receive the reserved price figures.

Below are the complete list of reserved price for all region.

Bear in mind that each region has 2 blocks to be tendered.

So, the total reserved price value are IDR 26.17b x 2 = IDR 52.35b

If we read the BWA tender document, it’s mentioned that one of the requirement is the local content portion. It should be 20% with 35% CAPEX. However, up until now, no local vendor is ready. Shall the tender will be postponed?

Last week, Hariff, one of the company which will manufacture the BWA equipment performed a trial in Serpong. The trial was not so successful. It can only serve 15 subscribers with the coverage of only 6 km. This is far from International standard which should serve at least 100 subscribers.

Due to this fact, many parties asked to postpone the tender. They argued that there will be some problem when thender continues. The winner will have to wait the local vendor readiness, meanwhile they have to spectrum levy.  So, shoould we wait the local vendor readiness? For how long?

However, the tender process is still on going right now. There is no sign to postpone it.

Indonesia Reaearch and Technology Minister, Mr. Kusmayanto Kadiman in one occasion said the BWA should not wait for the local readiness. As the tender is in progress, there are several ways out to do. When the winners will be assigned as they are, but the deployment will be delayed. Other soliution is to change the local content requirement.

Special respect shall be addressed to the regulator who have mention the local content requirement in tender document to give special treat to local industry. However, this good will was not responded well by local industry. What’s a pity.

I personally support for tender continuity. Just give the time limit for local vendor, when they are still not ready, the exception rule shall be applied. We don’t want to wait too long for new technology implementation. Look other neighbour countries, such as Malaysia and even East Timor, they have implemented WiMAX.

As schedule on 2nd clarification meeting on May 15th 2009, the BWA reserved price will be announced on May 22nd, 2009. The reserved price concerning 2 block of BWA spectrum namely in block 13 (2360-2375MHz) and  block 14 (2375-2390MHz). However up until now, May 23rd, no announcement has been made. Public relation has apologized this condition and informed that the delay is just because of technical reason only. However, this delay will have an impact to the whole schedule. The whole processes was previously scheduled to finish in the 3rd week of June, 2009.

The reserved price calculation is more complicated than the 3G reserved price on 2006 tender. The main reason is 3G is nationwide while BWA is regional license. In BWA lciense, there are 15 regions, so there will be 15 reserved prices. Hence, the reserved price shall be calculated for every region.

The BWA spectrum licenses were cheaper than 3G licenses in many countries. In May 2005, Singapore conducted 140 MHz of frequency spectrum auction in 25 slots and awarded 6 BWA licenses in 2.3 GHz and 2.5 GHz frequency bands. IDA as regulator collected far less money than the S$100 million for a 3G license (2001, 20MHz FDD) compare to e.g. MobileOne 4 lots (about 20MHz)  for S$2.1 million, Pacific Internet 5 lots (about 25MHz) for S$2.27 million.

Indonesia 3G reserved price was IDR 100b for 5 MHz (FDD) for nationwide license. The BWA license will be 15 MHz (TDD) and it will divided into 15 regions. How low can it be? Just wait.

Indonesian BWA’s Tender attracts many companies. The participants reach 73 companies. They consist of various telecommunication related business from cellular telecommunication network provider (Bakrie, Smart telecom, Indosat), Internet Service Provider (Centrin), Telecommunication supplier and IT Solution (Berca), fixed network provider (Telkom, Batam Bintan Telekomunikasi), current data service provider (IM2, Elang Mahkota, Citra Sari Makmur, First Media), and many other companies. So, the BWA are the waited for license for many parties.

The maximum total winners will be 30 companies. It is because Indonesia has been divided into 15 regions. And in each region there will be 2 winners (2 blocks of frequency). However, it is easy to predict that the total winners will be less than that figure. The first reason is each participant can bid for more than 1 region. So, they may be the winner in many regions. The second reason is: not all regions are interesting for the investors. At the end we may find out that the total winner will be less than 30.

The total participants are predicted to decrease when the reserved price is announced. The reserved price will be informed on Friday May 15th, 2009. Welcome BWA and welcome WiMAX.