Indonesia to drive telecoms infrastructure modernisation programme

24 Mar 2015

The government of Indonesia is looking to spearhead a drive towards widespread fibre-optic network coverage and the creation of ‘smart cities’, via a five-year plan in which it will commit more than USD24 billion in infrastructure projects in the archipelago, with a significant portion being set aside for telecoms – to push fibre and 4G coverage nationwide, rather than seeing it limited to the greater Jakarta area as it is currently. Local media portal Detik quotes the minister for communications and technology, Mr Rudiantara, as saying that the government is attempting to take a greater hand in the coordination of network rollouts by the big three providers – PT Telekomunikasi Indonesia (Telkom), PT XL Axiata and PT Indosat – including requesting that they submit their rollout plans, to help it reach this goal. With Indonesia’s volume of data traffic expected to grow six-fold, from 84 exabytes in 2014 to 656 exabytes by 2020, the country must roll out fibre-optic networks to carry the additional data.

As previously reported by TeleGeography’s CommsUpdate, in December last year Telkom, XL Axiata and Indosat said that whilst they were behind the government’s five-year broadband expansion plan, they would need ‘certain incentives’ before they can commit fully. Their statement came in the wake of an announcement from the minister suggesting that state-owned Telkom would set the pace in the country’s proposed drive to expand the country’s broadband capacity over the next five years. At the time the minister added that the government was considering extending ‘unspecified incentives’ to Telkom in an effort to bolster internet access in southeast Asia’s largest economy. However, with Rudiantara noting that the government was still in the process of finalising the details of the plan, Telkom went on record as saying it would require certain assurances – such as additional spectrum and some guarantee that it will be able to see a return on investment for covering less commercial areas. Further, it is understood that Telkom is advocating tax and regulatory incentives from the government, while for its part XL Axiata favours the adoption of an infrastructure sharing plan. Finally, Indosat says it would only come on board if the state provided it with assistance to boost its revenues and trim operational costs.