Telecom Regulatory and Policy Environment in Indonesia Results and Analysis of the 2008 TRE Survey

With its economy has largely recovered from the Asian financial crisis of the 1990s, Indonesia’s telecom markets are growing, but at a slower rate compared to most of its South East Asian neighbors. The growth is best seen in the mobile sector, with a 5 year compound annual growth rated (CAGR) of 34 percent. Competition exists. Nine national level operators had issued 82 million SIMs by 2007 end (35 SIMs per every 100 people). The fixed sector lags behind in growth (12 percent CAGR for the last five years) as well as in competition. Five vendors offer fixed wireless service while the wire-line market remains a virtual monopoly of the incumbent. Number of fixed connections in 2007 was only 15 million, and penetration was 6.5 phones per 100 people. Wire-line has not grown since 2004; fixed wireless is growing at a rate lower than that of mobile growth. Given the size of its population, Indonesia has a significantly low broadband user base than countries in the region. According to ITU statistics Indonesia has more than 13 million Internet users, but the vast majority use narrowband. The growth of broadband has been hindered by the lack of adequate infrastructure. Following a similar exercise in 2006, the 2008 Telecom Regulatory Environment (TRE) survey asked informed direct and indirect stakeholders in the Indonesian telecom sector to assess the regulatory and policy environment along seven dimensions (market entry, access to scarce resources, tariff regulation, universal service obligations, regulation of anticompetitive practices and quality of service), on a Likert scale of 1 to 5 (1 being highly unsatisfactory, 5 being highly satisfactory, with 3 being considered average). The respondents are selected from 3 categories: those directly impacted by the sector’s performance (operators, equipment vendors), those who broadly follow the sector (consultants, lawyers), those who represent the public interest in the telecom sector (consumer groups, other government officials, journalists, etc). The study analyses the results in the light of recent regulatory incidents