Notes

4G Bandwidth Block


After the launch of Long Term Evolution (LTE) 4G last December in Indonesia, the adoption of new telecommunications services by the local market has shown little progress as only a few of the subscribers have started using it. 6 months through the trial period, the realization of the expectation seemed to be slow in coming.

Unlike what has been predicted, domestic cellular operators, PT Telekomunikasi Selular (Telkomsel), PT XL Axiata (a sister company of Axis Capital Group) and PT Indosat have attracted fewer customers than expected to the new service, the highest subscribers being in the country’s capital, Jakarta.

As of January, Telkomsel’s 4G netted 30,000 of the operator’s around 138 million subscribers, while XL attracted around 15,000 of its 59.6 million subscribers.

Indosat, meanwhile, has not revealed any data on its 4G subscribers, but says it has attracted mostly corporate customers.

Many critics say that the only way for people to patronize 4G is when it can provide faster internet than that of 3G, which, in Indonesia’s case, remain moot and vague.

In previous reviews, the archipelago is one of the slowest internet providers in Asia. Running on 900 MHz frequency band with 5 MHz spectrum, the three operators’ 4G speed currently hits between 35 and 36 Mbps, far below the ideal 4G speed of 100 Mbps.

The Communications and Information Ministry has responded to the limited spectrum issue by planning band refarming on the 1800 MHz frequency, which will enable operators to have wider bandwidth blocks for their 4G services.

The band refarming is set to be completed by the end of this year, providing contiguous bandwidth block allocation of 22.5 MHz, 10 MHz, 20 MHz and 22.5 MHz for XL, PT Hutchinson 3 Indonesia, Indosat and Telkomsel, respectively.

Broadband penetration in Indonesia is rated to continue becoming low as the government has stated it to increase “meaningful” broadband penetration in 2014. However only 30% of the overall population have subscribed with hundreds have complaints on the ecosystem incorporated in this new LTE data.

Using examples of 4G adoption in Singapore and Malaysia, these two countries had their ecosystems in place when their telecommunications operators rolled out the service.

Singapore’s 4G penetrations currently hits around 50 to 70 percent, driven by its strong iPhone ecosystem. In Malaysia, meanwhile, 4G/LTE coverage reached around 40 to 50 percent, with a penetration rate of around 20 percent.

While Indonesia is currently preparing to build a 4G device ecosystem, the number of 4G-ready handsets available in the market remains very small. As of February, only around 5 percent of a total of 4 million imported smartphones were 4G-ready, according to data from the Industry Ministry.