Indonesia Won't See Widespread Roll Out of LTE Until at Least 2014
Indonesia is one of the few countries in Southeast Asia that have yet to deployed 4G commercially and it's under pressure from all fronts to rectify that situation. At the discussion about 4G LTE held on Thursday in Jakarta, carriers, regulators, network companies, and the government all agree that implementation of 4G is unavoidable and needs to happen very soon.
Head of the telecommunications section of the Indonesian chamber of commerce, Johnny Swandi Sjam said in his opening speech, "Other countries may have already implemented 4G networks but we have just recently completed the final tender on the final two blocks of the 3G frequency", looking rather embarrassed in acknowledging that fact.
He also said that in the first decade of mobile communications in Indonesia, the focus was on voice calls. Even though voice was so dominant, it eventually was overtaken in popularity by text messaging thanks to SMS.
Today, over the top services, better known to consumers as apps, which run over mobile data, are rapidly pushing SMS aside. "It's not inconceivable that these all you can eat text messaging services will evolve into video messaging and streaming along with the demand for the evolution of technology", said Sjam.
Sjam is projecting the number of 2G data subscribers to fall to 5% by 2015, whereas 3G subscribers are projected to reach 45% by that year, incorporating 4G subscribers once it's commercially available which implies that Indonesia will have 4G connectivity by 2015. His concern though, is that currently the 3G networks are so limited in availability in terms of frequency that this has pushed the popularity of apps that require low intensity data connection which actually drove revenue down instead of up. The arrival of 4G is expected to drive those revenues back up.
According to Sjam, in 2012, SIM card penetration reached 119.9% of the population and it's expected to reach 144% within three years, but actual usage lags at 58%. He said that a significant number of SIM cards are being used like disposable calling cards which is hurting carriers in terms of revenue and projections. That growth rate is actually relatively low but it represents an opportunity for carriers to seek new customers especially in an age when many people carry multiple mobile devices at once.
Comparing year on year revenues, the share of revenue from voice service has been in decline and will continue to decline, said Sjam. In 2012 voice revenue made up 61.8% of the total mobile revenue but it will drop to 55.9% by 2015. Non-voice revenue however is projected to slowly rise from 38.2% in 2012 to 44.1% in 2015.
President Director and CEO of Indosat Alexander Rusli said that the world has become more bandwidth hungry. As devices become more sophisticated, the data traffic consumed by these devices increase in multiple folds. Tablet data consumption is 120x greater than the traditional feature phone whereas smartphones consume 50x more data. "When customers switch to a more sophisticated device, their data usage increases".
"The bulk of the production is smart devices, no longer feature phones", said Rusli. "At Mobile World Congress, the focus was on smart devices while only a small number of feature phones were announced", he continued. "People used to want more processing power, but now they want more bandwidth".
The government is scheduled to complete its 4G regulations by the end of the year. This is expected to open the door for 4G LTE to be rolled out commercially in 2014, although this didn't stop Telkom Indonesia to say that Telkomsel, it's mobile carrier subsidiary, has plans to commercially roll out 4G LTE later this year in four areas, Jakarta, Bali, Medan, and Manado as stated by Abdus Somad Arief, Director of Network at Telkom Indonesia. He did not however, say on which frequency Telkomsel plans to roll out LTE.
The issue of frequency is important in that existing LTE-capable devices are equipped to handle LTE connections at specific frequencies. As we wrote last year, deploying LTE through an unpopular frequency will amount to very little as nobody will be able to take advantage of it. Even though the adoption of 4G LTE is crucial to the sustainability of the industry, it has to be done correctly with the support of all parties concerned. The industry and the government must learn from the failure of WiMAX.