Jakarta, CNBC Indonesia – The global cellular industry association, GSMA, has just released a report entitled “”Sustainable Spectrum Costs to Strengthen Indonesia’s Digital Economy”. One of the things mentioned is that frequency spectrum costs in Indonesia have increased significantly.
Commenting on the report, the Director of Postal and Informatics Equipment Resources (SDPPI) of the Ministry of Communication and Information, Denny Setiawan, explained that this matter really needed to be reviewed.
“In principle, the Ministry of Communication and Information is aware that current trends need to be reviewed,” he explained during a discussion on the 700 Mhz and 2.6 Ghz Spectrum Auction, Efforts to Encourage 5G Penetration, Jakarta, Monday (13/11/2023).
On the same occasion, Deputy General Chair of ATSI, Merza Fachys also explained the research. One of the recommendations brought by the GSMA is related to the annual cost of spectrum which needs to be reviewed again.
He believes that the current formula needs to be reviewed again. Considering that the economic value has changed, from previously additional revenue came from telephone activities to no longer due to telephone use using internet data.
“The industrial landscape has shifted a lot. From initially making calls for additional revenue, now that’s no longer the case. Data subscriptions are 100 thousand per month, calling at any time has no additional price,” said Merza.
In its research, GSMA explained that the ratio of annual frequency spectrum costs compared to cellular operator revenue in Indonesia is 12.2%. On the other hand, the average in the Asia Pacific and global regions is only 8.7% and 7%.
“With the supply of frequency spectrum set to grow significantly in Indonesia, GSMA’s analysis shows that reducing the unit price of frequency spectrum is very important to avoid soaring total costs,” said GSMA in its official statement.
“Otherwise, operators will have difficulty making significant investments in 5G development. This difficulty will have negative impacts such as slower network deployment, poor consumer mobile experiences, and the loss of potential economic growth that comes from applications using 5G technology the latest,” added GSMA.
Frequency fees are expensive
GSMA also provided three recommendations for the Indonesian government ahead of the upcoming frequency spectrum auction:
1. Reduce the Minimum Bid Price
One of the recommendations is to reduce the bargaining price for frequency spectrum band auctions. These costs are known to have increased in the last 10 years.
The government can provide space for new pricing and reduce the risk of unsold spectrum. If any costs are covered, they must be calculated in the minimum bargaining price and annual fees.
2. Review Spectrum Annual Fees
Another step is to evaluate and adjust the formula for managing the annual frequency spectrum costs. The government is asked to consider whether the parameters within the existing formula framework can be adjusted to provide long-term incentives and avoid increasing costs that are not in line with market conditions.
3. Frequency Spectrum Plans for Future Development
A strong foundation must be established for the mobile ecosystem. Namely by designing a clear and comprehensive frequency spectrum plan.
Not only to consider the existing frequency bands. But there are also long-term needs, especially for the medium spectrum.
[Gambas:Video CNBC]