Faisal Maliki Baskoro
Internet and pay-TV provider PT First Media on Monday launched its WiMax network, Indonesia’s first fourth-generation wireless broadband network.
The network, which is promised to cover Greater Jakarta and North Sumatra, will be operated by the company’s subsidiary Sitra Wimax, which aims to reach 150,000 customers in its first year of the operation.
“We’re coming into a market which is crowded with fixed-line operators and third-generation (3G) operators, but WiMax has the technical capability to reach speeds five times faster than the average connection speed and provides a stable connection,” said Kumaran Singaram, Sitra WiMax’s chief executive.
“When we say it’s a 4 megabits per second connection, it’s a stable, constant 4 mbps connection. It’s not an ‘up to 4 mbps’ promotion used to lure customers,” he said.
Around 30 million Indonesians are estimated to have Internet access, with around 4 million having high-speed access (more than 1 mbps).
“The number may be small, but we addressed it as an opportunity. The number of broadband subscribers is growing,” Kumaran said, adding that the company is targeting one million subscribers in five years.
“Indonesia is an emerging market and the broadband sector has not been fully tapped. A one percent increase in Internet penetration translates into 0.1 percent GDP growth,” Kumaran added.
Sitra WiMax would cover areas where Fastnet, First Media’s fiber optic Internet service could not reach, instead of “cannibalizing” its existing customers, he said. “Fastnet infrastructure only covers 25 percent of Greater Jakarta. Sitra will cover the rest of it because building WiMax infrastructure is faster and cheaper than fixed-line,” Kumaran said.
The service has been soft-launched in Lippo Karawaci, and Sitra says it will be rolled out in Jakarta in coming months.
Hengkie Liwanto, First Media’s president director, said that so far his company had invested $50 million in Sitra, and would invest up to $350 million over the next decade. “For the first year, Sitra will need an additional $100 million for capital expenditure,” he said.
The capital expenditure would be financed by a Rp 456 billion ($52 million) rights issue and internal cash and bank loans, he said.
In order to increase market penetration, Sitra will offer packages for prices lower than the average market rate. “For 1 mbps it will be around Rp 200,000 per month and for 4 mbps it will be around Rp 500,000 per month.”
Fourth-generation wireless technologies such as WiMax and Long Term Evolution promise to deliver much faster download speeds. WiMax has a maximum speed of 40 mbps, while LTE has a maximum speed 100 mbps.
“We have the technology for WiMax. It’s real and it’s here. LTE technology is not mature yet, maybe it will be within three years,” Hengkie said.
First Media won a tender held by the Ministry of Communication and Information Technology in July for government bandwidth, securing a license for a 2.3 GigaHertz frequency band to be used for its WiMax service.
Budi Setiawan, the director general for post and telecommunications at the ministry, said that First Media had passed the operational worthiness test.
Budi called for Sitra to implement its services in North Sumatra immediately, instead of just focusing on Greater Jakarta. He said First Media’s freeloading problem — people getting free access by piggy-backing on others’ wireless — had been resolved.
“We have cleaned most of the frequencies from freeloaders. Most of them did not know that they were freeloading on First Media’s network,” Budi said.
First Media and the Jakarta Globe are affiliated with the Lippo group.