{"id":20783,"date":"2023-11-09T00:03:57","date_gmt":"2023-11-09T00:03:57","guid":{"rendered":"https:\/\/www.gsma.com\/newsroom\/?p=20173"},"modified":"2024-02-22T12:34:27","modified_gmt":"2024-02-22T12:34:27","slug":"gsma-warns-of-14bn-idr-216tn-productivity-loss-to-indonesian-economy-unless-future-mobile-spectrum-prices-are-sustainable","status":"publish","type":"post","link":"https:\/\/www.gsma.com\/newsroom\/press-release\/gsma-warns-of-14bn-idr-216tn-productivity-loss-to-indonesian-economy-unless-future-mobile-spectrum-prices-are-sustainable\/","title":{"rendered":"GSMA warns of $14bn (IDR 216tn) productivity loss to Indonesian economy unless future mobile spectrum prices are sustainable"},"content":{"rendered":"

New GSMA Intelligence research reveals mobile spectrum costs in Indonesia have risen significantly, posing major threat for mobile operators looking to invest in country\u2019s future digital infrastructure<\/span><\/i>\u00a0<\/span><\/p>\n

9<\/span><\/b>th<\/span><\/b> November 2023, Jakarta: <\/span><\/b>With new mobile spectrum auctions fast approaching in Indonesia, a new report by the global mobile industry association, the GSMA, has warned that the country\u2019s roadmap for digital transformation could be held back, unless it reassesses how it prices 5G mobile spectrum.<\/span>\u00a0<\/span><\/p>\n

In the worst-case scenario, analysis from GSMA Intelligence forecasts that around one-third of the socio-economic benefits of 5G, some $14 billion (IDR 216 trillion) in Indonesia\u2019s gross domestic product (GDP) could be lost in 2024-2030, if prices of new spectrum bands reflect previous auction prices.<\/span>\u00a0<\/span><\/p>\n

The new report launched today, entitled: \u201c<\/span>Sustainable spectrum pricing to boost<\/span><\/a>\u00a0<\/span><\/p>\n

Indonesia\u2019s digital economy<\/span><\/a>\u201d, shows that since 2010 estimated total annual spectrum costs for mobile operators have increased more than five-fold in the country, as a result of auction-related payments and spectrum fees associated with licence renewals.\u00a0 In contrast, industry revenue growth has not kept pace with average revenue per unique mobile subscriber, which has declined by 48% over the same period (in USD terms). Also, spectrum fees which are adjusted annually by inflation have continued to increase.<\/span>\u00a0<\/span><\/p>\n

Spectrum-related fees in Indonesia are already high \u2013 annualised spectrum costs to recurring cellular revenue is currently at 12.2%, compared to the APAC and global median values of 8.7% and 7.0%, respectively. With spectrum supply set to expand significantly in Indonesia, GSMA analysis shows that, to avoid total costs spiralling, a reduction in unit spectrum prices is vital. Otherwise, operators will struggle to make the significant investments required for 5G development. This will result in slower network rollout, poorer consumer mobile experiences, and missed economic growth opportunities that will come from new 5G mobile-enabled applications.\u00a0<\/span>\u00a0<\/span><\/p>\n

To prevent this happening, the GSMA report has made three important recommendations to the Indonesian government, ahead of the forthcoming 5G mobile spectrum auction:<\/span>
\n\u00a0<\/span><\/p>\n

    \n
  1. Lower Reserve Prices<\/span><\/b>: The GSMA recommends setting more conservative reserve prices for upcoming auctions of new spectrum bands. The cost of spectrum in Indonesia has risen significantly in the last decade and this poses a major threat to future development of mobile services. By setting reserve prices below estimates of market value, the government can allow room for price discovery and reduce the risk of unsold spectrum. Where there are coverage or other obligations, the associated costs must be factored into the reserve price and annual fees.<\/span>\u00a0<\/span><\/li>\n
  2. Review Annual Spectrum Fees:<\/span><\/b> A further critical step is the evaluation of the formula governing annual spectrum fees. The government should consider how the parameters in the current formula could be adjusted to provide the right long-run incentives and avoid disproportionate increases in costs that are not aligned with market conditions.<\/span>\u00a0<\/span><\/li>\n
  3. Future-Proof Clear Spectrum Roadmap: <\/span><\/b>Indonesia should lay a robust foundation for its mobile ecosystem by crafting a clear and comprehensive spectrum roadmap. This should not only consider current bands but also longer-term needs, particularly for mid-band spectrum. This foresight will offer mobile operators the certainty needed to prepare investment plans and develop strategies for network deployment<\/span>.<\/span><\/b>\u00a0<\/span><\/li>\n<\/ol>\n

    Julian Gorman, Head of Asia Pacific, GSMA said: \u201cIndonesia is among the largest and fastest growing digital economies in the Asia Pacific region, which is testament to the government rightly prioritising ICT infrastructure including the completion of 4G rollout and the development of 5G networks. This said, the rollout of 5G in Indonesia will take time, this is reflective of the nation\u2019s nuanced approach given the practicalities of its geography and market readiness. According to our forecasts, 5G will reach 80% of the population by 2030.<\/span>\u00a0<\/span><\/p>\n

    \u201cWith new 5G mobile spectrum auctions approaching, we urge the government to continue to incentivise industry investment in a future-proof digital infrastructure which drives forward economic growth and huge societal benefits for citizens. For 5G to succeed in Indonesia, the government should focus on the right enabling policies, including spectrum supply and pricing. This requires a well-crafted regulatory framework for a successful auction that delivers a fair return for the government and encourages digital growth.\u201d\u00a0<\/span>\u00a0<\/span><\/p>\n

    While 4G coverage in Indonesia stands at an impressive 97%, the nation\u2019s 5G network roll out is at the start of the journey, currently reaching only 15% of the population. This disparity is exacerbated by a current shortage of mobile spectrum, particularly in mid-bands (1-7 GHz) for delivering high-speed mobile broadband services in densely populated urban areas, and low bands (low 1 GHz) for improved, more affordable connectivity in rural areas.<\/span>\u00a0<\/span><\/p>\n

    This is why, to support Indonesia\u2019s digital ambitions, the Ministry of Communication and Information Technology (Kominfo) is planning to award several frequency bands over the next two years including 700 MHz, 2.6 GHz and 3.5 GHz, as well as mmWave frequencies in the 26 GHz band. This additional spectrum will more than double the current total supply of mobile spectrum.<\/span>\u00a0<\/span><\/p>\n

    Based on Indonesia’s current spectrum roadmap, the GSMA assessed the impacts of different spectrum cost scenarios on 5G network rollout, adoption, and associated economic benefits spanning from 2024 to 2030. The findings underscore the pivotal role that sustainable spectrum costs play in ensuring investment in future mobile networks and the continued development Indonesia\u2019s digital economy. The in-depth <\/span>GSMA Intelligence<\/span><\/i> report, entitled \u201c<\/span>Sustainable spectrum pricing to boost Indonesia\u2019s digital economy<\/span>\u201d can be downloaded: <\/span>here<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

    -ENDS-<\/span><\/b>
    \n\u00a0<\/span><\/p>\n

    About GSMA<\/span><\/b>
    \nThe GSMA is a global organisation unifying the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. Our vision is to unlock the full power of connectivity so that people, industry, and society thrive. Representing mobile operators and organisations across the mobile ecosystem and adjacent industries, the GSMA delivers for its members across three broad pillars: Connectivity for Good, Industry Services and Solutions, and Outreach. This activity includes advancing policy, tackling today\u2019s biggest societal challenges, underpinning the technology and interoperability that make mobile work, and providing the world\u2019s largest platform to convene the mobile ecosystem at the MWC and M360 series of events.<\/span><\/p>\n

    We invite you to find out more at gsma.com<\/span><\/p>\n

    Media Contacts<\/span><\/b>
    \nGSMA Press Office<\/span>
    \npressoffice@gsma.com<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    New GSMA Intelligence research reveals mobile spectrum costs in Indonesia have risen significantly, posing major threat for mobile operators looking to invest in country\u2019s future digital infrastructure\u00a0 9th November 2023, Jakarta: With new mobile spectrum auctions fast approaching in Indonesia, a new report by the global mobile industry association, the GSMA, has warned that the […]<\/p>\n","protected":false},"author":101,"featured_media":20730,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_jetpack_memberships_contains_paid_content":false,"jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[7,3],"tags":[],"algolia_discover_type":[6627],"jetpack_publicize_connections":[],"yoast_head":"\nGSMA warns of $14bn (IDR 216tn) productivity loss 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