ICT business may reach $4.5 billion in 2015

Mariel Grazella, The Jakarta Post, Jakarta | Headlines | Tue, March 06 2012, 11:08 PM

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The quadrupling of Internet users in Indonesia by 2016 will translate into a US$4.5 billion business opportunity for not only mobile operators, but also other companies providing Internet-based services to consumers and enterprises, suggests a recent study.

A study by Frost and Sullivan predicts that the number of Internet users in Indonesia will rocket from 40 million in 2011 to 175 million by 2016. The sharp increase is accompanied by a boom in data connection subscribers — a number which is expected to leap from 52 million in 2011 to 167 million in 2016.

“Of the 167 million, 109 million will be on smartphones, while the remaining 22 million will be on tablets and large screen devices,” Jayesh Easwaramony, Frost and Sullivan Asia Pacific vice president for ICT practices, said recently.

He added that the large influx in Internet and data usage, spurred by the increasingly ubiquitous presence of smart devices, necessitated telecommunication operators to beef up infrastructure related to fixed broadband and 3G/Long Term Evolution (LTE).

Overall, the Asia Pacific fixed broadband market is expected to grow to 375 million users in 2015 or 76 percent more than 2011 figures. The 3G/LTE market is also forecast to swell by 168 percent to 1.25 billion users within the next three years.

“As more and more people use mobile broadband, they want to access the same services at home,” he commented on the rise of fixed broadband needs. Jayesh added that to fully monetize these trends, operators had to provide digital services that would ride upon the information highway.

“It is about creating the right service environment to allow the infrastructure to be monetized well,” he said, adding that the “big business potential” of ICT service-provision was not reserved for operators only.

Frost and Sullivan forecast that the market potential of providing enterprises with ICT services in Indonesia would touch US$3 billion (Rp by 27.3 trillion) in 2015, while the market potential for consumer services is estimated at about US$1.5 billion.

According to Jayesh, a prospective business for ICT players is cloud computing services, which is also expected to hit the mainstream in the Asia Pacific region.

“Cloud computing is becoming the fastest growing business in ICT, and it is changing the way people look at information technology [IT],” he said, adding that cloud computing was a cost-efficient solution for data storage.

On the consumer side, e-commerce was gleaming with promise, he noted. The next wave of e-commerce, however, would be mobile-based instead of desktop-based.

Indonesia currently has several large online stores, such as tokobagus.com, although many entrepreneurs and buyers have flocked to local online community site kaskus.us, in addition to Facebook.

However, the lack of widespread e-payment systems and smartphones have hampered the growth of mobile e-commerce, which, many have pointed out, was a more effective marketing tool.

According to Jayesh, e-commerce did not only encompass mobile advertisements, but also marketing tactics such as informing consumers via their mobile phones about current promotions as they browse through real sticks-and-bricks stores.

“Such digital engagement is a combination of online social networking, location-based detection and mobile connection. This is really the way to engage with customers,” he said, adding that providing location-specific information would also benefit news sites.

Notable news outlets, such as Indonesia’s largest newspaper Kompas, and the earliest news portal, Detik.com, are accessible via mobile. However, the stories they serve on their main pages are commonly general news updates.

Although trends such as cloud computing and location-based services would benefit telecommunications, the current trend of changing consumer communication behavior will leave revenues from short text messages (SMS) and voice services in decline.

Besides SMS, Indonesians have grown adept at communicating via applications such as BlackBerry Messenger and WhatsApp, in addition to social networking sites such as Facebook and Twitter.

These modes of communication are popular since consumers do not incur additional costs if they are subscribers of mobile data plans.

“Operators need to be part of all forms of communication. Otherwise, they cannot be called a communication service provider,” Jayesh noted.

Telkomsel has launched a data package that would allow customers have unlimited use of Skype, a voice over Internet protocol software application, through their mobile phones.

Yet, an issue which would still hound the Internet ecosystem, especially as it grows richer in services, is security.

“I don’t think there will be easy answers to solve the security problem,” Jayesh said. “We’ll have to seen how the industry solves this problem.”