Govt still mulling business plan for Palapa Ring

Arya Dipa, The Jakarta Post, Bandung | The Archipelago | Tue, August 09 2011, 7:00 AM

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The Palapa Ring fiber-optic cable laying project, which will serve as the basis for all telecommunications providers and users in Indonesia, is still hammering out its business plan how to share the bandwidth the network will provide, a government official says.

So far, 42,500 kilometers of cable have been laid, out of a planned 52,500 kilometers, and 27 of the nation’s 33 provinces have been connected.

“We are looking for a business pattern. The funds are available and it depends on the financial as well as the information and communication ministers to decide on the business plan,” Post and Informatics director general Syukri Bayubara said in Bandung on Monday.

The Palapa Ring is a fiber-optic telecommunication network aimed at connecting 440 regencies and municipalities in 33 provinces, using over-land and undersea cables.

The project is being carried out by a consortium of seven telecommunications providers: Bakrie Telecom, Excelcomindo Pratama, Indosat, Infokom Elektrindo, Macca System Infocom, Powertek Utama Internusa and Telekomunikasi Indonesia (Telkom).

The remaining 10,000 kilometers of cable to be laid in eastern Indonesia will connect Maluku and Papua, and Sulawesi and Nusa Tenggara.

Information and Communication Minister Tifatul Sembiring said the aim of the project was to reduce the information gap between people living in urban and rural areas.

“The project will connect major islands in Indonesia by fiber optics, so the broadband speed will be equal to 3G. The connection has reached 27 provinces so far,” he said.

The government had earlier offered a joint-investment pattern in the Palapa Ring project, in which every operator involved in the project would provide funds for investment and operations in accordance with the network capacity needed.

The business pattern was regarded the best for areas in the eastern part of Indonesia, where there are currently no fiber-optic cables.

The business plan for areas in western Indonesia is that of a capacity lease, in which fiber optics network capacity will be leased to operators.

Another business method for areas in western Indonesia is acquiring user rights of network capacity.

Syukri expressed hope that the business model offered by the government to complete the Palapa Ring project would be completely formulated by the end of the year.

“After that we will offer tenders. There are a number of alternative business patterns which I cannot disclose yet as they’re still being formulated,” Syukri said.

The Palapa Ring project is scheduled for completion in 2014, based on the assumption that the government formulates the business plan by the end of the year, he said.

Tifatul said that a World Bank study had indicated that a 10 percent investment in broadband network could raise economic growth by 1.38 percent, and that other surveys showed that investment in information technology communications could boost economic growth by between 3 and 5 percent.

“This has been proven in Indonesia. The final quarter report from the National Statistics Agency (BPS) showed that a 13.2 percent share of the economic growth comes from telecommunications and transportation,” he said.