Ditjen SDPPI – Kementerian Kominfo

Building The Mobile Broadband Ecosystem for The 700MHz APT Band at GSMA Mobile Expo 2013

700 MHz Digital Dividend Acceleration Study Dr. DENNY SETIAWAN

Deputy Director, Fixed and Land Mobile Services Directorate of Spectrum Policy and Planning

Director General of Resources and Standard (DG SDPPI) Ministry of Communication and IT Shanghai, 27 June 2013

National Broadband Plan Policy (2009-2014)

28/06/2013

 INFRASTRUCTURE SUPPLY GOAL:  National Mid-term Development Plan (RPJMN) : 30% coverage population has broadband access.  Broadband access: • > 256 kbps (OECD, White Paper BWA 2008). • > 512 kbps (ASEAN ICT Masterplan) .  88% District Capitals of 33 Provinces in Indonesia  Master Plan of Acceleration of Indonesia Economy Development Acceleration (MP3EI) 7 corridor growth areas, 50% districts (Kabupaten/Kota) by the year 2014. 2

Ditjen SDPPI – Kementerian Kominfo

Draft of Indonesia National Broadband Plan Palapa Ring (Initial concept) Total Underwater cable 35.280km Total land cable 21.807 km

Population : 234.2 million No of villages `77,000 No of islands 17,508

Palapa Ring First Stage Total new FO > 10.000 km Total cost : 300 juta US dolar Source: MCIT Indonesia

MP3EI: Master Plan of Economic Development Growth Area Acceleration 2025, 7 corridors in major islands 2012

2015

2020

AREA-1

256 kbps

2 Mbps

4 Mbps

AREA-2

256 kbps

1 Mbps

2 Mbps

AREA-3

256 kbps

512 kbps

1 Mbps

AREA-4

256 kbps

256 kbps

512 kbps

Source : WG 4G Indonesia

3

PALAPA RING, National Fiber Optic Backbone and Backhaul

Implementing PALAPA RING as a broadband national backbone and backhaul (c) Ministry of Communication and Information technology of Republic of Indonesia

INDONESIA ICT STATISTIC Services 1.

Unit

2004

2009

2010

2014 *

Telephone Fixed

Line Unit

8,703,218

8,423,973

8,429,180

8,429,180

Mobile

Line Unit

32,009,688

190,062,615

200,636,587

222,853,663

Total

Line Unit

40,712,906

198,486,588

209,065,767

307,145,463

Teledensity

Per 100 inhabitants

18,82

86,06

89,79

100

2. Internet Subscriber

Person

1.087,428

2,000,000

2,700,000

7,000,000

User

Person

11,226,143

30,000,000

45,000,000

130,000,000

Person

84,900

4,520,000

7,290,000

17,000,000

3. Broadband Subscriber

*) Estimated Ref : MASTEL, 2012 ICT Outlook

INDONESIA DEPENDS HEAVILY ON MOBILE BROADBAND 5

Impact of Broadband Towards Social and Economy World Bank Study 1,38 persen increase of GDP for each 10 % increase of broadband penetration. Source : GICT Dept. World Bank.

Source: ITU, 2012 • • •

Increase of 10% broadband penetration may reduce 0.06% unemployment rate (Brazil). Increase of 10% broadband penetration may increase 0.09 % GDP (Chile). Increase of 1% “household” broadband penetration may reduce 8.61% unemployment rate (Indonesia).

In Indonesia, with 10% average penetration of 3G services (2008-2011), additional of 10 of 3G services layanan 3G per 100 connection, can increase 1.5% GDP per capita Source: Deloitte 2011-GSMA

Source: Impact broadband to the economy (ITU study) 2012 6

Spectrum Crunch

28/06/2013

 Exponential growth of data traffic (Ipad, Iphone, tablet, android, etc)  Demand spectrum mobile broadband:  ITU-R Report M.2078, need additional 1280 – 1700 MHz bandwidth by the year of 2020  FCC-US and OFCOM-UK : need additional 500 MHz by the year 2020  Australia: need additional 150 MHz in year 2015, additional 150 MHz in year 2020. Currently 800 MHz  Indonesia: currently is only around 425 MHz effective bandwidth.  Band < 1 GHz (including Digital Dividend 700 MHz most optimum option of capacity and coverage)  Band > 1 GHz (in major market areas), including WiFi class-licensed for off-loading 7

Ditjen SDPPI – Kementerian Kominfo

28/06/2013

Spectrum Crunch (continued)

 Current situation:  Unbalanced bandwidth distribution : • CDMA operators : 4 Operator @ < 2 x 5 MHz, 1 operator 2 x 11.9 MHz • GSM/UMTS/HSPA operators – 2 operator @ 2 x 40 MHz, 2 operator @ 2 x 25 MHz, 1 operator 1 x 20 MHz – 2 operator do not have 900 MHz (coverage) – In 1800 MHz and 2.1 GHz, some portion of band do not contiguous  Mixed Band Plan: GSM900 vs CDMA 850, UMTS 2100 vs PCS1900  To fulfill the increase data traffic demand:  Increasing number of tower  Bandwidth increase  Increasing bit efficiency of technology (2G->3G->4G)  Ecosystem is very important (3GPP, LTE, IEEE, global standard, etc) 8

Ditjen SDPPI – Kementerian Kominfo

Proposed Policy and Strategy

28/06/2013

 Encouraging Below 1 GHz Mobile Broadband  4 CDMA 850 MHz operators @ 5 MHz...(do not support enough capacity for Mobile Broadband, while it is very good in coverage compared the other higher frequencies).  Encourage HSPA 900 MHz spectrum refarming deployment (by allowing technology neutrality)  Encourage Network Sharing to improve efficiency on infrastructure, but still maintain competition in services  Encourage more flexible use of spectrum: MVNO, spectrum sharing, infrastructure sharing, spectrum swap, spectrum aggregate, spectrum leasing etc  Need to improve policy and regulation 9

Ditjen SDPPI – Kementerian Kominfo

Spectrum Crisis in relation with Capex and Opex of Networks

Source : Author

To resolve “spectrum crunch“ of increasingly significant traffic of mobile broadband, three solutions are provided: • Additional Spectrum Bandwidth • Increase Efficiency of Spectrum with the use of technology upgrade with the latest technology • Increasing number of tower site

The bigger spectrum provided, the bigger saving of capex and opex of Mobile Broadband provisions

Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, 2013) 10

MOBILE BROADBAND EVOLUTION PATH TOWARDS LTE

Semua teknologi selular, baik GSM, CDMA, maupun Wimax pada akhirnya akan berevolusi menjadi menuju satu teknologi11masa depan : LTE (Long Term Evolution)

Band

Mobile Broadband Band (Existing and Future Potential) Bandwidth

Current Use

450 – 470 MHz

2 x 7.5 MHz

Mobile Cellular (CDMA)

694 – 820 MHz

2 x 45 MHz

Analog TV (Potential of Digital Dividend LTE 700 MHz)

2 x 20 MHz

FWA and Mobile Cellular (CDMA)

2 x 25 MHz

Mobile Cellular (GSM)

2 x 75 MHz

Mobile Cellular (GSM)

825 – 845 dan 870 – 890 MHz 890 – 915 dan 935 – 960 MHz 1710 – 1785 dan 1805 – 1880 MHz 1903.125 – 1910 dan 1983.125 – 1990 MHz 1920 – 1980 dan 2110 – 2170 MHz 2300 – 2390 MHz

2 x 8.675 MHz

Mobile Cellular (PCS-1900/CDMA)

2 x 60 MHz

Mobile Cellular (UMTS) Broadband Wireless Access. 2360 – 2390 MHz licensed issued for 15 Regional Zones (Wimax / LTE TDD)

90 MHz 2 x 15 MHz

2500 – 2690 MHz

BWA (TDD) 2520 – 2670 MHz is currently used by Broadcasting Satellite Services

150 MHz 12

Ditjen SDPPI – Kementerian Kominfo

700 MHz Digital Dividend

13

DIGITAL DIVIDEND 700 MHz ANALOG TV 478

328 MHz

806 MHz

TV Analog Free To Air (FTA) Reception

PROSES DIGITALISASI PENYIARAN DIGITAL TV

Future DTV

478 • •

TV Digital Terestrial Free To Air (FTA) Reception 526

192 MHz

DIGITAL DIVIDEND 694

806 MHz

112 MHz

LTE 700 MHz will be very important for Broadband development acceleration in 7 Corridors Areas MP3EI particulary Rural Areas with only using the existing 2G sites Unfortunately, it’s only available after Digital Switchover at the end of 2017

Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, DTE, FT-UI, 2013) 14

Digital Switchover Schedule Worldwide

Sumber: OFCOM (2011). International Communications Market Report. 15

DVB-T2 MPEG4 IMPLEMENTATION DVB-T2 IMPLEMENTATION

Bandwidth FFT mode Carrier mode Scattered Pilot Pattern Guard Interval Modulation Code rate C/N Data Rate Digital TV Quality SDTV SDTV HDTV HDTV

Fixed rooptop reception MFN (UK Mode)

Fixed rooptop reception limited area SFN (GE06 allotment)

Fixed rooptop reception large area SFN

1 8 MHz 32k Extended PP7 1/128 (28 ms) 256-QAM 0,67 18.9 dB 40.2 Mbps

3a 8 MHz 32k Extended PP4 1/16 (224 ms) 256-QAM 0,67 19.6 dB 37 Mbps

3b 8 MHz 32k Extended PP2 1/8 (448 ms) 256-QAM 0,67 20.0 dB 35.5 Mbps

Compression

Range (Mbps)

MPEG-2 MPEG-4 MPEG-2 MPEG-4

2 to 5 1.5 to 2 15 to 20 5 to 10 16

Typical Bitrate (Mbps) 3 1,5 16 8

Market Share of Analog TV Broadcaster Market Share Major Commercial National TV only

Market Share of all TV Broadcaster

RCTI

16,7%

16,3%

SCTV

15,7%

15,3%

Trans7

13,7%

13,4%

MNCTV

11,8%

11,5%

Trans 7

9,8%

9,6%

IVM

9,8%

9,6%

Global TV

7,8%

7,6%

ANTV

6,9%

6,7%

tvOne

4,9%

4,8%

MetroTV

2,9%

2,9%

TV Lokal Total

2,50% 100%

100,0%

Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, DTE, FT-UI, 2013) 17

TV Receiver Penetration Rate in Indonesia

 TV Receiver Penetration Rate: 57% Household,  Number of Household in Indonesia: 61,2 million HH (based on data from Bureau Statitics in year 2010) Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, DTE, FT-UI, 2013) 18

Schedule of Digital Switchover in Indonesia (1/2)

Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, DTE, FT-UI, 2013) 19

Schedule of Digital Switchover in Indonesia (2/2)

Source : Pemodelan Akselerasi Implementasi Digital Dividend di Indonesia (Denny Setiawan, DTE, FT-UI, 2013) 20

DIGITAL TV INDUSTRY MODEL (in one service area)

21

Digital TV Multiplex Licensing Areas (in 15 Regional Zones)

22

Digital TV Service Area and Digital TV Multiplex License Areas

23

Digital Switchover Schedule and Number of TV License in each area

24

Broadcasting Saving Cost Benchmarking of Num of TV Program Channel

Benchmarking of Total Capex Opex Mux

*In Million Rupiah, 1USD=9900Rupiah(IDR) 25

Broadcasting Saving Cost

Benchmarking of Capex Opex per TV Broadcasting Programme Channel 26

Broadcasting Saving Cost (Electricity)

Benchmarking of Electricity Consumption for 700 TV Tx Nationwide (in Rp. Millions, 1USD=9,900 Rupiah(IDR)) 27

Problems and Facts 







Delaying the Digital Switch-over and Licensing 700 MHz for Mobile Broadband until year 2018 compared with the Facilitating Digital Dividend in the end of 2014 will be very significantly impact the social and economy growth of Indonesia (BCG Report, 2010)  Decreas of GDP increase projection : 54%  Decrease of Government Income from Tax and others ; 69%  Decrease of Job Creation : 78% From All Spectrum Licensing Fess collected, the fund proportion given back for the ICT industry currently only maximum 6,75% of total almost Rp. 10 Triliun (1 USD Billion). Most of 90% Spectrum Licensing Fees collected from Mobile Cellular license fess. In US, there are initiative from FCC to release more spectrum for Mobile Broadband with the Incentive Auction, compensating the incumbent with the portion of the result of the spectrum auction fees. Supreme Court has decided to review the Ministrial Decree 22/2011 about the Free to Air Digital TV, make more complicated, step backward 28

Proposed Strategy  Clearing up both 700 MHz with intervention from Government  Utilizing the satellite infrastructure for distribution with cheap free-to-air Satellite Distribution in non major city commercial areas operated by Independent Multiplex  700 MHz Digital Switchover Acceleration  Looking for the progress and development of Digital TV Migration in Zone 1 and Zone 2 (Java, Bali islands Batam and Sumatera)  If the problem is not resolved, the alternative method is to establish Independen Multiplex, subsidy set-top-box, etc.  Options:  Government procurement, Build transfer operation to the indepeden Multiplex (both satellite and terrestrial)...NBNCo model in Australia  Incentive Auction....Compensating the incumbent with the fund provided by spectrum auction in 700 MHz and other band.  Joint announment the commitment to align with the 700 MHz spectrum band (with AITI, MCMC, IDA), 18 June 2013-CommunicAsia Singapore 29

Further action Further study is required Need more benchmark of success story of collaboration broadcaster and telco in convergence, in order to convince broadcaster that they will get more oportunity Any suggestion is welcome 30

Ditjen SDPPI – Kementerian Kominfo

E-mail: [email protected] [email protected]