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Expanded 5G Coverage Set to Improve Indonesia’s Digital Transformation

The Information and Communications Technology (ICT) sector is poised to boost Indonesia’s economic growth this year and in 2022. The nation has had a digital transformation strategy in place for a while, but the COVID-19 pandemic has driven faster-than-expected take-up of digital services. It has also pushed both the public and private sectors to accelerate the implementation of their plans.

By 2025, Indonesia’s digital economy is expected to contribute US$ 150 billion to the Gross Domestic Product. To achieve the target, the Indonesian government has put in place massive infrastructure development including the Palapa Ring Project that will provide a 4G network to all Indonesian cities and regencies. The project is estimated to have cost US$ 1.5 billion and comprises 35,000 km of undersea fibre-optic cables and 21,000 km of land cables, stretching from the westernmost city in Indonesia, Sabang, to the easternmost town, Merauke. Additionally, the cables also transverse every district from the northernmost island Mianagas to the southernmost island, Rote.

The Association of Indonesian Cellular Operators (ATSI) is now working on establishing its first 5G coverage by 2023, with major cities and tourist attractions expected to be among the first to adopt the technology. ATSI plans to perform frequency auctions next year in order to set up 5G networks in 2022.

Despite its relatively low fixed broadband teledensity, Indonesia is poised to become one of the world’s most important digital economic powerhouses, and 5G will be essential not just in accomplishing this aim but also in unlocking digital opportunities and growth.

From supporting the Indonesia 4.0 program to building a new technology-infused AI city in Kalimantan, the country could see its economy transition from a resource-based to a knowledge-based one. In fact, this increased reliance on IoT, automation, cloud-powered software, and data analytics are what will improve Indonesia’s digital economy, which is expected to reach US$ 133 billion by 2025.

With improving digital and communication infrastructure a top priority in Indonesia right now, 5G preparations will begin promptly to ensure that the archipelago’s 17,000 islands are able to support these digital ambitions.

The development and integration of 5G infrastructure to support the bandwidth required for digital applications to function are crucial to Indonesia’s digital transformation. The adoption and deployment of these applications will lead to an increase in the number of interconnected devices, sensors, and systems, as well as an exponential growth in data volumes.

To obtain the actual benefits of 5G, the move to a 5G-enabled smart nation necessitates strategic shifts on multiple fronts. This includes management of spectrum, the availability of 5G-enabled devices, as well as a concerted effort between regulators, telecom operators and users. For Indonesia, spectrum is anticipated to be the most significant limitation. In a 2018 report, the GSMA had recommended Indonesia release the 700MHz analogue TV spectrum, noting operators are mostly using 1800MHz for 4G. In Indonesia, mobile operators are mostly utilising the 1800 MHz spectrum for their 4G rollouts. Despite the geographical challenges, allocating the 700 MHz band quickly and in sufficient quantities would enhance their initiatives to extend coverage and help solve the prevailing digital divide.

However, the government does not want to rashly hurry the implementation of 5G. The Ministry of Information and Communications recently confirmed that 4G cellular connection speeds are sufficient for the moment and serve their purposes adequately. In addition, the ministry said that its focus is on rolling out internet access to some 13,500 remote villages that were still offline since 2020.


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