Mobile Broadband has the potential to affect 1.68% on the GDP of Indonesia by 2015, says Frost & Sullivan

With falling handset prices and increased number of application developers, mobile broadband, according to the Frost & Sullivan
analysis, will be the predominant broadband access model for emerging markets.

The impact of Wireless Broadband and related Industries in Indonesia has the potential to generate an overall impact of approximately $9 billion which translated to around 1.68 percent of GDP of Indonesia by 2015.

This is in line with studies conducted by World Bank (in 2009) which show in developed countries increasing broadband penetration by 10 percent has a 1.21 percent impact on GDP.

Broadband connectivity is increasingly seen as an integral lever for improving social and economic growth. Recent econometric studies have quantified the direct impact on productivity and economic growth suggesting that an increase in broadband penetration of 1 percent could result in 0.1 percent productivity gain.

To further the economic and social development of the country, harnessing the full potential of Mobile Broadband is essential. On the economic front, Mobile Broadband has the potential to have a 1.68 percent affect on the GDP of Indonesia by 2015.

Meanwhile, on the social front, Mobile Broadband can help meet several government and Millennium Development Goals like Literacy
improvement, Healthcare access and Financial inclusion which would lead to a more sustainable and equitable growth.

Indonesia is the third largest wireless market in Asia, behind only China and India in terms of number of mobile subscribers. At the
end of 2010, Frost & Sullivan estimated that Indonesia had 194.4 million wireless subscribers, representing a penetration rate of approximately 80.9 percent vs. 103.6 million wireless subscribers and a penetration rate of 44.2 percent at the end of 2007,” said Jayesh Easwaramony, vice president, ICT Practice Frost & Sullivan Asia Pacific.

Indonesia ranks second-lowest among all major markets in the Asia Pacific region in terms of wireline broadband penetration with only 2.3 percent population penetration as of 2010, but is expected to reach around 23 percent by 2015.

This is expected to grow exponentially as the 3G services introduced in 2006 are maturing. Competitive pricing plans for 3G services,
which were a result of a tariff war, and more recently creative Smartphone promotions, are also expected to contribute to this high growth.

Going forward, data revenues are expected to garner an increasing share of total wireless service revenues. Total data revenues in
2010 represented approximately 33 percent of total wireless revenues. This share is expected to reach around 54 percent by 2015. In this, non-messaging which include content, browsing and other data revenues from approximately 15 percent of data revenues and this share is also expected to double to approximately 30 percent by 2015.

The key challenge from telco operator is to find optimum business model for data services in offering services to the market together
with traditional voice and SMS.The additional CAPEX needed in delivering data services is significantly high in comparison
to incremental revenue generated by data service selling (be that mobile or nomadic data services).
This is the case since most of current data business model is to offer free initial application or content and only charge subscribers when they purchase additional features and/or higher version.

“Indonesia market in particular, has also high sensitivity to price as it has been shown in voice & SMS market,” said Eugene van de Weerd, country director, Frost & Sullivan Indonasia.

This condition is not unique in Indonesia market but also occurring in market worldwide where voice and SMS services are still contribute a dominant revenue proportion.

By Team