Indosat was established in 1967 and originally focused on international communication services. A 2000 law changed Indonesia's telecom market, allowing Indosat to offer domestic services. The document examines Indosat's strategy for broadband penetration, including using wireless GSM technology instead of CDMA due to existing infrastructure and global adoption of GSM. It recommends Indosat develop multimedia/value-added services to gain more profit and lease infrastructure to optimize bandwidth usage. Collaboration between Indosat and Telkom is suggested to strengthen both companies and Indonesia's telecom development.

1. Indosat’s Strategy for Broadband
Penetration in Indonesia
Case Study of “Bridging The Digital Divide: Indosat’s Drive
for Broadband Penetration in Indonesia”
M.Ridwan - 29112555
Machadi Dhana – 29112303
M. Khadafi – 29112324
Pedro Putu Wirya – 29112565
Seto Kusparyanti – 29112306
Yuliani Dewi – 29112321
Rahdianto Maulana - 29112554
Syndicate 5

2.  10 November 1967, Indosat established as subsidiary of US-
based International Telephone and Telegraph Corp. (IT&T)
 1991, there were PT Telekomunikasi Indonesia, PT Indosat
and PT Satelindo as the state owned companies, with
specific business segment specialization
 Telkom for local communication, Indosat for international
communication, and Satelindo for satellite communication
History of Indosat

3.  8 September 2000, the Indonesian government
issued Telecommunication Law, prohibiting activities
that could result in monopolistic practices
 Indosat lost it’s exclusivity to international
telecommunication service
 While it was also given the broader opportunity to
play role in domestic telecommunication business
 What’s Next for Indosat?
History of Indosat

4. Fixed Line Infrastructure
 Legacy network using telephone line and dial-up method
was the basic infrastructure for fixed line internet access –
before 2004
 ADSL launched by Telkom (July 2004) had shifted the way
of user internet behavior from “slow and frustrating” into
“quiet better accessibility”
 Copper telephone cabling infrastructure for telephony
access was the dominant resource for fixed line method
 While fiber optic/VSAT/Cable TV were not in significant
position to reach end user
Broadband Service in Indonesia

5. The Technology Preference
 Fixed line infrastructure was to minimal to cover people
 Huge investment was needed to provide good coverage to
most of the Indonesian people
 Geographic, geo-nature and demographic considerations
 The new player will never beat the pioneer on telephony
line infrastructure – Telkom
 What is the economics and optimum communication
technology to compete on?
Broadband Service in Indonesia

6. Wireless Communication Technology
 Using GSM/CDMA wireless communication protocol as the
backbone infrastructure
 GSM with 3G or 3.5G technology
 CDMA with CDMA 2000-1x technology
 The mobile internet infrastructure
 Accessibility anywhere, anytime
 Less investment compare to fixed line infrastructure
 Gain more coverage ratio
Broadband Service in Indonesia

7. The Challenges
 Broadband service increase along with degree of
competition in domestic market
 Content service will also drive the market growth of
broadband industries
 Customer wants low price, reliable performance and
high speed data access
 Content innovation is one of the key factor to get
more revenue on the broadband service
Broadband Service in Indonesia

8. Supporting Situation
 The only one company in Indonesia that can provide
customer with 3.5G HSDPA technology (December
2007) while the other competitor only provide in 3G
baseline
 To support the content delivery to user, Indosat has
IM2 to cover the Internet Service Provider
 Enhance setup to align with the next generation
model to reduce the cost of investment – rapid
changes on technology in Telco industry
What Technology Should Indosat Use?

9. Recommendation
 Using GSM technology instead of changing to CDMA
 Existing infrastructure can be optimized to enhance VAS (Value
Added Services)
 Keep the leading path through its 3.5G and optimize for the next
generation technology – thinking further for infrastructure
development
 Most of competitors are playing in GSM, instead of CDMA (and
we know exactly how CDMA failed in this country)
 Global technology using GSM, major gadget vendor produce and
focus on GSM handset other than CDMA
 The use of common tower can be one of the “token” to expand
the coverage (capital optimization vs. service deliverable)
What Technology Should Indosat Use?

10. Background
 Indonesia has low internet penetration, mainly because less of
connectivity
 Service to be offered to customer – the basic needs and wants
 The technology and application changes in Telco and IT
 Telco company will not survive if just relying on infrastructure base
business – do some innovation
Strong Point
 International gateway backbone and domestic fiber optic
 Backbone network established
 Leased line service coverage
 IM2 for multimedia content support
The Positioning of Indosat Broadband
Service

11. Recommendation
 Develop the multimedia content/value added service on top of
broadband infrastructure service
 Gain more profit from VAS business
 Lease the infrastructure to competitor to optimize the
bandwidth usage and gain some revenue
 The trend shifted of customer from basic communication service
into multimedia application service
 Compete with the competitor and be the leader by doing it now
 Capture the market and maintain the leadership
 It is predicted 5 years later that the internet user will be doubled
and broadband services will become more interesting to have
The Positioning of Indosat Broadband
Service

12. Background
 Two big player in broadband industries
 Collaboration of Telkom and Indosat can give more
significant impact to Indonesia’s telco infrastructure
and user penetration
Should Indosat Collaborate or Compete
with The Other?

13. Recommendation
 Learned from India, the government should support the collaboration
in order to strengthen each company and for national strategic
development
 Indosat with experience connecting international network and
wireless broadband access combine with Telkom with its strong point
in fixed line infrastructure and market leader in this segment
 At the end, the people of Indonesia will have better Internet access
and good telecommunication infrastructure covering across the
country
 The integration of the people across the nation will support the
enhancement of educational level, knowledge and prosperity level,
national security, and national collaboration for better Indonesia
Should Indosat Collaborate or Compete
with The Other?

14.  Leading in 3.5G technology
 Great Internet Service Provider, proved by winning
Top Brand Award in 2005 until 2007
 Strong financial to support capital expenditure
 One of the market leader in Telco industry
Indosat key success