Price of Internet connection in Indonesia may come down by 30% following new regulation from Ministry of Information and Communications this week. According to recent report by Bisnis Indonesia, the new regulation will be more fair and transparent in calculating leased lines cost that ISP’s have to pay to network provider. ISP depends on leased line from network provider such as Telkom, Indosat and Excelcom, to provide international Internet connection to their customers. Leased line cost account as much as 50% of ISP’s total operational cost.
Price reduction will give much relief for 20 millions Internet user in Indonesia where Internet connection price is highest in the region. Speedy –the widest broadband connection service by Telkom- cost Rp300.000 and Rp700.000 per month with maximum usage 750MB and 2GB per month consecutively. Telkom utilize its telephone cable line to perform broadband connection based on ADSL (asymmetric digital subscriber line) technology.
As for ISPs, the new regulation will help increase Internet usage to 30% this year. According to one survey, average time users spent on Internet a day is two hours. It’s unclear whether this new regulation has direct impact in boosting Internet user that was projected to reach 25 million to 30 million this year.
Another significant factor contributing to high price is international bandwidth consumption. Local Internet users depend heavily on international bandwidth to access major sites such as Google, Yahoo and Friendster hosted abroad. So far, the two Internet giants had not mentioned any plans to host their server locally despite their considerable share in the fast growing Indonesian online ads market.
