Future Prospects in Indonesia’s Telco Industry
In the previous post, I have briefly discussed the challenges of growing Indonesia telco industry. The summary was, (a) price of mobile services that it is relatively cheap compare to other countries is a challenge for the telco profitability, (b) it is tough play for mobile operators to expand its coverage and improve capacity given Indonesia’s vast geographical landscape and unique population distribution from one area to another.
Now, if we talk about the future, I still believe that there is a way to overcome the challenge with all opportunities that we have in the future.
First, consider the 5G: the technology that can drive the new use cases and optimize the current use cases of digital connectivity. According to Qualcomm, 5G is the next generation of network (after 2G, 3G, 4G) that we are currently use (see the 5G icon on the top-right of the Iphone screen below).
In a nutshell, 5G is a much powerful compare to 4G technology. It has several technological features that enable businesses to do more things with the network, such as for Internet-of-Things needs, super critical communication (e.g. remote surgery using robot), or simply enhanced connectivity to watch video anywhere. Click here and here to read more about 5G and its features. 5G’s latency, the amount of time it takes for a data packet to go from one place to another, is said to have 100x better performance compare to 4G. Of course it depends on all the aspect for connectivity, i.e. software, device, spectrum, etc. that is being used to emit signal.
In many sources, 5G is believed to be the accelerator of economic growth, given its use cases, and further it is also serve as the cost-efficient factor in providing network.
In Indonesia, words on street tell that not much changes from the consumer usage perspective: simply for video streaming, video conferencing, social media, etc. Hence, it seems the major use case for 5G is still the consumer use-cases, i.e. to serve better capacity in a condensed area. But still, if we account the amount of losses due to bandwidth overcapacity and weak signal, 5G will be a value-add.
In ASEAN, Indonesia download speed is the second slowest as compared to the other countries. This may look bad for now, but it is also a sign of future opportunity if Indonesia can improve the internet quality. Imagine the multiplier of economy that can be impacted from the speed improvements and better connectivity.
Second, think of the consumer behaviour changes. Like it or not, the world has become more and more digitalized. Thanks to CoVid-19 pandemic, the human society has been pushed to go online to deliver what ever they need to deliver. In some areas the habit is still continue, e.g. video conferencing, video streaming, etc., but at the other side, the habit may reduced, e.g. people are coming back to work from office.
Many exciting things also coming up from the digital world. Blockchain, gaming habit — both console and mobile, Over-The-Top such as content streaming like Netflix, HBO Go, as well as music streaming from Apple Music and Spotify. For Indonesia, the excitement may only stops at the video-streaming, video-conferencing use case in the near future.
The chart above shows that Indonesians are savvy mobile internet users when it comes to instant messaging, receive call, and watching video use cases. However, there are some areas that possibly to be introduced into online in the future. Some of that areas are listening to the music, get information about product or services, getting access to health services & government services, as well as looking for jobs.
Last one, the barrier to using mobile is something we ought to think carefully. Based on GSMA survey, affordability seems to be the main issue of mobile internet use case. High handset cost compare to the household income may hinder the growth. However, the good news is that we are seeing more and more affordable handset, which may help to break this barrier. The other issues seems to be the know-how: people do not know how what to press in order to be able to access internet on their mobile. This, too, will not be an instant changes, but as the younger population getting bigger, more and more people are used to it and can teach each other how to use internet.
