Indonesia’s Omnibus Law has sought to liberalize many of the country’s industries. Among them is the postal, telecommunications, and broadcasting industries.
The telecommunication sector is now open to 100 percent foreign investment from the previous 67 percent. Meanwhile, the foreign investment limit for the postal industry remains the same at 49 percent, however, foreign businesses must cooperate with domestic postal businesses through joint ventures.
Further, media and broadcasting activities such as magazines, newspapers, and bulletin publishing activities, have a maximum of 49 percent foreign ownership for a public listed company. Previously, these sub-sectors were reserved for domestic investments. However, there are still strict limitations on foreign ownership in private broadcasting activities, in which there is a 20 percent ownership limit.
The government issued Government Regulation 46 of 2021 (GR 46/2021) to implement its new policies postal, telecommunications, and broadcasting industries.
Postal operations in Indonesia
GR 46/2021 describes postal services as the following activities:
- Written communications/or emails;
- Financial transactions (giro, fund transfers, bills of exchange, postal deposits); and
- Postal agencies.
GR 46/2021 also states that for foreign postal businesses to operate in Indonesia, they must engage in a joint venture with a domestic company, and the operational areas of such partnerships are limited to provincial capital cities.
Further, foreign postal organizers that are in joint ventures with domestic companies are forbidden to do inter-city services.
Telecommunication operations in Indonesia
Under GR 46/2021, telecommunication services have been divided into three categories:
- Operation of telecommunications networks – this covers two aspects, the organization of fixed networks such as fixed local networks and long-distanced fixed networks, etc, and the organization of mobile networks, which comprise of mobile cellular networks, and mobile terrestrial networks, among others;
- Operation of telecommunications services – this category encompasses the operation of basic telephony services, the operation of value-added telephony services, or the operation of multimedia services.
Further, this category also includes the recognition of domestic and international businesses that conduct their business via the medium of the internet, which are also known as over-the-top (OTT) service providers; and
- Special telecommunications operations – these are telecommunications operations that have special characteristics, and objectives. GR 46/2021 allows for such operations can be organized for personal needs or state defense and security needs.
Leasing of telecommunication networks
The regulation allows telecommunication network providers may lease their networks to other telecommunication operators and non-telecommunication operators.
Facilitation of passive infrastructure
The central and regional governments will support initiatives to improve the business climate by providing land and passive telecommunications infrastructure, to be used jointly by telecommunication providers. This includes manholes, towers, poles, and ducts, among others.
In addition, business actors that own passive telecommunication infrastructure can provide access to telecommunication operators.
Through such common-use arrangements, the government hopes this will accelerate the development of the industry and increase efficiency for businesses.
Universal service obligation
The government will provide telecommunication infrastructure used by network providers and fund the provision of telecommunication services by providers of telecommunication networks.
However, telecommunication network providers are still required to contribute to the universal service obligation. Before GR 46/2021, network providers had to construct telecommunication networks in designated areas or contributions in the form of interconnection fees. Under the new regulation, network providers must contribute a percentage of their gross income to the government from their telecommunication operations.
Tariffs for telecommunications services and operating telecommunications networks
GR 46/2021 differentiates between the tariffs for telecommunications services and those for operating telecommunications networks. This amount will be determined by the Ministry of Information and Communications.
The tariffs for operating telecommunications networks comprise of:
- Network lease tariff; and
- Interconnection fee.
The tariffs for telecommunications services comprise of:
- Basic telephony services tariff;
- Added-value telephony services tariff; and
- Multimedia services tariff.
Resale of telecommunication services in Indonesia
GR 46/2021 has permitted the resale of telecommunication services in Indonesia but are limited to three types of services:
- Basic telephony, including but not limited to services that utilize internet protocol technology;
- Added-value telephony, including but not limited to premium SMS services; and
- Multimedia services, including but not limited to the utilization of internet access.
Technical standards for telecommunications devices and equipment
All telecommunication devices and equipment that are assembled or imported into Indonesia must meet various technical standards which are proven through certain certifications.
This requirement does not apply to telecommunication devices and equipment which are:
- For personal use and not for commercial purposes;
- Used for research and development purposes, natural disaster management purposes, and/or telecommunication, and broadcasting technology testing purposes, provided that the device/equipment is not traded for commercial purposes;
- Used as a test sample for device/equipment testing;
- Used for defense and security purposes; and
- Used for diplomatic representation.
Utilization of the radio frequency spectrum
GR 46/2021 provides a specific definition of the radiofrequency spectrum — electromagnetic waves with frequencies of below 3000 GHz that propagate through the air and/or space and which function as a medium for the delivery and/or receiving of information for broadcasting, telecommunications, aviation, astronomy, and cruises.
The use of the radio frequency spectrum now requires businesses to secure a radio frequency license. There are three types:
- Frequency Band License (Izin Pita Frekuensi Radio – IPFR) – has a validity period of 10 years and can be extended once for another 10 years;
- ISR permit – this permit has a validity period of five years and can be extended once for another five years; and
- Class permit.
Transfer of rights of the use of the radio frequency spectrum
Telecommunication network providers are permitted to transfer their radio frequency spectrum rights to other telecommunication network providers. Any parties that wish to engage in the transfer of the rights must seek permission from the Ministry.
The rights can be transferred in the following forms:
- Holders of an IPFR permit can transfer the rights to the radio frequency band usage to other telecommunications network organizers; or
- Two or more IPFR holders can transfer the right to use radio frequency bands to the respective IPFR holders.
Broadcasting services in Indonesia
Radio and TV broadcasting can only be conducted by the following parties:
- Public Broadcasting Institutions (Lembaga Penyiaran Publik– LPP);
- Private Broadcasting Institutions (Lembaga Penyiaran Swasta – LPS);
- Community-Based Broadcasting Institutions (Lembaga Penyiaran Komunitas – LPK); and
- Subscription-Based Broadcasting Institutions (Lembaga Penyiaran Berlangganan – LPB).
For businesses to begin radio or TV broadcasting, they first must obtain an Operational Broadcasting License (Izin Penyelenggaraan Penyiaran – IPP). Further, if the applicant uses an RFS or foreign satellite, then they must obtain an additional license for the operation of an RFS and/or foreign satellite landing rights. The IPP is valid for 10 years.
An LPS entity that carries out digital broadcasting with coverage covering all of Indonesia must contain at least 10 percent in local content, of the total broadcasting time each day.