Starlink Launches in Indonesia, Tapping into Booming Internet Market

Posted by Written by Ayman Falak Medina Reading Time: 2 minutes

SpaceX’s Starlink has launched its internet service in Indonesia, aiming to improve internet access to the vast archipelago.

The service is being tested on the country’s health sector by allowing healthcare professionals to input real-time data that can help alleviate challenges such as stunting and malnutrition. There are currently some 10,000 health clinics scattered throughout the country but around 2,700 remain underserved by local internet providers.

Starlink has already obtained a permit from Indonesia’s Ministry of Communication and Informatics to operate as an internet service provider for retail customers. However, the Indonesian government will focus on expanding the service to the country’s underdeveloped regions.

Starlink utilizes a constellation of low-Earth orbit satellites to provide high-speed internet with low latency. Unlike traditional satellite internet, which relies on geostationary satellites orbiting at high altitudes, Starlink’s satellites orbit much closer to Earth, significantly reducing latency and improving speed.

Indonesia is the third country in Southeast Asia after Malaysia and the Philippines where Starlink operates.

Indonesia’s huge internet economy

Indonesia is the fourth most populous country in the world, with over 270 million people. As of 2023, there are approximately 212 million internet users, representing a penetration rate of around 76 percent.

An overwhelming 90 percent of Indonesian internet users access the internet through smartphones.

Further, local infrastructure has been steadily improving. In late 2019, the government announced the completion of the Palapa Ring project – a priority infrastructure project that aimed to provide access to 4G internet services to more than 500 regencies across the country. The project is estimated to have cost US$1.5 billion and comprises 35,000km (21,747 miles) of undersea fiber-optic cables and 21,000km (13,000 miles) of land cables, stretching from the westernmost city in Indonesia, Sabang to the easternmost town, Merauke. Additionally, the cables also transverse every district from the northernmost island Mianagas to the southernmost island, Rote.

Initial plans to increase connectivity between Indonesia’s islands began in early 1998; however, these plans were abandoned due to the Asian financial crisis that year.

The project was divided into three regions: west, central, and east. The western region was completed in March 2018 and the central and eastern regions were completed in early and late 2019, respectively. The government plans to install more than 4,000 base transceiver stations (BTS) in the most remote areas to further improve internet coverage.

Through the Palapa Ring, the government can facilitate a network capacity of up to 100 Gbps in even the most outlying regions of the country.

Opportunities in Indonesia’s digital economy

Starlink is entering a market that boasts the largest number of internet users and the most robust digital economy in the region. Indonesia’s digital economy is among the fastest-growing and most dynamic in Southeast Asia, fueled by a large, youthful population, rising internet penetration, and a burgeoning middle class.

The e-Conomy report compiled by Google, Bains & Company, and Temasek predicts that Indonesia’s digital economy will have a gross merchandise value (GMV) of US$109 billion in 2025, which will rise to between US$210-US$360 billion by 2030. This will be largely fueled by the e-commerce sector which is expected to have a GMV of US$82 billion in 2025 and will increase to US$160 billion by 2030.

This is closely followed by online travel and online media which are expected to have a GMV of US$15 billion by 2030.

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