The introduction of Elon Musk’s satellite-based internet service, Starlink, is poised to shake up the telecommunications industry in Indonesia by potentially sparking significant price competition. This development has prompted the Ministry of Communication and Informatics (Kominfo) to address concerns regarding how Starlink’s service tariffs might impact local internet service providers.
Falatehan, Head of the Telecommunications Licensing Team at the Directorate General of Post and Informatics Administration (DJPPI) Kominfo, highlighted that Starlink’s service tariff of US$50 in Indonesia is competitive with current fixed broadband providers.
“Even though users need to invest in equipment costing US$287.5, or approximately Rp4.68 million, Starlink’s service tariffs remain competitive,” Falatehan said at the “Measuring the Impact of Starlink’s Presence on the Telecommunications Industry and Consumer Purchasing Power” event in Jakarta on Wednesday (12/6/2024).
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Despite this, Falatehan noted that existing fixed broadband providers have an edge in market expansion due to their use of resellers. Starlink, however, does not utilize resellers in its business model.
“Starlink appoints agents to sell user terminal equipment, and user activation is done by Starlink,” he explained.
Kominfo, according to its mandate, will supervise the implementation of telecommunications services, including monitoring the application of service tariffs. Falatehan suggested that existing telecommunications providers adopt a progressive and flexible approach that fosters innovation while maintaining fairness and universal access principles.
Several countries have already adopted collaboration models between Starlink and local providers, such as Australia, Japan, Africa, Malaysia, and the Philippines. Indonesia could potentially follow these examples. For instance, the geographical challenges faced by Australia make its model relevant to Indonesia, while Malaysia’s socio-economic conditions offer insights into market acceptance and adaptation strategies for Starlink.
The potential for price competition introduced by Starlink underscores the need for a balanced approach to fostering innovation and maintaining a competitive market landscape. This development holds significant implications for the future of internet service provision in Indonesia, driving both excitement and scrutiny within the industry.
