Broadband infrastructure construction stalls

JAKARTA: Indonesia faces particular bottleneck in establishing broadband infrastructure, following the plan to utilize digital dividend fund that has not been approved by Finance Ministry.Digital dividend happens to be an USO/ICT (universal service obligation) fund, being derived from 1.25% of Indonesian telco operators' gross revenues. Such fund probably values trillions of rupiah.Such digital dividend is managed by Communication and Informatics Ministrys Rural Telecommunication and Information Agency (BTIP) as it is recorded as non tax state revenue.The use of digital dividend is different in every country, some country may exercise it to construct broadband while others utilize it for broadcast establishment, said Director General of Pos and Informatics Devices Resources at Ministry of Communication and Informatics, Muhammad Budi Setiawan.According to him, Indonesia shall use such digital dividend fund entirely to construct broadband infrastructure, including any efforts to accommodate the penetration of long term evolution (LTE)s fourth generation.Broadband infrastructure procurement requires significant amount of fund, exactly as Palapa Ring that established fiber optic backbone network across Indonesia, with 50,000 km length.Such digital dividend fund will be use to construct broadband infrastructure, particularly in low economic or non commercial areas.At the moment, bottle neck still takes place in broadband construction process. The fund is available as the fund execution is still carefully discussed by Finance Ministry with other related parties. 100% of the fund will be used to establish broadband, he told Bisnis recently.In the meantime, Communication and Informatics Minister Tifatul Sembiring said that government will cover 30% of Palapa Ring total project value. Such fund is derived from universal service obligation fund or ICT fund.A stimulus for private sectorSuch incentive, as he added, happens to be a stimulus for investors to tap infrastructure projects in Papua.Palapa Ring is purely funded by private sector. While Papua is a rural area and it is not commercially benefiting. Thus, government provides fund assistance, reaching 30% of the total project values, he said amidst working meeting of Indonesia Telematics Society.USO fund happens to be 1.25% gross revenue of domestic telco operator. It is then included as non tax state revenue. Several Asian and Middle East countries have employed such USO fund system.USO funds will be fully utilized to finance all the needs of information technology and telecommunication sector, said Head of Information Center and Public Center of Ministry of Communication and Informatics, Gatot S. Dewa Broto.(T02/NOM)