MVNO is not a threat to Indonesian mobile operators

I hope the title of this article is not a match for the article published in here. In this paper, I would like to show my pro attitude towards the government's intention to revise two Government Regulations Number 52 of 2000 concerning the Implementation of Telecommunication and Government Regulation Number 53 of 2000 concerning the Use of Radio Frequency Spectrum and Satellite Orbit.

Why do I support? From the initial goal of the government in making plans to revise the two PPs, it is actually quite noble, namely to create efficiency for all business actors and evenly distribute broadband throughout Indonesia.

So that it is not just a mere intention, it is necessary to participate from all stakeholder to sit together and consult together to unite opinions so that this noble intention can run smoothly. Because, according to some reports, the government's intention is to make certain parties get into conflict with each other.

Previously, I would like to quote from the publication this. The government plans to change the sound of one of the articles in PP no. 52/2000 as a telecommunications network operator may lease its telecommunications network to other telecommunications network operators.

This is what makes many parties nervous because the main impact of the revised PP is the emergence of players mobile virtual network operators (MVNO) and there is a network sharing business model. Is that right?

MVNO is an operator that provides telecommunications services to customers but does not have a license from the government or regulator for the use of radio frequencies. MVNO has access rights to various radio elements belonging to telecommunications companies licensed as mobile network operators (MNOs).

By definition MVNOs are quite special because without the need to build their own network or have a license, they can provide telecommunications services like other MNOs. Roughly speaking, MNVO players can boomerang for MNO players, because they can trigger other "wars" to reach new markets, such as tariff wars.

However, try look another statement from Darmin Nasution, Coordinating Minister for the Economy of the Republic of Indonesia. He said the revision of the PP was aimed at accelerating the development of telecommunications infrastructure, one of which was the Palapa Ring project. The government, he continued, targets that by 2019 all district and municipal capitals in Indonesia will be connected to the telecommunications network.

In the road map Indonesian Broadband Plan (IBP) internet penetration rate reaches 50,2% for broadband with a minimum speed of 1 Mbps. To achieve that requires an investment of $ 27 billion. However, from current conditions the investment rate is only $3 billion per year. It is estimated that it will take about 9 years. Whereas the IBP period is only four years until 2019.

"So if we are not smart in investing efficiently, IBP will be difficult to achieve. Well, one way to make investment more efficient is by sharing. With it, we can build more infrastructure with the same amount of money, the effectiveness is very high. Of course we really welcome it, if we can come out soon (re: revision of the PP), even more happy," say Dian Siswarini, CEO of XL Axiata.

XL is one of the parties actively encouraging the government to immediately complete the work plan. In reality, XL has collaborated with Indosat to network sharing, by establishing a joint venture company PT One Indonesia Sinergy (OIS) which implements passive network sharing with schema multi-operator radio access network (MORAN).

MORAN allows both operators to share BTS, but still use their own spectrum. MORAN is one of the five models network sharing, CME Sharing, MORAN, multi-operator core network (MOCN), MVNO, and roaming .

See the benefits of revision from all sides

From result study conducted by Research and Markets, MVNO is very suitable if implemented in Asia as a developing country region, as long as the business model and partners are chosen correctly. In the research, Asia shows strong momentum in liberalizing regulations in the mobile market, will stimulate competitiveness, and reduce tariffs. Plus, an increase in the introduction of innovative products.

An example can be seen from the high subscriber growth of virtual operators in China, followed by the Philippines, Malaysia, Thailand. Then, results studi from McKinsey said MVNO players in developing countries could control around 10% to 40% of the mobile market share.

Quoting According to Nonot Harsono, Chairman of the Indonesian Telematics Society (Mastel), MVNO is considered to be a marketing partner for network or infrastructure owners. "It will bring new players, but not as builders or network owners," he said.

The telecommunication network that has been built aims to lease its channels to as many users as possible, both individuals and corporates. Thus, conceptualizing the MVNO helps to sell the channel.

According to the International Telecommunication Union (ITU), in practice the MVNO consists of four layers of business models. First, as a distributor of operator products. Second, as a billing system maker (billing). Third, as an application service provider. Lastly, as a core infrastructure provider.

Synergy form

These four layers of the business model, clearly enable MVNO to continue operating without disturbing other players. After all, in the end, the ultimate goal to aim for is the even distribution of internet usage throughout Indonesia.

From the operator and government side, the presence of MVNO can accelerate network deployment broadband while reducing the level of network utility. This will also have an impact on reducing interconnection costs due to lower network element costs.

In my opinion, the government needs to establish boundaries so as not to deviate, to determine the rights and obligations of MVNO and MNO players. What fees must be paid by MVNO players, what facilities can MVNO get after entering into a cooperation agreement, and so on.

The form can be explained in the PP to be revised or make derivative rules in the form of a Circular (SE) or other. This is useful so that the government can still become the police by controlling the industry through all the regulations that have been issued.

MNO players also need to provide synergy in the form of input assisted by valid data regarding all matters related to MVNO as a material for the government to consider when making derivative regulations. The final thing that business actors want from the birth of a new rule is win-win solution.