Jakarta, IO – The visit to Bali for the World Water Forum (WWF) by Elon Musk, CEO of SpaceX and Tesla, implies potentially significant advancements in digital technology. Starlink has officially received permission to launch in Indonesia, joining 32 countries in Europe, four in Africa, and eight in Asia and Oceania.
Facing infrastructure challenges, PT Starlink Services Indonesia is emerging as a crucial connectivity solution for the country. Supported by SpaceX, the company aims to provide Starlink satellite internet service across Indonesia, delivering reliable, high-speed access to every corner of the country, including areas previously neglected, impeded by high investment costs for cellular and fixed broadband connectivity.
Unlike traditional satellite internet services that use geostationary satellites positioned 35,786 km from Earth, limited by high latency of over 600 milliseconds—making them less suitable for streaming, online gaming, and video calls—Starlink employs a constellation of thousands of satellites orbiting closer to Earth (Low Earth Orbit/LEO), at around 550 km. This allows for broad global coverage with much lower latency, between 25 and 60 milliseconds, and download speeds ranging from 25 to 220 Mbps, providing a more responsive and smoother online experience.
Additionally, with over 5,250 satellites launched (as of January 2024), and plans to expand to 12,000 satellites, Starlink is committed to strengthening its global network. The service’s reliability is enhanced through its extensive satellite fleet, allowing significant redundancy. If one satellite encounters an issue, the user’s antenna will automatically switch over to another satellite, minimizing disruptions due to bad weather or thick clouds.
The FCC, the American telecommunications authority, has authorized SpaceX to provide broadband satellite internet services using the Ka and Ku bands, which cover frequency ranges of 27-40GHz and 12- 18GHz, respectively. Starlink also utilizes the V band (40-75GHz), as well as the X (8-12GHz) and K (18- 27GHz) bands. Data transmission from satellites to ground customer terminals uses frequencies of 10.7- 12.7GHz and 37.5-42.5GHz, while transmission from satellites to gateways uses ranges of 17.8-18.6GHz, 18.8-19.3GHz, and 37.5-42.5GHz. These channeled services using much lower frequency than traditional satellite services.
While this technology might revolutionize the development of the digital economy in Indonesia, there are aspects that we need to anticipate.
On the positive side, as an archipelagic country, the digital divide has been responsible for the economic gap between regions in Indonesia. Results from SUSENAS data by BPS illustrate that households in village areas with internet access have, on average, 1.46 million IDR more in monthly expenditures compared those of unconnected house holds, whereas the gap in city households is approximately 2.7 million IDR. The gap is even larger when the internet is used for productive purposes, such as trading, which can increase household expenditure by about 2 million IDR in village areas. Therefore, having internet access is believed to stimulate economic activity in Indonesia, as has been found in other developing countries – for example in the study by Hjort & Poulsen (2019). The study shows that the gradual arrival of fast internet infrastructure in Africa appears to increase employment rates, even for individuals who have only completed primary school.
Second, Starlink represents a new hope for bridging the digital divide, enabling people to enjoy broadband connections without the long wait for BTS development, especially in remote areas. Nevertheless, Starlink’s services come at a relatively steep cost. Customers in Indonesia must pay an initial subscription fee of around Rp750,000 and purchase the ‘Starlink Kit’ for Rp7.8 million.
There is a limited-time 40% discount until June 10, 2024, reducing the kit cost to Rp4.7 million. However, this cost can increase if customers choose packages with higher capacities or business packages offering mobility, with monthly subscription fees reaching up to Rp4.34 million. This might be a feasible solution for regional areas, even at the community level, to collectively procure the technology and enable internet connections.
On the other side of coin, there are aspect we have to anticipate.
There are concerns about the sustainability of cellular operators. Mobile Network Operators (MNOs) have been impacted by waves of technological developments, particularly Over-The-Top (OTT) services. During the heyday of the telecommunications industry, before 2010, when telcos traditionally relied on revenue from Short Messaging Services (SMS) and calls, Bloomberg data shows that the Average Revenue Per User (ARPU) for Indonesia’s telco operators was a staggering Rp 40,000.
However, with the massive adoption of WhatsApp starting in 2010 and onwards, the number of WhatsApp users in Indonesia has now reached 167 million in 2023, leading to a continuous decline in telecommunications ARPU. The average ARPU flattened to around Rp 35,000 during 2010-2017 and peaked in 2020, during the COVID-19 period when people mostly conducted their business at home.
With current mobile penetration rates reaching 124%, there is little room left for Mobile Network Operators (MNOs) as the cellular market appears saturated. This presents a choice that the Government should carefully consider: satellite and mobile technologies might act as substitutes rather than complements, potentially threatening the viability of legacy operators.
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If Starlink assumes a national policy stance and substitutes fiber optic development to extend the Palapa Ring to final users, it could result in huge sunk costs for the already developed backhaul, especially in eastern Indonesia. For example, a project in Papua to connect 17 districts has already absorbed about Rp 11 trillion in capex and opex. Delaying the operation of this infrastructure might increase depreciation costs. Similar projects exist in western and central Indonesia.
Lastly, privacy and security issues need to be addressed. A study conducted by IFG Progress in 2022 shows that as a “break-out” country according to the Fletcher Intelligence Index, Indonesia must pay close attention to the aspects of privacy and security amid current digital developments. Since Starlink has access to the flow of data, it is imperative to ensure that the implementation of a Personal Data Protection Law (UU PDP) is upheld. This means that data collection and usage by technology companies must strictly adhere to regulatory guidelines, ensuring that only permitted data is accessed and used appropriately.