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ADB/ITU Final International Workshop on Rural ICT Development A DB/ITU Project on “Rural Information and Communications Technology Policy Advocacy, Knowledge Sharing, and Capacity Building”. Indonesia Country Report on Regulatory Framework. Mr Arif Wismadi , ADB/ITU national consultant.

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indonesia country report on regulatory framework

ADB/ITU Final International Workshop on Rural ICT Development ADB/ITU Project on “Rural Information and Communications Technology Policy Advocacy, Knowledge Sharing, and Capacity Building”

Indonesia Country ReportonRegulatory Framework

Mr ArifWismadi, ADB/ITU national consultant

30th Jun – 2nd July 2011

Sheraton Krabi Beach Resort, Krabi, Thailand

content
Content
  • The (r)evolution of regulatory framework: why does it necessary?
  • Important milestone and its impact
  • What are specific regulation applied for USO/rural?
  • Lesson learnt
the r evolution of regulatory framework why does it necessary
The (r)evolution of regulatory framework: why does it necessary?
  • ICT is important for national integrity, therefore it should be considered as public domain, and to be manage by state (owner enterprise) SOE
  • Monopoly privilege was given to SOE with an obligation to connect rural and remote area
  • ICT is a lucrative industy, Indonesia is a big market, but under monopoly any new player is difficult to enter.
  • Monopoly privilege failed to realize rural and remote area connectity toward national integrity.
  • Globalization issues depress countries in the region to open the market: inefficient monopoly is the fact and it is the forcing factor for liberalization.
  • Monopoly, duopoly and market liberalism skewed ICT sector from public into ‘private’ domain.
the r evolution of regulatory framework why does it necessary4
The (r)evolution of regulatory framework: why does it necessary?
  • Private enterprise grown with little interest to serve rural, remote, non-economically viable.
  • Reinventing USO program to address rural connectivity and national integrity, led by Government.
  • ‘Pay’ or ‘play’ became the options, choice on ‘pay’ to provide equitable contribution and centralized resources management.
  • Collection and disbursement is new challange.
  • All regulatory intrument modified or formulated to support new program.
rural specific regulations
Rural Specific Regulations

NATIONAL LAW

36:USO Contribution

Government Regulation

52: USO definition

28: 0.75%

7: 1.25%

Ministry Decree

34: USO operational definition

Service Procurement

Operational Plan

Dir. General

USO with USF: 38.471 vil internet 500 vil+5.748 IPoP

SOE privilege and obligation to rural connectivity

USO Pilot Project w Gov. Budget

Deployment

lesson learnt
Lesson Learnt
  • It takes 10 years to operationalized USO with sufficient regulary support
  • Some aspect in regulatory frameworks: public-’private’ domain, financing, asset ownership, procurement scheme, single-multiyears basis, institutional , decentralized systems.
  • Reform from monopoly to market economy grows commercial market rapidly. Further investigation on the impact for rural need to be studied.
indonesia country report on government s institutional structure

ADB/ITU Final International Workshop on Rural ICT Development ADB/ITU Project on “Rural Information and Communications Technology Policy Advocacy, Knowledge Sharing, and Capacity Building”

Indonesia Country Reporton Government’s Institutional Structure

Mr ArifWismadi, ADB/ITU national consultant

30th Jun – 2nd July 2011

Sheraton Krabi Beach Resort, Krabi, Thailand

content9
Content
  • What we want to achieve with this structure?
  • Structure, hierarchy, functions.
  • How does it support rural?
  • Lesson learnt
what we want to achieve
What we want to achieve
  • How:
    • Regulatory Instruments
    • Government roles

Market economy while serving the unserved.

5 key roles of the public sector in ict
5 key roles of the public sector in ICT
  • Policymaker: MCIT
    • Determining the public interest in infrastructure and translating these interests into the legal, institutional, and regulatory frameworks
  • Regulator: MCIT to BRTI (Independent Regulatory Body)
    • Administering conditions of market entry
    • Investigating the exercise of anti-competitive practice
    • influencing pricing and service levels
    • setting rules/standards to protect public safety and the environment.
  • Custodian: MCIT (resource management i.e. Frequency, Numbering etc)
    • Maintaining good stewardship of public assets (financing, operation, maintenance through state operators or private managers and concessionaires)
  • Constructor: MCIT (e.g. facilities for Frequency Monitoring)
    • Designing and constructing infrastructure
  • Customer: BTIP/BP3TI (service procurement of USO Operators)
    • Procurement of infrastructure works or services
policy maker mcit
Policy Maker: MCIT
  • Determining the public interest in infrastructure and translating these interests into the legal, institutional, and regulatory frameworks

BRTI

Permen No17/PER/ M.Kominfo/10/2010

regulator brti
Regulator: BRTI
  • Maintaining good stewardship of public assets (financing, operation, maintenance through state operators or private managers and concessionaires)
  • Administering conditions of market entry
  • Investigating the exercise of anti-competitive practice
  • influencing pricing and service levels
  • setting rules/standards to protect public safety and the environment.
customer btip bp3ti
Customer: BTIP/BP3TI
  • Procurement of infrastructure services

KKPU is the USF. To use USF, the technical department (1) has to have authorization from Ministry of Finance (2), and as the implementation agency is the Office of Rural Telecommunication and Information (BTIP) (3). BTIP selects the operators (5) to provide USO service as required. Operators also sign contract with BTIP to provide service in certain time. In term of planning, The Local Government (4) and Community (6) propose the USO location and also harmonized the program with local program.

rural specific regulations15
Rural Specific Regulations

BRTI

BTIP

USO with USF: 38.471 vil internet 500 vil+5.748 IPoP

lesson learnt16
Lesson Learnt
  • The rapid growing of ICT market is a fact that ‘market forces’ is more dominant than ‘planning’.
  • Planning aspect in ICT sector is one of key-success factor for serving the unserved.
indonesia country report on funding mechanism

ADB/ITU Final International Workshop on Rural ICT Development ADB/ITU Project on “Rural Information and Communications Technology Policy Advocacy, Knowledge Sharing, and Capacity Building”

Indonesia Country Reporton Funding Mechanism

Mr ArifWismadi, ADB/ITU national consultant

30th Jun – 2nd July 2011

Sheraton Krabi Beach Resort, Krabi, Thailand

content18
Content
  • Why is it so diffult?
  • Option: play or pay? Pay.
  • Lesson learnt from pilot project
  • The transition of funding mechanism
  • Why do we need BP3TI?
  • Collection vs disbursement issue
financing issues on rural ict development
Financing issues on rural ICT development
  • Investment on fixed line for rural ICT in remote areas needs high-capital with low RoI (Return on Investment)
  • Development of ICT in rural areas is much more expensive (not attractive in business point of view)
  • Affordable technology and service are required for the poor in rural area
lesson learnt from pilot project
Lesson learnt from pilot project
  • Pilot: government budget, CAPEX for last-mile
  • Asset ownership, operation and maintenance
  • Annual budgeting vs response time
  • Revenue management
  • Financial risk management
evolution of uso policy
Evolution of USO policy

PREVIOUS (2003 – 2004):

  • USO FUND ONLY FOR ONE YEAR BUDGET
  • BASED ON PROCUREMENT (LOWEST CAPEX SUBSIDY FOR LAST MILE)
  • ASSET OWNED AND MANAGED BY GOVERNMENT
  • THE PROCUREMENT ONLY FOR ONE YEAR BUDGET (SINGLE YEAR)
  • THE OPERATIONS AND MAINTENANCE ARE DIVIDED EVENTS
  • THE MAINTENANCE AND MANAGEMENT RISK ARE RESPONSIBLE BY THE GOVERNMENT
  • NOT ANY GUARANTE FOR SUSTAINABILITY ACCESS AND TELECOMMUNICATION SERVICES
  • NEW (2007 – NOW):
  • EARMARKEDTHE USO FUND ONLY FOR THE USO AND END YEAR CASH BECOME THE EARLY YEAR CASH FOR THE NEXT YEAR.
  • BASED ON SERVICE PROCUREMENT (LOWEST OPEX SUBSIDY FOR LAST MILE ACCESS)
  • ASSET OWNED/MANAGED BY PROVIDER/S
  • THE PROCUREMENT FOR 5 YEARS FOR TELEPHONE & 4 YEARS FOR INTERNET (MULTI-YEARS)
  • THE OPERATIONS AND MAINTENANCE ARE AN INTEGRAL PART OFTHE CONTRACT
  • THE OPERATION AND MANAGEMENT RISK ARE RESPONSIBLE BY THE PROVIDER
  • AVAILABILITY, ACCESSIBILITY, AFFORDABILITY TELECOMMUNICATIONS ACCESS AND SERVICES
concept for new rural ict financing

Non-operational Revenue (USF)

Operational

Revenue

Operational

Expenses

MANAGEMENT

IFsurplus:

IFdeficit:

to improve the service

subsidy

Service Payment

Operational Revenue

Service

Performance

Operational

Revenue

Reral ICT 1

invoice

Opex:

Per Facilities

Operational

Rural ICT2

Revenue

Operational

Rural ICT- n

Revenue

Concept for New Rural ICT Financing

Rural ICT Authority

Non-operational Revenue

The payment based on the performance

slide23

USF

RISK

FIXED OPEX

DEFICIT

USF Expenses

SURPLUS

REVENUE

SUBSIDY: 00%

DEVELOPMENT

FUND

DEPOSIT

USF

USF

SUBSIDI 0%

100%

SUBSIDI

RISK

x

CONCESSION

RISK MANAGEMENT

PREMI

OPEX

Exit Strategy?

CONCEPT: FINANCIAL RISK MANAGEMENT of Rural ICT Authority

3rd Party

concept roles and responsibilities

MCIT + Interministrial

Parlement/

Interministrial Board

Civil Society

Representative

Rural ICT

Knowledge

Goverment /Contributor

Golden share

Concept: Roles and Responsibilities

Budget Proposal & Reporting

Budget Acceptance

Poilicy and Planning &

Financial Security

Operational Planning

Rural ICT Authority

INDEPENDENT AUDITOR

current implementation

Non-operational Revenue (USF)

Operational

Revenue

Operational

Expenses

MANAGEMENT

IFsurplus:

IFdeficit:

to improve the service

subsidy

Service Payment

Operational Revenue

Service

Performance

Operational

Revenue

Reral ICT 1

invoice

Opex:

Per Facilities

Operational

Rural ICT2

Revenue

Operational

Rural ICT- n

Revenue

Current Implementation

Rural ICT Authority

Non-operational Revenue

USO Operator

lesson learnt26
Lesson Learnt
  • Option for revenue collection: gross contract (revenue goes to authority) requires certain capacity, net contract (revenue goes to operator) – current scheme
  • Service contract requires a robust information management to monitor the operator performance.
indonesia country report on initiatives public private partnership

ADB/ITU Final International Workshop on Rural ICT Development ADB/ITU Project on “Rural Information and Communications Technology Policy Advocacy, Knowledge Sharing, and Capacity Building”

Indonesia Country Reporton Initiatives & Public Private Partnership

Mr ArifWismadi, ADB/ITU national consultant

30th Jun – 2nd July 2011

Sheraton Krabi Beach Resort, Krabi, Thailand

content28
Content
  • Obligation, Provision?
  • Financing and public, private and PPP
  • Some initiative and best practices
  • Where are we now?
  • Lesson learnt
financing scheme options for uso programs
Financing Scheme Options for USO Programs
  • FULL COST
  • INCREMENTAL COST
  • Incremental Cost
    • Reduce cost
    • Liability and Risk sharing
    • Public Private Partnership

OE1

OE2

OE1

COST

OPRT

OE2

COST

OPRT

cost sharing in rural ict development

operator

USOFund

Local government/community

LAND

BUILDING

PROPERTY

ELECTRICITY

WATER

Cost sharing in Rural ICT development
slide31

USO Standard Telecommunication Facilities

Name Board

Antena

Internet Facility

Sign Board

Telephone Facility

THE OFFICE FOR TELECOMMUNICATION AND INFORMATICS FINANCIAL PROVISION AND MANAGEMENT (BP3TI)

road map uso development
Road map USO Development

2015

2020

2025

2020

2025

2010

Ringing Villages

Smart Villages

I C T F U N D

Smart District

  • Network Infrastructur
  • Backbone
  • IIX
  • Incubator
  • Radio Komunitas, dll

4

  • Social Transformation
  • ICT Society

3

  • Villagers to Villagers (Community)
  • ICT Bordeless through sectors

2

  • Village to Village
  • E-Government : Single Identity Number/SIN
  • E-Education : Standard Buku Electronik/SBE – Depdiknas
  • E-Transportation/E-Ticketing
  • E-Business

1

  • Basic Telephony (Voice);
  • Internet Access
  • SMS
  • BTIP as Enabling Sector
  • BTIP as Servicing Sectors
  • BP3TI as Promoting Sector
csr program ctc jogloabang
CSR Program: CTC Jogloabang
  • Ananto Sulistyo

Managing Community ICT Center : the important factors to scaling up the model

csr private to community
CSR: Private to community
  • Established in 2008 with funding and assistance from Microsoft Indonesia, the ASEAN Foundation in the form of 2sets of computers and 1printer, along with operational and dial up Internet connection.
  • Community leader resposible to develop the program
community internet
Community Internet
  • Community Selfhelp for affordable internet provision in their (urban) neighborhood
local government initiative sragen
Local Government Initiative: Sragen
  • Teknologi Informasi & Komunikasi
  • VOICE
  • Tele Conference (VoIP)
  • (Telepon GRATIS antar SKPD)
  • VIDEO
    • Video Conference
    • CCTV (IP Camera)
    • DATA
    • Integrasi ‘Sistem Informasi Manajemen Daerah’ (misal : SIAK Online)
    • Internet (Email, Web dll) & Intranet (Pertukaran Informasi antar SKPD)
state gov initiative e learning infrastructure
State Gov Initiative: E-Learning Infrastructure

JARDIKNAS

The amount of connected schools in 2010 (25.565 schools)

INHERENT

Provincial education office

Universities

Polytechnic

Teachers/Lecturers

University

Schools

Institutes

an overview

An Overview

Where are we now?

motivations and real actions

3

Ideological Values

  • Interorganizational-
  • relationships
  • Transnational-practices

ICT for Socio-Cultural-EconomicTransformation

ICT as enabler

2

State centred

VALUES

Function asinteraction

& transaction

1

ICT for public service

Pragmatics Values

0

1

2

3

SYSTEMS NETWORKS

Simple networks

Complex networks

SYSTEMS NETWORKS and VALUES to determine three level of the objective of infrastructure utilization: public services, promoting transaction, transformation

Motivations and (real) Actions

Objectives of Infrastructure Development

(Usman et al, 2010)

lesson learnt42
Lesson Learnt
  • How to scale-up the best practices?
  • Leader and leadership, champion, are urgently required
  • Infrustructure is only one part, it is very important but insufficient
  • Activity based (economic sectors) is important driving factor for the devopment.
  • Community development program is one of critical success factor
  • USF fund is commonly for infrastructure, often not eligible for ‘non-ICT sectors’ activities. Eligibility of USF funded activity should be redefined.