I OVERVIEW

Infrastructure development, including the development of telecommunications infrastructure, is imbalanced among the islands of Indonesia. A key challenge is the need to reach an extended archipelago of over 17,500 islands. As such, the Ministry of Communication and Information Technology (MCIT) has issued Regulation of MCIT No. 25 of 2015 concerning Implementation of Telecommunication and Information Technology Universal Service Obligations (Regulation No. 25/2015) in order to expand telecommunication services coverage in Indonesia. The expansion principally targets remote or underdeveloped areas, including commercially underdeveloped areas and areas that have not been covered by the existing telecommunication services coverage. Further, the government also issued Presidential Regulation No. 38 of 2015 concerning Cooperation between Government and Business Entities for the Infrastructure Procurement, which allowed the government to establish cooperation with the private sectors (including state- and regional-owned enterprises) in procuring infrastructure for public interest by utilising resources from the private sectors, including the telecommunication and information technology infrastructures to expedite the development in the underdeveloped areas in Indonesia.

Separately, to combat social issues arising from Indonesia’s rapid population growth, the government established Law No. 11 of 2008 on Electronic Information and Transactions as the basic principle to regulate privacy and e-commerce in Indonesia. The Law has been supported with Government Regulation No. 82 of 2012 on Electronic System and Transaction Operation and various implementing regulations. However, effective implementation of the Law remains a key challenge for MCIT.

II REGULATION

i The regulators

MCIT governs and supervises the Indonesian technology, media and telecommunication sectors as the representative of the government of Indonesia. MCIT is the primary regulatory body, responsible for licensing and administration of the TMT sectors. Nevertheless, due to the complex nature of the technology sector, the Ministry of Industry also has the authority to administer, regulate and supervise matters relating to technological appliances and tools, with the exception of telecommunication devices.

To assist the administration of the telecommunication sector, MCIT has also established the Indonesian Telecommunication Regulatory Body (BRTI). MCIT specifically delegates its authority to regulate, supervise and control the provision of telecommunication network and services to BRTI, while maintaining the authority to formulate policies, regulate, supervise and control other fields of the telecommunication sector. MCIT is further supported by the Indonesian Broadcasting Commission (KPI), which is an independent state institution established under the Broadcasting Law (see below). An important role of the KPI’s involvement is to manifest public participation in the broadcasting area.

The key laws regulating Indonesia’s TMT sector include:

  • a Law No. 36 of 1999 on Telecommunication (the Telco Law);
  • b Law No. 40 of 1999 on Press;
  • c Law No. 32 of 2002 on Broadcasting (the Broadcasting Law); and
  • d Law No. 11 of 2008 on Electronic Information and Transaction (the EIT Law).
ii Regulated activities

Generally, the regulation of Indonesia’s telecommunication sector is divided into sectors. The telecommunications licensing regime is divided into three categories for the provision of telecommunication networks, telecommunication services and special telecommunication. The provision of a telecommunication network that requires radio frequency spectrum allocation or a network access code is limited. With the exception of special telecommunications, the provision of telecommunication networks and services requires a principle licence, followed by an operational licence. The principle licence is a non-transferable licence granted for a maximum period of three years for those telecommunication network licences where providers are limited; two years for those telecommunication network licences where providers are not limited; and one year for telecommunication service licences. All providers have the option to extend their licence once for either one year for telecommunication network licences whose providers are limited; or six months for both telecommunication network licences whose providers are not limited and for telecommunication service licences. The principle licence is issued by MCIT not later than 14 calendar days after receiving a completed application. If MCIT does not issue any decision to either approve or reject the application within such time frame, the application will be deemed as approved by the MCIT. The holder of a principle licence may begin to prepare the necessary infrastructure and facilities for operation. Once ready to commence operations, the principle licence holder shall conduct an operational feasibility test in order to obtain an operational feasibility certificate from MCIT, and may apply for an operational licence. The operational licence is granted by MCIT for an indefinite period, however the licence is subject to evaluation by either the Director General of Post and Telecommunication of MCIT or MCIT once every five years for basic telephony services, value added telephony services and multimedia services, and once every six years for the telecommunication network. For the provision of special telecommunications, no principle licence is required if the provision is for personal use or relates to a special duty. Neither a principle licence nor an operational licence is required if the provision is for the state’s defence and security.

In the media sector, pursuant to the Broadcasting Law, broadcasting institutions must obtain broadcasting operation licences prior to conducting broadcasting activities. Applications to obtain broadcasting operation licences must be submitted to MCIT through the KPI. MCIT then issues a decision to approve or reject the application. The broadcasting operational licence takes at least 100 working days to process as of the date the completed application is submitted. The validity period of the broadcasting operational licence is five years for a radio broadcasting operational licence and 10 years for a television broadcasting operational licence.

iii Ownership and market access restrictions

Foreign investment regulations apply within the TMT sector. Under Law No. 25 of 2007 on Investment, foreign investment may only be undertaken via an Indonesian limited liability company established for the purpose of foreign investment. Such companies are commonly referred to as Perusahaan Penanaman Modal Asing or PMA companies. Depending on the company’s field of business, the shares of a PMA company may be wholly owned by individual foreign investors or foreign entities. PMA companies may also arise through a joint venture scheme under the co-ownership of foreign individuals (or entities) and one or more Indonesian partners.

On 18 May 2016, the government issued Presidential Regulation No. 44 of 2016 on Fields of Business that are Closed and Fields of Business that are Conditionally Open for Investments (Negative List of Investment). This Negative List of Investment imposes the foreign shareholding restrictions in the form of maximum 67 per cent foreign ownership for a PMA company in the telecommunications sector in general, which shall include:

  • a the telecommunication networks provider, covering the provisioning of (1) fixed network and (2) mobile network operations (cellular or satellite); and
  • b the telecommunication services provider covering the (1) content service providers (ringtone, premium short message services, etc.); (2) call centre and other added value telephony services providers; (3) internet service providers; (4) data communication system providers; (5) public telephony internet service providers; (6) internet interconnection service (network access point) providers and other multimedia service providers.

Nevertheless, with regard to the provision of telecommunication network and infrastructure, the Negative List of Investment imposes further restrictions on the provision of telecommunication tower business, in which the telecommunication tower may only be provided and managed by local company.

Further, restrictions to foreign ownership also apply to media services. In the Negative List of Investments, new private radio broadcasting that falls under Indonesian Standard Classification (KBLI) No. 60102, and any new private television broadcasting falling under KBLI No. 60202, either in the form of a free-to-air or subscription broadcasting institution, are prohibited from having foreign ownership. Nevertheless, foreign ownership is available to existing free-to-air, subscription private radio and television broadcasting institutions up to a maximum 20 per cent.

This exception is in line with Government Regulation No. 50 of 2005 regarding the Broadcasting Operation of Private Broadcasting Institution and Government Regulation No. 52 of 2005 concerning Broadcasting Operation of Subscription Broadcasting Institutions (Broadcasting Regulations), which provides an exemption for existing free-to-air and subscription private broadcasting institutions. Provided that the institution was established by a local entity, existing private broadcasting institutions are allowed to increase and develop foreign shareholdings on the following conditions:

  • a the foreign shareholding does not exceed 20 per cent of its total issued and paid-up capital;
  • b there are at least two shareholders; and
  • c the increase of capital through foreign direct investment is implemented only after the broadcasting trial period has ended and the permanent licence for broadcasting operation has been obtained, which is at least within one year for television broadcasts and six months for radio broadcasts.

With respect to newspaper media, business activities classified under KBLI No. 58130, namely press companies, are wholly closed to foreign ownership pursuant to the Negative List of Investments.

It is advisable to consult with the Investment Coordinating Board regarding shareholding restrictions applicable to other fields of businesses in the communications and informatics sectors on a case-by-case basis.

Further, the Broadcasting Regulations restrict direct and indirect cross-ownership by private broadcasting institutions, printed media companies and subscribed broadcasting institutions to:

  • a one private broadcasting institution of radio broadcasting services and one subscription broadcasting institutions (either radio or television) with one printed media company in the same region;
  • b one private broadcasting institution of television broadcasting services and one subscription broadcasting institution (either radio or television) with one printed media company in the same region; or
  • c one private broadcasting institution of radio broadcasting services and one private broadcasting institution of television broadcasting services with one subscription broadcasting institution on the same region.
iv Transfers of control and assignments

In Indonesia, licences are generally attached exclusively to the company or legal entity that obtains the licence. Such licences cannot be assigned or transferred.

Under Article 71 and 72 of Regulation of MCIT No. 01/PER/M.KOMINFO/01/2010 TAHUN 2010 concerning the Operation of Telecommunication Network as amended by No. 38 of 2014 and lastly amended by Regulation of the Minister of Communication No. 7 of 2015 (Telecommunication Network Decree), and Article 66 and 66A of Decree of the Minister of Communication No. KM 21/2001 concerning the Operation of Telecommunication Services as amended by No. 31/PER/M.KOMINFO/09/2008 and lastly amended by Regulation of MCIT No. 8 of 2015 (Telecommunication Service Decree), the telecommunications licensee (Telco company) is prohibited from changing its shareholding composition if the licence of the Telco company is in the principle licence stage, except for a Telco company in the form of a public company; and it may only change its shareholding composition if the licence of the Telco company is in its operational licence stage, after fulfilling at least 50 per cent of its five-year obligation to develop and construct the required network, infrastructure or facilities under the telecommunication licence, except for a Telco company in the form of a public company whose shares are traded on the Indonesian Stock Exchange. Prior to the transfer of shares, the Telco company must submit a report to the Minister of Communication and Information Technology if it is providing the telecommunication network or basic telephony services; or the director general of MCIT if it is providing value-added telephony services or multimedia services.

Additionally, corporate actions in the form of a merger, acquisition or consolidation may require notification to the Business Competition Supervisory Commission (KPPU). Article 5 of Government Regulation No. 57 of 2010 on Merger, Consolidation of Business Entity and Acquisition of Shares which may cause Monopolistic Practices and Unfair Business Competition stipulates that the surviving entity must notify the KPPU if any of the following conditions are met: the value of assets of the business entity resulting from the merger, consolidation or acquisition exceeds 2.5 trillion rupiah; or the value of sales of the business entity resulting from the merger, consolidation or acquisition exceeds 5 trillion rupiah.

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and internet protocol regulation

The provision of internet access or IP-based services has traditionally been regulated as part of the telecommunication regulatory framework, and is essentially subject to the same legal principles and legislation. Nevertheless, Indonesia has also established specific regulations for multimedia services conducted by Telco companies. The regulations cover ISPs, VoIP, and wireless internet access services through, inter alia, Wi-Fi services.

Currently, MCIT does not strictly regulate the price of retail internet services; however, the internet service providers must set pricing plans pursuant to a tariff formula that takes into account the costs in providing its service. In addition, MCIT has established policies to ensure that certain standards of quality are met by internet service providers.

ii Universal service

The Telco Law obliges telecommunications operators to make a contribution to promote universal services in the telecommunications sector. The universal services obligation (USO) requires operators to contribute to telecommunications facilities and infrastructure, or to contribute through other compensation. Additional contributions include an interconnection cost for costs of system development. The elucidation of the Telco Law affirms that the obligation to develop telecommunication facilities under the USO is only imposed on fixed-network providers that have obtained basic telephony services licences for long-distance direct call or local calls. Other telecommunications operators are simply obliged to pay a contribution.

Under Government Regulation No. 80 of 2015 on the Types and Tariffs of the Non-Tax State Income Applied in the Ministry of Communication and Information Technology, in conjunction with Regulation No. 25/2015, every telecommunications network and service provider is charged with contributing to the fund for Universal Services Obligations in the telecommunications and information technology sector (USO Contribution). The USO Contribution is paid as a percentage of the annual gross revenue of the provider.

The USO Contribution tariff is further regulated by Regulation of MCIT No. 45 of 2012 on the Implementing Guidelines on Tariff of the Non-Tax State Income from the USO Contribution. The Contribution tariff is set at a rate of 1.25 per cent of the operator’s revenue per financial year. The payment of the USO Contribution must be made on 30 April of the subsequent year; however, the payment may be made on a quarterly or semi-annual basis through a self-assessment method based on the operator’s financial report.

According to the Regulation No. 25/2015, the mandatory USO Contribution finances the provision of technology and information technology infrastructure and ecosystem in the country’s remote regions and for persons with various disabilities in order to improve accessibility. The scope of the USO shall cover the provision of telecommunications and information technology infrastructure and ecosystem in the USO regions and disabled communities. The management of the USO implementation comprises the elements of (1) planning, implementation and monitoring and evaluation, to be performed by the Director General of Post and Telecommunication and the Telecommunication and Information Technology Financing Management and Provider Agency (BP3TI); and (2) and fostering, to be performed by MCIT.

iii Restrictions on the provision of service

From a regulatory perspective, the Telco Law separates telecommunications network provisions from those regulating telecommunications services. Nevertheless, the Telecommunications Network Decree provides that, in general, a telecommunications network provider may operate as a telecommunications service provider through its own telecommunications network. This effectively removes any real structural or functional separation between an operator’s network and service activities.

Further to the above, both telecommunication network providers and telecommunication service providers are subject to extensive obligations and restrictions regarding their service provision to consumers. Generally, and as stipulated under Article 17 of the Telco Law, telecommunications network providers and telecommunications service providers are obligated to provide telecommunications services based on the following principles: equal treatment and best service for all users; increased efficiency in telecommunications operations; and fulfilment of service standards as well as facilities and infrastructure standards.

In addition, the Telco Law obliges every telecommunication network provider to guarantee that its users are free to choose other telecommunication networks to meet their telecommunication needs;2 prohibits a telecommunication operator from engaging in telecommunication operations that violate the public interest, morals, security or public order;3 and obliges the telecommunication network provider to provide interconnection if so requested by other telecommunication network providers.4

Relevant provisions detailing the said obligations and restrictions are included in the various laws, including the Telco Law, the EIT Law and Law No. 8 of 1999 on Customer Protection (the Customer Protection Law).

iv Security

Various provisions in Indonesia’s laws and regulations relate to privacy and data protection. They apply to specific fields of business, trade and industry, including the banking, telecommunications and medical services sectors, and electronic transactions. However, in this era of globalisation and electronic devices, we are of the view that the EIT Law contains the most commonly used and applicable provisions regarding personal data protection and privacy policy. The EIT Law stipulates that, unless provided otherwise by relevant laws and regulations, the use of any information through electronic media that involves personal data must be made only with the consent of the person concerned. The EIT Law also provides that any person whose rights are infringed may lodge a claim for damages incurred under the law. The EIT Law further states that the protection of personal data is part of one’s privacy rights. One’s right to privacy includes the right to enjoy a personal life, free from any disturbance; the right to communicate with others without being monitored; and the right to supervise information access concerning one’s personal life or data.

Nevertheless, an exception exists under Article 42 of the Telco Law with Article 31 of EIT Law and Regulation of Minister of Telecommunications and Informatics No. 11/PER/M.KOMINFO/02/2006 on Technical Guidelines for Interception dated 22 February 2006 (Regulation No. 11/2006) and Regulation of Minister of Telecommunications and Informatics No. 01/P/M.KOMINFO/03/2008 on information recording for the Interest of Defence and National Security dated 3 March 2008 (Regulation No. 01/2008). Under the law, the government provides an exception for law enforcement agencies (LEA) to conduct a lawful interception as long as the activities conducted by the LEA are in accordance with the prevailing law. Specifically, Article 3 of Regulation No. 11/2006 provides that the lawful interception is performed for the purpose of inquisition, investigation and prosecution, and the criminal proceedings of a crime. Article 3 of Regulation No. 01/2008 provides that a lawful information recording can be conducted for the purpose of defence and national security.

In general, Regulation No. 11/2006 and Regulation No. 1/2008 stipulate that the technical mechanisms to conduct a lawful interception are as follows.

LEAs send the identification of the target to the telecommunication operator. Identification of the target is done electronically unless the electronic facility is unavailable, in which case identification is done manually. Alternatively, the state intelligence may send the identification of the target directly to the Minister of Communications and Information Technology confidentially, either electronically or manually.

The lawful interception mechanism will only be conducted by either LEAs or state intelligence based on the standard operation procedures set by either LEAs (and notified to the Director General) or the state intelligence.

In the event that the lawful interception is to be conducted by the state intelligence, the request for lawful interception must be done in writing to the telecommunications operators, along with written notice to the Minister.

The telecommunications operators are obliged to assist with the lawful interception process through the telecommunications facilities and infrastructure.

In relation to cybercrime, MCIT remains in the preliminary stages of review as the first step towards establishing a cybercrime law in Indonesia.

IV SPECTRUM POLICY

i Development

Upon the enactment of the Government Regulation No. 53 of 2000 on the Utilisation of Radio Frequency Spectrum and Satellite Orbit (GR No. 53/2000), Indonesia has set the basic rules regarding the spectrum policy. GR No. 53/2000 stipulates that MCIT functions as the principal regulator and policy maker, and authorises MCIT to control the spectrum allocation and policy in Indonesia.

The most recent spectrum policy by MCIT concerns the implementation of Microwave Link (i.e., a radio relay system above 1GHz between two radio stations at a fixed position), as provided under MCIT Regulation No. 33 of 2015 concerning Point to Point Microwave Link Frequency Band Utilisation Planning (Regulation No. 33/2015). The utilisation of the point-to-point microwave link radio frequency channel must be based on the radio station licence (Izin Stasiun Radio (ISR)), which will be granted based on the result of the technical analysis under the first come, first served principle. The point-to-point microwave link ISR may be granted to: (1) telecommunication network providers; (2) special telecommunication providers5; and (3) television broadcasting service institutions.

ii Flexible spectrum use

The licences required to use radio frequency spectrum (spectrum licence) include a radio station licence (apparatus licence), a radio frequency spectrum bandwidth licence (bandwidth licence), and a class licence (as attached to the telecommunication devices and equipment certification). Apparatus licences are granted by MCIT following technical analysis of the application being submitted. Bandwidth licences are granted by MCIT through a selection process, or are established through conversion of existing apparatus licences. The selection process must be done, together with selection of the telecommunication network or service operation, following the issuance of telecommunication network or service operation licences. The selection process can be conducted in one of two forms: comparative evaluation or tender. Spectrum licences for most of the cellular bands are granted as bandwidth licences. The spectrum licence will specify the permitted use of the spectrum. The spectrum licence is in principle non-transferable, unless the transfer is approved by MCIT. In the event that the ownership of a licence holder is transferred or two licence holders merge, the spectrum licence may continue to be used after obtaining prior approval from MCIT.

In addition to the above, MCIT may reallocate the use of (the existing) radio frequency based on the evaluation of the Directorate General of MCIT in the following scenarios: there is a change in international radio frequency spectrum allocation; the purpose of the usage is adjusted; or the radio frequency is modified for efficiency purposes or to prevent the occurrence of radio frequency harmful interference.

In relation to the reallocation of the existing radio frequency issue, MCIT issued Regulation No. 22 of 2014 on 21 July 2014 concerning the use of the 2.3GHz radio frequency band for mobile cellular telecommunications operation and reallocation of the use of the 1.9GHz radio frequency band using Personal Communication System 1900 to the 2.3GHz radio frequency band. Based on this Regulation, the 2.3GHz radio frequency in the 2,330–2,360MHz band is designated for cellular mobile telecommunication operation with TDD mode on a neutral technology basis that has national coverage. Further, the user of the 1.9GHz radio frequency band using the personal communication system has been reallocated and transferred to the 2.3GHz radio frequency band. The reallocation shall be completed at the latest on 14 December 2016. Regulation of MCIT No. 30 of 2014 was issued on 9 September 2014 to reorganise the 800MHz radio frequency band for mobile cellular network operation. This Regulation refers to the 800MHz radio frequency in 824–835MHz paired with the 869–880MHz band, and 880–890MHz paired with the 925–935MHz band, which are designated for cellular mobile telecommunication operation with FDD mode on a neutral technology basis that has national coverage. This Regulation requires the existing operator to migrate the radio frequency spectrum use to the designated spectrum. Regulation of MCIT No. 19 of 2015 was issued on 29 April 2015 to organise the 1,800MHz radio frequency band for mobile cellular network operation. This Regulation refers to the 1,800MHz radio frequency in 1,710–1,785MHz, paired with the 1,805–1,880MHz band, which is designated for cellular mobile telecommunication operation with FDD mode on a neutral technology basis that has national coverage, which will be allocated for 4G technology. The reorganisation is being implemented to allocate more frequency to optimise the application of long-term evolution (LTE) technology by telecommunication providers, and to minimise interferences due to the joint utilisation of the contiguous radio frequency band by different providers.

iii Broadband and next-generation mobile spectrum use

The government is aware of NGA technology; however, no specific regulation has been made regarding NGA technology or the obligations applicable to NGA networks.

Regulation of MCIT No. 21/PER/M.KOMINFO/10/2011 on the Utilisation of the Information and Communication Technology Fund (ICT fund) has provided the legal basis for a government financing scheme to promote basic broadband.

The ICT fund is sourced from the TUSO Contribution. The ICT fund provides for the rollout of a fibre optic network with the aim of enhancing the equitable distribution and penetration of internet and broadband services. The project will be carried out by the Telecommunications and Informatics Fund Management Centre.

iv Spectrum auctions and fees

In Indonesia, spectrum allocation is organised and granted by MCIT through a selection process (see Section IV.ii, supra). Details of the terms and conditions, including the procedure and cost of the selection, will be set under such Minister Regulation. Based on the latest selection organised by MCIT, we note that MCIT takes into account the offering and financial capabilities of each participant. The participant acknowledged as the winner of the selection process must pay the upfront fee for the spectrum licences to the government.

Below is a summary of the spectrum licence fees in addition to any other telecommunication licence fees relating to the spectrum licence that are payable by the Telco company to the government.

No.

Type of fees

Tariff

Payment basis

1

The telecommunication operational right fee

0.5 per cent of operator’s gross income per annual financial year

Annually, not later than April 30 of subsequent year; can be paid quarterly or semi-annually

2

USO contribution

1.25 per cent of operator’s gross revenue per annual financial year

Quarterly based on the operator’s financial report (self-assessment)

3

The radio frequency spectrum utilisation right fee

Determined by MCIT

Determined by MCIT

A

The operational right fee

A1

Determined through selection mechanism

Upfront licence fee determined by MCIT

Paid upfront prior to issuance of the radio frequency spectrum licence

Annual radio frequency spectrum licence fee

First payment paid upfront prior to the issuance of the radio frequency spectrum licence. Thereafter, on an annual basis by every anniversary date of the radio frequency spectrum licence

A2

Determined with a formula (applicable to the operation of certain radio frequency bands)

Annual radio frequency spectrum licence fee

Payment made on an annual basis on every anniversary date of the radio frequency spectrum licence

B

The radio station licence

Determined by MCIT

Determined by MCIT

V MEDIA

i Restrictions on the provision of service

Generally, restrictions on the provision of Telco services relate to:

  • a business competition as governed under Law No. 5 of 1999 on the Prohibition of Monopoly Practices and Unfair Business Competition;
  • b customer satisfaction as governed under the Customer Protection Law;
  • c various aspects of advertising through broadcasting media as regulated under the Broadcasting Law; and
  • d certain activities governed under the Indonesian Criminal Code.

In particular, advertising through broadcasting media is subject to the Indonesian Advertising Ethics Rules issued by the Indonesian Advertising Council, requirements issued by the KPI and other related regulations. The content of broadcast media advertising is the responsibility of broadcasting institutions. Pursuant to the Broadcasting Law, the duration of permitted commercial advertising for a private broadcasting institution is limited to a maximum of 20 per cent of the total daily broadcasting duration. At least 10 per cent of the commercial advertising duration must be allocated to social community service advertising. The Broadcasting Law further prohibits:

  • a the promotion of religious teaching, ideology, persons or groups that offend the feelings of, or degrade, any other religion, ideology, person or group;
  • b the promotion of liquor and the like, and any addictive substances or materials;
  • c the promotion of cigarettes that shows the physical form of cigarettes;
  • d any other matter that is against propriety, morality or religious values; and
  • e the exploitation of children under 18 years old.

The Broadcasting Standard also provides that local broadcast programmes must be produced and shown for at least 10 per cent of the daily networked broadcast duration for television, and 60 per cent of the daily duration for radio. Of such local broadcast programmes, 30 per cent must be shown at prime time. Gradually, the local broadcast programming for television must be increased to at least 50 per cent of the daily networked broadcast duration.

Furthermore, upon the enactment of Law No. 44 of 2012 on Pornography (the Pornography Law), content or information provided through media and telecommunication is further supervised and restricted. Article 4 of the Pornography Law prohibits the production, making, copying, multiplying, distribution, broadcasting, importing, exporting, offering, selling and purchasing, leasing or provision of pornography that explicitly contains:

  • a sexual intercourse, including deviant intercourse;
  • b sexual exploitation;
  • c masturbation;
  • d nudity or displays of exotic nudity;
  • e sexual organs; or
  • f child pornography.

In addition to the above, the EIT Law clearly prohibits the distribution of electronic contents containing pornography, gambling, offensive or defamatory content, extortion or threats. Contravention of the EIT Law may incur criminal sanctions.

Note that online advertising is not regulated by the Broadcasting Law. Online advertising is specifically regulated under the Indonesian Advertising Ethic Rules, and is subject to the EIT Law, the Pornography Law and the Indonesian Criminal Code.

ii Internet-delivered video content

As of 31 March 2016, MCIT has issued a Circular Letter No. 3 of 2016 concerning Provision of Over-The-Top Applications and/or Content Services via the Internet (OTT services) (Circular Letter No. 3/2016). The Circular Letter No. 3/2016 serves as a socialisation of the upcoming regulation on OTT services. It describes the OTT services as:

  • a internet-based applications for the purposes of communication (including short messages, voice calls, video calls, chatting, etc.), financial transactions, gaming, social media, and so forth; and
  • b internet-based contents, including voices, pictures, animations, videos, music, films, games, and so forth which can be downloaded or streamed via the internet.

Based on Circular Letter No. 3/2016, subject to the upcoming regulation, the delivery of video content through the internet may be considered as OTT services. As such, the provider of internet-delivered video content will be subject to certain requirements, that is, it shall: (1) establish a permanent establishment; (2) be fully liable for the provided services; (3) comply with the prevailing laws and regulations; (4) comply with provisions on data protection; (5) filter the content and do censoring; (6) use a national payment gateway; (7) use an Indonesian internet protocol number; (8) provide access for lawful interception; and (9) provide information and/or terms of use in the Indonesian language.

Further, the Pornography Law (as described above) provides some restrictions on the content of videos delivered through the internet.

In addition to the above, Regulation of the Minister of Communication and Information Technology No. 21 of 2013 dated 21 June 2013 on the provision of content services in cellular mobile networks and wireless local fixed networks with limited mobility, as amended and lastly amended by Regulation of MCIT No. 6 of 2015, provides further requirements for cellular networks and wireless local fixed networks with limited mobility. Under the Regulation, MCIT establishes:

  • a the requirement for the content service provider to establish contact centre information;
  • b the obligation for the content service provider to provide complete, true and accurate information regarding the content; and
  • c the prohibition for the content service provider to provide content that:

• contravenes Pancasila6 or the Constitution of 1945 of the Republic of Indonesia;

• has the potential to trigger inter-ethnic, religious, racial and group conflict;

• is a violation of morality or is pornographic;

• concerns gambling;

• concerns humiliation;

• concerns extortion;

• is defamatory;

• is a violation of intellectual property rights; or

• contravenes provisions of the prevailing law.

‘Content’ is described broadly as all forms of information that may take the form of writing, picture, voice or a combination thereof in digital form, including software applications for download.

VI THE YEAR IN REVIEW

The government of Indonesia is focusing on the construction and development of infrastructure. Based on Presidential Regulation No. 3 of 2016 on National Strategic Project Acceleration, one of the aims of the National Strategic Project is increasing broadband coverage, namely Palapa Ring Broadband (Eastern part) in 57 regencies/cities and Palapa Ring Broadband in 457 regencies/cities, both of which are based on the fibre optic cable network. These projects have been commenced based on a public-private partnership scheme, which includes cooperation between government and private entities to construct and operate the network that will be built in the area that has not been covered by the current telecommunication network.

Further, the Director General of Post and Information Technology Operation of MCIT, through Circular Letter No. 1153/M.KOMINFO/PI.0204/08/2016 on 2 August 2016 (the Circular Letter), instructed telecommunication network providers to reduce the interconnection tariff for cellular mobile network and circuit switched-fix local network, which was to become effective as of 1 September 2016. This tariff reduction was intended to be imposed for the benefit of the telecommunication consumers. However, as of 1 September 2016, the Director General has announced that the implementation of the Circular Letter will be suspended until further notice given that the interconnection offer document submissions by the telecommunication network providers have not yet been completed.

Other than infrastructure, MCIT is aware of the prospect of revenue generated through OTT services in Indonesia; as such, the government has concerns regarding legal basis and taxation of the OTT service providers. As part of the implementation of MCIT’s policy related to OTT services, MCIT issued a regulation pertaining to the electronic interactive game classification on 20 July 2016. In the upcoming regulations, OTT services could be the main player in Indonesia’s TMT sector.

VII CONCLUSIONS AND OUTLOOK

The TMT sector in Indonesia is currently undergoing a phase of development. However, the government’s commitment to developing the TMT sector, expanding the telecommunication infrastructure throughout the Indonesian archipelago, is particularly welcome. By taking into account the rapid growth of the mobile phone market, internet services and the Indonesian population, Indonesia’s TMT sector looks set to become an important sector in the future.

Footnotes

1 Agus Ahadi Deradjat and Kevin Omar Sidharta are partners at Ali Budiardjo, Nugroho, Reksodiputro. The authors are grateful to Daniel O Muliawan and Mahiswara Timur, associates at the firm, who helped write this chapter.

2 Article 19 of the Telco Law.

3 Article 21 of the Telco Law.

4 Article 25 of the Telco Law.

5 Pursuant to Article 4 paragraph (5) of Regulation No. 33/2015, Special Telecommunication Provider shall include government institution or legal entities other than telecommunication network provider and/or telecommunication service provider.

6 The official philosophical foundation of the state.