Digital Regulation Platform
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Indonesia’s Universal Service Obligation Fund

24.09.2020

Introduction

One of the main challenges to developing ICT Infrastructure in Indonesia is its geography. This includes the number of islands, size of the territory to cover, the numerous remote and difficult to reach areas, and the number of low-income and uneducated inhabitants (GSMA 2013: 151).

Owing to the limited funding capability of both the government and the private sector, infrastructure development cannot fully meet the demand in Indonesia. Thus, isolated and impoverished parts of the country are the most harmed (GSMA 2013: 151).

Structure

According to Telecommunications Law No. 36 of 1999, “every telecommunications network operator and/or telecommunications service operator is obliged to provide a contribution to universal services.” This contribution can consist of telecommunications facilities and infrastructure and/or other compensation. In 2000, Government Regulation No. 52 created the Universal Service Obligation Fund (USOF) in order to provide access to telecommunications services. The BTIP, the Indonesian Telecommunications Regulatory Agency, a non-profit public service institution, has been established to manage the USOF. The Directorate General of Posts and Telecommunications is the regulatory agency. The USOF has an annual budget in excess of USD 170 million (Broadband Commission 2019: 56).

In 2007, services covered by universal service obligations (USO) were expanded to include information technology and broadband service (GSMA 2013: 151). Services authorized include the provision of telecommunications and information technology services, public phone service 24 hours a day, independent technology, local content priority, Internet, and broadband (ITU 2013: 79).

All providers were required to pay 0.75 per cent of their gross revenues to the fund and, in 2009, Government Regulation No. 7 increased the percentage to 1.25 per cent of all gross revenues. The USO operators are chosen by BTIP through auction processes and are licensed by the government. The BTIP can choose any telecommunications technology based on demand, target, and characteristics of the area (GSMA 2013: 152). Subsidies go to villages through the operator to provide access and services.

Projects

BAKTI manages four programs, which are funded by the USOF:

Best practices

Some aspects of the Indonesia’s USOF are aligned with success factors:

References

BAKTI. 2019. Approaches to ASEAN Next Generation Universal Service Obligation (USO2.0) Consultative Workshop. Indonesia. https://www.baktikominfo.id/en/informasi/siaran-pers/approaches_to_asean_next_generation_universal_service_obligation_uso20_consultative_workshop-874.

Broadband Commission for Sustainable Development. 2019. The State of Broadband: Broadband as a Foundation for Sustainable Development. Geneva: International Telecommunication Union and United Nations Educational, Scientific and Cultural Organization. https://www.itu.int/dms_pub/itu-s/opb/pol/S-POL-BROADBAND.20-2019-PDF-E.pdf.

GSMA. 2013. Universal Service Fund Study. London. https://www.gsma.com/publicpolicy/wp-content/uploads/2016/09/GSMA2013_Report_SurveyOfUniversalServiceFunds.pdf.

ITU (International Telecommunication Union). 2013. Universal Service Fund and Digital Inclusion for All Study. Geneva: International Telecommunication Union. https://www.itu.int/en/ITU-D/Conferences/GSR/Documents/ITU%20USF%20Final%20Report.pdf.

Last updated on: 05.10.2020