Is 5G Going to Finally Take Off in Indonesia in 2024?

As covered in an earlier ABI Insight, “Indonesia: Strong Government and Industry Support Required to Overcome 5G Implementation Issues,” although 5G commercial services were launched in the country as far back as June 2021, further deployments of 5G networks and services have since been slow. According to the Global System for Mobile Communications Association (GSMA), as of November 2023, the country’s 5G network only covers 15% of the population, which pales in comparison to its 4G coverage standing at 97%. While there could be multiple factors behind the slow 5G rollout in the country, some of the prominent factors include the lack of allocated spectrum to Communications Service Providers (CSPs) to support the widespread adoption of 5G and aggressive tariff pricing.

However, in a positive development, Indonesia’s Ministry of Communication and Information Technology (KOMINFO) has signaled its strong intentions to further develop the country’s 5G capabilities and has issued a public consultation on the use of the 700 Megahertz (MHz) and 26 Gigahertz (GHz) Radio Frequency (RF) bands for 5G services in October 2023. A spectrum auction exercise is expected after the conclusion of this consultation, which could signal a significant turning point for 5G development in Indonesia.

Fixed Wireless Access (FWA) is a wireless technology that provides high-speed broadband Internet to fixed locations. FWA operates by establishing a wireless link between a central base station and Customer Premises Equipment (CPE) located at the user's location. Although not a new technology, FWA is considered one of the key defining applications for 5G in delivering high data throughput services to homes, in lieu of fiber connections.

5G FWA is particularly suited for the Indonesian context, given that 1) Indonesia consists of more than 11,000 inhabited islands, making the deployment of fiber networks difficult and costly; 2) the country has a low Fixed Broadband (FBB) penetration rate of under 5 per 100 people; and 3) a strong national push is being made to improve the country’s digital infrastructure. In light of the above, ABI Research estimates that FWA subscriptions in Indonesia will grow at a CAGR of 33% from 0.64 million to 2.69 million users between 2023 and 2028.

Notably, 4G FWA in Indonesia did not take off. In the past, there were eight FWA-only operators offering broadband connectivity via 4G technology. However, most, if not all, are no longer in operation today. So, what can CSPs do differently this time around to make 5G FWA successful? ABI Research lists some of our key recommendations below:

• Building a Strong Business Proposition: FWA's success in the 5G landscape stems from its high-speed connectivity, rapid deployment, affordability, and adaptability in urban and rural areas. In particular, with enhanced 5G Millimeter Wave (mmWave) capabilities, it is expected that broadband speeds for FWA connectivity will be as reliable as fiber and will offer ultra-high throughput and ultra-low latency for broadband connection. However, to provide a strong FWA experience, CSPs will need to work closely with Network Equipment Vendors (NEVs). For example, Telkomsel’s partnership with Ericsson and Qualcomm to trial 5G mmWave for FWA in March 2023 is a positive step in the right direction.
• Building Strong Vertical Partnerships and Collaborations: CSPs should focus on building strong vertical partnerships and collaborations with other third-party solution providers. This can include initiatives such as bundling various value-added services with 5G FWA subscription plans. For instance, Zain Saudi Arabia has reported robust 5G FWA growth by leveraging strong 5G network performance and attractive promotions—free 5G FWA CPE router & extender, and bundles for Over-the-Top (OTT) Television (TV) and cloud gaming/devices.

While the recent 5G developments in Indonesia present an exciting opportunity that CSPs can capitalize on, the continuing lack of availability of the 2.6 GHz and 3.5 GHz frequency bands (mid-band) for 5G services—which are currently being used for Broadcast Satellite Services (BSS) and Fixed Satellite Services (FSS), respectively—is a potential stumbling block that prevents CSPs from unlocking the full potential of FWA.

For instance, although the 700 MHz (low-band) provides comprehensive coverage, its smaller bandwidth only enables throughputs and latencies that are slightly better than 4G networks. 5G mmWave for FWA could be viable in suburban and urban areas, but it currently faces issues with device price point, overall ecosystem, and requirements for dense infrastructure deployments due to its short range. In contrast, mid-band spectrum is regarded to be ideal for 5G FWA due to its ability to support high data throughputs over relatively longer distances. In order to support a successful 5G FWA strategy, access to sufficient 5G mid-band spectrum is another critical piece of the puzzle that Indonesian regulators will still need to address.