Classification and Licensing of Telecommunications Providers Introduction of Competition in the Indonesian Telecommunications Industry

- 36 - Finally, oversight authority of the ITRA covers:  operating performance;  competition; and  utilization of telecommunication equipments.

C. Classification and Licensing of Telecommunications Providers

The Telecommunications Law organized telecommunication services into following three categories:  provision of telecommunication networks;  provision of telecommunication services; and  provision of special telecommunications services. Licenses issued by MoCI are required for each category of telecommunications services. MoCI Regulation No.12010 and MoC Decree No.KM.212001 dated May 31, 2001 regarding the Operation of Telecommunications Services, as amended by MoCI Regulation No.31PERM.KOMINFO092008 dated September 9, 2008, are the principal implementing regulations governing licensing. MoCI Regulation No.12010 classified network operations into fixed and mobile networks. Fixed network operations are grouped into:  local fixed network operations;  fixed domestic long distance operations;  fixed international connection operations; and  fixed closed network operations. The mobile network operations were divided into:  terrestrial mobile network operations;  mobile cellular network operations; and  satellite mobile network operations. MoC Decree No.KM.212001 categorized the provision of services into basic telephony services, value-added telephony services, and multimedia services. The provision of multimedia services is further categorized into provision of internet services, network access point services, public internet telephony services, and data communication system services. The provision of network services and of telecommunications services requires separate licenses according to the established categories. Special telecommunications license held for private purposes, broadcasting, as well as defense and national security are provided separately.

D. Introduction of Competition in the Indonesian Telecommunications Industry

In 1995, we were granted a monopoly to provide local fixed line telecommunications services until December 31, 2010, and DLD services until December 31, 2005. Indosat and Satelindo which subsequently merged with Indosat were granted a duopoly for provision of basic international telecommunications services until 2004. As a consequence of the Telecommunications Law, the Government terminated our exclusive rights to provide domestic fixed line telephone and DLD services and Indosat’s and Satelindo’s duopoly rights to provide basic international telephone services. Instead, the Government adopted a duopoly policy to create competition between Indosat and us as comprehensive service and network providers. The market for IDD services was liberalized in August 2003 with the termination of Indosat’s and Satelindo’s exclusive rights. In 2012, Indosat began operating fixed line services and, in 2013, fixed wireless access and DLD services. We subsequently received our IDD services license and began offering IDD services in 2004 in direct competition with Indosat.

E. DLD Services