- 39 - transactions. In July 2010, MoCI replaced this regulation with MoCI Regulation No.11PERM.KOMINFO072010 “MoCI
MoCI Regulation No.112010 recognizes IPTV as a convergence of telecommunications, broadcasting, multimedia and electronic transactions and provides that only a consortium comprising at least two Indonesian entities may be licensed as an
IPTV provider. Each consortium must together hold licenses as a local fixed network provider, internet services provider and one broadcast services provider. Such consortium may only provide IPTV services in the area covered by all three required
licenses. MoCI Regulation No.112010 further requires that IPTV services be delivered through a wire network.
L. Satellite
Our international satellite business is highly regulated. In addition to being subject to domestic licensing requirements and regulation for the use of orbital slots and radio frequencies as stipulated in MoCI Regulation No. 13PM.KOMINFO82005
dated September 6, 2004 which is partially amended by MoCI Regulation No.37PM.KOMINFO122006 dated December 6, 2006 “MoCI Regulation No.372006”, our satellite operations is also regulated by the Radio Communications Bureau of the
International Telecommunications Union.
Furthermore, MoCI Regulation No.372006 dated December 6, 2006 requires foreign satellite operators to obtain a landing right license to operate in Indonesia which requires such foreign satellite operators to coordinate with domestic satellite operators,
including us, to ensure that no Indonesian satellite and terrestrial systems will be disrupted by their operation.
M. Consumer Protection
Under the Telecommunications Law, each network provider is required to protect consumer rights in relation to, among others, quality of services, tariffs and compensation. Customers injured or damaged by negligent operations may file claims against
negligent providers. Telecommunications consumer protection regulations provide service standards for telecommunication operators.
N. USO
All telecommunications operators, whether network or service providers, are bound by a USO regulation that requires them to contribute to providing telecommunication facilities and infrastructure in the interest of opening equal access to
telecommunications throughout all regions in Indonesia, which is generally done by way of financial contribution. MoCI Regulation No.32PERM.KOMINFO102008 dated October 10, 2008 regarding the USO as amended by MoCI Regulation
No.03PERM.KOMINFO022010 dated February 1, 2010 “MoCI Regulation No.322008” stipulated, among others, details services that shall be provided in relation to USO regulation, which is providing telephone, SMS and internet access services in
remote and other areas of Indonesia that have been classified as USO regions where it is not economical to provide these services.
USO payment requirements are calculated as a percentage of our and Telkomsel’s unconsolidated gross revenues, net of bad debts andor interconnection charges andor connection charges. Pursuant to Government Regulation No.72009 dated January 16,
2009, regarding Tariffs for Non-Tax State Revenue that apply to the Ministry of Communication and Information “GR No.72009” and Decree No.05PERM.KOMINFO22007 dated February 28, 2007, the current USO tariff rate is 1.25 of gross
revenue, net of bad debts andor interconnection charges andor connection charges. Subsequently, in December 2012, Decree No.05PERM.KOMINFO22007 was replaced by Decree No.45 year 2012 of the MoCI which was effective from January 22,
2013. The Decree stipulates, among other things, the exclusion of certain revenues that are not considered as part of gross revenues as a basis to calculate the USO charged, and changed the payment period which was previously on a quarterly basis to
become quarterly or semi-annually.
O. Telecommunication Regulatory Charges
On January 16, 2009, the Government issued Government Regulation No.72009, which sets the types of non-tax state revenues that apply to the MoCI derived from various services, including telecommunications.
We are required to pay right-of-use fees related to the radio frequency spectrum that we use. The right-of-use fees with reference to our BTS licensing were payable annually based on a formula that took into account base prices for both radio frequency
spectrum and transmission capacity, as adjusted by fee indices set by the Minister of Communications and Information in consultation with the Minister of Finance. The right-of-use fees calculated with reference to our radio frequency spectrum is
determined by tender and comprises of both an upfront fee and radio frequency spectrum “IPSFR” annual fees.
On December 13, 2010, the Government issued Government Regulation No.762010 amending Government Regulation No.72009. Pursuant to Government Regulation No.762010, we are no longer required to pay right-of-use fees calculated with
- 40 - reference to the BTSs that we deploy in our network, except for BTSs deployed in our backbone, with effect from December 15,
In addition to radio frequency spectrum right-of-use fees, Government Regulation No.72009 requires all telecommunications operators to pay an annual license fee for telecommunication operation, which is equal to 0.5 of unconsolidated gross revenues,
net of bad debts andor interconnection charges andor connection charges.
Pursuant to Law No.282009 regarding Local Taxes and Local Fees, local governments are permitted to impose fees on the sites that we use for telecommunications towers. The fees may not exceed 2 of the site’s assessed tax value. Currently, there are
some 525 local provincial and regency level governments through out Indonesia that may be authorized to impose these fees to increase in the future.
P. Telecommunications Towers
On March 17, 2008, the MoCI issued MoCI Regulation No.02PERM.KOMINFO32008 regarding Guidelines on Construction and Utilization of Sharing Telecommunication Towers “MoCI Regulation No.022008”. Under MoCI Regulation No.022008,
the construction of telecommunications towers requires permits from the relevant governmental institution, while the local government determines the placement and locations at which telecommunications towers may be constructed. In addition,
telecommunications providers that own telecommunication towers and other tower owners are obligated to allow other telecommunication operators to utilize their telecommunication towers without any discrimination, with due regards to the
technical capacity of the respective tower.
Since the operations of telecommunication towers involves a number of relevant Government bodies, on March 30, 2009, a joint regulation is issued in the forms of Minister of Home Affairs Regulation No.182009, Minister of Public Works Regulation
No.07PRTM2009, MoCI Regulation No.19PER.M.KOMINFO032009 and Head of the Investment Coordinating Board Regulation No.3P2009 regarding Guidelines for the Construction and Shared Use of Telecommunications Towers “Joint
Decree”.
The Joint Decree regulates that license for telecommunication tower construction is to be issued by regents or mayors, and for Jakarta Province, its Governor. The Joint Decree also provides for tower construction standards and requires that
telecommunications towers be made generally available for shared use by telecommunications service providers. The owner of a telecommunications tower is allowed to collect a fee, which is negotiated with reference to costs associated with investment and
operational costs, the return of investment and a profit. Monopolistic practices in the ownership and management of telecommunications towers is prohibited.
In addition to the Joint Decree and MoCI Regulation No.022008, several regional authorities have implemented regulations limiting the number and location of telecommunication towers and require operators to share in the utilization of
telecommunications towers.
Competition
Measures following the Telecommunications Law’s adoption in 2001 moved the Indonesian telecommunications sector from a duopoly between Indosat and us to one with multiple competing providers. See “Legal Basis and Regulation – Introduction of
Competition in the Indonesian Telecommunications Industry”.
Competition Law
The Government currently promotes liberalization, competition and transparency in the telecommunications sector. It does not prevent providers from attaining and capitalizing upon a dominant market position. However, the Government does prohibit operators from
abusing a dominant position. In March 2004, the MoC issued Decree No.332004, which prescribes measures to prohibit such abuse by dominant network and service providers. A provider is considered dominant based on factors such as scope of business, service
coverage area and control of a particular market. Specifically, Decree No.332004 prohibits dumping, predatory pricing, cross- subsidies, mandatory use of a provider’s services to the exclusion of competitors and hampering mandatory interconnection
including discrimination against specific providers.
Competition in the telecommunications sector, like all Indonesian business sectors, is also governed more generally by Law No.51999 dated March 5, 1999 regarding Prohibition of Monopolistic Practice and Unfair Business Competition “Competition
Law”. The Competition Law bans agreements and activities tending toward unfair business competition, as well as the abuse of a dominant market position. Pursuant to the Competition Law, the Commission for the Supervision of Business Competition “KPPU”
has been established as Indonesia’s antitrust regulator with the authority to enforce the provisions of the Competition Law.
- 41 - The Competition Law is implemented by various regulations, including Government Regulation No.572010 dated July 20, 2010
A. Fixed Line, Fixed Wireless and DLD
