Towards the end of 2019, Indonesia completed the Palapa Ring project, which sought to provide 4G internet access throughout the country. A massive endeavor costing US$1.5 billion, the project involved 35 thousand km of fiber optic sea cables and 21 thousand km of land cables. It stretched from Sabang in the west to Merauke in the east, and from the northern island of Mianagas to Rote Island in the south.
It’s hoped the project will increase economic development throughout the country, along with increasing connectivity to outlying areas, and bring Indonesia’s Internet speed up to 100 Gbps.
Yet for all the hope this project portends, the fact 5G networks are going up in other countries around the world – including many in Southeast Asia – shows how Indonesians have struggled to keep up with connection speeds. This has long presented a problem for digital marketers doing business in Indonesia, as it limits their ability to utilize cutting-edge graphics and video to capture people’s attention online.
Due to longer download and lag times, streaming video becomes less effective as a marketing tool. It’s also why messaging services like WhatsApp, which don’t use so much data, are so popular.
Solving this problem is key to lighting up Indonesia’s digital economy, and it’s one of the primary drivers behind the Palapa Ring project, which sought to alleviate the technological gap between it and other countries. Though Indonesia’s economy has grown quickly, including its digital sector, just think what would happen if it had the same infrastructure as many other Asian countries like South Korea, Taiwan, or Singapore.
CEO and Populix cofounder Timothy Astandu thinks this may at least partly be due to tight government control, and wrote last year in the Jakarta Post: “A few years ago, an Indonesian ex-minister for technology even insinuated that we didn’t need fast internet, since it would only be used for downloading illegal content.”
One serious drawback for Indonesians wishing to embrace online media has always been the country’s lackluster Internet speed, which even now is less than half the global average for mobile users and just over 25 percent for fixed broadband download speed. This is primarily due to the lack of fiber optic infrastructure, though there’s more to it than that.
Let’s look at its speed and ranking internationally according to Speedtest, from May 2020, compared to others in the region.
First, for mobile devices, it’s 115th out of 139 countries ranked:
- 13. Singapore 56.87 mbps
- 60. Vietnam 32.83 mbps
- 63. Thailand 31.23 mbps
- 79. Myanmar 24.32 mbps
- 91. Laos 21.85 mbps
- 98. Malaysia 22.87 mbps
- 115. Indonesia 14.02 mbps
- 121. Philippines 14.23 mbps
Then, for fixed broadband it’s 117th out of 174 countries ranked:
- 1. Singapore 205.13 mbps
- 3. Thailand 170.14 mbps
- 39. Malaysia 81.08 mbps
- 59. Vietnam 52.89 mbps
- 79. Laos 34.16 mbps
- 111. Philippines 22.31 mbps
- 117. Indonesia 19.79 mbps
- 123. Myanmar 18.00 mbps
Note how both the Philippines and Indonesia are both towards the bottom in Southeast Asia. It’s not just due to lack of infrastructure, but to geography.
With roughly six thousand inhabited islands in the Indonesian archipelago, the country is vulnerable to accidental undersea cabling cuts, which can drastically affect Internet speed. While faults in water over 1000 meters deep occur almost exclusively due to natural events like underwater landslide and seismic activity, those occurring in under 200 meters are typically man-made, with nearly two thirds caused by fishing and anchoring.
Along with such challenges, the Covid-19 pandemic made reliance on the Internet even more important. Demand for faster speeds by Indonesians has made the government take note, and it’s speeding up the infrastructure that will contribute to the country’s digital transformation.
The COVID-19 pandemic has additionally forced many to spend more time at home and rely on the internet to connect themselves to the outside world. As a result, demand for faster Internet speeds rose and the government was forced to speed up its much-promised infrastructure expansions – including preparing the country for 5G technology.
“We need to improve our digital infrastructure first before we can launch the digital transformation,” Communication and Information Technology Minister Johnny G. Plate said in an early June 2020 online seminar. “We already have the backbone telecommunication network infrastructure in place. We need to continue with the development of middle-mile and last-mile networks in residential areas at the sub-district, village, urban hamlets and neighborhood unit level.”
In other words, development must occur to allow access to 2G, 3G, and 4G before the government can upgrade networks to 5G. That said, access to 4G in public places in most major cities is readily available, with free Wi-Fi in major malls and even many small cafes. And for locals who haven’t experienced faster speeds, that’s more than good enough.
Another aspect of Internet connectivity in Indonesia is the use of smartphones and other mobile devices rather than personal computers. While there’s been a natural progression from desktops to mobile Internet access worldwide, Indonesians by and large are leapfrogging directly to smartphones as a way to access the digital world.
Bi-passing desktops or laptops by Indonesians can partly be explained by economics. In Indonesia, phones that can access the Internet are relatively inexpensive, with cheaper knock-offs available for under 1 million IDR (about US$90). Smartphones are much less expensive than even a cheap laptop, and more portable.
Remember those stats above? There’s not much difference between mobile and fixed Internet speeds throughout Indonesia, and with urban areas offering numerous free Wi-Fi hotspots smartphones and other mobile devices are much easier to use.
According to Newzoo, Indonesia was sixth in the total number of smartphone users at over 67 million in 2019. In 2017, the Global System for Mobile Communications (GSMA) highlighted the Indonesian economy as the most the improved from 2014, with a 64% penetration rate for mobile users overall, at 176 million subscribers.
It’s only a matter of time before all of Indonesia’s mobile users turn to smartphones to access the Internet. As the country’s infrastructure continues to improve, monthly data plans become increasingly affordable. Add to this a requirement by the Indonesian government that manufacturers of 4G-enabled smartphones use local content – either parts or software – in their devices, and you’ll understand why smartphone usage is increasing so rapidly.
According to Geopoll, international trade and business is also becoming more reliant on mobile technology. Economic success in Indonesia has increasingly corresponded with mobile phone ownership, and young people throughout Southeast Asia increasingly see smartphones as a status symbol. Meanwhile, their individual economic success helps build national economies.
Where Marketers Should Focus
This upward trend of mobile Internet penetration additionally helps digital marketers study how to better utilize mobile Internet access in order to reach customers. It’s estimated that mobile penetration rates reached 80 percent in 2020, including in rural areas, with apps for communication being the most popular, followed by shopping apps and social media platforms.
Most locals use Internet-based modes of communication such as WhatsApp, Viber, LINE, Skype, or Facebook’s Messenger, and these applications can provide an avenue through which companies can market themselves. This conversational consumerism is uniquely Indonesian.
This isn’t just a new phenomenon, either. A Euromonitor study in 2014 looked at how Indonesian smartphone users applied this new technology to shopping, looking into how retailers and brands could create marketing strategies that take advantage of this. Online publisher TechCrunch reported mobile software application downloads grew by 55% between 2016 and 2017, while during this same period they only grew by 5% in the United States.
Data from Apptopia shows 2019 app downloads in Indonesia, showing a national obsession with gaming apps, as 2.8 billion games were downloaded, which equates to 11 apps per capita. The smart money would be on brands who can utilize this gaming fixation in their marketing.
Indonesia’s digital economy has additionally quadrupled since 2015, now estimated at US $40 billion, with ride-hailing and e-commerce both primary drivers of this growth. Yet another interesting aspect of Indonesia’s fascination with the digital world involves social media.
For Indonesians, business and leisure – like shopping and socializing – go hand in hand on mobile devices. Payment apps with social features, such as GoJek, dominate Indonesia’s digital environment. And conversations around commerce – along with influencers – are mobilizing shoppers in Indonesia to a far greater extent than in other countries.
So, for any e-commerce business, it’s important to create a social aspect as well, especially if you’re utilizing an app. Make sure users can share content, because Indonesians don’t want a standalone social app. They want something that they can use to show off to their friends online, something that’s actionable and sharable. That’s what will keep users coming back for more.