Jakarta, INTI - In today’s digital economy landscape, fiber optic infrastructure is no longer merely a supporting utility, it has become the backbone of digital sovereignty. Digital sovereignty refers to a nation’s ability to define, control, and operate its own digital infrastructure strategy in ways that maximize benefits for society. This includes safeguarding citizens’ data, securing critical infrastructure, and ensuring long-term technological independence.

Within the broader digital infrastructure ecosystem, fiber optics function as the central nervous system of modern digital communications. Advances in fiber optic technology have enabled high-speed connectivity, accelerated cloud computing adoption, and supported the rapid processing demands of Artificial Intelligence (AI). At present, fiber optics remain the most capable medium for delivering massive data capacity with low latency, making them essential to powering the future digital economy.

Despite this strategic importance, Indonesia’s telecommunications infrastructure development continues to face major challenges. As data consumption grows exponentially, the industry is confronted with potential inefficiencies driven by heavy market fragmentation. With more than 1,000 licensed Internet Service Providers (ISPs) operating in 2025, increasingly intense competition risks creating duplicated infrastructure investments while also affecting overall service quality. Infrastructure expansion must also address urban planning concerns, particularly the growing presence of unorganized poles and cable networks that remain poorly integrated into city environments.

This raises a critical question for stakeholders: should capital expenditure continue flowing into potentially redundant network deployments, or is industry consolidation necessary to ensure long-term sustainability?

Industry Diagnosis: Structural Inefficiency

Recent data highlights a significant imbalance within Indonesia’s digital infrastructure landscape. According to the 2025 APJII Internet Survey, internet penetration has surpassed 229 million users, yet fixed broadband (FBB) adoption remains relatively low compared to total household penetration.

The core challenge is not the lack of investment, but rather the uneven and overlapping allocation of capital. In premium residential and business districts such as SCBD, it is common to find five to ten providers deploying parallel fiber optic networks along identical routes. This creates multiple layers of inefficiency.

From a capital expenditure perspective, large-scale investments continue to concentrate on overbuilt infrastructure in the same locations, while many tier-3 regions remain underserved. At the same time, poorly managed cable infrastructure negatively impacts urban aesthetics, public safety, and the implementation of Smart City concepts that rely on organized underground utility systems.

Why Consolidation Matters

Infrastructure consolidation presents a practical and economically sustainable solution. From a long-term business perspective, consolidation can generate substantial industry-wide value creation through several mechanisms.

By sharing passive infrastructure such as poles, ducts, and manholes, operators could potentially reduce network deployment costs by 30–40%. These savings could then be redirected toward service innovation or expansion into underserved regions. Consolidation would also support the nationwide rollout of 5G and IoT ecosystems, both of which require dense network deployments to sustain small-cell architecture. Without shared infrastructure, 5G backhaul costs may ultimately make services less affordable for consumers.

In addition, separating infrastructure assets (NetCo) from service operations (ServCo) has proven capable of improving corporate valuation due to lower risk exposure and more stable cash flow structures.

Separating the “Road” from the “Vehicles”

Globally, many countries have already moved toward Open Access and Neutral Carrier models, where ownership of the “road” (fiber infrastructure) is separated from the “vehicles” (internet services).

In Singapore, through NetLink Trust, the government appointed a single entity to build and manage the passive layer of the national fiber network. The result has been highly efficient capital utilization with minimal duplication of infrastructure deployment. Fiber penetration has reached nearly 100%, while service providers such as Singtel and StarHub are able to focus on competing through service quality and pricing instead of bearing excessive construction costs.

Similarly, in the United Kingdom, Openreach was established through the functional separation of British Telecom (BT). Openreach is required to provide equal and non-discriminatory access to all service providers, including BT’s competitors. This approach has helped create a fair competitive environment, accelerate innovation, and ensure that rural network development remains economically feasible through shared infrastructure models.

Telkom’s Strategic Direction

Indonesia has not remained passive in facing these challenges. PT Telkom Indonesia has already begun implementing a major transformation strategy centered on business separation and infrastructure optimization.

Through the ServCo-focused FMC strategy, IndiHome’s integration into Telkomsel allows service operations to concentrate entirely on customer experience and service convergence without being burdened by network infrastructure complexities.

At the same time, the establishment of InfraCo aims to consolidate fiber optic and access network assets into a dedicated entity focused on network excellence. This transformation also enables Telkom to unlock the value of fiber infrastructure by converting it from a cost center into a long-term revenue-generating asset. InfraCo is expected to operate neutrally and potentially open wholesale opportunities for other operators, similar to the successful infrastructure-focused business model demonstrated by Mitratel in the tower industry.

Telkom’s strategic move sends a strong signal to the broader industry. Consolidation among major players may eventually encourage medium and smaller operators to adjust their business strategies in pursuit of greater operational efficiency.

Toward an Integrated Digital Highway

The consolidation of Indonesia’s fiber optic industry should be considered a strategic national priority. However, corporate initiatives alone will not be sufficient without strong government support and regulatory alignment.

The government could play a crucial role by introducing policies that encourage industry consolidation, such as tax incentives or subsidies for mergers and infrastructure-sharing initiatives. Drawing lessons from Malaysia’s JENDELA (Jalinan Digital Negara) program, Indonesia could also establish national standards for Common Utility Ducting systems.

Ultimately, future competition should no longer revolve around “who owns the most poles,” but rather “who delivers the best services on top of shared infrastructure.” Effective regulatory intervention would ensure that investment continues to grow while remaining aligned with urban planning objectives and long-term national development goals.

Only through this integrated approach can Indonesia transform today’s chaotic “cable jungle” into a seamless and efficient “digital highway”, one capable of accelerating inclusive digital economic growth and supporting the vision of Indonesia Emas 2045.

Conclusion

Indonesia’s fiber optic infrastructure stands at a critical inflection point where rapid digital demand collides with structural inefficiencies. While investment and competition have driven expansion, the current fragmented model has also created duplication, uneven access, and urban complexity. Moving forward, consolidation and infrastructure sharing are no longer optional but essential to improve efficiency, expand equitable connectivity, and support emerging technologies such as 5G, cloud, and AI. With the right combination of industry transformation and regulatory support, Indonesia can shift from a fragmented network landscape into an integrated, future-ready digital backbone that strengthens national digital sovereignty and accelerates inclusive economic growth toward Indonesia Emas 2045.

Read more: Indosat Transfers Rp8.18 Trillion Fiber Optic Assets to Subsidiary