Fri, 21 Mar 2025 14:57 | Network Infrastructure | Editorial INTI
Jakarta, INTI – The internet service provider (ISP) industry in Indonesia continues to grow rapidly. Currently, there are 1,288 ISPs registered with the Indonesian Internet Service Providers Association (APJII), with approximately 850 operating on the island of Java. This large number significantly impacts market competition and service quality for consumers.
Fierce competition among ISPs pushes companies to provide the best services at increasingly competitive prices. From a consumer perspective, this is beneficial as they can access internet services at more affordable costs. However, for ISP operators, this high level of competition presents its own challenges.
In an exclusive interview conducted by the INTI Media team on March 20, 2025, Muhammad Arif Angga, Chairman of the Indonesia Internet Service Provider Association (APJII) shared his insights on the current situation. He explained that the high number of ISPs, particularly in Java, has led to an extremely competitive market, where pricing plays a crucial role in customer decisions.
"With over 800 ISPs operating in Java alone, the market is highly saturated. A price difference as small as IDR 10,000 can cause customers to switch providers. This situation makes it difficult for ISPs to maintain a healthy profit margin, ultimately affecting their ability to invest in improving service quality," he stated.
In the rapidly evolving technology sector, continuous investment is essential for ISPs to adapt to user demands. However, when prices are overly competitive and profit margins are minimal, ISPs struggle to expand and enhance their services. If this trend continues, Indonesia’s ability to innovate and compete in the global digital ecosystem could be hindered.
Each ISP faces different operational costs (OPEX), depending on their business scale and areas of operation. Larger ISPs tend to have lower production costs compared to smaller ISPs. This creates a significant pricing challenge, especially for new or emerging ISPs.
Another issue is overlapping infrastructure due to the large number of ISPs operating independently. "We often see fiber optic cables piling up in various locations, yet not all are optimally utilized. This reflects inefficiencies in investment, where resources could be better allocated to improve service coverage," Mr. Arif added.
To address these challenges, a shift in approach is needed—from intense competition to stronger collaboration among ISPs. "We have encouraged our members to explore collaboration opportunities. Rather than operating independently, working together can lead to more efficient infrastructure utilization and improved services overall," Mr. Arif explained.
The mobile telecommunications industry provides a relevant example, where operators have increasingly consolidated through mergers and partnerships, creating a more sustainable business environment. A similar approach could be adopted in the ISP industry to drive growth while maintaining service quality.
However, achieving effective collaboration requires the right strategies. Many new ISPs operate in regions with smaller-scale businesses, making it crucial to develop policies and frameworks that facilitate cooperation without compromising business sustainability.
The government plays a key role in shaping a healthy ISP ecosystem. Well-structured regulations can help manage industry growth, ensure fair competition, and promote service quality improvements. Policies that support ISP collaboration and more strategic infrastructure investments will be crucial in building a stronger and more efficient internet industry in Indonesia.
With the right regulatory framework, ISPs can focus more on enhancing service quality rather than merely competing on price. This will not only improve user experience but also strengthen Indonesia’s position in the global digital economy.
The competitive landscape of Indonesia’s ISP industry presents both opportunities and challenges. While consumers benefit from more affordable prices, the industry must find ways to sustain growth and improve service quality. ISP collaboration, supported by effective regulations, can create a healthier and more resilient industry ecosystem. With this approach, Indonesia can continue strengthening its internet services and competing effectively on a global scale.
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