Industrial Convergence and Communication Policy Reform in Indonesia

Abstract

The digitalization of communication technologies, with the Internet as a catalyst, has radically altered the business models and industrial structures of the media and telecommunication industries. These technological and industrial developments have driven regulatory reform in the communication sectors towards regulatory convergence. However, silo regulatory models, that distinctly govern the media and telecommunication sectors, continue to be enacted in many countries globally, including Indonesia. This study focuses on efforts taken to regulate industrial convergence in the Indonesian media, telecommunication and Internet sectors, which to date has not been thoroughly studied. It examines a series of policies proposed by the Indonesian executive and legislature between the period of 2009 and 2015, including the Telematics Convergence Bill, the amendment of the Broadcasting Law and Ministerial Regulations on digital TV migration. Following a qualitative research tradition, this research conducted interpretive policy analysis. Primary data was gathered from semi-structured interviews with figures of regulatory bodies and relevant policy documents related to the Indonesian media, telecommunication and Internet sectors. Meanwhile, secondary data was gathered from academic and empirical literature. This research poses questions: What problems or issues of industrial convergence are considered as critical in the proposed policies? How are these problems or issues going to be regulated? What problems or issues have been overlooked? How do the proposed policies address the issues of public interest, competition, media diversity and universal services as the main regulatory concerns related to industrial convergence? Finally, what factors have inhibited the policy process of the proposed policies? The findings suggest the policies that have been proposed to respond to industrial convergence in Indonesian tend to target the emerging new players and protect the existing incumbents. Through licensing mechanisms, new business opportunities, such as multiplexing business, have been won by mostly incumbents. Emerging new players are positioned in policy so as to further economically benefit the incumbents. With these policy directions, the status quo in the Indonesian media and telecommunication industries is sustained. With a lack of concern about cross-industry (vertical) expansions, we are witnessing increased ownership concentration in the Indonesian media, telecommunication and Internet sectors. In addition, there is a lack of commitment from both the government and the parliament to establish a single independent regulatory agency governing the Indonesian communication sectors. While the parliament opts to maintain the currently segmented regulatory bodies, the government aims to gain even more control over the Indonesian communication sectors through the Ministry of Communication and Informatics. In summary, the findings of this study confirm that bureaucratic and political factors have been the main obstacles to regulatory reform towards regulatory convergence in Indonesia.