The adoption of Fixed-Mobile Convergence (FMC) services - namely the fusion of fixed and mobile broadband access to provide a seamless connectivity experience for both enterprise and consumer segments - is a not a new phenomenon across the global telecoms landscape.
However, FMC is increasingly becoming a strategic focus for both Mobile Network Operators (MNOs) and Internet Service Providers (ISPs) in Indonesia as they pursue profitable revenue streams - in line with the continuing growth of data consumption across all customer categories.
In this latest Wellington Perspective, we examine how the FMC market opportunity is evolving in Indonesia - as well as the marketing initiatives being implemented by the leading service providers in order to sustain and enhance their respective competitive positions.
Fixed-Mobile Convergence (FMC) has several dimensions across the entire telecoms sector, driven primarily by in-market dynamics and prevailing competitive forces
The primary FMC scenarios being played out in telecoms markets around the globe – including Indonesia – fall into the following categories:
Convergence as a Competitive Weapon – each operator seeks a) to maximise the penetration of their captive base of both converged and non-converged accounts, b) to increase their share of household and/or enterprise spend, c) to minimize attrition (churn) rates - thereby leveraging convergence trends to secure and maintain market share.
Convergence of Client-facing Operations - operators unify all customer-related policies and procedures i.e. multi-channel marketing, sales distribution channel management, customer acquisition/on-boarding, service provisioning, account billing and customer care.
Convergence of Back-end Services - operators look for close integration throughout the service delivery value chain - e.g. inter-working of OSS (Operation Support Systems) and BSS (Business Support Systems). cloud computing platform interfaces and content rights management.
We are focusing on the first of the above scenarios - Convergence as a Competitive Weapon – as this is currently the ‘direction of travel’ for the telecoms sector in Indonesia.
The MNOs have adjusted their respective business models to reflect the changes in the service preferences of the enterprise and consumer segments
Each of the Indonesian wireless operators has developed an initial convergence proposition, with XL Axiata being the pioneering MNO for FMC services – following the launch of XL SATU in June 2021. This preceded the acquisition of Link Net from First Media in 2022, with XL Axiata intending to transform the merged entity into a full-service, fixed broadband infrastructure provider.
Telkomsel (TSEL) launched a branded FMC service (‘Telkomsel One’) following the transfer of the IndiHome ‘Triple Play’ service into the TSEL portfolio in July 2023. Telkomsel One consolidates all of the related services - Orbit, IndiHome, Halo, and Telkomsel Prepaid - into a fully-integrated offering for the household and SME segments.
The incumbent ISPs are also compelled to respond to the wider range of highly-competitive product and service offerings available to their subscribers
The ISPs are each focused on extending their aggregate ‘homepass’ count, accompanied by the corresponding provision of Fiber-to-the-Home (FTTH) connectivity. They compete primarily on a) the known service quality of their core fixed broadband propositions, b) differentiated content packages and c) value-for-money Internet access for their target segments .
Addressing the unserved and underserved communities in the remote regions of Indonesia – currently challenging for the ISPs from a cost and service provisioning perspective – will be facilitated over time by the broader availability of 4G/5G cellular coverage and access to satellite transmission networks.
New market entrants - such as Starlink - are disrupting the broadband services sector and stimulating further industry collaboration
Starlink – part of Elon Musk’s SpaceX group – is the world's first satellite constellation using a Low-Earth Orbit (LEO) to deliver high speed, low latency Internet capability to enterprise accounts. The full array of mainstream services - video streaming, online gaming, video calls and cloud computing – are supported by the Starlink offering.
Starlink has identified Indonesia as a high potential market, with an initial focus on providing broadband access to the Frontier, Outermost, and Disadvantaged areas (3T) areas of the archipelago – in conjunction with the incumbent MNOs and ISPs.
In addition, Starlink is exploring the viability of deploying high quality Internet services to bolster the operations of Community Health Centers (Puskesmas) and to provide reliable broadband connectivity to public educational facilities in these remote regions.
We cover all of the above issues - and more! - in depth as part of the report pack available here.
If you would like to discuss any aspect of this report, please feel free to contact us.