Foreign over-the-top (OTT) service providers continue to dominate Indonesia’s digital market, prompting calls for the government to establish stronger regulations to protect national interests and support local players.
“Films and television programs from OTT services are consumed by more than 200 million internet users in Indonesia, making it the fourth-largest online population in the world,” said Minister of Communication and Digital Affairs Meutya Hafid in a recent statement, as reported by Kontan.
The widespread popularity of OTT services—ranging from video streaming platforms to instant messaging apps—has been fueled by the extensive digital infrastructure developed by Indonesian telecommunication operators. According to a 2024 survey by the Indonesian Internet Service Providers Association (APJII), internet penetration in the country has reached 79.5 percent.
Despite this high penetration, foreign OTT providers remain the primary beneficiaries. Many of these companies, noted Indonesian Internet Service Providers Association Secretary General Zulfadly Syam, do not maintain legal entities or physical infrastructure in Indonesia, yet fully capitalize on the country’s networks.
“OTT is just one layer of the digital architecture. Foreign OTT players grow here because internet infrastructure is built by Indonesian Internet Service Providers Association members. They merely ride on it without contributing anything, either to Indonesian Internet Service Providers Association members or the state,” Zulfadly said on July 23, as quoted by TribunNews.
He pointed out that the current regulatory framework for the digital sector is weak, allowing foreign OTT operators to function in Indonesia without paying taxes or making significant contributions. Most only register as electronic system providers rather than fully compliant business entities.
High-Quality Internet Needs Backing of Strong National Policy
Zulfadly also warned that this imbalance could strain Indonesia’s telecommunication resources. Bandwidth and frequency—both limited and costly—are being used heavily by foreign OTT platforms as data traffic continues to surge. Meanwhile, internet prices are expected to decrease, pressuring local operators to provide high-quality services at lower costs while bearing the expense of expanding infrastructure.
“Accessing foreign OTT platforms requires large overseas bandwidth, which naturally incurs higher costs,” he explained. “Yet members of Indonesian Internet Service Providers Association are under constant pressure to provide high-quality internet access to these platforms, or risk losing customers.”
Zulfadly emphasized that unlike China, which has successfully compelled foreign OTTs to comply with its domestic rules and fostered local alternatives, Indonesia lacks bargaining power. He urged the government to overhaul telecommunication regulations and invest in research and innovation to nurture local OTT services.
“The government must create a conducive ecosystem and open space for innovation so local OTTs can grow. Because Telecommunications is a strategic sector that must be safeguarded for the sake of national interests.” he added.
Source: Kontan, TribunNews
Photo Credit: ipqi.org
