Over the past three years, China has dramatically upgraded its oft-lamented internet infrastructure.
First came the government’s substantial investment in opening up its national connective infrastructure by almost tripling the number of ‘national level’ (internationally connected) internet exchange points throughout the country. Previously these nodes could only be found in the major cities of Beijing, Shanghai and Guangzhou, limiting connection speeds inland. Adding five more hubs throughout the country has balanced speeds away from the coast and rendered the nation’s cyber-infrastructure less vulnerable to attack or fault.
More visible however, was the rollout and dramatic adoption of 4G mobile networks across the country. First deployed commercially in 2014, the reliable, high-speed networks now enjoy more than 60 per cent of China’s domestic market share. China adopted this technology considerably faster than the United States and Japan, according to Bernstein Research’s 2016 China Telecommunications report.
The broad adoption of these mobile networks will support high-bandwidth media such as high-definition streaming and virtual-reality content. It will also provide the reliable connections needed for consumer and industrial Internet of Things (IoT) solutions.
However, these advances have not fully spread throughout the country, as 19 per cent of Chinese consumers still lack connections that can consistently provide speeds above 4Mbps, and only 20 per cent of consumers have connections that sustain speeds above 10Mbps, according to the Akamai Report for Q1 2017.
As the largest economy in South-East Asia and the 16th largest in the world, it’s no surprise many Australian businesses see Indonesia as a vital expansion target, especially as the archipelago nation is currently only Australia’s 14th largest trading partner. Australia’s Department of Foreign Affairs and Trade reports that Singapore, Hong Kong and Malaysia all outranked Indonesia last year in combined Australian imports and exports, indicating a terrific growth opportunity over the next decade.
Indonesia’s citizens are highly digitally engaged, supporting a vibrant startup ecosystem and eagerly consuming online content through their mobile networks, which offer some of the cheapest data connections in the Asia-Pacific region.
However, the nation lags behind many of its Asian neighbours in terms of connection speed, averaging just 3.9Mbps despite the introduction of 4G in 2015, according to McKinsey’s 2016 study Unlocking Indonesia’s Digital Opportunity.
Comprising more than 17,000 islands, Indonesia’s unique geography poses a challenge to increasing internet penetration beyond its current level of 34 per cent. As of 2015, 4G penetration was only 7.6 per cent and fixed broadband only reached 2.5 per cent of Indonesians, almost exclusively within the greater Jakarta area. This dramatically limits the geographic potential for online media consumption, IoT devices and industrial digitisation outside the capital.
Over the next few years, the continuing rollout of 4G coverage across the island nation and projects such as the Indigo subsea cable system will boost Indonesia’s connection speeds and reliability to its neighbours, including Australia and Singapore. Nonetheless, high-speed and reliable internet will be centred on the main islands of Java and Sumatra for the near future.
Indonesia also has unique requirements for companies that are looking to utilise public or hybrid cloud services, as its robust data sovereignty laws require organisations to store certain kinds of data onshore.
Speaking at Telstra Vantage™ 2017, Erik Meijer, president director and chief executive of telkomtelstra, a joint venture between Telkom Indonesia and Telstra, announced the company was in the process of circumventing this barrier to expansion by constructing a local, semi-private Microsoft Azure stack to store sensitive data onshore in accordance with Indonesian law.
Advancing digital technology is lowering the barriers to international expansion in China and Indonesia and the potential for fully digitised organisations to expand effectively into less digitised markets is profound. However, understanding the unique infrastructural circumstances of these varied markets and their limitations is a vital step towards finding local partners to support expansion.