Over the top but under the law

Over the top but under the law

Netflix ban by the country's biggest telecom operator compels Indonesia to update rules to cover internet-based services. 

The unilateral decision by the state-owned telecom operator PT Telekomunikasi Indonesia to block the video streaming service Netflix has prompted the government to upgrade and clarify its regulations for internet-based over the top (OTT) services.

Existing regulations have not kept pace with technological developments, though most of the rules can be applied in some form to services such as Netflix, said Imam Nashiruddin, a member of the Indonesian Telecommunications Regulatory Body (BRTI).

"We hope to issue new regulations in March. In principle, we welcome OTT services but they all have to comply with Indonesian regulations based on the 'same services, same rules' principle," Imam told Asia Focus.

There are at least three laws in place that can be applied to OTT services -- the film law, telecommunications law and broadcasting law -- but Imam said they were not integrated and required major revisions to reflect developments in information and communications technology.

As well, he said, regulations needed to be written in such a way as to create a balance between affordability for users and business sustainability for operators.

The new, more integrated regulations could cover the three types of internet-enabled services such as chat applications that offer voice communication, text messaging and video calls; user-generated content, streaming, on-demand video, live music, games and applications and commerce used for transactional purposes.

Imam said regulation of OTT-enabled commerce would be included in the government regulation on e-commerce, which is now being reviewed by the trade, ICT and finance ministries and other agencies. OTT communications would be treated in the same way as other providers that charge users for their services.

He added that the government would only need to "polish" the rules to accommodate free-of-charge services so that users remained protected while business sustainability would not be threatened. It is now updating a 2013 ministerial regulation on content service providers for more appropriate regulation of OTT content such as Netflix, Hulu or Apple Music.

"Due to our uneven broadband penetration and wide geographical area, Indonesia cannot conform to a net-neutrality principle and will focus more instead on utilising telecommunications providers to develop network and broadband services throughout the country, to boost national economic development and provide the maximum benefit for the people," Imam said.

ICT ministry spokesman Ismail Cawidu told Asia Focus that the new regulation would require further consultation with other ministries. For example, the education ministry should be consulted, along with the culture ministry, which oversees the Film Censorship Body.

Noting that the ban imposed on Netflix came from the state-owned telecommunications company, ICT Minister Rudiantara told a House of Representatives committee that it didn't reflect national government policy.

PT Telekomunikasi Indonesia said it blocked Netflix it lacked a permit to operate in Indonesia. It said it was also protecting its customers from inappropriate content such as pornography and depictions of violence that are illegal in the country.

Netflix issued a diplomatic response to the ban, saying in a statement that "services delivered over the internet present all sorts of novel questions for policymakers". The US-based company early this year surprised the market by announcing a major expansion to about 130 countries, and it has acknowledged that some countries might have concerns.

Meanwhile, Netflix is still accessible on the internet platforms provided by other operators in Indonesia, and they are banking on the appeal of its movie and television programme offerings to their customers.

Imam said that the government had not ordered other providers to follow the lead of Telkom because it would be up to each company to treat this as an executive business decision.

"They could block Netflix if they think the service is going through their network without making any contribution or even causing them losses," he said.

The Indonesian Telematics Society (Mastel) welcomed Telkom's decision to block the service. Chairman Kristiono said Netflix did not comply with the 2002 Broadcasting Law and the 2009 Film Law. The latter requires all films to receive approval from the censorship body, and this was one of the reasons that Telkom cited for its decision to block Netflix in all its three internet platforms.

In a letter sent to ICT Minister Rudiantara in mid-January, Mastel said that by requiring its users to subscribe to monthly packages and receiving payment for its services in Indonesian territory, Netflix is subject to the broadcasting law as a broadcasting subscription provider. Consequently, it needs to be a legal entity within the country, obtain an operating licence and be established with business capital wholly owned by an Indonesian individual or legal entity.

"We are giving Netflix a grace period of one month to comply with our regulation and set up a legal entity in Indonesia. We hope by the end of [February], it will be able to finalise its obligations in accordance to our laws and regulations," Imam said.

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