The Demand of Services for Information Technology Industry in Indonesia

Abstract

This research has a goal for analyzing determinant demand of telecommunication services either mobile phone or internet in Indonesia. This research uses secondary data of publication result from the Indonesian Central Bureau of Statistics in 2012-2013 period for 34 provinces in Indonesia. The demand for mobile phone is considered as the function of Gross Domestic Product (GDP) per capita and the region for dummy while the demand of internet service is the function of mobile phone service request, GDP per capita, proportion of educated society, proportion of the employment, and the region as a dummy. This research also modifies the model by placing the region as a moderating variable on GDP per capita. Furthermore, it is also done by using reduced form (mediation) to estimate the indirect effect on mobile phone ownership towards internet service request. The result of research showed that the demand for mobile phone and internet in Indonesia was influenced by income factor (GDP per capita). Yet In Indonesia, there are still imbalances in adapting the information technology (internet) between the area of Java-Bali and the outside of those areas. The result of research also showed that the demand for the telephone was able to be mediation of internet use. However, some regions (Maluku and Papua) have not optimally exploited mobile phone to access the internet compared to other regions.

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