## 4 Evaluation of Current Formula for Spectrum Usage Fee  
### Origin of The Current Formula  
The document ITU-R SM.2012-5 (06/2016) provides an analytical model to formulate the spectrum usage fee on the basis of specific incentives designed to promote the efficient use of the spectrum in any country [48]. The formula is developed based on the concept that there may be different requirements for valuating the spectrum that reflect more than administrative convenience. However, the main paradigm of the model is to keep improving the efficiency of spectrum utilization.  
Indonesia has adapted and modified this model with the country's specific administrative incentives price (AIP). Figure 6 shows how Indonesia's current spectrum usage fee adapts the ITU-R SM.2012-5 (06/2016), resulting in (5).  
\begin{table}
\begin{tabular}{c c c c c} \hline \hline
**No** & **Islands** & **Numbers of Industrial Areas** & **Area (Ha)** & **Percentages** \\ \hline
1 & Java & 73 & 39,444.37 & 60.7\% \\
2 & Kalimantan & 19 & 7301.46 & 11.2\% \\
3 & Sulawesi & 6 & 5502.00 & 8.5\% \\
4 & Sumatera & 40 & 11,969.40 & 18.4\% \\
5 & Maluku and Papua & 2 & 600 & 0.9\% \\
6 & Nusa Tenggara & 1 & 191 & 0.3\% \\  & Total & 141 & 65,008.23 & 100.0\% \\ \hline \hline \end{tabular}
\end{table}
Table 2: The number of operational industrial areas in 2019 [46].  
The sequential narration for Figure 6 is as follows:  
1. Determine the total amount of the annual payments for the spectral resource (\(C_{an}\)) \[C_{an}=C1+C2-I_{an}\] (2) where \(C1\) is the expense of national and international spectrum management, \(C2\) is state net income (optional), and \(I_{an}\) is the sum of the annual inspection charge.
2. Determine the value of the spectral resources (\(W_{i}\)) \[W_{i}=\alpha_{i}\times\beta_{i}\times(F_{i}\times S_{i}\times T_{i})\] (3) where \(F_{i}\) is the resource factor of frequency, \(S_{i}\) is the resource of territory, \(T_{i}\) is the resource of time, \(\alpha_{i}\) is an aggregate coefficient that takes a variety of weighting variables into account, such as commercial, social, and operational factors, and \(\beta_{i}\) is the weighting coefficient that defines the exclusivity of frequency allocation.
3. Determine the annual price for a unit of the spectral resource (\(\Delta C_{an}\)), with the unit being the country's currency per MHz.km2 \[\Delta C_{an}=L\times(\frac{C_{an}}{W})\] (4) where \(L\) is an adjustment factor that can be determined by the government for the next fiscal year.  
Figure 6 also shows that when adopted by the Indonesian government, each factor defined by the International Telecommunication Union (ITU) is translated into five factors that structure the Indonesian spectrum usage fee. Equation (5) states the current formula, and its factors are explained in Table 3[2].  
\[\text{Indonesian spectrum usage fee}=N\times K\times I\times C\times B \tag{5}\]  
The government of Indonesia has set the value of \(N\times K\) to 28.36 for all bands [3], while the value of \(I\) is shown in Table 4. The table indicates that when the frequency becomes higher, the price unit becomes cheaper. Concerning the resource factor of territory, Indonesia applies the concept of nationwide population (kilo population) as a measure for the C value. However, as noted by one researcher [7; 8], the nationwide population might not accurately assess the valuation of 5G-mmWave private network licenses, as these will be used in an industrial area.  
Figure 6: Spectrum valuation formula from ITU-R SM.2012-5 (06/2016), adapted from the current Indonesia spectrum usage fee.