Telkom Satellite Problem Interrupts ATMs – Points to Banking Vulnerability

BCA CEO: We don't plan to rely on just one satellite any longer

JAKARTA (TheInsiderStories) – A recent telco-owned satellite glitch, which knocked out thousands of cash machines across Indonesia, highlighted the vulnerability of the nation’s remote banking operation, over-dependent on just one telecommunications provider.

On Monday (8/29), thousands of ATMs across the country were knocked offline due to satellite errors; big players such as Bank Central Asia, Bank Rakyat Indonesia and Bank Negara Indonesia were affected, according to state-controlled PT Telekomunikasi Indonesia Tbk (Telkom), in a Monday announcement. Telkom 1 suffered connectivity problems after a shift in direction of its antenna.

While lenders are still trying to cope with the problem by redirecting ATMs to other satellites, the problems are unlikely to be resolved within two weeks.

An executive from PT Bank Central Asia Tbk., one of Telkom’s satellite clients, conveyed his disappointment on Monday, saying the lender plans to rely less on Telkom 1, as the glitch has affected their 5,700 ATMs and disrupted communications to its 126 cash offices.

He said BCA intends to redirect about 2,000 ATMs to the Apstar 5 satellite, which belongs to US telecommunication giant AT&T, and 3,700 more to Telkom 3S.

“We don’t want to see this thing happening more often in the future. Honestly, I am afraid now of using satellites [to support ATM operation]. We don’t want to rely on just one satellite,” he said.

Telkom 1 Lifetime in Question

The antenna problem with Telkom 1 satellite also affected Indonesia’s largest micro-financier, PT Bank Rakyat Indonesia Tbk. The lender operates own satellite as well, and is now planning to rely on it more to support its ATMs.

The lender is now at the final stage of redirecting all of its ATM communications to its BRIsat satellite.

From a total of 24,802 ATMs and 10,656 branches, only 321 ATMs and 124 branches were affected by the Telkom 1 satellite error.

An executive at BRI said they have migrated communication services of the 26 ATMs and 47 branches affected to their own satellite. However, more work still needs to be done to mitigate the problem.

Indra Utoyo, BRI’s Digital Banking and Strategy Director, said the lender learned from the lesson that even when it uses its own satellite, it will prepare a backup satellite, particularly when its existing satellite nears the end of its lifetime and needs replacement. “Thus we can avoid such an error,” he said.

ICT Minister Rudiantara warned Telkom that such errors could harm customers nationwide and cause a loss for lenders.

Telkom now serves 63 customers with its satellite business, of which eight are VSAT providers that serve the banking sector. These VSAT providers run 15,000 sites, such as ATMs and EDC machines.

“Operators should have a better backup system, considering an investment in a satellite is costly and carries major risks. From the beginning of the launch, it can be lost; it takes another 3 years to build another new one. That’s why we need insurance in satellite investment. Typical satellite lifetime is 15 years, but in this case Telkom and its customer agreed to operate the satellite in a specific term and conditions,” he said.

Internet technology expert Ruby Alamsyah said lenders may need more time to repoint and migrate their customer database to another satellite from Telkom 1, as not all the data has been backed up.

He estimated at least it will take two or three weeks.

“I think there is no need to be panic. This error didn’t touch customer back-end data. For example, in the banking sector, it should only affect ATM features, not mobile banking or internet banking. In addition, some banks have installed backup links and they can still use a 3G or GSM network, so their operations didn’t automatically shut down completely,” he said.

Anto Prabowo, Acting Deputy Commissioner of Logistics and Strategic Management at OJK, said he advised people not to panic and reconfirm at a bank’s call center if they face any trouble. He said the error was not in ATMs.

Central Bank Governor Agus Martowardojo confirmed that payment systems –including Real Time Gross Settlement — was not affected much.

Writing by Yosi Winosa