MANILA, Philippines – Address first the issues hounding access to broadband before harping about how Internet connectivity can help spur further social development in the country, such was the challenge posed by various business organizations and information and communication technology (ICT) experts represented in the state of Philippine broadband press conference held Wednesday, February 24.
Organized by the Joint Foreign Chambers, Philippine business groups, and industry associations, the press conference featured a policy brief that highlighted how the country’s broadband penetration is limited, quality is poor, and access is expensive.
Particularly, it cited the major problems hounding broadband connectivity like barriers to entry of new telco players; anti-competitive practices; inadequate infrastructure; weak and ineffective regulation; prohibitive bureaucratic requirements in infrastructure build-out; and lack of interconnection.
MSMEs at the losing end
“An often-cited World Bank study estimates that a 10% increase in broadband penetration can lead to a 1.38% increase in a country’s GDP (gross domestic product),” the policy brief cited.
It also cited that during the Asia-Pacific Economic Cooperation Summit held in Manila in November 2015, the Trade and Industry department stressed the need for the government to promote micro, small, and medium enterprises (MSMEs) and to help make them go global.
MSMEs comprise majority of businesses in the country, thus the broadband initiative becomes part of building an inclusive economy.
Philippine Chamber of Commerce and Industry (PCCI) President George Barcelon said [M]SMEs have the greater challenge to be connected and have an e-commerce presence.
Management Association of the Philippines (MAP) President Perry Lim Pe said “having a fast, affordable broadband will help ease of doing business in the Philippines.”
Value added, public utility
But in the Philippines, the Internet is considered an enhanced or value-added service. And duopoly is currently at play in the country, with the Philippine Long Distance Telephone Company (PLDT) and Globe Telecom, Inc. having 70% and 28% of the market share, respectively.
“[And] Smart [PLDT], Globe are among the most profitable telcos in the world,” said Winthrop Yu, chairman of the Internet Society-Philippines Chapter (ISOC-PH).
“We need more players in the sector. Otherwise, even the most powerful regulator can’t do much,” Yu added.
PLDT and Globe provide fixed and mobile services nationwide. But while Internet access is growing in the country, it is still at a much slower pace compared to its neighbors in the Association of Southeast Asian region.
So what can the government do—or the next administration for that matter—to make broadband penetration better and access more affordable?
For one, the government should consider adopting an open access model, which would identify various segments in the infrastructure and open them up to more different players without requiring a Congressional franchise.
Updating laws and regulations to promote investment and innovation in communications and connectivity is also another recommendation.
Estrellita Juliano-Tamano, national chair of the Federation of International Cable TV & Telecommunications Association of the Philippines (FICTAP) said they have been lobbying for the amendment of the Republic Act No. 7925 or the Public Telecommunications Policy Act.
“At the moment we can’t really give fast, cheap Internet in the countryside. [And] farmers, OFWs (overseas Filipino workers) are demanding us to give them [fast] Internet connection,” she said. Thus, to lobby further, they formed a party list to have R.A. 7925 amended, hopefully in the next Congress.
“The government should also give fast, cheap Internet connectivity to OFWs so they can stay connected with their families,” Tamano added.
PCCI also called for the enactment of the Department of ICT Act. “PCCI has long been lobbying for a Cabinet-level ICT department,” Barcelon said, and expressed hope that the next administration pick up these issues.
Easing the 60-40 rule concerning foreign ownership was also raised by MAP’s Pe. The telcos in the country are regulated by the National Telecommunications Commission (NTC), which still follows the Commonwealth Act No. 146 or the Public Service Law, which defines wire or wireless communications as a public service, thus, subject to foreign equity restrictions. “Amendments can be made to exempt certain segments of the Internet infrastructure as a public service, particularly those that do not serve the public directly,” the policy brief read.
The NTC should also be reorganized, as it is “toothless” at the moment, said Mary Grace Mirandilla-Santos, a national ICT research consultant at the Asian Development Bank (ADB) and vice president for policy of the ISOC-PH.
For it to function well as a regulator, the NTC has to have the institutional capacity, competent human resources, and independent leadership to carry out its functions. The NTC had no presence though in Wednesday’s press conference to respond to such recommendations.
Leveling the playing field was also another recommendation. “Local IP (Internet protocol) peering will also help secure traffic,” Santos said. IP peering occurs when two networks exchange traffic with each other freely, thus improving performance and capacity for handling large amounts of traffic, among other benefits.
Santos said the government, being a large Internet user, would benefit tremendously from having a more secure network, as Internet Service Providers (ISPs) can keep domestic government traffic within Philippine territories.
Shared infrastructure was also another recommendation, like allowing tower co-location to lower cost for small players, especially for networks outside urban centers.
Building a national broadband network (NBN) is also another option to allow any ISP to connect. But the NBN scandal under the Gloria Macapagal-Arroyo administration, which involved allegations of corruption when the contract was awarded to China’s ZTE, still make some parties cringe with the idea of an NBN, Santos shared. Updating and upgrading the country’s ICT strategies was also recommended by the various groups.
Also, the NTC is urged to improve its spectrum management, particularly making it more transparent when it allocates a spectrum or an electromagnetic bandwidth to a telco. Santos said in the Philippines, a telco can have a spectrum in seemingly perpetuity, whereas in other countries, they require to sun-set spectrum assignments and refarm spectrum resources when necessary.
For instance, San Miguel Corporation has the 700 megahertz spectrum that it earlier announced would be allocated once Australia’s Telstra partners with the firm in providing 4G mobile broadband services in the country. This is still on a wait-and-see mode.
Lastly, the telco sector should benefit from the passage of the Philippine Competition Act, and the Philippine Competition Commission should prioritize studying whether the country’s telco landscape is adequately competitive.