Second of three parts
WITHOUT an amendment to the mandate of the National Telecommunications Commission (NTC) and the reclassification of the Web access as a basic service, the regulator will only have little power over the Internet market in the Philippines.
But these are just a few of the factors that affect Internet speed and price. Another reason why Internet connection in the Philippines is slower compared to its Association of Southeast Asian Nations (Asean) peers is the lack of investments—both public and private. NTC Director for Regulations Edgardo V. Cabarios said the Philippines is one of the developing countries that still do not have a universal-access fund.
Under the existing laws, we do not have a so-called universal access. The law only states that we have to give priority to the development of infrastructure in unserved and underserved areas, but it did not specify how,” he said.
So, what happened was, private money was used to develop the needed infrastructure to provide Internet access.
It was not enough, however.
Need for a universal-access fund
“We let the private sector do it. But private investments require return,” Cabarios said. “There goes the problem. Can you bring the price down? No, because private investments require financial return. Nobody will invest if they will not get something out of their money.”
Private investments over the past 10 years, estimates show, likely reached more than P600 billion. However, these are limited to the networks of the two main telecommunications players in the Philippines.
Over the past decade, Philippine Long Distance Telephone Co. (PLDT) had invested P300 billion in network facilities and support infrastructure alone, company spokesman Ramon R. Isberto said.
Globe Telecom Inc., on the other hand, has been spending an average of P25 billion annually since 2005 to improve its network coverage.
This year the telecommunications company of Manuel V. Pangilinan has earmarked P43 billion to further develop its facilities and content, while the Ayala-led firm has programmed a P39.65-billion capital for this year.
“Average industry capital expenditures is at P60 billion per year, but this is not enough. For us to provide a 2-megabits-per-second [Mbps] connection to 80 percent of the households in the Philippines, we have to invest roughly P800 billion on the average,” Cabarios said.
But at the rate of P60 billion per year, it may take more than 10 years before each household could be equipped with such a speed.
“This plan is listed on the Philippine Digital Strategy, that by 2016, we should have a minimum 2-Mbps connection for each household. But the problem is, we do not know how, given the limited resources that we have,” the NTC official lamented.
Hence, private investments are helpful, but government intervention is needed.
“You cannot just let the private sector invest by itself. We have to address the problem in a comprehensive approach,” Cabarios said.
In Thailand, for example, the government has invested $114 million to improve the Internet service or availability. The fund is part of Bangkok’s economic policy.
The Vietnamese government, on the other hand, owns two of the three largest telecommunications companies in Ho Chi Minh City. Investments mainly come from the government.
Malaysia, he added, has now spent a total of $4.5 billion over a 10-year period to lay fiber-optic lines to every home in the country’s urban area.
Other developing and developed economies are investing billions of dollars to improve Internet access in their countries, Cabarios added.
“Universal-service funds have been created in developing countries, often in cooperation with the World Bank, as policy tools for liberalizing markets to provide financial assistance to meet regional and rural service targets for both telephony and Internet services, among others,” he said, citing a GSM Association report on access funds.
The problem is, there is no legislation for a universal-access fund in the Philippines.
“We have charges for power, road usage and water, but none in telecommunications. The proposal of the commission is for the fund to come from 1 percent of the total government revenue. We need that to deploy broadband in unserved areas and help small and medium enterprises to compete,” Cabarios said.
Thus, Internet infrastructure and pricing are controlled by the country’s top 2 telcos, Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, said.
Absence of public backbone
A fellow of ICT policy and regulation think tank Learning Initiatives on Reforms for Network Economies (Lirne) Asia, Santos said the country is relying on the infrastructure of PLDT and Globe, both of which are not enough to provide adequate or decent access to all Filipinos.
“We do not have a national backbone. We rely on the private companies for infrastructure. What we need is a carrier-neutral backbone,” she said.
Engr. Rodolfo Noel I. Lozada agreed, comparing the current state of the country’s Internet connection to a network of roads and highways that were built over the long period of agricultural and industrial era.
“Those roads were built primarily by the government for public transport use, allowing unhampered movements of people and goods that led to the progression of the Filipino nation to what it is now,” he said.
The tollways, however, were only built less than a decade ago, riding on the progression of the Philippine economy. The country is now in the cusp of the digital era, where digital products and goods are traded globally. This requires a transport infrastructure to move these digital goods.
“This is where the heart of the current problem lies. The government has not built any major digital highway for public use. Practically all of the digital roads and highways are privately owned and imposes a ‘toll fee’ per use,” Lozada explained.
“Can you imagine if all the roads and highways are all private toll roads? Traveling from any point to another location will be very expensive and slow,” he added.
In December last year, motorists complained that the normal five-hour drive going up to Baguio City took them 12 hours due to the queue at each toll-road junction connecting three superhighways.
Lozada said if only the government had built the National Broadband Network (NBN), the country could have been spared from the current slow Internet speeds.
“That is similar to how the government had built the public roads and highways during the agricultural and industrial era. It is a must for the government to provide for a big digital highway that allows very fast and free public transport of digital products and goods,” Lozada said.
He added that with a state-owned backbone in place, “private service providers will be limited to providing on a pay-per-use arrangement the last mile connection to the end users and the local loop connection to the NBN.”
This design will provide a very fast and low-cost Internet service to the entire nation, to both cities and rural barangays alike, he said.
“It will effectively negate the current worst of the Third World kind of Internet that the country is experiencing right now,” he said.
Lozada is best known for being the whistle-blower of the blotched NBN-ZTE scandal during the Arroyo administration.
Sustainable exchange
This is where the peering between Internet service providers (ISPs) comes in. Essentially, the peering of Internet protocols (IPs) allows the exchange of Internet traffic among data-service providers, making it faster for the transfer of information from one point to another.
To do this, ISPs have to be linked via an Internet exchange, ideally in the Philippine Open Internet Exchange (Phopenix), a government-operated Internet-exchange facility.
“Without IP peering, local in-country Internet traffic need to travel out of Philippine borders and be exchanged abroad, transit, before reaching its local destination. Enterprises that are IP peered with Phopenix will have cost savings, as local in-country Internet traffic exchanged through Phopenix will not count against the use of international network links or backhaul usage,” Democracy.Net.PH, a group that advocates for the Magna Carta for Philippine Internet Freedom, cofounder Pierre Tito Galla explained.
As local in-country Internet traffic will not need to transit abroad, ISPs will exchange with each other to lower latency—that is, better response times—and deliver this lower latency for the enjoyment of consumers.
Lower latency for consumers means a faster, more reliable and more stable Internet-connectivity experience, particularly for e-commerce transactions with businesses, financial institutions and government front-line services.
“IP peering helps the Philippines achieve a more robust, fault- and attack-resistant network infrastructure. As local in-country Internet traffic need not transit abroad, the impact of events such as submarine cable breaks and DDOS attacks initiated by foreign cyberattackers and cybercriminals will be mitigated,” Galla said, referring to the distributed denial-of-service, or DDOS, attack.
A DDOS attack occurs when multiple systems “flood” the bandwidth of a targeted system, resulting in the unavailability of online services.
“This is especially true for government traffic, which may include sensitive national-security data and citizens’ personal information, that can be exchanged locally through the Phopenix,” he said.
Simply put, IP peering allows consumers to enjoy “more robust, fault- and attack-resistant network infrastructure, which is personally important to consumers in their transactions through the Internet, such as tax filing, banking, e-commerce and Skype conversations with family and friends overseas, among the many uses of fast, reliable and inexpensive Internet.”
But there exists a lack of effective and reliable interconnection among ISPs.
PLDT and its subsidiaries are not too positive with the mandated IP-peering policy of the government.
For the country’s No.1 telecommunications provider, peering through a single, government-owned Internet exchange should have a “basic multilateral-peering framework” to trade traffic.
Isberto said his company is now in discussion with the Department of Science and Technology-Advanced Science and Technology Institute (DOST-ASTI) to make its open Internet exchange more sustainable.
“Globally, the sustainability of an open-Internet exchange is largely dependent on its members adhering to basic multilateral peering framework leading to a member-governed Internet exchange that allows participants to trade traffic,” he said.
While working to develop such multilateral peering framework, PLDT was able to reach an agreement with DOST-ASTI on the free use of PLDT fiber and collocation facilities for the open-Internet exchange.
“This would allow the DOST to setup and operate a Phopenix node in PLDT’s Vitro Data Center facility. This arrangement will not only facilitate future bilateral peering connectivity engagements between PLDT and Phopenix members, but more important, the multiple node setup will also provide additional resiliency to Phopenix’s network,” Isberto said.
Globe General Legal Counsel Froilan M. Castelo said the proposed peering arrangements should have minimum to no cost at all to the telecommunications players.
“Globe maintains that there should not be any access charge to this to maintain or lower Internet costs. A draft NTC memorandum circular on Internet peering, circulated for the industry players’ comment in 2011, ‘orders all ISPs in the Philippines to deliver and receive traffic between domestic end-points and without passing the traffic across the international border.’ We have proposed that such delivery and receipt of traffic should also be free of Internet-peering charges,” he said.
He added that the open exchange should be telco-neutral to keep local traffic local and peering charge-free.
“The Internet exchange proposed by Globe and other ISPs will allow participating networks to be physically interconnected in a single facility, and traffic from one member ISP passing through this Internet exchange will not be billed by the other member ISPs. Also, operating costs shall be equally shared by all participants. We believe this arrangement will level the playing field,” Castelo said.
No brunt for consumers
Galla assured consumers that the peering policy will not have any negative effect to consumers.
“Unlike increasing transit and settlement, consumers need not fear increases in costs that are passed on to them; with IP peering, consumers can expect decreases in costs of bandwidth. Nor should consumers expect increased costs due to additional capital expenditure on the part of telecommunications companies; IP peering with Phopenix does not require heavy capital expenditure,” he said.
With the reduction in the need for transit, consumers can expect lesser latency or “lag.” With the reduced requirement for transit bandwidth, consumers can expect telecommunications firms to use their cost savings to improve their network infrastructure and even perhaps reduce the costs of bandwidth.
IP peering, he added, is likewise beneficial to the ISPs
“As far as telecommunications entities are concerned, the fact that Globe Telecom is peered with Phopenix and is urging its competitor PLDT and its affiliates to do the same, supported by the fact that many other competing telecommunications entities, service providers, government networks and other entities are peered with Phopenix, is a clear signal to the industry that IP peering is good for each enterprise individually and for the ICT sector as a whole,” Galla said.
Localization of content
But given the current situation—wherein there is an apparent lack of effective and reliable interconnection among ISPs—the possible localization of foreign content is being stalled. Having localized foreign content allows for the faster loading of data from web sites.
“One of the inherent problems relating to the Internet is that all the foreign traffic has to run through undersea cables. The way to improve Internet speed in the country is to get foreign content localized,” said Louis Napoleon C. Casambre, undersecretary of DOST.
This, according to NTC’s Cabarios, would entail the setting up of caches of content providers in the Phopenix.
Having a cache in an Internet exchange will allow faster loading of data. Google, for one, has deployed a cache here in Manila, hence, it loads faster compared to other web sites.
“The fact that deploying a cache here in the Philippines is not easily done implies that the cost is quite high. Their considerations are the average Internet traffic in the Philippines, revenues from advertising, among others,” Cabarios said.
Isberto said around 90 percent of the content being accessed in the Philippines is foreign.
To be continued
1 comment
this is the most intelligent and well researched article on philippine internet connectivity to date.