Conclusion
GIVEN that the slow but expensive Internet connection in the Philippines is a result of a confluence of problems—from the lack of infrastructure investment to inadequate government funding and the absence of sustainable peering among providers—addressing the need for better Web access can only be achieved in a holistic manner.
Aside from updating the law that hampers the National Telecommunications Commission (NTC) from regulating Internet as a basic service and several measures that pertain to competition, foreign ownership and public service, the national government must also team up with the private sector to address the problem comprehensively.
NTC Director for Regulations Edgardo V. Cabarios underscored the importance of a universal-access fund to increase government spending for Internet access.
“One of the reasons Internet connection prices are high is because of subsidies being spent by telco to provide access to low-traffic areas. The government should invest, so we can reduce the subsidies by the private sector,” he said.
Philippine Long Distance Telephone Co. (PLDT) Spokesman Ramon R. Isberto, on the other hand, pointed out that the private sector would find it more attractive if the government would grant incentives to investments in the information and communications technology (ICT) sector.
“There are no private-sector incentives for investment in ICT infrastructure. There is no current program in that area. That seems to be puzzling why there is no such provision,” he lamented.
Isberto, who also speaks for Smart Communications Inc. and its subsidiaries, noted that his group is ready to invest more to improve the state of Internet service in the country.
His camp, he emphasized, is willing to work hand-in-hand with the government to put the Philippine Internet market on a par with its neighbors. Cabarios also suggested the establishment of an interagency body to review how the government should move to improve Internet speed in the Philippines.
“I recommend the creation of an interagency body with Congress to study government intervention in infrastructure to increase Internet speed and penetration,” he said.
This points to the establishment of a state-owned backbone, which, according to ICT policy and regulation think tank Learning Initiatives on Reforms for Network Economies Asia fellow Mary Grace Mirandilla-Santos, is a need to lessen costs and improve speed.
“The lack of government support to set up a national backbone prevents us from improving the state of the Internet in the Philippines,” she said. Globe General Legal Counsel Froilan M. Castelo agreed, saying that Internet-service providers (ISPs) must peer through a telco-neutral Internet exchange to lower costs and improve speed.
“The absence of an effective and reliable domestic Internet protocol [IP] peering among local telecommunication providers weighs down on local Internet speeds. An IP peering arrangement will enhance Internet speeds and could possibly lower Internet connectivity costs,” he said.
But for Isberto and Cabarios, IP peering is only a short-term solution.
“IP peering should help improve the quality of user experience for local Internet traffic. This will benefit not only our customers but also those of other ISPs. But, as we have explained in previous discussions, this is not enough. This is because the bulk of Internet content accessed by Filipinos comes from overseas,” Isberto said.
To improve customer experience for this type of Internet traffic, wherein 90 percent of content comes from abroad, ISPs should increase their international IP transit capacity and, at the same, increase the amount of popular global Internet content stored or “cached” in the Philippines.
“IP peering will address some concerns, but not everything,” he said. “The government really needs to invest.” At the end of the day, a partnership between the private sector and the government will address the problems in Internet access and speed.
“It’s both a government intervention or a private sector or market solution,” Sen. Paolo Benigno A. Aquino IV said. “We can only improve and speed up Internet connection in our country by the said partnership.”
Economic impact
The fuss with all the talks on Internet speed, price and access is relevant to the growth of the Philippine economy, the country’s chief economic planner said.
The current state of the Internet in the Philippines is constraining the economy from growing further, National Economic and Development Authority Director General Arsenio M. Balisacan explained.
“The high cost of Internet, and the very slow speed, is constraining the capacity of the economy to achieve a faster growth. We really need to do something about that because it is a major driver for our growth,” he said.
Cabarios agreed, saying that there is a direct correlation between broadband access and the growth of a country’s gross domestic product (GDP).
“Where there is an increase of 10 percent in broadband penetration, there is also a 1.23-percent increase in GDP. When you double the speed of the connection, the GDP will also rise by 0.3 percent,” he said.
The economic planner added that the government should invest more in ICT infrastructure to bolster the growth of the economy, if not sustain it.
“For our economy to sustain its rapid growth of 6 percent to 7 percent in the coming two to three decades—the period that we would need to catch up with our neighbors—we would need to invest aggressively and massively in infrastructure; and ICT is one of them,” he said.
The government spent about P1.76 billion in ICT development last year. For 2015 the government has earmarked about P3.18 billion to develop the sector.
Now the government is moving to increase the budget for ICT development next year with a proposed allocation of P4.37 billion.
“I think we should have more given the backlogs in the access to ICT,” he noted. “If we want inclusivity, the tool for achieving that low-lying fruit needs a few billion pesos more.”
He added that his office will be discussing the next medium-term plan, or through 2022, ahead of the next administration.
“We’ll be happy to help. In 2016 we’ll be crafting the next medium-term plan of 2017 to 2022. This is an opportunity to put into the plan an aggressive stance on ICT access,” Balisacan said.
Promote inclusive growth
Balisacan also said that the Internet is a means to promote inclusive growth, calling it a “great equalizer” that needs to be improved.
“If you want inclusive growth, we need to get information accessible to areas without Internet connection,” he said.
Indeed, the Internet will play a key role in shaping the future of the Philippine economy, the International Data Corp. (IDC), an ICT think tank, predicted.
According to IDC Philippines Country Head Jubert Alberto, telecommunications companies will focus on developing their network and coverage to provide better access to Filipinos. They have been, in fact, transitioning from a legacy mobile and telephony providers to digital enablers.
“The telco space in the Philippines is bolstered by the evolving role of telcos from being a pure connectivity provider to becoming a total ICT provider. The ‘one to majority’ marketplace allows for telcos in the Philippines to be the services provider that can service various marketplaces,” he said.
PLDT and Globe Telecom Inc. have been, over the past few years, launching various digital initiatives that promote the access to the Web.
Smart, Sun and Talk ‘N Text—the mobile brands of PLDT—are currently offering free Web access with a data cap of 30 megabytes per day. This is on top of the free access to several applications, like social-media site Facebook.
Globe, on the other hand, offers free access to Facebook and Viber.
Many Filipinos today get relevant information from social media, as smartphone penetration in the Philippines continues to grow. It is now pegged at more than 50 percent, thanks to the proliferation of cheap mobile devices from China.
Mobile phones are also being used as virtual wallets. Both Smart and Globe offer their own e-money service. PLDT even partnered with the government to release conditional cash transfers to the poorest of the poor.
There is still a large number of Filipinos who remain unbanked and uncarded. World Bank data showed that only three of 10 Filipinos have bank accounts, and only 18 percent of all adults in the poorest 40 percent of the households in the Philippines are banked.
Financial inclusion, according to the monetary agency, is classified as “having an account that allows adults to store money and make and receive electronic payments.”
Aside from these, the top 2 telcos in the Philippines are also ramping up their efforts to promote the digital lifestyle to Filipinos. This also entails services that promote inclusive growth to the poorest of the poor.
“If we can make available those possibilities also for our poor people, those outside of Metro Manila and those who are in far-flung areas, then you have developed a tool for inclusive growth,” Balisacan said.
1 comment
SLOW INTERNET
This slow internet speed problem was similar with the telephone problem the Philippines had during the 1970’s with PLDT (Retelco). During those times, telephone subscription is very costly and there were very few available. The telephones then had party lines (two separate telephone numbers but each function as the extension of the other) and some single lines telephones. The problem is not the party line but the availability of dial tones. You have to wait for hours just to make a call during daytime and sometimes, you have to wait for the whole day just to be able to call. Most people then call at midnight. The telephone during those times were nearly useless.
The key is when Globe Telecom joins the telephone market. Within a year(+/-), lots of telephones suddenly becomes available and cheaper; all were single line; and with good signal and dial tone and no more waiting for the whole day.
The question is, how come that, within 1 year, the Philippines telephone system drastically improved (and at a very short short period of time)? Did PLDT spend a lot in infrastructure or the infrastructure was already there but not utilized? You are right dear readers, and that is economic sabotaged, since telecommunication is a very very important factor in the economic well-being of a nation. Deals can be consummated over the phone, staff can be instructed by their supervisor over the phone, etc. Imagine the improvement in just 1 year that was not done before but can be done easily. This kind of things led the Philippines to it’s current level right now, from number 2 in Asia after the war to the so called sick man of Asia that it is today. It is also during those times (1970’s) that Singapore is inching up and the Taipans began showing their pangs.
Your guess is as good as mine, that the telephone problem before and internet problem now is another Chinese conspiracy. You must be watchful to correct the past and to protect yourself now and in the future. Well, there might be other capable companies that will be willing to enter the Philippine Internet market and improve it just like the way Globe Telecom did to improve the Philippine telephone system.