THE country’s low investment in internet connectivity has led to expensive broadband services, slow speeds, and the Philippines accounting for half of the Asean’s population that do not have mobile broadband services, according to the World Bank.
In a Policy Note, the World Bank said Manila has invested less than 1 percent of GDP in telecom infrastructure annually. The Washington-based lender estimated that the country’s investment declined to 0.44 percent of GDP in 2022 from 0.64 percent in 2018.
As a result, the cost of broadband connections is 11 percent of the country’s Gross National Income (GNI) per capita or more than four times the cost in other Asean countries. Mobile broadband cost was estimated at 2 percent of GNI per capita or 1.5 times higher than other countries in the region.
“The cost of inaction—loss of growth opportunity, people remaining unequipped for future jobs, and widening of the digital divide—is too high for the Philippines. Outdated policy and regulations have long stunted the growth of the country’s broadband industry and expansion of digital infrastructure,” the report stated.
“For inclusive growth through digitalization that benefits all Filipinos, updating Philippine policy to promote competition, encourage investment, and upgrade broadband infrastructure is urgent and necessary,” it added.
P110-B investment gap
The World Bank estimated that the investment gap in the Philippines is around $2 billion or P110 billion per year in broadband investments. The government’s direct investments and fiscal measures would not be enough to cover the gap.
The report noted that the P5-billion budget of the Department of Information and Communications and Technology (DICT) this year was still not enough to address the gaps.
These gaps could be addressed by maximizing spectrum user fees (SUFs). The World Bank said spectrum holders must pay an annual SUF based on per frequency and base station.
The World Bank said the National Telecommunications Commission (NTC) SUF collection almost tripled in 5 years to over P6.7 billion in 2022 from P2.4 billion in 2017, reflecting the growth of the industry.
“However, the significance of spectrum revenue, measured as a percentage of total government revenue, has been miniscule: from 0.09 percent in 2017 to 0.14 percent in 2022. This is, by far, the lowest spectrum revenue rate among regional peers, such as Malaysia [0.34 percent], Indonesia [0.91 percent], and Thailand [1.57 percent],” the report stated.
Apart from this, the World Bank said some of the binding constraints that have prevented the Philippines from investing in better broadband infrastructure include barriers to market entry, as well as an “unlevel playing field” that stem from problems such as price discrimination that is disadvantageous to small Internet Service Providers (ISPs).
The report also noted that an ineffective infrastructure sharing policy framework has not only led to weak coordination among operators and regulators, but made “network deployment costly and inefficient.”
The World Bank noted another constraint: the lack of a modern spectrum policy framework. The report said the radio spectrum management is based on analog-era laws enacted almost a century ago or in the 1930s; and over three decades ago or the 1990s.
“Unlike in other countries, the Philippines allows an assignee to indefinitely hold spectrum and does not require any service obligation. Procedures in spectrum recall and reassignment are unclear, and spectrum assignment and use non-transparent, causing spectrum fragmentation, spectrum scarcity, and under-collection of government revenue,” the World Bank said.
Earlier, Socioeconomic Planning Secretary Arsenio M. Balisacan told reporters that the Radio Control Law of 1931 is outdated and should not be allowed to celebrate its centennial in 2031.
Balisacan said, therefore, that it is imperative for the Legislative-Executive Development Advisory Council (Ledac) to include this in the priority bills to be crafted by Congress.
USAID Better Access and Connectivity (Beacon) Consultant Scott Minehane explained that a spectrum is an electromagnetic wave comprising both electric and magnetic fields. It is not only related to telecommunication but also aeronautics, the maritime industry, and even microwave technology.
Minehane said it is considered a national resource that is also a non-exhaustible natural resource that needs to be managed. It can be reused by dividing into frequencies, time, angle of arrival, polarization, geography, and users.
Compared to its peers in the Association of Southeast Asian Nations (Asean), only the Philippines has a spectrum law that is older than 1999, Minehane said in a forum presentation.
Apart from the amendment of the law, the Philippines, he added, should allocate more International Mobile Telecommunications (IMT) spectrum intelligently and sustainably and as soon as possible.
According to him, allocating more IMT spectrum will allow the country to extend wireless connectivity such as to 6G, which is expected in 2030. An expanded IMT spectrum will allow for future allocations beyond 6G.
He also cited a need to balance higher spectrum allocations through improvements in infrastructure investment. This should include geographic extension of access network reach in rural and regional areas.