Many people blame Globe Telecom Inc. and PLDT Inc.’s Jurassic telecom infrastructures for the country’s slow Internet connectivity. The duopolistic stranglehold that these companies have on the industry, already burdened by conflicting rules set by the government agency tasked to regulate it, compounds the problem tenfold.
The ultimate solution advanced by President Duterte is to welcome another player.
Let’s rewind a bit to get a clearer understanding of what really ails the country’s telecom industry.
Two companies hold the industry in the palm of their hands. They can command higher prices by using their respective production costs as justification. The prices they charge their customers could be much lower, of course, if only the market were more competitive. Higher prices would mean that consumers may be forced to demand lower quantity to save on cost. Thus, the quantity produced and expended will be less than that under a competitive market with more players.
The bottom line is that prices become prohibitive, and production, too low. Herein lies an incompetent distribution of resources.
The result: consumers suffer. The country has one of the slowest, but most expensive, Internet service in Asia, with high-speed service costing about $57 per month more than in the United States. Customer complaints are often handled by inept consumer representatives, and are not acted upon swiftly. Obviously, the market is not getting its money’s worth. No matter how bitter the pill, consumers have to swallow it because they have no other choice.
The Philippines has been consistently ranked at the bottom of numerous reports which quantify global Internet speed and accessibility. Mobile operator analyst OpenSignal nailed the Philippines’s mobile Internet speed at 8.24 Mbps in the third quarter of last year. This makes us the fourth-slowest among the 77 countries in the report, and the slowest in Southeast Asia. The report says that, while mobile Internet availability slightly improved quarter-on-quarter, the Philippines still had the least accessible mobile networks in
Southeast Asia.
The government, in trying to break the duopoly, wants to entertain a third telco player. After some delays, the selection process for a new player will push through as scheduled after the Department of Information and Communications Technology (DICT) overcame a legal hurdle from Now Telecom, which earlier moved for a temporary restraining order to stop the whole process. That, however, is an entirely different story.
Another problem which I believe the government has to focus on is the lack of cell sites to distribute the needed signal to speed up the country’s Internet connectivity. Normally, it takes two years for a single tower to be put up. But in the Philippines, where bureaucratic red tape rules, it may take forever. Prolonged license tenders and corruption in local government weigh down the rollout of the much-needed infrastructure to improve the country’s connectivity.
Internet delivery in the Philippines will remain at a snail’s pace, no thanks to the ridiculous expanse of certifications required, and the time it takes for local government units (LGUs) to approve them. Compared with other countries where digital processing takes only a day, without red tape or any other obstructions, it takes at least 24 stages and close to an excruciating 100 days just to secure a construction permit, which may be even made 10 times slower and longer because of corruption and inefficiency. Among the various permits and requirements for building cell sites are an environmental impact assessment and certification that the site is not a protected area. To top it all, local governments unjustifiably levy P200,000 per year on a single tower.
And now this: The DICT has been working on a common tower policy that is expected to speed up the tower building process, and help local telcos expand their network, lower prices, and allow for more players to enter the industry.
While the intention seems good, certain provisions in the common tower guidelines actually run counter to the open-access scenario that the government wants to push. Aside from Presidential Adviser on Economic Affairs and Information Technology Communications Ramon “RJ” Jacinto’s adamant stand on limiting independent tower companies to only two, the guidelines also prohibit telecoms firms from building towers near or beside other companies’ towers.
Since the problem is in the scarcity of cell towers, the country needs the telecom companies and the viable independent tower companies to build as many towers as they can in the least amount of time in order for more investments to come in. In short, we need an open or unrestricted access to ensure investment and spur industry growth to benefit the public.
The DICT’s “two-tower company” policy directly contradicts Senate Bill 1763 or the Open Access in Data Transmission Act, which aims to foster competition by opening up different segments of the market to other players in order to break down regulatory barriers, and create an open and level playing field.
It is illogical to limit tower companies to two and prohibit telcos themselves from building towers. This is the exact opposite of open access. The Philippines needs more, not fewer, towers.
Various stakeholders and the tower companies themselves naturally disagree with the DICT’s guidelines, with many asking: Why place a limit when we all want to build?
The current permit processing and building time are already cumbersome, and made more constricted by this new policy which adds even more bureaucratic layers. There is also a new tower company accreditation process, the build-up period and triggering mechanisms—all new processes and steps that would further aggravate the sordid state of the country’s telecom industry.
Looks to me like the two-tower company policy is another half-baked solution to a gargantuan problem that will continue to punish hapless consumers. Whose interest is the DICT trying to protect?
For comments, suggestions e-mail me at: mvala.v@gmail.com.
1 comment
Do we have the guideline for licensing of a tower company?