How not to bridge the digital divide

I got a number of positive responses from budding entrepreneurs to my column last week supporting the new competition policy of the National Telecoms Commission. "Just wanted to let you know that your article today about insights on the future direction of the telecom industry was right to the core!" one writer said as he identified himself as part of "a startup company, envisioning Internet and its pivotal role as a future delivery medium of both voice and data services."

"I’m an avid reader of your column and I thank you for your most recent article re: competition in the telco industry," Jong Merida writes. "You are doing a great service to many Filipinos by writing about these developments in your trademark simple and readily understandable style. Empowering the ordinary consumer is an inevitable result of your enlightening articles and we are truly grateful for. I personally learn so much from your article that I make it my business to read you first thing in the morning."

Then I got another e-mail that had no signature other than the e-mail address and the blogsite of the writer (Maccess). It had an attached draft policy reform proposal for broadband which I found extensive and should be must reading for NTC commissioners, legislators and industry leaders. In fact, I think Malacañang should get a copy and use it as a guide, if it sincerely wants to use the Internet to leapfrog countryside development as Ate Glue often declares.

I will just take up a few policy reform options offered and while I do not claim original authorship of these ideas, I fully subscribe to them. The paper clearly articulated a plan to reform our policy and regulatory environment to enable us to bridge our country’s digital divide. From this point on, the ideas in the position paper and my reactions will necessarily intertwine.

The first important point raised by the paper is the horrible fact that "we have among the highest fees for Internet access in the world, and the terms are onerous: Mandatory two-year contracts, mandatory bundled services for things we don’t need, unreasonable deposits, and more." It notes that "the government’s push for Voice over IP is a great idea. VoIP is how the world communicates. Unfortunately, you can’t get the Internet you need for VoIP without getting the bundled phone line that it replaces."

Hence, the first policy consideration ought to allow making broadband available on its own, without mandatory bundling. Naked Broadband (Internet Access without mandatory bundling of landline or cable TV services) should be available to consumers and businesses, if we are to make net accessibility affordable to local communities and small businesses.

No service contract should require a commitment of more than a year, and there should be a three-month opt-out period. Why should anyone be made to suffer the bad service of a telco or broadband provider just because of this lock up period? On the other hand, why would anyone want to change providers if the service is good?

In fact, we should go further in the matter of Internet connectivity. Major cities worldwide: San Francisco, Sydney, Singapore, Taipei, and many others one can just open a wireless equipped laptop and be connected, oftentimes for free. I recall that the City of Cerritos in Southern California and I think Philadelphia are providing citywide connectivity through WiMax.

That is something similar to what Chairman Bayani F. has proposed for Metro-wide Wireless Internet. But for that to happen, the NTC must first dismantle the restrictions that prevent us from helping build a wireless city. We may need Congress to update our laws to make that possible. We’re prohibited from doing anything by our provider contracts.

In the US, telcos are prohibited by law from putting restrictions we have on our service contracts with telecom companies. "If you have a commercial line, you can share, resell, and distribute your connection. That’s why even small towns have Wireless Internet provided by the community. In Africa, towns are being connected to the Internet and the phone system using commonplace wireless technologies such as HSPDA (cellular wireless) and Wi-Max (long range wireless). More importantly, these are being done by small town businesses: National Franchise not required.

We are missing the boat by allowing the big telcos to continue with their old monopolistic ways. The Internet age is all about distributing economic opportunity… having lower prices through greater efficiency, so we can have productivity driven wage increases. We can’t develop Silicon Valley type entrepreneurs if the creativity of our local Yahoos and Googles is suppressed by our antiquated rules and choked by greedy telcos.

It is not enough for a telco to provide Internet connection to a hundred schools and feel that they have done their social obligation. That’s barely scratching the surface. The objective should be to reform the system so that we are able to develop a nationwide network of free or low-cost Internet access through a combination of private sector and government initiatives. We need to have a system that encourages nationwide technopreneurship and bridges the digital divide between major cities and rural areas.

What we have now amounts to an "entrepreneurship penalty" imposed by the big telcos that charge more to SMEs for essentially the same services provided to residential subscribers. We need to liberate the SME and NGO sector from provider imposed restrictions. We need the SMEs and NGOs to help provide nationwide universal Internet Access.

The major providers can focus on the infrastructure and backbone components, with SMEs, NGOs, LGUs, schools, tasked with providing grassroots connectivity. Such a development would encourage the development of neighborhood economic activity, from traditional services to new economy services, such as "home-sourcing," and "community sourcing," such as in the fields of transcription services, design services, and software development.

Of course we understand, as I explained last week, why the big telcos are desperately trying to squeeze whatever they can from a dying or dead business model. The importance of POTS (Plain Old Telephone System) is diminishing over time. That’s why telcos insist on bundling these with broadband subscriptions. Every year, fewer and fewer customers wish to maintain the cost overhead of a telephone line. Many residential users now prefer cellular services, businesses selling to international customers may be satisfied with VoIP calling.

Perhaps the big telcos need not worry too much about lost revenues if they are prohibited from bundling. It stands to reason that as the cost of broadband is reduced (net of mandated bundles), deployment rates should increase. "New applications, infeasible with the current mandatory bundling practices, shall be possible. Examples include: Feeder lines for Wi-Fi transmitters, feeder lines for monitoring cameras in remote locations."

Broadband access plans should be sold on bandwidth only, without restrictions as to number of computers, purpose, etc. The current "plan structure," counts attached computers and require SMEs to subscribe to costly high-end plans–whether or not they need it. Many SMEs cannot justify the expensive commitments providers impose based on an arbitrary classification system. The end result is that these SMEs do not obtain broadband Internet access, relying instead on slow dial-up (with resultant efficiency penalties).

I guess the big telcos are exploiting the slow process of updating our laws. But we have no time to lose. We are already being overtaken by upstarts in the region like Vietnam. And we will likely lose out on the vast opportunities in the business outsourcing business, for instance, because we don’t have the right regulatory environment for this new age.

We simply have to reform our system to maximize benefits from the Internet age. What we have now is simply how not to bridge the digital divide. No wonder our better trained people just move on and leave the country out of sheer frustration.

Why?

Here are some male chauvinist words of wisdom from Ray Orosa.

Why do men fart more than women?

Because women can’t shut up long enough to build up the required pressure.

And… why do men die before their wives?

Because they want to.

Boo Chanco ‘s e-mail address is [email protected]