How to be left behind
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - October 19, 2018 - 12:00am

From the country that was second only to Japan to one that is fast approaching second to the last in ASEAN, just about sums up our journey over the last 50 years.

The world is now talking about the Fourth Industrial Revolution and we can see how technology is fast changing the lives of people everywhere. It is good and bad.

Good because it provides us a chance to leapfrog development stages by adopting cutting edge technology. Bad because our mindsets are still pretty much stuck in an older era.

There is a recent study sponsored by Google and the Asia Foundation and the conclusions are troubling, even if not new to me.

Internet and its enabling broadband technologies are governed in our country by a law that was promulgated in 1931. A related law was passed in 1995 when FVR opened up the telecoms industry from the PLDT monopoly.

But the 1995 law is also no longer sufficient to regulate the brave new world of digital technology. Our laws must keep up with technological developments or we will miss the benefits. 

Congress is costing us big money, but is sleeping on its job. We should get our money’s worth. Passing a free WiFi law is hardly keeping up with technology.

Indeed, every time I complain about something to the NTC, the regulator of the industry, I am told that their hands are tied. They are just implementing the mandates given by our outdated laws.

Essentially, I am always told that broadband is considered a value added service (VAS) and is not regulated like plain ol’ telephone service. As such they can only monitor the speed the telcos provide, let consumers know but can’t impose standards that must be met.

But, as the study points out, “emerging technologies have dislodged outdated and inefficient traditional technologies, and have brought in a more diverse set of service providers.

“As the world enters what has been dubbed as the Fourth Industrial Revolution, internet connectivity will be a more important development enabler, especially for developing countries. In the case of the Philippines, the challenges of poor access, poor quality, and high cost of internet connectivity are well-documented.”

We complain about the telco duopoly, but no one in the Senate nor in the House is about to do something that will address the issue. We are focused on the third telco to provide the duopoly some competition. But unless our laws are updated, the new entrant may end up like the two incumbent players.

The Philippine policy environment, the paper points out, is not only outdated, but also restrictive with regard to emerging internet technologies.

Our basic problem, the paper concludes, is that our “overall policy framework was developed and continues to be based primarily on analog-era cellular and landline technology as opposed to digital technology.

“As a result, government agencies, regulators, and service providers interested in deploying new digital technologies have to operate in an analog-era policy environment.”

The NTC regulates on the basis of telco-centric classification of service providers. Here are some problems.

Only a telephone company with a congressional franchise and NTC provisional authority/CPCN, is allowed to build and operate a network. By law, a “network” is defined based on connections that will accommodate telecommunications.

These regulatory constraints, the paper pointed out, prevent non-telcos, such as ISPs and VAS providers from utilizing emerging and alternative internet technologies, to operate a data-only network and provide connectivity where the large telcos will not go.

“Where does a telecom network end and the last mile network, where ISPs connect the end users, begin? The regulatory definitions remain vague due to outdated policy.

“We need reforms to allow new services and/or providers to deploy emerging technologies which can dramatically improve access, quality, and cost of Philippine internet service. These include the reclassification of data services to distinguish and unshackle them from basic telecommunications…”

There is more… why should someone who just wants to provide broadband services be required to install landlines for entry into the telecommunications and broadband markets? In an era where landline growth is flat or declining, it does not make economic sense to apply those requirements on new entrants, particularly those who wish to focus on broadband services.

Why would one need a telecoms franchise to be allowed to access satellites to provide broadband connectivity?

A proposal to redefine public utility to exclude telecoms is moving too slowly in Congress. Such legislation would free the telecoms sector from constitutional ownership restrictions and get the big international players to invest in modernizing our telecoms infrastructure.

We also need to reform spectrum management that will, among others, enable NTC to audit spectrum use. NTC must be able to recall or redistribute underutilized spectrum to various types of service providers who can offer emerging internet technologies.

Updating our laws is urgently needed if we are to catch up.

Vietnam, with a lower GDP per capita ($2,343 vs the Philippines at $2,989), has 170 percent more fiber connections than the two dominant Philippine operators have of all types of fixed broadband subscribers combined.

Internet speed in the Philippines is reported as among the slowest in the world. Akamai Technologies’ State of the Internet report has been ranking the Philippines’ fixed broadband speed as the slowest in Asia Pacific since the 4th quarter of 2016.

 OpenSignal’s Global State of Mobile Networks placed the country’s 3G/4G speeds at second slowest in the world in February 2017. A year later, its State of LTE ranked the country’s 4G/LTE (Long Term Evolution) speed as fourth slowest out of 88 countries measured.

OpenSignal’s State of Mobile Video report also recorded the country’s mobile video experience as the poorest globally.

We have to get cracking on reforming the policy and regulatory environment. Otherwise, we will be left further behind.

Boo Chanco’s e-mail address is Follow him on Twitter @boochanco

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